Investment Programming

Professor

Jo B. Bitonio

Presented by:

Sheryle A. Domingo

MDM Public Mgmt.

DM 211

Project Development

and Management

PROGRAMMING

To begin with the presentation, let us

review how investment

programming is related to

Development Planning Process and

Strategic Planning Process Model

DEVELOPMENT PLANNING MODEL HAS 8

STEPS

1. Situational analysis

2. Goal/ objective/ target setting

3. Policy/ strategy formulation

4. Program/ project identification

5. Investment programming 6. Budgeting

7. Implementation and monitoring

8. Evaluation and plan update

Situation

Analysis

Project Preparation

Goals Objectives

Targets

Policies Strategies

Program

Project Identification

Investment Programming

Budgeting

Implemen-

tation and

Monitoring

Evaluation

and Plan

Update

Feedback loop

Figure 2. Development Planning Process Model (NEDA, 2001)

Studies

Planning

Programming

Budgeting

Implementation

Evaluation researches

a. Organizing and staffing

b. Training

a. External environment

b. Internal organization

d. Strategic Planning framework

c. SWOT Analysis

Steps in Strategic Planning Process Model

Effect

Impact

Evaluation

Plan

Update

Implementation

Budgeting Investment

Programming

Program /

Project

Identification

Policy

Strategy

Formulate Vision

Environment

Scanning

Organization

And

Staffing

Training Project

Preparation

Internal

External

SWOT

Framework

Mission

Goals

Objectives

Targets

Input

Process

Output

Outcome Strategic Planning Process Model

Source: Miclat (1997)

INVESTMENT PROGRAMMING

- Is the process of rational listing of programs and

projects planned to be undertaken within a given time

frame for the purpose of enhancing the process of

asset generation and capital accumulation for some

desired future benefits for the institution

- Entails a systematic, identification, preparation,

selection, scheduling or even phasing of programs and

projects given the scarce resources available.

www.openuni-clsu.edu.ph/openfiles/.../investment_programming.doc -

accessed 2/4/2014

INVESTMENT PROGRAMMING

The investment program is the basis for

programs and projects that are considered

or included in the preparation of the annual

plan corresponding budget estimates

(Miclat, 2005).

www.openuni-clsu.edu.ph/openfiles/.../investment_programming.doc -

accessed 2/4/2014

http://www.slideshare.net/jobitonio/ilocos-regional-development-plan-20112016

The 2011-2016 PIP shall serve as:

(a) an instrument to tighten the planning, programming,

budgeting and monitoring and evaluation linkages;

(b) basis for public sector resource allocation and for pipelining

public sector PAPs for processing at the Investment

Coordination Committee (ICC)/NEDA Board (NB);

(c) Basis in monitoring public investment performance in terms

of achieving the goals and targets under the PDP/RM pursuant

to AO 25 s, 2011

http://www.neda.gov.ph/?page_id=1231 –accessed 2/6/2014

The PIP contains PAPs to be implemented by the NG,

GOCCs, GFIs and other offices and instrumentalities

within the medium-term regardless of financing but

which indicates, nonetheless, sources of funding

whether purely NG, GOCCs, GFIs, ODA grants, public-

private partnerships, including joint ventures, or from

local government units (LGUs) for their counterpart in NG

projects. It includes identification of the spatial coverage

of PAPs, including the PDP Chapter and 16 point agenda

being addressed and their objectively verifiable

indicators (OVIs).

http://www.neda.gov.ph/?page_id=1231 –accessed 2/6/2014

EXCLUDED

recurrent cost on the general operation of the

government, personnel services, relending and/or

guarantee related activities to private institutions, and

other administrative capital expenditures.

PAPs to be financed purely from LGU revenues and

independent projects of the private sector including

those of non governmental organizations (NGOs)

http://www.neda.gov.ph/?page_id=1231 –accessed 2/6/2014

There are four types of instruments through which a strategic development plan

may be carried out (Miclat, 2005). These instruments are:

1. Government investments and development services to

promote development of the public sector;

2. Government investments and development services to

promote development of the private sector;

3. Private sector investments and other development

activities; and

4. Government policies and regulation affecting public and

private sector development.

* 1 & 2 controlled by the

government and contained in the

investment program

3. Private sector initiative subject to influence by

Government

4. Supports proposed investments and services

www.openuni-clsu.edu.ph/openfiles/.../investment_programming.doc -accessed 2/4/2014

SPECIFIC TYPES OF INVESTMENTS IN INVESTMENT PROGRAM

1. Capital expenditures/ outlay.

Capital expenditures require physical facility

construction and asset acquisition

An amount spent to acquire or upgrade productive assets (such

as buildings, machinery and equipment, vehicles) in order to

increase the capacity or efficiency of a company for more

than one accounting period.

Also called capital spending

www.openuni-clsu.edu.ph/openfiles/.../investment_programming.doc -accessed 2/4/2014

http://www.businessdictionary.com/definition/capital-expenditure-CAPEX.html#ixzz2sLXOIuu5 -accessesd2/6/2014

Cont. SPECIFIC TYPES OF INVESTMENTS IN INVESTMENT PROGRAM

…….

2. Outlays for social and human development

Outlays for social and human development investments

on health, education, counseling, placement as well as physical

infrastructure like academic buildings and laboratory rooms and

administrative buildings and structures.

3. Equity investments and financial and technical

assistance.

These are direct investments of the government and

bilateral or cooperative ventures with private sector like

loans, financing, grants, endowments, etc.

www.openuni-clsu.edu.ph/openfiles/.../investment_programming.doc -accessed 2/4/2014

Cont. SPECIFIC TYPES OF INVESTMENTS IN INVESTMENT PROGRAM 4. Expenditures for project development.

These are expenses for project identification,

environmental and institutional scanning, pre-feasibility

studies, feasibility studies proper and other expenditures

related to and necessary in determining the desirability of a

project.

5. Other expenditures attributable to any of the above

items.

These are recurrent or repetitive expenses for operations

and maintenance of facilities or services resulting from and

directly attributable to the afforested programs and projects.

www.openuni-clsu.edu.ph/openfiles/.../investment_programming.doc -accessed 2/4/2014

OTHER TYPES OF INVESTMENTS Bonds

grouped under the general

category called fixed-income securities

commonly used to refer to any securities that are

founded on debt

When you purchase a bond, you are lending out your

money to a company or government. In return, they agree

to give you interest on your money and eventually pay you

back the amount you lent out.

http://www.investopedia.com/articles/younginvestors/10/what-is-an-investment.asp accessed 2/5/2014

Houses, apartments or other

dwellings that you buy to rent

out or repair and resell are

investments

literally certificates that say you own a portion of a company

which entitles you to vote at the shareholders’ meeting and

allows you to receive any profits that the company allocates to

its owners. These profits are referred to as dividends

STOCKS

Real Estate

Precious Objects

Paintings, jewelries and other collections

MUTUAL FUNDS

http://www.investopedia.com/university/beginner/beginner5.asp -accessed 2/5/2014

INVESTMENT PROGRAMMING PROCESS

1. Project Identification

In identifying projects, meeting of development needs and

solving problems and constraints are taken into account. The

identification of projects begin with ideas which are believed or

perceived to be effective solutions to development problems

and unsatisfied demands and unmet needs; utilization of

present and potential human physical and financial resources;

and required response to external threats to government

incentives, and to local political and economic pressures such

as growing disparities in the level of development of faculty

and colleges, and among faculty members and non teaching

staff.

www.openuni-clsu.edu.ph/openfiles/.../investment_programming.doc -accessed 2/4/2014

2. Project Integration

refers to the unification of various sets of programs, projects

and activities in the institution to achieve efficiency,

effectiveness, unity, cohesiveness, and complementarily.

Uses the techniques Sanitization and Augmentation

a. Sanitization

programs and projects are screened, evaluated. Modified,

and eliminated considering the factors of redundancy,

impracticality, undesirability or inefficiency in relation to the

goals and objectives of the strategic plan.

Cont. INVESTMENT PROGRAMMING PROCESS

b. Augmentation

Refers to adding or increasing potential and viable project

ideas as well as modifying proposed programs, projects

and activities in order to better attain the specific target of

the strategic development plan.

Aims to achieve maximum possible economic efficiency.

Identified additional programs and projects must be those

considered critical, supplemental, supportive, and

innovative

www.openuni-clsu.edu.ph/openfiles/.../investment_programming.doc -accessed 2/4/2014

3. Project Packaging

Refers to the combination of mutually reinforcing

investments from different sectors and agencies required to

achieve common development.

Mutually reinforcing simply means that the combined

benefits of two or more objectives will be larger than the sum

total of benefits of these projects if they are implemented

separately

Cont. INVESTMENT PROGRAMMING PROCESS

Each development package shall have as its focus a

development objective and the geographic unit to which the

objective is directed or aimed.

Project components can be derived from:

A. The goal and objectives of the strategic plan which are

disaggregated into sectoral or sub-sectoral levels;

B. Project ideas from the local level which originate from the

recognition and analysis of unsatisfied needs, constraints

or potentials;

C. A combination of the two.

Cont. INVESTMENT PROGRAMMING PROCESS

4. Project Prioritization

With scarce capital resources, it is normally not possible

to implement at the same time all programs and projects

which have been identified, screened, and packaged. The

logic of investment programming lies in the task of matching

the requirements of proposed investment projects with

expected available financial resources over a specified

timetable.

process for determining which projects will be scheduled

for implementation ahead of others.

www.openuni-clsu.edu.ph/openfiles/.../investment_programming.doc -accessed 2/4/2014

COMMON METHODOLOGIES IN PRIORITIZATION

1. Problem structure approach

The project which addresses the problem identified as

the most significant obstacle to development is

considered.

2. Supply and demand projection.

By extrapolation and use of coefficient through time and

space, areas with larger supply and demand gap are

given priority.

COMMON METHODOLOGIES IN PRIORITIZATION

3. Weighted ranking indicators and goal matrix systems

Any of the systems of ranking projects involving

the use of weighted indicators and goal is applied.

4. Economic profitability indicators.

The economic profitability or desirability indicators

like cost-benefit ratio (CBR), net present value (NPV),

internal rate of return (IRR) can be used (NEDA, 1993)

www.openuni-clsu.edu.ph/openfiles/.../investment_programming.doc -accessed 2/4/2014

TOOLS IN DEVELOPING THE PRIORITIZATION APPROACH

1.Financial

Viability

(Financial &

Economic

Returns)

2.Social and

Political Acceptability

3.Connectivity

to

National

Policies

4.Implement

ation Capability

5.Number of

Beneficiaries

and Social

Impact

6 Relevance

to

Productivity

7 Environmental

Implications

8 Feasibility

of Inter-local

Cooperation

9 Functionality

(Utility and

Use)

http://www.jmc2007compendium.com/Tools-in-Developing-the-Prioritization-Approach.php -accessed 2/6/2014

CRITERIA FOR PRIORITIZING PROJECTS CATEGORY GENERAL CRITERIA

Urgent Projects that cannot be reasonably postponed

Projects that would remedy conditions dangerous to

public health, safety and welfare

Projects needed to maintain critically needed programs

Projects needed to meet emergency situations

Essential Projects required to complete or make usable a major

public improvement

Projects required to maintain minimum standards as part

of ongoing program

Desirable self-liquidating projects

Projects for which external funding is available

http://www.jmc2007compendium.com/Tools-in-Developing-the-Prioritization-Approach.php -accessed 2/6/2014

CATEGORY GENERAL CRITERIA

Necessary Projects that should be carried out to meet clearly identified and anticipated

needs

Projects to replace obsolete or unsatisfactory facilities

Repair or maintenance projects to prolong life of existing facilities

Desirable Projects needed for expansion of current programs

Projects designed to initiate new programs considered appropriate for a

progressive community

Acceptable Projects that can be postponed without detriment to present operations if budget

cuts are necessary

Deferrable Projects recommended for postponement or elimination from immediate

consideration in the current LDIP

Projects that are questionable in terms of over-all needs, adequate planning, or

proper timing

CRITERIA FOR PRIORITIZING PROJECTS

http://www.jmc2007compendium.com/Tools-in-Developing-the-Prioritization-Approach.php -accessed 2/6/2014

References:

http://www.jmc2007compendium.com/Tools-in-Developing-the-Prioritization-

Approach.php -accessed 2/6/2014

http://www.neda.gov.ph/?page_id=1231 –accessed 2/6/2014

www.openuni-clsu.edu.ph/openfiles/.../investment_programming.doc -accessed

2/4/2014

http://www.businessdictionary.com/definition/capital-expenditure-

CAPEX.html#ixzz2sLXOIuu5 -accessesd2/6/2014

http://www.investopedia.com/university/beginner/beginner5.asp -accessed

2/5/2014

http://www.investopedia.com/articles/younginvestors/10/what-is-an-

investment.asp accessed 2/5/2014