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JEPBE > Proj Devt > Flashcards

Proj Devt Flashcards

1
Q

3 Phases of Project Development

A

Pre-investment Phase
Investment Phase
Post-investment Phase

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2
Q

Sub-phases of pre-investment phase (4)

A

Project concept or identification
Project definition or preparation
Project feasibility study
Project approval and financing

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3
Q

Sub-phases of investment phase (2)

A

Detailed engineering/design

Project implementation

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4
Q

Sub-phases of post-investment phase (2)

A

Project operation

Ex-post evaluation

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5
Q

Occurs when resources can no longer be reallocated to make some economic agents better off without making one or more individuals worse off

A

Pareto optimum

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6
Q

Occurs when the gains to those who benefit from a project are sufficient to compensate those who are made worse off and still leave residual benefit

A

Potential Pareto improvement

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7
Q

This refers to the situations when markets fail to allocate resources efficiently. Some reasons are failure of competition, or monopoly power, public goods, externalities, information failure, and incomplete markets.

A

Market failure

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8
Q

Refers to the assessment of the project’s commercial profitability and capability to service its obligations. A project’s financial attractiveness to its investors is measured by the use of financial indicators such as ___

A

Financial analysis, net present value (NPV)

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9
Q

Assessment of the project’s desirability in terms of its net contribution to the economic and social welfare of the country as a whole. Residual benefit is measured by the ___ of the incremental net economic benefits

A

Economic analysis, net present value (NPV)

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10
Q

A tool used in project analysis to identify and possibly quantify the costs and benefits of a project that accrue to the different project participants, e.g., consumers, suppliers, government, project workers

A

Distributional or stakeholder impact analysis

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11
Q

An assessment of the adequacy of the local institution responsible for managing the different stages or phases of the project

A

Institutional analysis

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12
Q
  • A technique for assessing a project’s risk
  • Simultaneously takes into account the different ranges of possible values and different probability distributions, either continuous or discrete, for key project variables
A

Monte Carlo simulation

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13
Q

The analysis of project risks associated with the value of key project variables (e.g., price of the good the project will produce, inflation, price of key inputs) and therefore the risk associated with the overall project result

A

Risk analysis

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14
Q

The analysis of the possible effects of adverse changes on a project

A

Sensitivity analysis

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15
Q

Costs that are incurred with or without the project and have no opportunity costs to the project

A

Sunk costs

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16
Q
  • The value of the inputs and outputs including the effect of general inflation
  • This is the price of a good seen in the market
A

Nominal/current price

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17
Q
  • The value of the inputs and outputs without the effect of general inflation
  • It reflects the value of the good relative to the other goods in the economy
A

Real/constant price

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18
Q

Nominal price formula

A

Nominal price = real price x (1 + inflation rate)

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19
Q

A process of translating future values into its present worth. This process takes a future peso amount and reduces it by a discount factor that reflects the appropriate interest rate

A

Discounting

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20
Q
  • The difference between the present value of the benefit stream and the present value of the cost stream for a project
  • Should be greater than ___ to be acceptable
A

Net Present Value (NPV), zero

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21
Q

Net Present Value formula

A

NPV = (B-C) / (1+r)^t

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22
Q

The ratio of the present value of the project (financial or economic) benefits stream to the present value of the project (financial or economic) costs stream, each discounted at the appropriately defined discount rate

A

Benefit-Cost Ratio (BCR)

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23
Q

Benefit-Cost Ratio formula

A

BCR = (NPV of benefits) / (NPV of costs)

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24
Q
  • This appraisal technique is primarily used in social projects and programs, and sometimes in infrastructure projects, when quantifying benefits in monetary terms is difficult
  • Useful in choosing from different technologies that provide the same service
A

Cost Effectiveness Analysis

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25
Q

A collection of buyers and sellers that interact, resulting in the possibility of exchange

A

Market

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26
Q
  • Reflects demand for a product for final consumption purposes
  • Examples of such products are basic food commodities, housing, clothing, health care and basic educational services
A

Consumer demand / final demand

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27
Q
  • The demand for a product used as an input in the production of other goods and services
  • Examples are the demand for lumber for furniture-making, for oils and fuels for industrial processes, and for research, training and skills for various productive applications
A

Producer demand / intermediate demand

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28
Q
  • Special case of consumer demand where services have no market price, where needs are virtually unlimited, and where instead of consumer incomes, the limiting factor is government’s ability to pay
A

Demand for social services

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29
Q

The movement of a variable that tends to oscillate above and below its secular trend line for a period longer than one year, sometimes even longer than twenty years

A

Cyclical fluctuation

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30
Q

Behavior of the variable that indicates a pattern within a period of one year

A

Seasonal variation

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31
Q

Used to understand which among the independent variables are related to the dependent variable, and to explore the forms of these relationships

A

Regression

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32
Q

The degree to which two variables are systematically associated with each other

A

Correlation

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33
Q

The statement of a project’s cash inflow and outflow year by year throughout its expected life

A

Financial cash flow statement

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34
Q

The benefit forgone by not putting the asset to its best alternative use

A

Opportunity cost

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35
Q

The highest financial price it could be sold for

A

Financial opportunity cost

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36
Q

Current assets net of its current liabilities

A

Working capital

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37
Q

An accounting cost which reflects the interest foregone because funds are tied up in the construction of the project

A

Interest during construction (IDC)

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38
Q

Represents the value of additional resources required beyond the original cost to complete the project

A

Physical contingency

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39
Q

The maximum amount consumers are prepared to pay for a good or service

A

Willingness to pay

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40
Q

The economic price of foreign currency

A

Shadow exchange rate

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41
Q
  • The cost of a company’s funds (both debt and equity), or, from an investor’s point of view “the required rate of return on a portfolio company’s existing securities”
  • It is used to evaluate new projects of a company
A

Economic cost of capital (ECC)

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42
Q

Percentage difference between the Shadow Exchange Rate and the Official Exchange Rate

A

Foreign Exchange Premium

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43
Q

A good or service is considered ___ when an increase in demand (supply) by a project does not affect the amount demanded (supplied) by domestic consumers (producers)

A

Tradable goods and services

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44
Q

A commodity or service is ___ from a country’s point of view if its domestic price lies above its FOB export price or below its CIF import price

A

Non-tradable good

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45
Q
  • A means of testing how sensitive a project’s outcomes (cashflows, NPV or IRR) are to changes in one parameter value at a time
  • “What-if” analysis
A

Sensitivity analysis

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46
Q

This analysis allows a number of variables to be altered in a consistent manner at the same time

A

Scenario analysis

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47
Q

Collecting, recording and reporting information concerning any and all aspects of the performance of a project or a program that a project manager or head of the organization/agency or controlling agency may wish to know

A

Monitoring

48
Q
  • A development management approach aimed at enhancing the likelihood of achieving the desired outcomes and longer-term impact of development projects
A

Results Monitoring and Evaluation (RME)

49
Q

Points in a project when a major activity either begins or ends, or cost data becomes critical

A

Milestones

50
Q

Defines a project in a structured format via the facilities and the items required to build the facilities, or the contracts required to complete construction of the facilities

A

Work breakdown structure (WBS)

51
Q

A chart depicting work to be done and some of the interrelationships between and among all phases of the work

A

Gantt chart

52
Q

Plotting project activities according to network techniques results in the depiction of the project as a collection of parallel paths from project start to finish. The network will show several courses of paths of project completion

A

Critical path method (CPM)

53
Q

The ___ will present the sequence of activities requiring the longest time for project completion.

A

Critical path

54
Q
  • A participatory planning tool whose power depends on the degree to which it incorporates the full range of views of intended beneficiaries and others who have a stake in the project design
  • A tool for summarizing the key features of a project design at the time of project identification, during preparation and at appraisal
A

Logical framework (LogFRAME)

55
Q

A two-page report that highlights the main areas of slippage and shortfall, the problems leading to the shortfall and the action areas requiring immediate attention

A

Flash report

56
Q
  • A consolidated flash report on all projects where critical milestones have slipped or the commissioning date has not been honored
  • Presents an at-a-glance picture of shortfalls and bottlenecks faced by major projects
A

Exception report

57
Q

A liability equal to the amount of the purchase or the proportion of it that was not in cash

A

Accounts payable

58
Q

An asset equal to the amount of the sale net of cash receipts. These are amounts owed to the project proponent by its customers

A

Accounts receivable

59
Q

An indirect benefit associated with the improvement in the extent to which the basic needs of specified segments of society, e.g., the poorer house¬holds, are met

A

Basic needs externality

60
Q

The amount of cash held for facilitating the transactions of the business

A

Cash balance

61
Q

The price of an imported good at the port of destination

A

Cost of insurance and freight

62
Q

Savings to existing consumers arising from the difference between what they are willing to pay for an output and what they will actually pay for the project’s output

A

Consumer surplus

63
Q

Ratio of a commodity’s economic price to its financial (demand or supply) price

A

Commodity specific conversion factor

64
Q

Cash and other assets that are expected to be realized in cash or sold or consumed during the normal operating cycle of the entity or within one year, whichever is longer

A

Current assets

65
Q

These are obligations that are expected to be satisfied either by the use of current assets or by the creation of other current liabilities

A

Current liabilities

66
Q

Systematic short-term movements with higher values, followed by lower values, followed by higher movements again

A

Cycle term

67
Q

The price at which purchasers are willing to buy a given amount of project output, or the price at which a project is willing to buy a given amount of project input

A

Demand price

68
Q

A percentage term representing the rate at which the value of equivalent benefits and costs decrease in the future compared to the present

A

Discount rate

69
Q

A table or a formula listing all possible values that a discrete random variable can take on, along with the associated probabilities

A

Discrete probability distribution

70
Q

Markets with distortions which drive a wedge between marginal economic benefit and marginal economic costs, such as taxes, subsidies, tariffs, monopoly power, externalities

A

Distorted markets

71
Q

The value to the economy of the set of activities given up by the workers including the non-market costs (or benefits) associated with the change in employment

A

Economic cost of labor or the shadow wage rate

72
Q

The real rate of return in economic prices on the marginal unit of investment in its best alternative use

A

Economic opportunity cost of capital or Social discount rate

73
Q

The weighted average of the demand price (willingness to pay) and the supply price (economic resource cost).

A

Economic price

74
Q

The percentage change in one variable divided by the percentage change of another variable, all things remaining unchanged. It measures the responsiveness of one variable to another variable holding other things constant.

A

Elasticity

75
Q

Any difference between the observed values and forecasted values.

A

Error term

76
Q
  • Effects of an economic activity not included in the project statement from the point of view of the main project participants, and therefore not included in the financial costs and revenues that accrue to them
A

Externalities

77
Q
  • An occurrence or incident that confers benefits (damages) on some persons who are not fully consenting parties in reaching the decision that gives rise to the event in question
A

Externality

78
Q

Summary indicators used to assess the financial situation and performance of a project. Such indicators are used to measure a project’s liquidity and solvency, operating efficiency, debt coverage and profitability, among others

A

Financial ratios

79
Q

The assessment that a project will have sufficient funds to meet all its resource and financing obligations, whether these funds come from user charges or budget sources; will provide sufficient incentive to maintain the participation of all project participants; and will be able to respond to adverse changes in financial conditions.

A

Financial sustainability

80
Q

The price of an exported good at the port of origin.

A

Freight on board

81
Q

The three basic postulates underlying the economic analysis of projects
1 - undistorted demand price
2 - undistorted supply price
3 - costs and benefits

A

Harberger postulates

82
Q

Additional output produced by a project over and above what would be available and demanded in the without project situation

A

Incremental outputs and inputs

83
Q

An increase in the general price level

A

Inflation

84
Q

A produced good or service which is used as an input to the production of another good or service

A

Intermediate good

85
Q

The discount rate at which the NPV is equal to zero

A

Internal rate of return

86
Q

Internal rate of return formula

A

0 = (B-C) / (1 + IRR)^t

87
Q

An inter-agency committee of the NEDA Board tasked to evaluate the technical, financial, economic, social and institutional develop¬ment feasibility/viability of major capital projects and to review the fiscal, monetary and BOP implications of MCPs

A

Investment Coordination Committee

88
Q

Translates present values of benefits and costs to their future equivalent

A

Compounding

89
Q

A tool for decision-making wherein the marginal (i.e., incremental) benefit of the activity being considered is compared with the marginal (incremental) cost of undertaking the activity

A

Marginal analysis

90
Q

The incremental benefit (e.g., revenue or utility)/cost (e.g., use of input) arising from a new activity

A

Marginal benefit/cost

91
Q

The additional output produced with the employment of an additional unit of labor, holding constant the utilization of other factors

A

Marginal product of labor

92
Q
  • The common yardstick that measures the objective being maximized
  • The unit of account used in measuring costs and benefits
A

Numeraire

93
Q

The scale of the project that will maximize its net present value

A

Optimal scale of project

94
Q

The beginning period of a project that will maximize the net present value of the project

A

Optimal timing of project

95
Q

Exists when:

(i) agents are atomistic (i.e., there is no single buyer or seller which can influence prices);
(ii) there is no product differentiation;
(iii) there is perfect information (all economic agents know the information the others possess); and
(iv) there is no barrier to entry and exit.

A

Perfect competition

96
Q

Simply normalizes the price level so that in the base period the index is equal to one

A

Price index

97
Q

The excess of the revenue received by a producer of a commodity over the minimum amount they would be willing to accept to maintain the same level of supply

A

Producer surplus

98
Q

The smallest, separable investment unit that can be planned, financed and implemented independently. It involves the use of scarce resources during a specific time period for the purpose of generating a socio-economic return in the form of goods and services

A

Project

99
Q

The process composed of phases through which a project undergoes from inception to maturity.

A

Project cycle

100
Q

Summary indicators used to determine a project’s profitability from both the financial and economic standpoints

A

Project evaluation criteria

101
Q

Goods characterized by very low levels of subtractibility and excludability

A

Public goods

102
Q

Implies that a good is available to all consumers at the same time, and consumption by one consumer does not use up or reduce the supply available for another consumer

A

Low subtractibility

103
Q

Implies that if a good is provided to a consumer in a defined region then other consumers in that region cannot be easily excluded from consuming the same good

A

Low excludability

104
Q

The return on capital that will accrue to the owners of a project after all financial obligations to lenders, government, workers, and suppliers are met

A

Return on equity

105
Q

The rate used to discount the future streams of economic benefits and costs

A

Social discount rate

106
Q

The ratio of the economic price value of all goods in an economy at their border price equivalent values to their domestic market price value

A

Standard conversion factor

107
Q

The price at which project inputs are available, or the price at which an alternative to the project output is available

A

Supply price

108
Q

This concept implies that money received or consumed today has greater value than the same money received or consumed at some future time

A

Time value of money

109
Q

Long term movements in a series

A

Trend term

110
Q

determined by calculating the relative weights of the capital resources and multiplying them with the corresponding opportunity cost of capital for each of the capital resource

A

Weighted average cost of capital (WACC)

111
Q

The comparison of the situation before the project is implemented with the situation after the project is implemented

A

Before and after analysis

112
Q

The comparison of the situation or state of affairs with the project against the most likely situation that would prevail without the project

A

With or without analysis

113
Q

The price at which goods and services are available on the international market

A

World price

114
Q

Benefit cost ratio formula

A

NPV of benefits / NPV of costs

115
Q

Payback period formula

A

Initial investment / cash inflow

JEPBE (17 decks)

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