Benefits of Project in Nepal

Project management in Nepal is a new approach for achieving the objectives of time bound complex projects efficiently and effectively. It has been widely used in Nepal since 1970s.

The benefits of project management approach to Nepal are:

1. Change Management: Project management approach has served as a vehicle for introducing and managing change in Nepal.
2. Environmental Adaptation: The flexibility in operations provided by project management approach has facilitated environmental adaption. Nepalese environment is full of risks requiring flexibility.
3. Resource Mobilization: Project management has been the prime vehicle for mobilizing foreign aid for Nepal's development. The share of foreign aid has been about 55 percent in the total planned outlay in Nepal over the last forty years.
4. Infrastructure Development: Project management has been instrumental in developing physical and social infrastructure in Nepal.
5. Better Resource Utilization: Project management has facilitated co-ordination and better utilization of resources across ministries in the government. Decision making has been faster.
6. Human Resource Development: Project management has facilitated human resource development in Nepal. A pool of professional project managers and experts is available in Nepal. Professional and technical development has been facilitated by foreign training and seminars made possible through project funding. The country's human resource capability has increased.
7. Organizational Re-engineering: Project management has facilitated pure project and the matrix organization structure to implement projects in Nepal. This has facilitated organizational re-engineering.
• The "Development Committee" pure project structure was the outcome of the need to apply project management concept to manage development projects.

Project Planning in Nepal

Project planning is concerned with the development of a project for investment. It consists of:

• Feasibility study to determine project implementability.
• Appraisal to evaluate project's ability to succeed, and
• Detailed engineering design and estimating to plan project implementation.

Most central level development projects in Nepal are planned by the donors. Most local level projects, however, are planned within the country by various agencies of the government or local authorities.

• National Planning Commission (NPC) is responsible for preparation of five year development plan. Projects are the primary means of translating development plans into action. NPC is responsible for identification, planning, monitoring and evaluation of development projects.
• Central level projects should have approval of NPC. Local level projects should have approval of the Secretary f the concerned Ministry within the policy guidelines of NPC. The project approval is based on the appraisal of the project proposal. A format has been prescribed for preparing project proposal. A process has also been prescribed for approval of the project.

Contents of Project Proposal
The project proposal should contain the following information:

1. Outline of the Project: Objectives, location, duration.
2. Total Investment of the Project: Development, construction, operation, others.
3. Sources of Funds: Government, donors-loan, grant.
4. Returns from the project:
• Contribution to production increase
• Growth in employment
• Internal rate of return
• Other Economic and social benefits
5. Economic Analysis of the Project:
• Cost/benefit ratio
• Cost effectiveness estimates
6. Project Implementation: Schedule and budget.
7. Implementation Requirements: In terms of -
• Human Resources
• Construction materials
8. Project Operations: After completion and handover of project:
• Management arrangements
• Expenditure estimates for 3 years
• Income estimates for 3 years
• Approval of the Project

Project Approval
The project approval process is based on:

1. Consideration of project's fit with national objectives and sectoral strategies. If it is not included in the periodic plan, NPC concurrence should be obtained.
2. Recommendation of department head about the reasonableness of project costs in terms of current prices and cost benefit analysis.
3. The concerned ministry should approve and implement the project keeping in view the concurrence of NPC.

•  If the project is not included in the periodic plan or if the financial outlay is going to increase, the concurrence of NPC and Finance Ministry is needed.
• If the opinions of NPC and Finance Ministry differ, the project should be forwarded for cabinet approval along with project operation plan.

Historical Overview of Project Management in Developing Countries

Developing countries are characterized by low levels of economic and human development. Low per capita income is the indicator of their underdevelopment. Project management emerged in these countries as follows:

1. The project model for managing development in the modern sense appeared with the centralized planning model of the Soviet Union in 1930s. Many developing countries adopted centralized planning model after the second World War. USA adopted this model in 1960 for Manhattan Project.
2. The increased inflow of foreign assistance from developed to developing countries during the cold war years in 1950s and 1960s gave further impetus to the project model. Much of the foreign aid to developing countries was project-based. Projects become the primary means of translating development plans into action.
3. During 1970s, the project management model was adopted by developing countries to implement complex development projects. Pure project and matrix project organization structures were also used. The total responsibility and accountability for the project from initiation to completion was entrusted to the project manager.
4. The implementation of development plans and programmes in developing countries has come to depend heavily on project management. Effective project management is a dominant concern of public and private organizations. Donors insist on it to channel foreign assistance.
5. The bureaucratic model of managing development has failed to manage change in developing countries. The project management model has been used widely by developing countries to implement projects at the national as well as local levels in present days.

Historical Overview of Project Management in Nepal
Nepal is one of the least developed countries of the world. More than 30 percent of people live below the poverty line. Its per capita income is about US 540$. It ranks low in the Human Development Index (HDI) of UNDP. The country's isolation from the outside world for more than one hundred years till 1951 kept it backward in terms of development. The project management in Nepal emerged as follows:

1. The project concept is Nepal began in 1950/51 with a grant assistance of US $ 100,000 by USA. The planned development began with the implementation of the First Five Year Plan in 1956. Since then, Nepal had implemented nine development plans. The financing of Nepal's development plans has been heavily dependent on foreign assistance. Foreign assistance in Nepal is heavily project-based.
2. The foreign aided projects in Nepal consist of:
• Turnkey Project: Implemented by contractors through global bidding process. 
• Donor Executed Projects: Donors directly execute the projects.
• Nationally Executed Projects: Nepalese project managers execute projects.
3. Project Management model appeared in Nepal during 1970s. The organization structure adopted for project was "Development Committee". It was an autonomous pure project organization structure for the management of a specific project. The matrix project organization structure has also been used in selected cases.
4. INGOs and private sector are also using the project management concept since 1980s. BOT (Build, Operate, Transfer) modality has also emerged.
• Foreign Direct Investment in Nepal has also led to greater use of project management. Nepal has approved about 900 such projects till 2003-04. But very few of them are operational.
• Today, the implementation of Nepal's development plan depends heavily on project management. The project management model is widely used to implement projects in public, private and non-government sectors.

Financial Controls

Financial controls focus on accounting. They provide an insight into project's performance during implementation. They can be of following types:

1. Cash Flow Statement: It is a statement of sources and uses of cash funds. It shows where cash came from and where cash was used during the given period.
2. Ratio Analysis: Ratios are used for efficiently and profitability control. They show relationships between figures for evaluating financial performance. They can be based on balance sheet or income statement. The popularly used ratios are:
• Liquidity Ratios: They measure ability to pay back short term debts. Current Ratio (current assets : current liabilities) is a good indicator of liquidity.
• Debt Ratios: They measure ability to meet long term financial obligations (Total debts to Total assets). They are also known as Solvency Ratios.
• Operating Ratios: They measure the efficiency of operations. Inventory turnover ratio is an example.
3. Auditing: It is a comprehensive, systematic, independent and periodic examination or truth and fairness of financial statements. It examines propriety (compliance), efficiency and performance. It can be internal or external.
• Internal Audit: It is carried out by members of the project organization. It examines accuracy and reliability of financial transactions. It evaluates operational efficiency and control system. It is a continuing activity for internal control by project management.
• External Audit: It is independent examination of financial accounts and statements by legally authorized auditors. It takes place after the end of financial year. It is done to safeguard the interests of the project.