Project Cycle Management (PCM) for the

2021/2027 EU budget

Roberto Cioni

Roberto Cioni

European Public Procurement Expert and Contract Manager, Agile Procurement manager;
Legal Project Management; Prince2 Pratictioner

Published Dec 8, 2021

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The European Project Cycle Management is a tool to plan and perform European actions at
Portfolio, programme, and project level in many activities. In the last few years, the
Commission has focused on guaranteeing effectiveness in projects financed by the EU
budget. Moreover, the EU Parliament issued, in 2017, a resolution on future perspectives for
Technical Assistance in Cohesion Policy, and, in 2018, the EU Union adopted the new
Financial Regulation;

The purpose of this paper is to analyse how this new framework of rules impacts PCM in the
design phases and how these apply directly to NextGenerationEU programmes and the
Recovery and Resilience Tool.

The first introduction of PCM was in the sixties as part of the World Bank and United Nations
development and cooperation programs.
In 1992, the European Commission decided to use a "Project Cycle Management" (PCM) as
the primary set of project design and management tools (based on the Logical Framework
Approach) in EuropeAid Programmes. Accordingly, the EC (the EuropeAid's Unit 03)
produced its first PCM manual and Handbook in 1993, followed by the current version in
March 2004.

PCM, designed to manage development projects and international cooperation

programmes, was quickly used as an operational tool for managing all European funding
programmes. For example, the Commission uses the PCM manual on tender or grants award
procedures implementing the EU or the EDF budget, both in Direct and Shared
Management.

Moreover, it complies with one of the basic rules on implementing the EU budget, "the
efficiency of the European actions".

But what is it an efficient European action?

On the one hand, it is an action that has replaced or enforced a national act on a particular
field (The principle of subsidiarity as is defined sub Article 5 of the Treaty on European
Union). But, on the other hand, it is the action that archives the "best value, in terms of
quality and quantity, for money" (Art. 33 Financial Regulation, Performance and principle of
economy, efficiency and effectiveness).

PCM manual defines quality: "primarily in terms of the relevance, feasibility, and
effectiveness of the Programmes and projects supported with EC funds, including how well
they are managed. "To achieve this "effectiveness", let's now take a quick look at the most
critical features of the PCM:

• A clarified division into standardised phases of the planning cycle; and a set of
templates for documents.
• An exhaustive stakeholder's analysis, including the primary target group and the final
beneficiaries.
• A bottom-up approach to planning activities involves the beneficiaries and all the
stakeholders.
• A Logical framework approach based on causes/effects.
• A preliminary meeting focused on preparing a compelling project proposal using
GOPP or/and LFA Workshop. The product of these actives is the logical framework
matrix (LFA).
• An application of a clear and transparent Key Performance Indicators system. It is
crucial to verify the achievements in terms of quality and benefits, and, nowadays,
emphasis must be put on the 2030 Agenda targets and indicators.
• A clearly defined coordination, management, and financing arrangement system.
• A monitoring system to oversee and follow the implementation and support project
management.
PCM has a four-step project system to follow:

1. Planning

2. Preparing

3. Implementing

4. Monitoring and control

Efficient planning, preparation and implementation must enable European actions to keep
pace and evolve continuously according to the needs of beneficiaries and the territorial
conditions in which the activity is carried out.

This activity should ensure compliance with the principle of complementarity, partnership,
technical assistance (Article 4 of European Regulation 2052/88 amended in 1993).

Then the Commission issued Regulation n. EU/240/2014 ( the Code of conduct on

partnership in the framework of the ESI Funds), updating the European Structural and
Investment Funds, but these are rules applied, as guidance and good practice, in any action
that wants to be effective within the Member State.

The European Commission will apply these rules in programs such as NextGenerationEU and
the Recovery and Resilience Facility (as a matter of fact, these tools reinforce the same
chapter of the European budget).

Some parts refer to the Planning documentation, but the Code of Conduct specifies who are
the stakeholders to be involved in the planning phase (Article 3, "Identification of relevant
partners for the Partnership Agreement) as:

1) The competent regional, local, urban, and other public authorities.

2) Economic and social partners, including nationally-recognised social partners'

organisations and national chambers of commerce and business associations.

3) Bodies representing civil society, such as environmental partners, non-governmental

organisations, and bodies responsible for promoting social inclusion, gender equality and
non-discrimination.

The Member States shall identify the relevant partners for each programme, and they have
to mentor them in participating in grants and tender within the appropriate programmes.

European Parliament resolution of May 18, 2017, on prospects for technical assistance in
cohesion policy) is aimed at improving the effectiveness of European programs "Whereas,
regional and national authorities often lack the necessary capacity to efficiently and
effectively implement ESI funds and organise a partnership with other public authorities,
including urban authorities, economic and social partners, and representatives of civil society
following Article 5 of the CPR."
In terms of direct and shared management, the most critical part probably lies in the new
Milestones map in action planning.

1. Planning

The Commission must ensure a three-year program (the n+3 rule) with a clear explanation of
the availability of budgetary resources, the criteria for selecting actions to be carried out, the
Identification of beneficiaries, and the location and timing of the action.

That is why the funds in the 2021/2027 budget will be allocated to programmes starting in
2021, particularly those under direct management. Indirect management programmes
managed by member states will begin operationally in 2023 at the end of the current
programming period.

The work program must indicate the budget for each objective and respect principles of
coherence by showing the links with the three funding axes established by art. 270 of the
Financial Regulations:

(a) at least 55 % to the Progress axis;

(b) at least 18 % to the EURES axis;

(c) at least 18 % to the Microfinance and Social Entrepreneurship axis.

In the strategic planning phase, the partner must provide a project brief that outlines the
idea, beneficiaries, background, risks and opportunities, stakeholder analysis, benefits, and
co-funding options.

2. Preparing

Based on their analysis, the entities responsible for the program must determine the
projects to be financed by the programs. Therefore, they should indicate the projects'
objectives, beneficiaries, type of action, partners, support funding, and expected benefits.

3. Implementing

Program managers must implement the budget by launching tenders and calls for proposals
at this stage. They must ensure that the finalised actions align with PCM principles, such as
consistency with program objectives; they must ensure project consistency by
demonstrating a coherent, feasible, sustainable project and achieving the intended purposes
and benefits.

4. Monitoring and control

Chapter 7 of the PCM manual "Monitor, review and reporting" is perhaps the most exciting,
full of techniques and good practical practices. Still, for the subject treated so far, I limit
myself to saying that a control activity can be ex-ante, in itinere, and ex-post.
Checks on the effectiveness of the action are done at several levels. In Direct Management,
the Commission carries out general monitoring. The Member State and its intermediate and
delegated bodies are at the level of Shared Management to carry out such checks.

The implementation of the EU budget must consider the compliance of the intervention with
European policies and other existing programs and the rules of financial management.
Therefore, as every contract with the Commission includes a legal agreement and a financial
agreement, the control will be on the legal and fiscal compliance of the action.

Therefore, on the one hand, we will have control over compliance with regulations on the
awarding of contracts, respect for competition, protection of the environment, respect for
the principle of equal opportunities and the prohibition of child labour (in line with European
policies).

On the other hand, compliance with the financial rules stated in the financial regulations, as
the Title II on budgetary principle, and the restrictions on tenders and grants contained
therein.

Checks can be followed centrally by the Commission or by the Member State. At the level of
the Commission, the assessment is carried out internally on each fund to be disbursed with a
dedicated internal audit service. On top of that, the Commission can perform control to on-
site like inspection both on the national contracting authority and beneficiary level.

The external, independent audit is carried out following article 70, point 6, of the Financial
Regulations by the European Court of Auditors.

Member State control follows national rules.

In conclusion, the use of PCM for the processing of Recovery and Resilience Facility funds
updated to the changes introduced by the Commission and the Parliament must be
considered a critical point.