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Financial Management and Analysis of Projects : 4. Financial Management of Executing Agencies : 4.2. Institutions and Systems
4.2.7. Project Objectives
4.2.7.1.
A project should respond to clearly defined objectives, including
among others, sustainable economic goals; financial objectives;
achievement based on the least cost solution; time-bound delivery
of benefits; and financial viability.
4.2.7.2. ADB has a broad interpretation
of financial viability in the context of project design and development.
It implies at an optimum, the ability of a project to replicate
itself, to finance day-to-day operations and maintenance, and to
service its debt. As a minimum, financial viability should represent
the provision of adequate funds to finance day-to-day operations
and maintenance. The provision may come from either the operations
of the project itself and/or from government budgetary support.
This will be sufficient to assure ADB that a partial revenue-earning
or a nonrevenue-earning investment will generate the target levels
of economic benefits through its working life.
4.2.7.3. In addition, primary aims
should be the extent to which the inclusion of financial and institutional
components of a project that can enhance good governance, either
of the EA and the project itself, or of any related/adjacent institutional
elements.
4.2.7.4. For projects to be developed,
implemented and operated by public sector institutions, ADB requires
that a project be designed, developed and operated (among other
factors) within the objectives and framework of the financial policies,
strategies and systems prescribed by those institutions of the government
concerned. These are government institutions responsible for national
and sectoral economic and financial planning.
4.2.7.5. For private sector projects
to be developed implemented and operated by private sector institutions,
ADB requires that a project be within the objectives and framework
of the financial policies, strategies and systems prescribed by
the Articles (or a similar statutory document) of the company or
organization. Furthermore, this should be within, and in conformity
with, national and sectoral economic and financial planning objectives
4.2.7.6. Identification and confirmation
of project objectives and those of its implementing and operating
agency, and the proposed and/or actual means of their achievement,
are key tasks for the financial analyst.
4.2.7.7. While financial aspects of
these matters should attract the financial analyst's principal
attention, they must be intellectually aware, and capable, of responding
to other factors. These may be related to economic and technical
objectives, techniques of design and implementation, and the operation
of the project, together with the impact of any related, ongoing
facilities and activities with which the project will be linked.
These may include parallel investments in the same or other sectors
that are to be appropriately linked to achieve common economic objectives.
For example, the construction of water supply and sewerage facilities
by different EAs, or by the same agency drawing on different sources
of funding, should have common economic, financial, and environmental
objectives. These should primarily be related to achieving appropriate
standards of public health, including in particular recognition
of the financial impact which good health has upon the earning capacity
of the population concerned.
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