Using This Book

_{The organization,} conventions and notation, and special features of this book are briefly explained here at the outset for the reader's convenience.

Organization of Chapters

Chapters are presented in an order that in general follows the process of preparing an agricultural project analysis. The sequence of this pro-cess is described in the last section of chapter 1, "Steps in Project Analy-sis." Because the analytical process is iterative, chapters frequently contain cross-references to appropriate sections and subsections in other chapters.

Computations

Project analyses rest on many assumptions that by their very nature are only approximate. The final results of computations, therefore, should be rounded with this limitation in mind and presented appro-priately with only significant digits included-say, in millions or thousands of currency units, thousands or hundreds of tons or hectares, or the like. To make methodological points more apparent, however, many illustrative computations in this book have been carried out much further than called for by such a rule. Hence, they should not be taken as a model for presentation. (See the section in chapter 9 entitled "How Far to Carry Out Computations of Discounted Measures" for a discussion of this topic.)

Decimals and commas in numbers

Throughout this book, a decimal is indicated by a point set level with the bottom of the line of type (.). In numbers of 1,000 or greater (except those designating the year), a comma (,) distinguishes groupings of thousands. Thus, 1 million would be written 1,000,000.0. Whenever a decimal fraction appears that is less than 1, a zero appears before the decimal point to avoid misreading the fraction; thus, one-fourth appears in decimal form as 0.25.

Rounding convention

For all computations in this book, the following rules have been used for rounding:

1. When a value of less than 5 is to be dropped, the digit to the left is unchanged.
2. When a value of more than 5 is to be dropped, the digit to the left is increased by 1.
3. When a value of exactly 5 is to be dropped, the digit to the left, if even, is left unchanged; if odd, it is raised by 1. Under this rule, all numbers that have been rounded by dropping an exact value of 5 are reported as even numbers.
Thus, in the first illustrative tabulation in the "Compounding" subsec-tion of chapter 9, the following rounding will be found:
1,050 x 1.05 = 1,102.50 rounded to 1,102 (Rule 3) 1,102 x 1.05 = 1,157. 10 rounded to 1,157 (Rule 1) 1,157 x 1.05 = 1,214.85 rounded to 1,215 (Rule 2).

Calculations

Throughout the text, illustrative calculations made in project analysis are given (within parentheses or brackets) after the explanation of how they are derived. Most of these calculations are done by simple arithme-tic. (For the sake of completeness, there are many calculations presented in this manner that are very simple; I hope the reader will be patient with such obvious examples.) More elaborate formulas are displayed on the page.

Units of Measurement and Currency

Metric units are used for all measurements unless otherwise speci-fied-thus, "tons" refers to metric tons, not "long" or "short" tons. Special units-for example, "animal units" or "work days"-are defined in the text and in the glossary-index (see "Supporting Materials," below). To emphasize the worldwide scope of agricultural development efforts, examples of project accounts give money amounts in the cur-rency of the country in which the project is located. The standard sym-bols for these currencies are identified in the text and tables; when appropriate, generic "currency units" are also used.

Notation

An explanation of the conventions used for notation in this book may help in reading the tables, mathematical formulations, and the six-decimal discount factors.

Tables

In the tables in this book a zero indicates "none" or "no amount," and a dash (-) indicates "not applicable." In chapters 4, 5, and 6, and in tables 9-7 and 9-8 where financial accounts are discussed, the accounting con-vention of indicating negative numbers by parentheses has been adopted. In all other tables, negative numbers are indicated by a minus sign (-).

The tables in this book are of several general kinds: tables that lay out methods of calculation (for example, tables 3-3 and 7-2); "pattern account" tables that lay out a recommended format for project accounts for either financial analysis (the tables in chapter 4) or economic analysis (the tables in chapter 7); and the usual sort of table that simply presents project data.

In some of the pattern account tables additional information for under-standing (for example, the financial or economic rate of return) is given after the main rows of entries. The reader is reminded that, to arrive at the total values in the tables of chapters ₉ and 10 that include entries for multiyear spans, annual amounts must be included for the number of years involved.

In tables that illustrate financial accounts, the reader should note that in some cases intervening years have been omitted (see, for example, table 5-1).

To aid computation, portions of Compounding and Discounting Tables for Project Evaluation (Gittinger 1973) have been reproduced in the seven compounding and discounting tables that appear in this book.

Mathematics

As noted above, standard arithmetical notation has been used through-out the book. When division is indicated in a line of figures, a division sign (=) is used rather than a slash (/).

In the section in chapter 10 entitled "Calculator Applications in Project Analysis" the operations that are indicated on the keys of the simple electronic calculator used are shown in the text in boldface type.

Six-decimal discount factors

When six-decimal discount factors are used in the text or in tables, a notation of inserting a space between the third and fourth decimal places has been followed to make the factors easier to read.

Technical Terms

Specialized financial, accounting, economic, and project terms (and the few acronyms and abbreviations used in the book) have been com-piled and defined in the glossary-index (see "Supporting Materials," below). The most important of these, of course, are also defined in the text where they apply.As a guide to understanding the format of project accounts, the prin-cipal headings of the pattern account tables-categories that are likely to appear in most agricultural project analyses-have been listed in _italic type in the text of chapters 4, 5, 6, and 8.

Supporting Materials

The reader may find supporting materials that are included in this book, or available from the sources indicated, helpful for further study of project analysis.

Appendixes

Chapter appendixes supplement the discussion of topics in chapters 4, 8, and 9. Appendixes to the book provide general guidelines for preparing an agricultural project analysis report (appendix A); give summary dis-counting tables for common discount rates and the formulas for comput-ing discount factors directly using an electronic calculator (appendix B); and discuss the bilateral and multilateral sources of specialized assist-ance for the preparation of complex agricultural projects (appendix C). The assistance discussed in appendix C is negotiated and undertaken at the institutional level by the agencies and governments involved.

Bibliographic sources

Primary sources have been identified in the text by the author's sur-name and the publication date of the material cited. These sources, and additional references, are listed and annotated in the bibliography.Sources of some individual tables and figures are not listed in the bibliography but are cited in full in the appropriate table or figure legend. Some of these source materials have restricted circulation and are unavailable to the general public.

I could not have written this book without access to the experience of the Economic Development Institute _(EM) and its parent institution, the World Bank. The record of this experience is predominantly in the public domain. Information about how to obtain publications of the _EDi and of the World Bank will be found on the last page of this book.

Glossary-Index

As an aid to the reader, the index has been enhanced by incorporating glossary entries that define the principal technical terms used in this book. Because interpretation of some of these terms varies among the specialists involved in preparing agricultural project analyses (these professionals are an inquisitive lot-they have to be-and the field is a dynamic and changing one), the definitions given cannot be "defini-tive"-they reflect the use of these terms in this book.

Project examples

Data from actual agricultural project investments assisted by the World Bank or other international development agencies or financed by governments have been used to illustrate the analytical methodology presented here. The adaptation and interpretation of these data are my own. The use of project information in this book is purely illustrative; it does not represent a judgment by the funding agency or borrowing government about any particular project.