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p. 69 of 203 BACK | NEXT Foreword 1. Introduction to the Guidelines 2. User Instructions 3. Preparing and Appraising Investment Project 4. Financial Management of Executing Agencies 4.1. Financial Management Overview 4.2. Institutions and Systems 4.3. Financial Analysis 4.4. Measuring Performance 4.4.1. Introduction to Measuring Performance 4.4.2. Objectives of Measuring Performance 4.4.3. Performance Indicators 4.4.4. Using Benchmarking Indicators 4.4.5. Selecting Indicators and Covenants 4.4.6. Operating Indicators and Covenants 4.4.7. Capital Structure Indicators 4.4.8. Liquidity Indicators 5. Reporting and Auditing 6. Financial Institutions 7. Knowledge Management

Financial Management and Analysis of Projects : 4. Financial Management of Executing Agencies

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4.4. Measuring Performance

4.4.1. Introduction to Measuring Performance

4.4.1.1. Revenue-earning projects operate in the public and private sectors of member countries’ economies. The advice in this subsection is broadly applicable to institutions in both sectors. However, there are good reasons for applying performance measurement to the operations of a nonrevenue-earning project particularly to measure the efficiency of its use of a project’s resources, including human resources.

4.4.1.2. ADB encourages the application of financial performance measurement techniques to revenue-earning EAs that implement and operate projects financed using ADB loans, and which typically apply these factors in the designs of their primary cost recovery mechanisms. More specifically, they apply to all revenue-earning enterprises for which financial performance necessary to achieve the project objectives agreed between the borrower and ADB needs to be covenanted in legal agreements.

4.4.1.3. However, because each sector contains subsectors which may not be mutually compatible, either in their fiscal and social objectives, or in detailed aspects of their accounting treatment and financial reporting, sector-specific guidance may be provided in supporting guidelines at a later date by ADB. Nevertheless, this subsection does provide examples from different sectors to explain its concepts, and these may be used by ADB staff as guidance for financial performance measurement techniques in these sectors.

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