Manual for Development Projects - Planning Commission

Chapter-1
Thereafter, the PSDP is integrated with the national budget for consideration by the National
Assembly.
1.39 When allocation of development funds in the PSDP comes for consideration before the
Priorities Committee meeting, it is decided on the basis of the availability of funds, past
performance and the phasing set in the PC-I. The priority in the allocation of funds should be in
accordance with the ranking of projects from the point of view of their economics, ie the
internal financial rate of return (IFRR) and the internal economic rate of return (IERR) either
after allocation had been made for each sector, say, water or even prior to that. However,
sometimes the political and social objectives are to be met first through allocation of funds. For
example, if primary or secondary or university education is to be promoted, the ranking on the
basis of economic rate of return is not necessary. Similarly if regional development is required
to be done (as a political objective) or infrastructure is to be laid or potable water and other
utilities of essential nature are to be provided for improving the quality of life, then the rate of
return would not be taken into account, though provision will be made at the stage of the
approval of the project that maximum revenues be obtained after project execution so that at
least the O&M cost of the project is recovered. Full discussion of how the appraisal of the
project from the point of view of financial and economic analysis is to be done has been made
in Chapter 5 of this Manual.
1.40 During the financial year, if any agency requires additional funds for some of its projects
for inescapable reasons, the agency approaches the Planning and Development Division
(Programming Section) in either of two ways:
(a) If some savings are available within that agency's PSDP allocation, it requests the Planning
and Development Division for re-appropriation. After consideration of the case in relation to
the implementation of other projects, the Planning Division decides the case.
(b) If saving is not available in the agency's allocation, it requests the Planning and
Development Division to allow a supplementary grant. The Planning Division decides each
case on its merit and then recommends it to the Finance Division.
Transformation of Plan into Viable Projects/Programmes
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1.41 Projects are the cutting edge of development. By this is meant that, without projects, it is
unlikely that general development plans which hasten economic growth and further a range of
social objectives will be fulfilled. Projects provide an important means by which investment
and other development expenditure foreseen in plans is incurred. Sound planning requires good
projects, but effective project preparation and analysis must be set in the framework of a
broader development plan. Projects are a part of an overall development strategy and a broader
planning process, as such they must fit in appropriately. Within the broad strategy, analysis
must enable the sponsoring agency to identify potential projects that address the policy of
production targets and priorities.
1.42 The general development plans, currently prepared in Pakistan, provide the general
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9/23/2010