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p. 31 of 203 BACK | NEXT Foreword 1. Introduction to the Guidelines 2. User Instructions 3. Preparing and Appraising Investment Project 3.1. Investment Projects Overview 3.2. Possible Investment Projects 3.3. Appraisal Checklists 3.4. Forecasting 3.4.1. Introduction to Forecasting 3.4.2. Using the COSTAB Model 3.4.3. Preparing Project Cost Estimates 3.4.4. Determining Contingencies 3.4.5. Disbursement Profiles 3.4.6. Preparing Financing Plans 3.4.7. Computing Incremental Project Cash Flows 3.5. Preparing Financial Benefit-Cost Analyses 3.6. Loan Covenants 3.7. ADB Reports 4. Financial Management of Executing Agencies 5. Reporting and Auditing 6. Financial Institutions 7. Knowledge Management

Financial Management and Analysis of Projects : 3. Preparing and Appraising Investment Project : 3.4. Forecasting

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3.4.5. Disbursement Profiles

3.4.5.1. ADB has gained considerable experience and information since it began its operations with regard to the capacity and capability of borrowers and their EAs in the various sectors to fulfill their commitments to construction schedules.

3.4.5.2. Disbursement patterns show that borrowers rarely meet these schedules, and time (and cost) overruns are a consistent feature of many lending operations. Therefore, the forecast construction period of a project should not vary greatly from the average for similar projects executed in the same sector in the country concerned. The financial analyst should obtain disbursement data for the country and sector in which the project under development is located to develop a disbursement profile.

3.4.5.3. The adoption of realistic implementation and disbursement estimates based on sector/country disbursement profiles should be reflected in the contingencies allowances and the economic internal rate of return (EIRR) and financial internal rate of return (FIRR) calculations.

3.4.5.4. Base costs are typically estimated as part of a feasibility study and are refined to take into account any further engineering and other detailed preparation work that has taken place by the time of appraisal.

3.4.5.5. With large, complex projects, or in cases where there is little record of recent procurement involving ADB projects in the country, the services of specialized cost estimating firms, or quantity surveyors, or the advice of contractors or manufacturers may be employed to confirm or modify base cost estimates.

3.4.5.6. During appraisal, the estimates should be adjusted and updated to take account of any price changes in the period between their preparation and the base cost date specified in the RRP.

Back 3.4.4. Determining Contingencies	Next 3.4.6. Preparing Financing Plans