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Financial Management and Analysis of Projects : 4. Financial Management of Executing Agencies
4.4.2. Objectives of Measuring Performance
4.4.2.1. ADB's objectives in using
performance measurement techniques as a key element in the management
of projects is to: (i) provide the managements of the borrower, the
EA, and ADB with an effective means of measuring the progress of a
project, of its many components, and the adequacy and timeliness of
provision and use of funds; (ii) regularly assess the potential for
achieving the technical, financial, and economic objectives of the
project; (iii) determine the form and nature of corrective actions
necessary to achieve targets measured by performance indicators; and
(iv) assist in defining new or modified performance measures that
may be more effective, and to replace those that are ineffective.
4.4.2.2. The OGC takes the key financial
performance objectives agreed with a borrower and an EA at appraisal
and loan negotiations and translates these into financial covenants
in loan agreements. Loan covenants, with the relevant performance
indicators incorporated in the text, are established among other things,
as a means of assuring the regular (normally annual) measuring of,
among other things, the: (i) the enhancement (or otherwise) of specified
sector(s) of the national economy concerned; (ii) the impact of the
project on the community concerned; (iii) the impact of the project
on key concerns, such as poverty relief, environmental protection;
(iv) the extent to which the investment (including ADB's loan
proceeds) is utilized effectively; (v) the extent to which the ADB's
loan, other lenders or donors funds, and the government's counterpart
contribution each are effectively used for the purposes intended,
and (vi) the efficiency and effectiveness of the management of the
EA in managing the project.
4.4.2.3. In addition to covenanted indicators,
ADB will seek to agree with the EA concerned that other noncovenanted
performance indicators will be subject to periodic reports to ADB.
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4.4.1. Introduction to Measuring Performance | Next
4.4.3. Performance Indicators |
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