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This project is co-financed by the European Union and the Republic of Turkey

Bölgesel Rekabet Edebilirlik Operasyonel Programı’nın Uygulanması için Kurumsal Kapasitenin Oluşturulmasına Yönelik Teknik Yardım Technical Assistance on Institutional Building for the Implementation of RCOP in Turkey .

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This project is co-financed by the European Union and the Republic of Turkey

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  1. Bölgesel Rekabet Edebilirlik Operasyonel Programı’nın Uygulanması için Kurumsal Kapasitenin Oluşturulmasına Yönelik Teknik Yardım Technical Assistance on Institutional Building for the Implementation of RCOP in Turkey This project is co-financed by the European Union and the Republic of Turkey • Project Appraisal in depth for Business Infra and Business Support Gerbrand.vanBork@ecorys.com IPA Funds Programme Management 12-19 sept. 2011

  2. Project Appraisal This project is co-financed by the European Union and the Republic of Turkey • Objectives • Understand key principles of project appraisal • Project selection by selection criteria approach • Key points • Call for proposals • Selection criteria • Feasibility Study IPA Funds Programme Management 12-19 sept. 2011

  3. Project Idea & Partner Search Project Proposal & Partnership Implem-entation Funding Proposal Need Concept Project Screening/Prioritisation More mature project More information The Project PipelineProcess This project is co-financed by the European Union and the Republic of Turkey IPA Funds Programme Management 12-19 sept. 2011

  4. The Project AppraisalProcess • Not eligible (Information to MC and Lead Applicant) • Eligible This project is co-financed by the European Union and the Republic of Turkey 1. Eligibility Check • 0Knock out (objective of the project can not be fulfilled) • Very poor • Poor • Adequate • Good • Excellent 2. Quality Check • Rejected • Approval with conditions • Approval 3. Approval IPA Funds Programme Management 12-19 sept. 2011

  5. A. Eligibility Check This project is co-financed by the European Union and the Republic of Turkey • Documents submitted in due time • Application is complete • Application is fully and properly filled, signed, dated and stamped • All Co-financing Statements are correctly filled and printed • (draft) Partnership agreement • Partnership, budget, etc. following rules (minimum / maximum partners?) IPA Funds Programme Management 12-19 sept. 2011

  6. B. Quality Check (Selection Criteria) This project is co-financed by the European Union and the Republic of Turkey 1) Relevance of the proposal • Content related 2) Coherence of the proposal 3) Quality of results 4) Quality of management • Implementation related 5) Quality of partnership 6) Budget and finance IPA Funds Programme Management 12-19 sept. 2011

  7. The general evaluation critera This project is co-financed by the European Union and the Republic of Turkey IPA Funds Programme Management 12-19 sept. 2011

  8. Criteria for Project Appraisal This project is co-financed by the European Union and the Republic of Turkey • Important categories of appraisal criteria: • 1. Institutional assessment (implementation related) • 2. Relevancy of the project • 3. Coherence of the proposal • 4. Effectiveness and efficiency • 5. Risk assessment • 6. Economic and financial assessment • 7. Sustainability of the project • 8. Cross-cutting issues IPA Funds Programme Management 12-19 sept. 2011

  9. Institutional Assessment: • suitabilility of applicant and partners for implementing the project This project is co-financed by the European Union and the Republic of Turkey • Are the implementation structure and responsibilities clear? • What is the experience of applicant withrelevant project implementation experience? • Is a PIU established and no. of operational staff? • Experience of staff in PIU? • Financial status of applicant? • Partnership: are relevant partners involved (NGOs, key SMEs etc.) eligible and suitable? IPA Funds Programme Management 12-19 sept. 2011

  10. Business infra and support • projects This project is co-financed by the European Union and the Republic of Turkey • Partnership: • Is a key branch or business organisation involved? • Are key players in the sector involved? • Is there a demand pull mechanism in the project? IPA Funds Programme Management 12-19 sept. 2011

  11. 2. Relevancy of the project This project is co-financed by the European Union and the Republic of Turkey • Justification: what are the key problems the project should solve or what are the needs of the target group (or opportunities)? • Does the project address the causes of these problems/needs of the target groups or opportunities? • Are the target groups the relevant ones? IPA Funds Programme Management 12-19 sept. 2011

  12. 2. Relevancy: business infra and business support This project is co-financed by the European Union and the Republic of Turkey • Business infra: • Demand and shortage? • The right concept and sectors targeted? • Business support: • The right clusters or SME types targeted? • The right training and consultancy planned (relevant for business needs)? IPA Funds Programme Management 12-19 sept. 2011

  13. 3. Coherence of the proposal This project is co-financed by the European Union and the Republic of Turkey • Is the project logically structured (LFA: overall objective, specific objective, activities, measurable indicators quantified) • Do the activities lead to the results and specific and overall objectives? • Is the target group clearly defined? • Are the indicators well defined, SMART and relevant for assessing the achievements regarding the objectives • Is there a clear and feasible implementation schedule? IPA Funds Programme Management 12-19 sept. 2011

  14. 4. Effectiveness and Efficiency This project is co-financed by the European Union and the Republic of Turkey • Are the expected impacts on the main objectives potentially substantial or very limited? • What are the cost per effect obtained (cost-effectiveness)? • Co-finance: are the contributions of main stakeholders who obtain benefits from the project in line with these benefits? IPA Funds Programme Management 12-19 sept. 2011

  15. Effectiveness: Business infra and business support This project is co-financed by the European Union and the Republic of Turkey • Business infra: • Sustantial amount of new companies or visitors pot. attracted? • Net employment impacts substantial? • Business support: • Impact on cluster growth, business turnover, profits or employment expected? • Impact on investments? • Impact on nr. of start-ups? IPA Funds Programme Management 12-19 sept. 2011

  16. Effectiveness: innovation projects This project is co-financed by the European Union and the Republic of Turkey • Is the future growth potential of the relevant cluster likely? • Is there a pull mechanism in the project to create market oriented innovations? (partnership: companies or branches involved, open shared facilities, innovation platforms and networking mechanisms) • Uniqueness: is the innovation or research project different from other innovation initiatives elsewhere? • Promotion: is there a mechanism in the project to diffuse/ promote the innovations? (demonstration facilities, platforms, etc.) • Is the innovation project linked to other initiatives or universities? IPA Funds Programme Management 12-19 sept. 2011

  17. Efficiency This project is co-financed by the European Union and the Republic of Turkey • Business infra: • Is the ratio between estimated costs and expected results satisfactory? • - Cost per ha land? • - Cost per new companies or visitors pot. attracted? • - Cost per gross or net employee created? • Is the proposed expenditure necessary for the implementation of the action? • Business support: • Cost per business plan or company trained? • Cost per start-up expected? IPA Funds Programme Management 12-19 sept. 2011

  18. Impact on projects Low Medium High Probability 0.65 - 1.0 Medium High Unacceptable 0.3 - 0.64 Low High Unacceptable 0.0 - 0.29 Low Medium High 5. Risk Assessment This project is co-financed by the European Union and the Republic of Turkey • Are there important risks for the project? • Can the project deal with these risks (is the design so that risks are minimized)? • Unacceptable risk (killer assumption): redesign the project!!!! • How to assess importancy of risks? IPA Funds Programme Management 12-19 sept. 2011

  19. Risks This project is co-financed by the European Union and the Republic of Turkey • Business infra: • Competition and demand (attraction of new companies or visitors) • Cost overruns • Technical implementation and delays • Business support: • Low participation of target group • No demand pull mechanism • Innovations not diffused or adopted • Competition from other sectors or other innovation projects (in or outside Turkey) • Lack of other relevant support policies IPA Funds Programme Management 12-19 sept. 2011

  20. 6. Economic and Financial Appraisal This project is co-financed by the European Union and the Republic of Turkey • Does the project really need a subsidy (is the project not profitable?) (see later) • Is the project financially sustainable? • How big are the expected main economic impacts (employment, incomes)? • Are the outcomes of the CBA (if available) positive? IPA Funds Programme Management 12-19 sept. 2011

  21. 7) Sustainability of the Project This project is co-financed by the European Union and the Republic of Turkey • What is lasting after the project has been implemented? • Institutional sustainability: what provisions for long term are made in the project? • Exit strategy and follow –up available? • Financial sustainability: are there financial means arranged for long term impacts? IPA Funds Programme Management 12-19 sept. 2011

  22. 7. Sustainability mechanisms for business support This project is co-financed by the European Union and the Republic of Turkey • Ownership of political and management levels • Budget agreements on financing of long term business support (centers) • Sound business support models (services, target groups, mechanisms) • Financial models (fee based business support) • Capacity building in services delivery and fund raising IPA Funds Programme Management 12-19 sept. 2011

  23. Sustainability mechanisms for innovation projects This project is co-financed by the European Union and the Republic of Turkey • Ownership of political and management levels • Bedding in research institutions and regional network • Budget agreements on financing of long term operational costs of research centers • Sound partnership/collaboration models and dissemination/diffusion methods • Open facility sharing and up to date research and facilities • Good legal framework for patents and publications IPA Funds Programme Management 12-19 sept. 2011

  24. 8) Cross-cutting issues This project is co-financed by the European Union and the Republic of Turkey • Impacts on horizontal principles • Gender equality • Minorities and disadvantaged groups • Environmental impacts • Information Society and Innovation IPA Funds Programme Management 12-19 sept. 2011

  25. Exercise: Project Appraisal This project is co-financed by the European Union and the Republic of Turkey • Assess the OIS in your folder (and mainly read 2. Objectives, Rationale, Results, Activities and Sustainability and focus on relevancy, effectiveness and sustainability of the project. • What are strong points of the operation? • What are weak points? • What should be improved? • How could sustainability be (further) improved? IPA Funds Programme Management 12-19 sept. 2011

  26. Steps in Feasibility Analysis/CBA This project is co-financed by the European Union and the Republic of Turkey • Step 1: Context analysis & project objectives • Step 2: Project identification • Step 3: Feasibility and option analysis • Step 4: Financial analysis • Step 5: Economic analysis • Step 6: Risk assessment and sensitivity analysis IPA Funds Programme Management 12-19 sept. 2011

  27. Step 1: Context analysis & project objectives This project is co-financed by the European Union and the Republic of Turkey • Socio-economic context of the project • Consistency with EU and national frameworks • Legislation • Policies • What are the key objectives of the project? IPA Funds Programme Management 12-19 sept. 2011

  28. Step 2: Project Identification This project is co-financed by the European Union and the Republic of Turkey • Problem or need analysis: what is the main problem or need as a justification for the project? • The project must be a clearly identified single unit of analysis • Scope and scale of the project • Identification of project services (“the project market”) • Identification of relevant stakeholders (winners and losers) IPA Funds Programme Management 12-19 sept. 2011

  29. Step 3: Feasibility: demand versus supply This project is co-financed by the European Union and the Republic of Turkey IPA Funds Programme Management 12-19 sept. 2011

  30. Step 3) Option Analysis This project is co-financed by the European Union and the Republic of Turkey • Are other policy options for reducing the problem considered? • Do Minimum alternative: cheaper smaller scale solutions, use of existing facilities Global alternatives: • Non investment policy instruments (regulation, pricing etc.) IPA Funds Programme Management 12-19 sept. 2011

  31. Step 4 Financial Analysis This project is co-financed by the European Union and the Republic of Turkey • What is the project’scommercial profitability? • What amount of finance is needed and how will the project be financed? • What will be the subsidy (or EU contribution)? • Will the project be financially sustainable? The answers to these questions are given by the financial analysis of the project Financial Analysis FINANCIAL VIABILITY FINANCIAL SUSTAINABILITY FINANCIAL PROFITABILITY IPA Funds Programme Management 12-19 sept. 2011

  32. Financial return on investment This project is co-finnced by the European Union and the Republic of Turkey IPA Funds Programme Management 12-19 sept. 2011

  33. Step 5: Economic analysis: This project is co-financed by the European Union and the Republic of Turkey socio economic costs & benefits of projects • Contribution of the project to wellfare (well being) of the country or region: so all impacts are in principle included • Perspective: society • Types of impacts: • Market impacts: for users and suppliers on the market of project services (coverse financial analysis + add) • Non market (external) impacts: no market price available: environmental impacts, social impacts • Indirect impacts: priced impacts for other markets/actors IPA Funds Programme Management 12-19 sept. 2011

  34. Outcomes CBADecision rules government This project is co-financed by the European Union and the Republic of Turkey IPA Funds Programme Management 12-19 sept. 2011

  35. Step 6. Risk and sensitivity analysis This project is co-financed by the European Union and the Republic of Turkey • External risks (political, economic, demographic) • Project internal risks (technical, organizational etc.) • Selection of important factors which influence the • results (NPV of IRR): • Sensitivity analysis: impacts of different factors on outcomes • demand, FA, CBA • Scenarios future amount of waste (or water/ energy consumption) • Discount rate • Higher financial costs etc. IPA Funds Programme Management 12-19 sept. 2011

  36. Example: Possible risks business infrastructure This project is co-financed by the European Union and the Republic of Turkey • Competition of other business parks • Lower demand for land (lower economic growth) • Lower land prices • Higher investment costs • Higher operating costs • Delays in construction due to technical risks or land acclamation problems IPA Funds Programme Management 12-19 sept. 2011

  37. Conclusions This project is co-financed by the European Union and the Republic of Turkey • Feasibility studies are useful for decisions of government (project selection, timing, size) • Feasibility studies can help to improve projects (timing, size) • Feasibility study shows items for risk management • Assumptions are important for the outcomes of the study • Check the assumptions in the studies! IPA Funds Programme Management 12-19 sept. 2011

  38. This project is co-financed by the European Union and the Republic of Turkey Each group will identify for their project which elements should be in the Terms of Reference for a feasibility study 1. What are the most important questions and specific issues relevant for your project for the consultant to address? 2. Which important risks should be described and which sensitivity analysis should be undertaken? 3. If you have time: which partners/stakeholders would you invite for guiding & commenting on the study? IPA Funds Programme Management 12-19 sept. 2011

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