siam: strategic impact andassumptions-identification method forproject, program, and policy planning...

8/3/2019 SIAM: Strategic Impact andAssumptions-Identification Method forProject, Program, and Policy Planning (George Abo

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TECHNOLOGICAL FORECASTING AND SOCIAL CHANGE 22,31-52 (1982)

SIAM: Strategic Impact andAssumptions-Identification Method forProject, Program, and Policy Planning*GEORGE ABONYI

ABSTRACT

This paper presents a method, called SIAM, for assessing the social soundness of projects, programs,and policies (with emphasis here on the first two). It is based on work by R. 0. Mason. I. I. Mitroff, and J. R.Emshoff. SIAM was applied initially as one part of a computer-assisted framework for the socioeconomicassessment of highway infrastructure plans. It has since proven useful in a wide range of projects and programs.

A development project at the planning stage is a future scenario. Its final form and impact will beconditioned not only by its structural and economic characteristics. but also by the characteristics of theenvironment in which it is embedded. It is vital therefore to assess not only a projects technical and economicviability, but also its strategic viability involving sociopolitical considerations. A project embodies certainexpectations about the present and future behavior of a variety of interests. These assumptions are implicit in thetechnical design and projected impacts, including the estimated benefits. The success of the project hinges on thevalidity and stability of these assumptions. SIAM provides a procedure for the comprehensive identification ofrelevant stakeholders. stakeholder-project linkages, and for identifying the critical assumptions implicit in thetechnical design of the project and in its economic assessment.

IntroductionOVERVIEW

This paper presents a method for assessing the social soundness of projects,programs, and policies. The technique, called the Strategic Impact and Assumptions-Identification Method (SIAM) was applied initially as one part of a computer-assistedframework for the socioeconomic assessment of highway infrastructure plans [3]. It is,however, appropriate to a wide spectrum of applications. In general, SIAM assists in

Although the logic of SIAM is equally applicable to project, program or policy planning. only the termproject will be used in this paper.

SIAM is based on work by Mason and Mitroff 1161 and Mitroff and Emshoff [18]*Part of this work was developed for, and with the assistance of, the Project Assessment and Evaluation

Branch, Department of Regional Economic Expansion, Government of Canada. Special thanks to Mr. BemdZechel, then project manager. and thanks to Mr. Dick Bugatsch. both of whom played key roles in thedevelopment and application of the ideas in this paper.

GEORGE ABONYI is the Coordinator of the Management and Policy Group. Faculty of Administration,University of Ottawa, Ottawa, Canada.0 1982 by Elsevier Science Publishing Co., Inc. 0040-16251821050031-22 $2.75


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32 G. ABONYI

identifying the strategic linkages between a proposed project and specific social groups inthe projects environment. The outcome is more likely to lead to a project that is respon-sive to needs, and less likely to lead to unanticipated conflicts.

The conceptual approach to project planning implicit in the technique is presentedbriefly in Section II. Section III presents the SIAM method and illustrates it with anapplication to the planning of a smelter project. A preliminary summary of the techniqueis provided in the next subsection, with more detailed development given in Section III.SIAM: A PRELIMINARY SUMMARY

A public agency is considering support for a smelter intended to provide a basis forthe development of a given region. Support for the smelter project requires an assessmentof its potential viability. This may involve an assessment of the projects economicviability-as measured in terms of social benefits and costs-and even more fundamen-tally, an assessment of its strategic viability. The latter involves sociopolitical considera-tions that are not considered in conventional economic analysis, yet are implicit in suchanalysis and condition its results.

A development project embodies certain expectations about the present and futurebehavior of particular interests linked to the project, such as suppliers, workers, effectedcommunities, and so on. These implicit assumptions are embedded in the technical designand in the projected impacts, including the estimated benefits. The success of the projecthinges on the validity and stability of these assumptions over time.

SIAM is a systematic procedure for identifying critical strategic issues that must beconsidered before binding commitments are taken, for example, to support the smelterproject. It guides the analyst in considering a larger number and more specific types ofsocial groups than traditional categories such as user, non-user, region, and restof society. It requires a broadening of the concept of project, and correspondingly, of theconsideration of groups who may affect or be affected by project planning and implemen-tation. The purpose is to identify the critical assumptions about these groups implicit inthe project design and (if undertaken) in its economic assessment.

In general, SIAM addresses the following types of questions:l What are the real boundaries of the proposed project as implied by its inputs and

outputs?. Given the above, which are the social groups to be effected by and/or likely to

effect the proposed project either directly or indirectly?l What are the assumptions about the existing and future behavior and preferences of

these groups on which project design and/or expected benefits are based?l Which groups perceive decreases (increases) in net benefits as a consequence of the

project?l What specific project consequences and therefore associated design characteristics

are likely to lead to conflict? With whom? For what reasons?l Can project design be modified to account for differing needs and preferences not

presently accommodated? How? At what cost? (And/or) can preferences and be-haviors of relevant groups be influenced? How? At what cost?

Projects, including those with a high economic rate of return or extensive expectedbenefits, may encounter serious problems in implementation if the assessment processfails to address such questions.The inputs to SIAM include data on the technical, financial, and economic dimen-sions of a proposed project, and the perceived, revealed, or projected preferences and


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SIAM: STRATEGIC IMPACT AND ASSUMPTIONS 33

behaviors of relevant social groups. The output of SIAM is the identification of significantassumptions underlying project design and estimated impacts, and the identification ofpossible conflicts and their sources in specific project dimensions or consequences. As aresult, (technical) design modifications may be considered as a response to questionableassumptions, anticipated conflicts, or newly perceived needs. Proposed modifications forproject design may then be recycled through SIAM in an interactive assessment pro-cess. Dialogue with relevant groups may be initiated, focusing on particular projectdimensions or consequences, with the objective of eliminating possible conflicts. Theresult for the community of social groups is a closer fit between their needs and projectdesign. For the project planner (and decision maker) this process is more likely to result inimplementable projects that meet the needs of divergent interests.The Point of View Implicit in SIAM3A BRIEF NOTE ON COLLECTIVE CHOICE

Including an assessment of social soundness in the planning framework changesnot only the information base for decision making, but the conceptual basis as well. Avehicle is introduced for incorporating the behavior and preferences of disaggregatedsocial groups into a dynamic process of project planning and implementation. The view ofcollective choice implicit in the general approach is fundamentally different from thatimplicit in optimization techniques. (This issue is developed in detail in [I], [2], [5], and isonly briefly summarized here.)

The optimization framework views society implicitly as an organic whole, assumingthe existence of a social preference. Optimization techniques then attempt to identifythe socially most preferred alternative, the best option in the eyes of society as awhole. The approach to collective choice implicit in SIAM perceives society as charac-terized more by diversity than uniformity; more by localized and individualized intereststhan by societal consensus on abstract objectives; and concerned with the general stabi/it>of project planning decisions in a social context.

The assumption is that non-market decision making in general, and project planningin particular, is not the same as, and cannot be reduced to a process that chooses inaccordance with some concept of social preference. Collective choice is thereforesomething more general, that has as a particular submodel the explicit search for acollective optimum by means of a social preference function. Alternatively, collectivechoice can also mean that preferences are used more modestly, as constraints to determineadmissible or acceptable outcomes without signaling the best or optimal choice.BEYOND BENEFITS AND COSTS

Social benefit/cost analysis is a method consistent with the optimization approach tocollective choice. It is also a generally accepted method for the economic assessment ofprojects. A useful way to introduce SIAM is to relate it to this approach.

Economic assessment of projects attempts to account for and value a range ofproject impacts. However, the success of a project depends on how the project compareswith the goals, expectations, and present and future behaviors of relevant interests. Thereis therefore a need to consider the social soundness of projects.

There seem to be three main reasons for going beyond economic assessment. The

Those interested primarily in the technique itself can proceed directly to SectIon III.


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34 G. ABONYI

first two are relatively clear and well understood; the third is perhaps the most importantbut the least perceived.

1. Benefit/cost analysis has typically been applied to investment in a single sectorsuch as water resources and highways. As a result, benefit and cost items haverelated largely to the particular system, such as a highway system, of which theproject forms a part. The analysis therefore has tended to focus mainly on thoseaggregate groups who use the goods and services that the project generates. Thiswould correspond to the transport efficiency and primary (and quantifiable) im-pacts of highways. However, the concern in development planning focuses on thewider impacts of projects. Therefore a greater number of groups is likely to beinvolved, the relevant impacts of projects are wider, and the set of intangiblefactors is likely to be larger.

2. A second dimension involves equity considerations in development. As normallypracticed, benefit/cost analysis does not consider in any detail the incidence ofproject impacts on the various social groups involved. One attempt to introducethis into social benefit/cost analysis is Lichfields Planning Balance Sheet (PBS)[4]. SIAM goes further in linking project design and impacts to the preferencesand behaviors of relevant social groups. This may lead to modifications in techni-cal design, changes in preference and behaviors of particular groups, or revisionof estimated economic impacts. It can also assist in tracing the ultimate incidenceof net gains and losses.

3. The third reason for SIAM, and perhaps the most important, involves focusingattention on the validity of assumptions implicit in a projects technical design andin the estimation of benefits and costs in economic assessment. A project bringsnew activities into an existing environment. Into its technical design are incorpo-rated certain, usually implicit, assumptions about existing and future behavior andpreferences of affected social groups. Expected benefits of a project, such ascontributions to net employment and net income, the generation of new economicactivities, are then premised on such assumptions. Phrasing the issue in this wayidentifies explicitly that certain project impacts often ignored or classed as projectoutputs in economic assessment are in fact critical inputs-i.e., required re-sources such as attitudes, propensities, skills--essential to the successful imple-mentation of the project. This approach also highlights the fact that responses byparticular groups in the environment of the project-based on their perception ofneeds, interests, and judgments about relevant project consequences-play acritical role in conditioning successful implementation. A principal objectiveof SIAM, then, is to uncover the most significant assumptions underlying re-quired and anticipated social as well as economic changes on which the success ofthe project is implicitly based. The concept of project changes in the process.

A DYNAMIC CONCEPT OF PROJECTSProjects may be perceived as systems interconnected in a dynamic and complex

fashion with an evolving environment. This environment conditions the projects finalform and actual impacts. In effect, a development project at the planning stage is afuturescenario. Assessment at this stage is then a process of estimating its multidimensionaltrajectory. At the implementation stage a project becomes a set of activities limited intime and space, introduced into a social, political, economic, and ecological environmentwith which it interacts.


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SIAM: STRATEGIC IMPACT AND ASSUMPTIONS 3.5

The final form and impacts of a project are conditioned by: 1) the projects internal(structural) characteristics; 2) characteristics of the environment; and 3) the dynamicinteraction between the project and its environment.

1. Internal Characteristics: The basic characteristics of a project are determined byits technical (and economic) structure. It is created in a series of stages, normallyincluding conception, formulation, analysis/assessment, and implementation.The progress through each stage involves a reduction in the degrees of freedomavailable for the next stage; that is, long before analysts perform financial andeconomic assessments, technical designers and project managers (in charge oftechnical formulation) will have imposed fundamental structural characteristicson the project which may be difficult to modify. Conditioned by their worldviewsand capabilities, they will already have constrained the projects wealth-generat-ing potential and its real impacts.

2. Environment: The final form and actual impact of the project are also conditionedby the characteristics of the environment into which it is placed. A project isimplemented in a milieu vivant which includes a sphere of human activities(sociopolitical as well as economic) and a biosphere, or natural environment. Thefocus here is on the socio political environment, assumed to be composed ofindividuals who, in order to protect (and/or further) their interests, form coali-tions with differing perceptions and interests. These social groups, which mayrange from amorphous alignments to structured organizations, then stand for amultiplicity of interests. They are involved in a dynamic game of conflict andcooperation that defines the context into which a project is introduced. SlAMintroduces this into project analysis through the concept of stakeholders. Thisterm (to be elaborated on later) refers to groups, organizations, and institutionswhich potentially have direct or indirect links to the project.

3. Dynamic Interaction: A project plan as a future scenario embodies certain expec-tations about the present and future behavior of these stakeholders. These implicitassumptions are embedded in the technical design and in the estimation of projectimpacts. Project implementation then hinges on the validity and stability overtime of these assumptions.

The problem may be summarized as follows. In the (primarily) efficiency-basedassessment of a project as an isolated unit, key questions about the proposed project andits likely impacts may be missed. Therefore analysts and decision makers may not identifyand act upon the critical strategic variables (i.e., those of the project and/or environment)which condition success in implementation. While analysis and assessment of projectsin their technical, financial, and economic dimensions are very important, their socio-political assessment is equally important. This, however, requires a dynamic orientationand a different framework for analysis.The SIAM ProcedureOVERVIEW

SIAM is best described as an interactive search process that aids in generating andstructuring information. Its basic output involves the identification of two types of strate-gic assumptions for a given project. The critical assumptions are of primary importance.These are the assumptions that, given present knowledge, are judged to be important but


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uncertain. This uncertainty may be reduced through further data gathering and analysis,modifications in project design, or through negotiations with particular groups aboutspecific conflict points associated with the project. Otherwise the sources of uncer-tainty and their implications, associated with particular assumptions, are highlighted inthe decision process. Key assumptions follow the critical assumptions in importance.These, given present knowledge, are both important and certain. They need to be ex-plicitly identified and monitored as project planning and implementation proceed. If anyof the key assumptions become less certain over time, this may indicate the need for areassessment of the project.

The identification of the critical and key assumptions is the output of SIAM. Theprocedure that generates this as output comprises five phases. The first phase involves theidentification of as broad a set of stakeholders as possible, and their specific linkages tothe project. Perceiving a project as a system interacting with its environment provides auseful basis for this step. The second phase requires the generation of assumptions aboutthe current and future behavior of the stakeholders identified earlier. The third phaseinvolves the elimination of non-essential assumptions, leaving only the more significantones for further consideration. In the fourth phase the remaining assumptions are pri-oritized in order to identify key strengths and critical weaknesses of the project from theperspective of social soundness. The fifth and final phase lies outside the analysis proper.In it, the implications of the analysis are examined with respect to possible modificationsof the project and/or the environment. This may take the form of design modifications,changes in the results of the economic assessment, or focused dialogue with particularstakeholders about potential conflict points. The overall logic of SIAM is presented inFigure 1. The next section presents the procedure in detail, utilizing for illustration thesmelter project example introduced earlier.DETAILED PROCEDUREPhase I: Identification of Stakeholders, Stakeholder Properties, and Stakeholder-Project

Linkages.The initial input to SIAM is as detailed a description of the project as is available.

This may include the following:1. Technical (e.g., engineering) data

a. description of the project designb. technical and socioeconomic data supporting why the project is requiredC. technical analysis of the project, including relevant descriptors and projected

consequences in real termsBasic financial and economic data can be added as they become available. These couldinclude the following:

2. Financial and economic dataa. details of the analysis of commercial profitability, measured at market pricesb. details of the economic assessment of social profitability utilizing shadow

pricesThe above data describes the project in terms of technical and economic descriptors.

Utilizing this data a comprehensive list of stakeholders may then be generated.


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SIAM: STRATEGIC IMP ACT AND ASSUMPTION S 41

Stakeholder is a general term referring to any group, organization, or institutionwhich potentially has a vested interest, either direct or indirect, in the project. Astakeholder depends on the project for the realization of some of its goals, and the projectdepends on the stakeholder for a full realization of its potential.

Identification of stakeholders is a critical phase of the SIAM procedure since itdefines the boundaries of the analysis. Subsequent phases of the procedure focus onassumptions the identification and classification of which are dependent to a large extenton the initial identification of relevant stakeholders. In effect, assumptions are statementsidentifying particular stakeholder-project linkages deemed relevant to the planning andimplementation of the given project.

There are two general approaches to generating the list of stakeholders; both shouldbe utilized. One approach involves working from the outside in, that is, from theenvironment to the project. (A version of this approach is utilized by Mason and Mitroff[16].) Given a general understanding of the project structure and impact, a list ofstakeholders is generated in an ad hoc manner. The following types of questions can assistin generating the stakeholder list:

Who is affected by the project (benefits/disbenefits)?Who has an interest in the project?Who is in a position to affect the planning or implementation?The tendency to lump stakeholders into aggregate categories such as users, non-

users, and rest of society, must be avoided. The objective is to identify as wide a set ofdisaggregated stakeholders as possible.

The next step in this approach is to link each stakeholder as precisely as possible tothe project. In effect, the following question is posed: What particular property of thisstakeholder is relevant to what specific dimension (i.e., descriptor) of the project?Existing project descriptors are compared with the list of stakeholders in addressing thisquestion. If no specific linkage can be identified for a particular stakeholder, thisstakeholder becomes a candidate for elimination from further consideration.

The drawback of this approach is that given its ad hoc manner, key stakeholders andstakeholder-project linkages may be missed. The more systematic second approachshould also be utilized. It proceeds from the inside out, that is, from the project to theenvironment. The project is perceived as a system linked to particular nodes of itsenvironment (i.e., stakeholders) through specific inputs and outputs. The first step in thisapproach then involves a qualitative systems analysis of the project, identifying allrelevant inputs and outputs. The contributing factors and sources are traced back for eachinput; the consequences associated with each output are projected forward. The secondstep involves the identification of the stakeholders associated with each input and output.Having analyzed the project in detail, the following questions are posed for each projectdescriptor (e.g., technical, financial, economic): Given what is known about this de-scriptor (i.e., input or output), or subset of descriptors, which stakeholders are likely to beaffected by it? In what way(s)? Which are likely to care about it? Ought to care about it?Why?

Figures 2-5 provide an example of this approach with respect to the smelter project.It is evident from these figures that an important by-product of this analysis is a deeperunderstanding by the analyst of the structure and full impact of the project.


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