Logical Framework Approach

Using LFA in Activity Cycle Management

Policy Analysis

Any potential Activity must be relevant to both partner and NZAID policy frameworks. These are likely to include our partner’s national development plan; the NZAID country strategy; relevant sector policies and strategies; and policies relating to mainstreamed and other cross-cutting issues such as gender, environment, HIV/AIDS, governance, and conflict prevention. For further information on this refer to the NZAID Screening Guide for Mainstreamed and Other Cross-cutting Issues.

The relevance of any proposed Activity to such policy and strategic frameworks should be confirmed early in the identification process.

Situational Analysis

Activities also need to take into account different country and other operational circumstances. There is a wide range of possible analyses that can be carried out as part of such situational analysis. Of these, stakeholder analysis, problem analysis, objectives analysis, strategy analysis and risk analysis are fundamental to using the LFA. These analyses must be underpinned by a thorough situational analysis of cross cutting issues. Some of these may already be available, for example from national planning or donor strategy processes.

The identification stage should identify whether more rigorous analysis of one or more of these issues is needed to support the basic LFA. Details of when and how these analyses should be carried out are covered in the NZAID Screening Guide for Mainstreamed and Other Cross-cutting Issues and specific cross-cutting tools guidelines.

Stakeholder Analysis

A stakeholder is any individual, group, community or organisation with a potential interest in the outcome of an Activity, either as a result of being affected by it or by being able to influence the project, in a positive or negative way.

Different groups (and individuals) have different concerns, abilities and interests and these need to be fully explored in the situational analysis. A stakeholder analysis should help to identify:

different viewpoints
possible conflicts
capacities to build on
ways to reduce or remove negative impacts on vulnerable groups
incentives and disincentives for the different stakeholders

Another purpose of stakeholder analysis is to identify the concerns of disadvantaged or vulnerable groups such as the poor, women, children, ethnic minorities and the disabled.

The stakeholder analysis should be used to help identify the groups who will need to be involved in the further Activity design, implementation and evaluative processes. A preliminary stakeholder analysis should always be carried out early in the Identification stage. Stakeholder analysis must be repeated throughout the Activity cycle.

NZAID staff will rarely be directly involved in carrying out a stakeholder analysis. More detail of the processes and options for presenting information gathered during the analysis are provided in Annex 1: Stakeholder Analysis Process.

Problem Analysis

Most, if not all, development assistance is designed to address a particular need, challenge, or problem. A problem analysis usually focuses on the needs of a particular group of people (sometimes referred to as the ‘target group’). It seeks to identify the cause and effect relationship between the different factors or ‘problems’ impacting on their needs.

A problem analysis helps ensure that:

key problems and their underlying causes are clearly identified
stakeholders are given an opportunity to explore these, and
the final design includes measures to address them.

As with other steps in the LFA stakeholder participation is essential. One of the purposes of problem analysis is to enable stakeholders to guide and learn from the process. It can also empower them to address issues outside the immediate focus of the Activity.

Details on how a problem tree analysis is carried out are included in Annex 2: Problem Tree Analysis.

Other tools can also be incorporated into the process, such as SWOT (Strengths, Weaknesses Opportunities and Threats) analysis, and opportunities analysis.

Problem analysis is an interim step in the LFA process of identifying Activity objectives.

Objectives Analysis

Objectives analysis translates the problems identified in the problem tree analysis into positive outcomes. For example: “too many children dying” might become “a 25% reduction in under-five mortality rates”. Setting these out as an ‘objective tree’ helps assess whether there are any other gaps that need to be addressed in order to meet the Activity goal.

Details on how to carry out an objective analysis and develop an objective tree are included in Annex 3: Objective Analysis.

Strategy Analysis

The purpose of the strategy analysis is to identify possible alternative options for achieving objectives, assess their feasibility and agree on a single preferred strategy for the Activity.

The objective tree developed as part of the objectives analysis will show a number of possible alternative strategy options. These options should then be assessed with reference to the various stakeholders (e.g. how they would be affected by them or contribute to them), and other appraisal criteria. See NZAID Activity Appraisal Guideline.

Selecting the most appropriate strategy is the key design decision, because all of the subsequent formulation processes will follow on from this. However, this is not a science: it will often be necessary to make compromises between the interests of different stakeholders, political demands and resource constraints.

Further guidance on carrying out a strategy analysis is included in Annex 4: Strategy Analysis.

Risk Analysis

Before an Activity strategy can be decided, the relative riskiness of possible strategy options must be assessed. Risk analysis and risk management are important throughout the Activity cycle. New risks can arise at any time and Activity management must be able to identify and respond to these.

The process of risk management is described in the NZAID Risk Management Guideline.

Institutional Analysis

Assessment of the capacity and capabilities of key partner institutions and/or partner organisations is an important part of an Activity situational analysis. Institutional analysis is the first step in the NZAID Institutional Strengthening Tool to be developed in phase 2 of the NZAID Tools Programme.

Poverty Analysis

All NZAID Activities are required to contribute to the elimination of poverty. Preliminary screening of potential Activities will help determine whether sufficient information is available for NZAID decision-making (see NZAID Screening Guide for Mainstreamed and other Cross-cutting Issues). If relevant analytical work has not already been undertaken, an Activity-specific poverty analysis may be needed. Guidance is provided in the NZAID Poverty Analysis Tool.

Gender Analysis

Gender considerations are mainstreamed into all NZAID Activities. The NZAID Screening Guide for Mainstreamed and other Cross-cutting Issues helps assess whether further information is required. When more information is needed, the NZAID Gender Analysis Tool provides more detailed guidance.

Environmental Analysis

Environmental sustainability is also mainstreamed into all NZAID Activities. The NZAID Screening Guide for Mainstreamed and other Cross-cutting Issues should be used for preliminary assessment of all Activities. Should further information on environmental impact be needed, the NZAID Environmental Analysis Tool (to be developed in phase 2 of the NZAID Tools Programme) will provide more detailed guidance.

Financial and Economic Analysis

Before taking a decision whether to proceed with an Activity it’s important to know how much it will cost and what the expected financial and economic benefits will be. Financial analysis focuses on the direct costs and benefits of the Activity itself; economic analysis examines these for society as a whole.

While it may not always be appropriate to undertake a full economic analysis, we should at least consider the cost-effectiveness of the interventions supported by the Activity. For example: we should always analyse the cost-effectiveness of different ways of achieving a particular Activity objective.

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