Provide the authorities with a sufficient set of good investment initiatives so that they can execute the most convenient investment options for society as a whole.
formulation-and-evaluation-of-social-projectsThe central concern is the efficiency of the use of public investment resources.
SNI contributions
The National Investment System establishes the bases and conditions for the development of the public investment process; This allows:
• Transform «ideas» into «investment initiatives“
• Differentiate between investment initiatives suitable for society as a whole from those that are not.
Basic Definitions
The National Investment System works from some basic definitions:
• The superior administration of the SNI corresponds jointly to the MINISTRY OF SOCIAL DEVELOPMENT
• The SNI is legally valid and its rules are mandatory for all public entities indicated by law.
• Investment resources can only be applied to initiatives formulated and evaluated in terms of "investment initiatives" and according to the rules established in the SNI
• A clear division of roles is established between the investment entities, the Ministry of Finance and the MINISTRY OF SOCIAL DEVELOPMENT
Definition of Roles
• The functions of identifying and prioritizing problems, as well as formulating and evaluating investment initiatives aimed at
solving these problems, lie with the investment entities, that is, Ministries, Services, Companies, Regional Governments and Municipalities.
• The MINISTRY OF SOCIAL DEVELOPMENT establishes a set of norms, procedures and methodologies for the formulation and evaluation of investment initiatives that should be applied by investing entities (around 25 methodologies); In addition, the MINISTRY OF SOCIAL DEVELOPMENT must submit each investment initiative to analysis and issue the corresponding technical recommendation.
• The Ministry of Finance determines the budget frameworks, evaluates the spending capacity of the institutions, and allocates resources at the request of the investing entities. To approve the allocation of resources for a specific investment initiative, the Ministry of Finance must verify that it has a favorable report (RS) issued by the MINISTRY OF SOCIAL DEVELOPMENT.
• According to these definitions, the Ministries of Finance and Planning do not define the priorities of investment entities, but the Treasury, based on the Budget Law, sets the budget framework for investment; SOCIAL DEVELOPMENT MINISTRY defines the portfolio of eligible investment initiatives.
MINISTRY OF SOCIAL DEVELOPMENT AUTHORITY
The National Investment System is the result of a long and complex construction process (around 40 years): Methodological Aspects
• Choice and development of a methodological approach
• Estimation of social prices
• Design of methodologies by types of investment initiatives
• Incorporation of environmental impacts
• Incorporation of gender, participation, disability.
• Ex-post evaluation
Institutional Aspects
• Legal validity
• Division of roles
• Adaptation to processes of deconcentration and decentralization of the State
Human Resources
• Training
• Qualification and update
Computing Aspects
• The Integrated Project Bank
• Equipment
• Human Resources
Legitimacy of the System over time
Three dimensions
• Economic: Efficiency creates resources
• Ethics: Inefficiency contributes to deepening inequalities.
• Politics: Public efficiency preserves democracy.
INVESTMENT INITIATIVES (IDI)
Projects:
• Decision on the use of resources in order to increase, maintain or improve the production of goods or the provision of services.
• It usually materializes in a physical work. Normally its execution is financed with capital or investment expenses and its operation with current or operating expenses.
Programs:
• Decision on the use of resources in order to increase, maintain or recover the capacity to generate benefits from a human or physical resource.
• It materializes with an action and is normally financed with current or operating expenses, even when from an economic point of view, it is real investment.
• It must have a defined and finite duration, to differentiate it from normal operating activities.
Basic Studies:
• Decision on the use of resources in order to identify the existence or characteristics of human or physical resources. It does not generate benefits directly or immediately and it is materialized in a document that contains information.
SNI STRUCTURE
1) Economic Technical Analysis Subsystem
2) Budget Formulation
Subsystem 3) Budget Execution Subsystem
4) Ex-Post Evaluation Subsystem
1) Economic Technical Analysis Subsystem
Set of rules, instructions and procedures that allow to homogenize and coordinate the process of identification, formulation, presentation and evaluation of investment initiatives. (SEBI Manual)
Result of the economic technical analysis:
RS: Favorably Recommended
FI: Not recommended due to lack of information
OT: Not recommended for other reasons
RE: Investment Initiative RS Reevaluation
IN: Ministry does not pronounce itself
Main elements:
• Evaluation Methodologies
• Social Prices
- Social Discount Rate (opportunity cost of capital)
- Social Value Exchange Rate (country cost of producing an additional currency)
- Social Value Labor (marginal cost to employ one more worker)
- Social Fuel Value (transport sector)
- Social Value of Time (transport sector)
• Training
• Evaluation of Investment Initiatives (IDI)
• BIP
2) Budgetary Formulation Subsystem
Its objective is to allocate financial resources to projects of sectorial, regional interest and those of State Companies that have the favorable recommendation of MIDEPLAN.
• Process of Discussion and Budgetary Allocation
3) Budgetary Execution Subsystem
Its objective is to regulate and supervise the execution of public spending and its respective financing.
• Execution of Public Expenditure
• Monitoring of Physical-Financial Execution
• Accountability to the Comptroller
4) Ex-Post Evaluation Subsystem
Determine the efficiency and effectiveness of investment initiatives, by controlling their management and measuring the short, medium and long-term results that this initiative has on the target population.
• Analysis of the effects and impacts of the investment.
INTEGRATED PROJECT BANK
Integrated Project Bank Concept
• It is a computer system on investment projects.
• Its main objective is to support decision-making and control regarding public investment.
• Considers from the pre-investment state through to the end of the execution, when the investment initiative begins its operation. The ex post evaluation was incorporated in the last 3 years.
Historical evolution:
• 1st Stage: 1982 to 1984 (Manual)
• 2nd Stage: 1985 to 1992 (First Network)
• 3rd Stage: 1993 to 1998 (Red Mideplan)
• 4th Stage: 1999 to 2002 (Intranet)
• 5th Stage: 2003 to… (Internet)
Main Modules of the BIP
BASIC ELEMENTS FOR THE FORMULATION OF A PROJECT
INTRODUCTION:
SOCIAL INVESTMENT PROJECTS:
Corresponds to the decision on the use of resources in order to increase, maintain or improve the production of goods or the provision of services. It usually materializes in a physical work. Normally its execution is financed with capital or investment expenses and its operation with current or operating expenses.
KEY QUESTIONS TO FORMULATE A PROJECT
What is the project intended to address? Problem
Why is it required? Foundation
Who will be addressed? Population
Where will it take place? Location
What is it done for? Objectives
How will the objectives be achieved? Technical Specifications, Budget
Diagnosis:
• Identification of the problem
• Population
• Location
• Determination of demand, supply, deficit
Analysis of Alternatives
Evaluation of Alternatives
Technical Specifications
Schedule of Activities
Official Budget
WHAT IS THE DIAGNOSIS?
• Diagnosis is defined as the process of analysis, measurement and interpretation that helps to identify problem situations and the causal factors involved in order to obtain the necessary background to plan and guide action.
DIAGNOSTIC FUNCTIONS
• Descriptive
• Explanatory
• Predictive
INFORMATION SOURCES
• PRIMARY SOURCES
-Interviews with qualified informants.
-Focus groups.
-Specific surveys (case studies)
• SECONDARY SOURCES -Censuses
-Economic
statistics.
-Home, Employment, other surveys
PROBLEM IDENTIFICATION:
TECHNIQUES TO PRECISE THE PROBLEM:
• There are various techniques or tools that facilitate the analysis of a problem. For example. “Fishbone” and “Problem Tree”
• The problem tree is an explanatory model, a simplified scheme of reality and is elaborated in a participatory way through successive approaches.
WHAT IS THE PROBLEM?
It refers to an unsatisfactory state or situation, which cannot be resolved, autonomously, by those affected.
PROBLEM IDENTIFICATION:
STARTING POINT: DEFINITION OF A CENTRAL PROBLEM
ALTERNATIVE APPROACH: TWO ALTERNATIVES FORMULATED
1. DESIGN OF SUITABLE COLLECTOR MACHINE
2. DEVELOPMENT OF A VARIETY OF FRUIT THAT RESISTS THE MECHANICAL COLLECTION POPULATION:
You can talk about 3 types of population:
Reference population: it is a global population figure, which we take as a reference framework for calculating, comparing and analyzing demand.
Affected population: it is the segment of the reference population that requires the project services to satisfy the identified need. Also called a deprived population.
POPULATION
Identification of the Population
- Demographic characteristics
- Economic
characteristics
- Cultural characteristics - Social characteristics
Targeting of the Target Population
LOCATION
- The location corresponds to the presentation and description of the physical space in which the target and affected population lives.
- On multiple occasions, such characterization allows a deeper understanding of the particularities of the central problem.
Analysis of demand
• The need associated with the target population must be covered by delivering the goods and services that the project will generate.
• Then, it is necessary to determine what is the demand, what are the needs of the target population: demand for goods, demand for health, demand for education, demand for mobilization, etc.
Methods to estimate demand:
1. From consumption standards:
Many projects are associated with an identifiable target population, making it feasible to translate demand into "per capita consumption units."
D = PxC
D = expected demand
P = deprived population
C = normal consumption per capita
2. From historical consumption records
Projections can be made from a historical series of data.
The method consists of identifying what the consumption trend has been in previous years and projecting the expected consumption for the coming years while maintaining the observed trend.
Method steps: define the trend and adjust on the trend
• It can be done graphically, analytically. One method used is linear adjustment (linear regression), in which the straight line that best represents the trend of the series is searched. y = a + bx where:
y = variable that we are analyzing x = chronological variable (years) a and b = parameters that define the line.
Other methods:
• Records of requests. For example: attention requests, registration requests.
• User surveys. For example: purchase surveys, vehicle count, etc.
Analysis of the offer:
• It is the volume of goods or services that is provided in the area of influence. Eg: Number of license plates, volume of drinking water, etc.
• To estimate the offer, the following must be considered:
- existing infrastructure capacity
- available equipment and qualified personnel
- compliance with service quality standards
Deficit calculation
• The difference between the existing supply and the demand for the product to satisfy the needs is the deficit.
Deficit = Supply - Demand
When supply is non-existent, the deficit will correspond to the total estimated demand.
The deficit can be:
• The offer is projected considering the expected evolution of the services currently provided, considering their adequate maintenance.
• Demand is projected according to population growth and / or specific variables.
ALTERNATIVE ANALYSIS:
OPTIMIZATION OF THE CURRENT SITUATION:
• One of the alternatives, which should always be examined, is the optimized base situation or the optimization of the current situation.
• Corresponds to the current situation improved with low-cost measures. They can be administrative, procedural measures, method changes.
• You can consider:
-Investments minor
-Measurements management
-Reformas institutional
• Some possible measures:
- Redistribution of Personnel
- Recruitment of additional personnel
- Increase in service hours
- Reassignment of population
- Changes in the use of infrastructure
- Retrofitting of premises
- Redistribution of equipment
- Minor infrastructure
repairs
- Equipment repair - Personnel training
- Computerization
- Citizen or private sector cooperation.
The relationship of costs and benefits will provide information on the suitability of each alternative and will allow comparisons to select the best one.
Benefits and costs:
• Direct: C / B directly associated with the project or the increased availability of the product or service.
• Indirect: Substitution effects, chaining, externalities.
Project Cash Flow
In order to work with the information, the income and cost cash flows are used, which allow us to: • Order the information, • Facilitate detecting errors or omissions
• Simplify calculations.
The development of alternative solutions to the problem, provides information on the requirements of facilities, operation, location, schedules of application of resources. This allows:
• To quantify, value and distribute the expected benefits of each alternative over time. Profit flow.
• Quantify, value and distribute in time the investment and operating costs expected for each alternative. Cost Flow.
Users
PROJECT EVALUATION:
• Cost-Benefit Approach: the objective of the evaluation is to determine if the benefits obtained are greater than the costs involved. For this, it is necessary to identify, measure and assess the costs and benefits of the project.
• Cost-efficiency approach: the objective of the evaluation is to
identify the alternative solution that presents the least cost, for the same benefits.
• Therefore, in order to apply this approach, it is essential to be able to configure alternatives that provide comparable benefits, in order to be able to evaluate which of them is more convenient from the technical-economic point of view.
(Identifying, quantifying, and evaluating costs equals the cost-benefit approach.)
• THE SCHEDULED ACTIVITIES DEFINE THE MODE OF PRODUCTION, OR THE WAY IN WHICH THE GOODS OR SERVICE IDENTIFIED AS A PRODUCT WILL BE PROVIDED.
• IN THIS WAY, EACH PRODUCT CORRESPONDS TO AN ACTION OR A SET OF ACTIONS CLEARLY RELATED TO HIM.
CALENDARIZATION OF ACTIVITIES
• CALENDARIZATION OR PROGRAMMING IS A WAY TO LIMIT THE TIME OF PERFORMANCE OF EACH ACTIVITY WITH THE AIM OF:
- RATIONALIZING THE USE OF RESOURCES
- BETTER DEFINE RESPONSIBILITIES
- FAVOR THE TIMELY DELIVERY OF THE PRODUCTS
- OPERATIONAL CONTROL
• THE GANTT DIAGRAM OR CHARTER IS THE MOST KNOWN AND USED INSTRUMENT TO ESTABLISH A CALENDAR OF OPERATIONS OR ACTIVITIES
CHILEAN NATIONAL PUBLIC INVESTMENT SYSTEM
GENERAL REVIEW
NATIONAL PUBLIC INVESTMENT SYSTEM
• It establishes the bases and conditions on which the public investment process is developed in the country, in order to promote those investment initiatives that are most profitable for society, according to the guidelines of the Government's policy.
• OBJECTIVES:
-Support investment decision-making.
-Ensure an efficient allocation of public resources, which are scarce.
-Contribute to increase the general welfare of the community.
NATIONAL PUBLIC INVESTMENT SYSTEM
• In order to ensure efficient resource allocation, at least three dimensions must be considered
• Efficiency:
-Technical-economic: With the same resources, more needs can be solved in a better way ("Efficiency generates resources").
-Politics: Public efficiency legitimizes the action of the Government and preserves democracy.
-Ethics: Inefficiency contributes to maintaining or deepening inequality of opportunities.
• Inefficiency in a project is paid for by someone.
NATIONAL PUBLIC INVESTMENT
SYSTEM LIFE CYCLE OF THE
EX-POST EVALUATION PROJECT
NATIONAL PUBLIC INVESTMENT SYSTEM
• MIDEPLAN and DIPRES are responsible for regulating and administering the SNI
• The SNI implements procedures that allow for the coordinated participation of the different public institutions that participate in the investment process, whether as:
-Gestor (organized Community)
-Formulador
-Unit Evaluadora
-Unit Financial
-Unit Technical
-Unit Operadora
NATIONAL SYSTEM OF PUBLIC INVESTMENT
SUBSYSTEM ECONOMIC TECHNICAL ANALYSIS
• Set of rules, instructions and procedures that allow the homogenization and coordination of the process of identification, formulation, presentation and evaluation of investment initiatives carried out by the different institutions of the public sector.
• Its objective is to guide the resource allocation process towards those investment opportunities that are most convenient for society.
ECONOMIC TECHNICAL ANALYSIS SUBSYSTEM
MAIN ELEMENTS:
• Preparation and annual review of regulations, instructions and procedures for public investment.
• Review and analysis of investment initiatives: Work carried out by the SERPLACs and the Investment Department of the MINISTRY OF SOCIAL DEVELOPMENT MIDEPLAN
• Design of Evaluation Methodologies
- Improvement and updating of current methodologies.
- Development of specific methodologies by type of projects and for integral projects, which allow collecting the synergy between different interventions.
ECONOMIC TECHNICAL ANALYSIS SUBSYSTEM
• Calculation and updating of social prices, so that they reflect the true value for society, calculate, estimate and disseminate:
- social discount rate (opportunity cost of capital);
- social value of the exchange rate (cost that it means for the country to produce an additional currency);
- social value of labor (marginal cost incurred by society for employing a worker more than a certain qualification);
- social value of fuel (transport projects)
- social value of time (transport projects)
ECONOMIC TECHNICAL ANALYSIS SUBSYSTEM
• Integrated Project Bank
Computerized information system to support the SNI, whose objectives are:
-Establish a database of public investment projects at the national, regional and municipal levels.
-Allow aggregate and specific analysis of public investment
- Allow Ex-Post Evaluation analysis of investment initiatives
BUDGETARY FORMULATION SUBSYSTEM
• Its objective is to allocate financial resources to projects of sectorial, regional interest and those of State Companies that have a favorable recommendation.
• It allows institutions to have the necessary financial resources to execute their projects.
• DIPRES is the institution responsible for formulating the Public Sector Budget, which is finally approved as:
- Public Sector Budget Law
BUDGETARY FORMULATION SUBSYSTEM
• Budget Discussion and Allocation Process
Preparation of the Exploratory Budget and the Financial Framework
Preparation and Discussion of the Budget Project
Approval of the Budget Project at a higher level
Preparation of the Budget Law for approval by the National Congress
Implementation of the Budget Law
BUDGETARY IMPLEMENTATION SUBSYSTEM
• Its objective is to regulate and supervise the execution of public spending and its respective financing.
• DIPRES has the function of regulating and supervising the execution of public spending; without prejudice to the powers of the Comptroller General of the Republic.
• The financial execution information (allocations, contracts and expenses) is entered in the BIP, by the executing entity of the initiative.
EX - POST EVALUATION SUBSYSTEM
It determines the efficiency and effectiveness of the use of public resources and verifies if the investment initiatives, once executed, comply with the objectives and social returns estimated in the ex-ante evaluation, which also allows:
Generate information to complete the life cycle of a project and feed back the SNI, helping to improve it.
Derive corrective actions to improve current investment processes.
Support the continuous process of updating methodologies and criteria for formulation and ex - ante evaluation.
Scope of the Ex - Post Evaluation
Simple ex post evaluation: it is carried out once the initiative execution phase is finished, where the results are measured in the variables of costs, times and technical specifications.
Ex post in-depth evaluation: it should be applied when the initiative is operating or in a normal regime and analyzes whether ex ante estimates are met.
PROJECT MANAGEMENT
A project is a planning that consists of a set of activities that are interrelated and coordinated; the reason for a project is to achieve specific objectives within the limits imposed by a budget, previously established qualities and a previously defined period of time
PROJECTS
A project is to gather several ideas to carry them out, it is a DEFINED AND TIMELY PROCESS that takes place for a limited time, and that aims to achieve a unique result.
It arises as a response to a need, in accordance with the vision of the organization, although it may deviate according to interest.
STAGES OF A PROJECT
It consists of establishing the need u
IDEA opportunity from which the project design begins. The project idea may start due to any of the DESIGNED following reasons:
Unmet current needs or are expected to exist in the future if no action is taken.
Idle capacity or underutilized resources that can optimize current conditions.
Definitions of the Sponsor who attributes the responsibility according to the objectives of the organization
STAGES OF A PROJECT
IDEA The options, tactics and strategies to continue are valued, having as main indicator the objective to be achieved. At this stage, the approval of the
project DESIGN occurs, which is usually done after reviewing the project profile and / or pre-feasibility studies, or even feasibility. Once the approval has been given, EXECUTION operational planning is carried out, a relevant process that consists of anticipating the different resources and the time periods
EVALUATION necessary to achieve the purposes of the project, also establishes the assignment or requirement of respective personnel.
STAGES OF A PROJECT
IDEA
It consists of putting into practice the planning carried out previously.
DESIGN
Here it is relevant to achieve the monitoring and control of the
Project management, evaluating through progress and deliverables the compliance of the equipment and resources considered in the planned times.
EXECUTION
EVALUATION
OF STAGES OF A PROJECT
IDEA
Final stage of a project in which it is reviewed, and the pertinent evaluations are carried out on the
DESIGN planned and executed, as well as its results, considering the achievement of the stated objectives.
EXECUTION
At this stage, the definition of standards for similar projects is achieved.
EVALUATION and best practices are obtained as value gained for the organization.
DEVELOPMENT OF EDT
It consists of a hierarchical decomposition, oriented to the deliverable product, of the work that will be carried out by the project team, to achieve the project objectives and create the required deliverable products.
The components of the lower level EDT, called work packages, must have sufficient detail to be able to:
Control the duration of the activity
Know the required resources
Know the cost of the activity
Project management methods
Gantt diagram
The basic tool used to plan work for a project is the Gantt chart. It is a bar chart that shows the origin and end of the different minimum work units and task groups as well as the dependencies between minimum work units (they can be end-start, end, start-end, start-start).
Project management methods
PERT
The program review and evaluation technique or PERT is basically a method to describe, link and analyze each and every one of the tasks involved in completing a given project, especially the time to complete each task based on talents and resources, and Identify the minimum time necessary to complete the total project based on talents and resources.
Project management methods
Critical chain
Critical Chain Project Management (CCPM) is a method that focuses on the resources required to execute project tasks. It tends to keep resource usage level, but it asks them for more flexibility in their work hours and to be able to quickly change tasks or task chain so as not to delay the entire project.
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