The project development cycle

I once posted in the internet that it would take five to seven years to complete a regular multi-billion infrastructure project, from concept to opening/operations.  It was met with disbelief. But a few, however, agreed, although on closer look, these were the ones who do development work, both in government and the private sector.  Let's sketch a timeline here.  The entire project development cycle starts with the “concept;” - it has to start with an idea.  It may just come out of some people's thinking, or it is a product of some other planning analyses.  But that idea has to germinate into a particular “project” which needs to be done.

The first thing to do is to determine whether the project idea is feasible - thus, the need for a feasibility study.  In most cases, and especially if it runs into billions, you still need to do a pre-feasibility study first.  Both may take four months (for simple projects) to 1.5 years (for projects like an airport or a subway).  Usually done by specialists, you also need to procure their services.  The bidding alone may take two to six months.

The hardest hurdle is the project approval stage.  Infrastructure projects maybe proposed by national government agencies, or local government units, with concurrence from each other.  These big projects may be funded by national funds, or official development assistance (ODA).  In recent years, a third source - the private sector, through Public-Private Partnership (PPP) schemes has also become more prominent.  Project approval is required before it gets funded, but the mode of funding is usually approved together with the project approval itself.

If a project is funded out of the General Appropriations Act (or GAA as how we call the national budget), the agency concerned has to line it up in the next year's budget, or the year after next.  We need not stress here that the list is always very long especially in developing countries like ours and there is a mad rush of local politicians to get projects in their areas first.  The other avenue is to get projects funded under ODA, but this is a list, too, with too much financing requirements than there is available funds.  But the ODA list is shorter - not too many people know how the ODA process works.

The ODA track is longer because you have to pass through three bodies of government - the ICC-TB (Technical Board), the ICC-CC (Cabinet Committee, usually called the CabCom), and the NEDA Board itself, in that order.  ICC stands for Investment Coordinating Committee, a sub-committee of the NEDA Board (which is headed by the President).  ICC-CC is headed by the Department of Finance; ICC-TB is chaired by NEDA (agency).  And if you don't know what you're doing, don't even attempt to submit anything to the ICC-TB (the first obstacle).

You have an equal chance of getting your projects approved on the first pass, deferred pending resolution of certain issues, or disapproved outright without even getting into the agenda.  It's a ladder-scheme; you go to the next higher level assessment and evaluation when you get approved in the first body.  Not too many people realize the difficulty of this process.  For example, very few people know that the Metro Cebu Development Project (MCDP) - III, which includes both the South Coastal Road and the South Reclamation Project (SRP), was first submitted to the ICC in 1991 but got finally approved in 1993 already!  If properly prepared, you can get a fast approval too.  The airport terminal project of MCIA was submitted ICC-TB in August last year; it got approved by NEDA last November.

Once you get the project approved, the project financing follows.  While technically the project approval process involves only an internal evaluation of project viability and candidacy to funding, the matter of financing is usually discussed already, within ICC and with the ODA donors, which maybe multilateral (World Bank, ADB) or bilateral funding institutions (JICA, KOICA, AusAid, USAID, etc.).  This portion takes time, too, maybe a year, and includes the approval process of the funding institution as well as the signing of the loan/grant documents.

After all these months/years, the actual construction starts.  It is not unusual for projects to have construction times actually shorter than the time it takes to prepare it (concept, Pre-FS/FS, approval, appraisal, and financing).  Note that the construction is preceded by another procurement process which may also take six months.  So to say that it will take five to seven years is actually very optimistic.  But if there is one thing we should learn from this process, it is to diligently do the project preparation well ahead of when it is actually needed.  In simple terms, plan ahead of time, and do it right and diligently.