Public Sector vs Private Sector - Research Paper Example

Evaluation of projects - Public Sector vs Private Sector - BlueJay Manufacturing Project – Aims In BlueJay Manufacturing a project needs to be developed for supporting the training of employees in responding more effectively to customers’ orders. A project should be introduced for enhancing the development of a unique training program that meets specific criteria in terms of its cost, its duration and its quality (Olateju, Abdul-Azeez, & Alamutu, 2011, p.1). Evaluation of project – Methods In general, the evaluation of projects has three key parts: a) the identification of costs, b) the identification of outputs and c) the comparison of the findings related to the previous two phases (Marieta, Opreana & Pompiliu 2010, p.132). In practice, the method chosen for the evaluation of a project can highly vary depended on the project’s targets, the resources available and the environment in which the project was first developed. For example, if the project has been developed in the private sector its evaluation will be based on a method that will be different from those used in the public sector. Cost Benefit Analysis/ Cost Effectiveness Analysis The specific method of project evaluation is ideal for projects that have both economic and non-economic effects (Simic, Vratonjic & Beric 2011, p.114). When the costs involved in a project are difficult to be precisely estimated, then the Cost Effectiveness Analysis would be preferred. The Cost-Effectiveness Analysis has an important benefit: it gives the chance to choose among alternative projects so that the project related to the lowest costs is identified (Simic, Vratonjic & Beric 2011, p.115). The only drawback of the Cost – Effectiveness Analysis is the following one: in projects of the public sector not all costs can be clearly estimated in advance, especially if the project involved is related to a non-economic sector, as, for example, education (Simic, Vratonjic & Beric 2011, p.115). Evaluation of project – Process In the context of the Cost-Effectiveness Analysis a project can be evaluated through a series of activities that need to be developed in the order described below: Figure 1 - Phases of Cost-Effectiveness Analysis (Simic, Vratonjic & Beric 2011, p.117) Setting project’s goals and purpose Setting ‘the conditions for the achievement of goals’ (Simic, Vratonjic & Beric 2011, p.117) Introducing alternatives; for each goal at least two alternatives need to be available, meaning alternative strategies/ methodologies for achieving a particular goal Introducing evaluation criteria; for example: ‘feasibility and availability’ (Simic, Vratonjic & Beric 2011, p.117) Introducing evaluation criteria related to costs; fixed cost criteria are preferred since they refer to a wide range of costs, including ‘research and development, project implementation and maintenance’ (Simic, Vratonjic & Beric 2011, p.117) Deciding on the quality/ appropriateness of alternatives Evaluating each alternative in terms of its sensitivity, i.e. whether it is vulnerable to changes. Evaluating each alternative in terms of its content, meaning especially the accuracy of costs involved The findings of the research over the quality of a project are further discussed and analyzed aiming to present all aspects of the project and of the alternatives available A different process for the evaluation of a project can be chosen, taking into consideration the economic and social environment and the project’s targets. For example, the African Development Bank Group tends to use a specific process for evaluating its projects; this process is presented in Figure 2 below. Figure 2 – Evaluation process of projects developed by ADBG (ADBG 2004, p.iii) Evaluation of project – Costs The costs of a project are usually categorized according to the nature of the project and its targets. In the case of BlueJay, costs would be divided into two major categories. A. Total ownership costs These are the costs for handling orders internally, i.e. by developing the in-manufacturing potentials of the organization. These costs are further divided to: Research and development costs/ Design costs/ Manufacturing costs/ Monitoring costs B. Outsourcing costs These are the costs for buying products from suppliers; these costs are depended on the offer of suppliers in regard to each product In general, the costs of each project are depended on the phases of the project involved. In a typical project life cycle, a series of specific phases need to be incorporated, as indicated in Figure 3 below. Figure 3 – Project life cycle (Hosein 2003, p.4) Comparison with similar projects of the public sector Compared to the public sector’s programs, the training program suggested for the organization would have the following advantage: it would be easier for each employee to talk to the firm’s owner. In public sector, politicians have the role of CEO of large organizations. In the private sector it is easier to visit the firm’s CEO and discuss on all critical employment issues (Marieta, Opreana & Pompiliu, 2010, p.133). Also, in the public sector funding is usually secured while in the private sector there is no such guarantee. In the public sector also, projects are more flexible, allowing for further changes, if necessary (Marieta, Opreana & Pompiliu, 2010, p.133); in the private sector projects can be quite complex making the introduction of changes a challenging task. Most important, in the public sector projects aim to promote public interest (Marieta, Opreana & Pompiliu, 2010, p.133). In the private sector projects are commonly developed for increasing the wealth of shareholders, i.e. for increasing the profitability of the organization, either in the short or the long term (Marieta, Opreana & Pompiliu, 2010, p.133). References African Development Bank Group (2004) Manual – Monitoring and Evaluation guidelines. Private sector projects funded by ADB. Operations Evaluation Department, 1-57. Retrieved from http://www.afdb.org/fileadmin/uploads/afdb/Documents/Evaluation-Reports/00157955-EN-ME-GUIDELINES-PRIVATE-SECTOR.PDF Hosein, A. (2003) A Framework for Monitoring and Evaluation in a Public or Private Sector Environment. Project Management Institute. Southern Caribbean Chapte, 1-26. Retrieved from http://unpan1.un.org/intradoc/groups/public/documents/caricad/unpan010982.pdf Marieta, D., Opreana, A. & Pompiliu, M. (2010) Efficiency, effectiveness and performance of the public sector. Romanian Journal of Economic Forecasting, 4, 132-147. Retrieved from http://www.ipe.ro/rjef/rjef4_10/rjef4_10_10.pdf Olateju, O., Abdul-Azeez, I. & Alamutu, S. (2011) Project Management practice in Nigerian Public Sector – An empirical study. Australian Journal of Business and Management Research, 1(8), 1-7. Retrieved from http://www.ajbmr.com/articlepdf/AJBMR_17_26i1n8a1.pdf Simic, N., Vratonjic, V. & Beric, I. (2011). Methodologies for the evaluation of public sector investment projects. Megatrend Review, 8(1), 113-130. Retrieved from http://www.megatrendreview.com/files/articles/015/Simic-Vratonjic-Beric.pdf Read More