AusGuideline

4.4 Preparing an annual plan

Associated guidance on activity implementation

Part 4: Activity implementation
AusGuideline 4.1: Mobilising activities
AusGuideline 4.2: Baseline studies
AusGuideline 4.3: Monitoring activities & managing contracts
AusGuideline 4.5: Using a technical advisory group
AusGuideline 4.6: Undertaking an implementation review

October 2005

© Commonwealth of Australia 2005

AusGuideline 4.4 Preparing an annual plan

Last updated 28 October 2005

Contents

1 Purpose of an annual plan 1

2 Structure, scope and timing of an annual plan 1

2.1 Structure 1
2.1.1 Review of progress 1
2.1.2 Implementation strategy and joint work program 2
2.2 Scope 2
2.3 Timing 3
3 Preparation and approval of an annual plan 3
3.1 The first annual plan 3
3.2 Preparing a draft annual plan 4
3.3 Agreement by the implementation partners 5
3.4 Final approval of the annual plan 6
3.5 Interim arrangements 7
4 The responsibilities of the activity manager 7

5 Annual plan format and content 9

A Indicative annexes to an annual plan 13

B Indicative implementation and resource schedule for an annual plan 17

Shortened forms 19

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1 Purpose of an annual plan

For AusAID’s major activities that span several years the annual plan is usually the key
document for defining, justifying and scheduling activity implementation on an annual basis.

Each annual plan contains a review of an activity’s progress to date and, based on that
analysis, an implementation strategy and a detailed work program for the coming year.

The annual plan of a joint activity is a key planning, management and monitoring tool for the
participants in implementation: the delivery organisation, the counterpart agency, the partner
government’s central aid coordination authorities and AusAID.

It is essential that the counterpart agency delivering the partner government’s contribution
agrees to the annual plan. In most countries, formal agreement by the partner government’s
coordination authorities is also required.

2 Structure, scope and timing of an annual plan

2.1 Structure
Each annual plan has two basic parts

ƒ a review of progress to date, and

ƒ an implementation strategy and work program for the coming year, incorporating any
lessons from the review of progress, and providing
– justification, if required, for the proposed joint program of work, and
– explanation of the expected outputs and development benefits of that work program.

2.1.1 Review of progress

The review of an activity’s progress is a major part of each annual plan (except for the first
annual plan). The review of progress reports on the results of implementation in terms of the
planned work, outputs, outcomes and impacts of the activity.

If difficulties arose during implementation, the review will analyse the causes and effects of
those difficulties and the options for remedial action, including adjustments to activity
implementation.

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The review of progress is central to activity monitoring. It consolidates the results of all other
progress monitoring and reporting as a basis for setting future directions, and is considered
and discussed by all the activity participants.

2.1.2 Implementation strategy and joint work program

The implementation strategy is the proposed overall approach to activity implementation

during the annual plan year. It includes the strategic approach to risk management, to
sustainability and to monitoring and performance assessment. It also includes overall
approaches to activity management and to the development partnership between the
counterpart agency and the delivery organisation.

The joint work program is the detailed schedule of implementation work and outputs for the
year. It outlines Australian and counterpart inputs, work and outputs.

The joint work program should be consistent with the activity description in the activity
design documentation, the delivery agreement and the activity-specific memorandum of
understanding (MOU). If the proposed work program is not consistent with any one of
these reference documents, this inconsistency must be highlighted in the annual plan. An
explicit discussion of the proposed change in arrangements, and a clear justification, is
needed.

In addition, if an annual plan recommends a change to any one of the reference

documents, a change frame must be provided (as an annex). This change frame will record
each part of the existing design, delivery agreement or activity-specific MOU that is to be
altered, and record along side it the proposed new design arrangement, contract provision or
MOU clause.

For further information on change frames, see Section 5, ‘Annual plan format and content’,
and Annex A, ‘Indicative annexes to an annual plan’, in this guideline.

2.2 Scope
The annual plan should

ƒ review the progress of implementation against the previous annual plan, the contract
requirements, the implementation schedule of the activity design documentation, and the
objectives and indicators in the simplified monitoring toolbox (SMT)

ƒ assess the progress of implementation at several levels, including

– progress in undertaking major elements of the previous annual plan’s programmed
work
– progress in producing activity outputs

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– progress towards achieving the objectives at the component, purpose and goal levels of
the activity design, and
– progress towards achieving the planned longer term impacts
ƒ identify any significant problems encountered in the past year
ƒ review the activity design and propose changes (if any) based on the experiences of
implementation

ƒ provide a detailed work program for the following year, describing and scheduling tasks
and inputs, and including a budget that sets out the costs of implementing the work
program

ƒ confirm the partner government’s inputs for the coming year

ƒ review and (if necessary) update the activity monitoring plan
ƒ report against, review and update the activity’s risk management analysis, risk matrix and
risk management plan

ƒ report on issues relating to sustainability, and review and revise the sustainability analysis
and strategy, and

ƒ provide, as an attachment, a Simplied Monitoring Toolbox (SMT) corporate report

(reporting benefits and overall activity rating).

2.3 Timing
The annual plan aligns to either the Australian financial year (1 July to 30 June) or to that of
the partner government. In either case, the first draft of the annual plan is submitted to
AusAID three months prior to the start of the year covered in the annual plan.

3 Preparation and approval of an annual plan

3.1 The first annual plan

The first annual plan is prepared by the delivery organisation as soon as practical after the
activity begins in the partner country.

The format of the first annual plan is the same as for subsequent plans (see Section 5, ‘Annual
plan format and content’). However, there will be no progress to report other than on
mobilisation and any preparatory or associated work carried out by the partner government.

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As with all subsequent annual plans, the first annual plan is based on the activity
documentation, the activity-specific MOU and the contract (or other delivery agreement). It is
prepared in close consultation with the counterpart agency.

The first annual plan gives the delivery organisation and the counterpart agency an
opportunity to review the activity design and to propose any necessary design changes to
AusAID and the partner government. It also provides an opportunity for other stakeholders’
current interests and views to be taken into account. AusAID therefore strongly
recommends that, as part of the annual planning process, the delivery organisation hold
workshops with the counterpart agency and any other key stakeholders.

If the activity design was well prepared, there was no significant delay between activity
design and implementation, and there were no major changes in the partner government’s
economy or institutional structure, the design is unlikely to require more than minor changes,
if any, in the first annual plan period.

3.2 Preparing a draft annual plan

Each year the delivery organisation prepares the first draft of the annual plan and submits it to
AusAID three months prior to the start of the annual plan year. This is often a deliverable
under the contract or other delivery agreement. The activity manager may need to track the
preparation of the draft annual plan to ensure it is available in good time.

The draft annual plan is prepared to match an indicative budget for the Australian
Government contribution. This budget is based on the activity design, and the availability of
aid funds. The delivery organisation should confirm with the activity manager the indicative
budget before it prepares any detailed draft work program. (Note that this figure remains
indicative until after the Australian Federal Budget is announced).

When the delivery organisation is preparing the first draft of an annual plan for a joint
activity, it must consult the counterpart agency on progress to date and on the proposed
joint work program for next year.

The first draft is submitted to the AusAID activity manager for clearance prior to circulation
of a final draft to the other implementation partners. The activity manager coordinates
AusAID’s review and assessment of the first draft. The activity manager should also
personally review and assess that draft (see Section 4, ‘The responsibilities of the activity
manager’).

In addition, the activity manager must estimate AusAID’s management costs for the activity
for the coming year. These are all AusAID costs associated with the activity that are not paid
under the delivery agreement. They include the costs of, for example, consultants engaged for

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a technical advisory group (TAG), review missions, monitoring visits, independent audits,
desk studies, AusAID staff travel and minor costs incurred by the post. (None of these
management costs are included in the activity’s annual plan).

These estimated management costs are then added to the budget figure for the annual plan to
yield the estimated total expenses for the activity for the year. An assessment is then made of
whether sufficient funds are likely to be available from the anticipated program allocation for
next year. If the funds are likely to be insufficient, consideration may need to be given to
reducing the planned work and budget of the activity.

The activity manager should also forward the first draft of the annual plan to relevant sector
advisers and officers in the Contract Services Group (or other specialised areas of AusAID)
for assessment. The activity manager may also go to external advisers such as members of
TAGs or quality assurance contractors (where these are in place) for professional advice.

Based on the activity manager’s own assessment and other advice received, the activity
manager may require the delivery organisation to provide additional information or make
modifications to the draft.

When AusAID is satisfied with the draft, the document becomes the final draft of the annual
plan and is ready for joint review and consideration by the implementation partners. The
delivery organisation circulates the final draft to the members of the JMC.

3.3 Agreement by the implementation partners

The basic functions of the JMC – sometimes called the ‘project coordinating committee’ – are
to monitor and assess progress in activity implementation and to review and set future
directions for the activity. Because of these functions, consideration of the draft annual plan is
a key task of the committee.

However, any JMC member may seek informal discussions prior to the meeting on key issues
that arise in the draft annual plan. If a major issue arises in activity implementation, it is
common for there to be informal consultations and dialogue prior to considering the issue at
the meeting.

The JMC meeting may be the end point of an extended process of discussion and consultation
between the partners. Sometimes, final agreement between the members is not reached at the
meeting. If this is the case, it can be agreed that the annual plan be endorsed by a letter from
the partner government after the outstanding issues are resolved.

AusAID representatives are not permitted to agree to any annual plan (either at the
JMC meeting or in informal discussions) that would increase AusAID’s total planned

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expenses for an activity, without prior written approval of that increase in expenditure
from the relevant AusAID FMA 9 delegate.

In addition, no final AusAID agreement may be given to the proposed total annual
budget figure for the activity until
ƒ the Australian Government Budget has been announced, and
ƒ the financial manager on the program desk in Canberra has confirmed that the program
allocation is sufficient to allow approval of the proposed total annual budget for the
activity.

If the annual plan endorsed by the JMC involves significant changes to the scope of the
activity, the activity manager may need to

ƒ manage the preparation of a corresponding variation to the delivery agreement in

collaboration with the Contract Services Group prior to implementation of the changes

ƒ prepare and agree with the partner government any necessary changes to the activity-
specific MOU, including any change to resource schedules and commitments

ƒ document any agreed changes in the appropriate activity file, and

ƒ arrange the preparation of a new SMT report.

3.4 Final approval of the annual plan

Arrangements for giving final approval of an annual plan may vary for different types of
delivery agreement – either a commercial contract or one of the other forms of agreement.

Under a commercial contract, AusAID must give final approval of the annual plan in writing
to the contractor. This authorises the contractor to implement the annual plan.

The written approval often follows on directly from endorsement of the annual plan by the
JMC. However, sometimes additional steps are required before a contractor can be given
written approval.

In particular, the annual plan must not be approved until there is mutual agreement
between AusAID and the contractor on any amendments to the contract that are required
to implement the endorsed annual plan. Until this agreement is reached, it is not possible to
either approve or implement the endorsed annual plan.

In some countries, the partner government formally approves the annual plan after
endorsement by the JMC. If this is the case, the activity manager must ensure this approval
has been granted before granting AusAID approval of the plan.

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If implementation of the annual plan requires amendment to the activity-specific MOU, the
partner government will need to agree to make such changes prior to final approval of the
annual plan.

3.5 Interim arrangements

If it is likely that AusAID will not give written approval of an annual plan until after the
commencement of the annual plan year, an interim arrangement may need to be made
between AusAID and the delivery organisation. In such cases, the activity manager and the
delivery organisation may be able to reach agreement on arrangements that give the delivery
organisation a basis to undertake programmed work in the first quarter of the financial year.
Such agreements must be in writing.

Any such agreement for work to take place in the first quarter must be fully consistent
with the existing contract. It must not include any work that requires a subsequent
amendment to the contract. The activity manager must consult with the Contract Services
Group before entering such an agreement.

4 The responsibilities of the activity manager

For the first draft of an annual plan, the activity manager must consider the following issues

Counterpart involvement
ƒ check that, for a joint activity, the plan includes the inputs and responsibilities of both the
counterpart agency and the delivery organisation (the activity implementers)

ƒ ensure that progress reporting and the proposed work program covers the work of both
activity implementers

ƒ confirm informally with partner government authorities that they were adequately
consulted by the delivery organisation on both progress to date and next year’s work
program

ƒ confirm informally that the counterpart agency

– is in general agreement with the annual plan’s review of progress to date, and
– has agreed to the proposed annual work program, particularly the counterpart agency’s
actions and inputs

Adequate review of progress

ƒ consider whether the review provides the key types of progress information, including

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– an analysis of progress at the development outcomes level (the primary focus of post
monitoring and very important to partner government authorities)
– information on progress in producing activity outputs and contract deliverables
– information on progress against the previous annual plan
ƒ consider whether the progress reporting is consistent with the information provided to the
post in other progress reporting, particularly any six-month progress reports and SMT
reports

ƒ consider whether the review of progress is consistent with the information previously
passed to the post through general activity monitoring

Consistency with reference documents and budget

ƒ check whether the proposed work program is in accordance with the activity design as
amended by any previously approved changes

ƒ check whether the proposed implementation and resource schedules are in general
accordance with the activity design documentation, as amended by any previously
approved changes

ƒ check that the draft plan meets any special requirements for the annual plan set out in the
delivery agreement

ƒ check that the proposed expenditure for the coming year is within the indicative budget
provided by the program desk in Canberra

ƒ check that the proposed expenditure is consistent with the work program and with the cost
items in the basis of payment of the delivery agreement

Proposed changes
ƒ make judgments as to whether any changes proposed to the activity design or
implementation approach are justified (perhaps based on professional advice from
AusAID advisers or other experts)

ƒ clarify details of any variations to the delivery agreement that are required as a result of
changes introduced by the annual plan

ƒ make judgments as to whether any proposals to change the activity-specific MOU and/or
contract are justified (perhaps based on professional advice from the Contract Services
Group or other experts), and

Performance information
ƒ check that an adequate SMT corporate report is attached to the Annual Plan

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In reviewing the draft annual plan, the activity manager will normally seek expert advice by
forwarding it to

ƒ an AusAID sector adviser in Canberra, for overall professional assessment and advice on
activity progress and the work program (and any proposed changes to the activity design
or implementation approach)

ƒ the Contract Services Group for advice on any issues that will require a change to the
contract, and/or

ƒ an existing TAG or quality assurance contractor with knowledge of the activity for advice.

When a final annual plan is in place, the activity manager should enter the financial estimates
into Aidworks.

5 Annual plan format and content

The level of detail in an annual plan varies according to the activity. The delivery agreement
will record what the delivery organisation is obliged to do in preparing an annual plan. It will
often also outline the required content and structure of the annual plan.

The annual plan must discuss the activity using the same terms (eg components and outputs)
as in the main activity reference documents: the activity design documentation, the activity-
specific MOU and the contract or other delivery agreement. The annual plan should also use
the same resource and cost categories as these other main documents. However, an annual
plan is intended to be a stand-alone, self-explanatory document that describes and justifies a
year of work implementing the activity.

For a major activity, it would be expected to include a discussion of the following matters.

Introduction

To place the annual plan in context, a concise introduction should briefly describe
ƒ the main reference documents
ƒ the major implementing agencies
ƒ the preparation of the annual plan (who was consulted and what input they had).

Activity description

The progress to date must be reviewed in perspective. Thus, it is necessary to provide an

outline of the activity. This should be concise, and briefly include
ƒ purpose and goal
ƒ component description

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ƒ planned outputs
ƒ strategy for implementation
ƒ risk management
ƒ monitoring
ƒ sustainability.

Review of progress and implementation approach

This section provides an opportunity for the delivery organisation and the counterpart agency to

ƒ report progress to date in achieving activity objectives for each component (with reference
to performance indicators) and for the activity as a whole

ƒ report any significant problems or changed circumstances experienced during the past year
ƒ assess the level of risk these problems present to the achievement of activity objectives,
particularly the higher level objectives of the activity, and

ƒ propose changes to the activity design or implementation approach necessary to overcome

any difficulties (or maximise benefits) in the coming year and justify these by reference to
the work and lessons of the previous year.

The annual plan is also expected to contain reviews of the risk, sustainability and monitoring
strategies. Each will require a separate short section. In particular, the delivery organisation
and the counterpart agency should review and, if necessary, update

ƒ the activity risk analysis, the risk matrix and the risk management plan
ƒ the sustainability analysis and the sustainability strategy, and
ƒ the monitoring plan.

In some cases, some of these topics may need a lengthy discussion. This longer material can
be placed in an annex and summarised in this section of the plan. Where necessary this
section should also be supported by change frames. Change frames would usually be
presented in annexes. (An indication of the type of information included in a design change
frame is in Table A1 of Annex A to this guideline).

Implementation strategy and work program for next financial year

The main topics of this section are usually

ƒ Strategy – This outlines the implementation team’s strategy for achieving programmed
outputs and objectives in the coming year

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ƒ Work program and benefits – This describes

– the work that will be undertaken in the various components and outputs of the activity,
and the contributions of both the delivery organisation and the counterpart agency to
this work
– the outcomes that are expected from each activity component (or from the activity as a
whole), and
– the expected developmental benefits, including contributions to the purpose and goal of
the activity, and progress towards planned long-term impacts

ƒ Implementation and resource schedules – The proposed work program must be supported
by implementation and resource schedules (cross-referenced to the schedules in the activity
design documentation). (Indications of the structure and the types of information to include
in an implementation and resource schedule in an annual plan are included in Annex B to
this guideline), and

ƒ Confirmation of partner government inputs – The annual plan should include a

statement by the counterpart agency confirming that the partner government will provide
the resources and undertake the work for which it is responsible. These counterpart inputs
must be identified in the implementation and resource schedules.

Expenditure

This section provides an overview of estimated expenditure by Australia and the contribution
by the partner government for the year. Summary and detailed expenditure tables are included
as annexes to the annual plan.

Annexes to the annual plan

There are five standard annexes to an annual plan. These are

ƒ change frame(s)
ƒ the summary of expenditure by government and by component
ƒ the summary of expenditure by government and by cost category
ƒ the detailed cost schedule for activity components, and
ƒ an SMT corporate report (covering benefits and overall rating).

Annex A indicates the structure and the types of information for the first four annexes.
Information on the Simplified Monitoring Toolbox (SMT) is available through the ‘Subject’
button of the AusAID intranet main page, or on AusAID’s internet site by searching for
‘SMT’.

Proposed changes to the activity design are recorded in a design change frame. This links the
activity documentation and the annual plan. It includes a justification for each change and the
implications for overall activity cashflow.

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Separate change frames are also required for proposed changes to the delivery agreement or to
the activity-specific MOU.

In addition to the standard expenditure tables, an alternative way to present the costs for the
Australian contribution is to present them in the same structure as the basis of payments. For
example, if the basis of payments consists of milestones, regular progress payments and
reimbursements for procurement, training or other costs, then the annual plan could present
the Australian costs in a table with the same format. The table would show the months in
which

ƒ milestones are expected to be achieved

ƒ progress payments are due, and
ƒ procurement, training and/or other reimbursable costs will be incurred.

Activity managers may find this format useful in undertaking their financial management
responsibilities. The activity manager should notify the delivery organisation in advance if
they would prefer cost information in this form.

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A Indicative annexes to an annual plan

Table A1 Design change frame

Activity documentation Design Change to design Justification Impact on budget Changes Decision
reference

Design Proposed Positive Negative

This column refers to the State what the State the proposed Provide Give Give budget Record value Record value Record decision
reference in the activity position/situation is change justification for the ACTIVITY figure for of positive of negative when available
documentation. It can be in the activity proposed change DOCUMENT proposed change change from AusAID
a paragraph reference documentation ATION change
and/or code reference in budget figure
the logframe matrix or in
the implementation or
cost schedules.

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Table A2 Summary of expenditure, by government and by component

Code a Component title Year 1 b Total Recurrent cost

Jul Aug Sep … Apr May Jun

Government of Australia
1
2
3
Total

Partner government
1
2
3
Total

Annual total
a Code of component in the ACTIVITY DOCUMENTATION.. b Australian financial year is shown in this example. All months should be shown.

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Table A3 Summary of expenditure, by government and by cost category

Code a Category costs of each Year 1 b Total Recurrent cost
government
Jul Aug Sep … Apr May Jun

Government of Australia
P Personnel
E Procurement
T Training
O Other
Total

Partner government
P Personnel
E Procurement
T Training
O Other
Total

Annual total
a Code of category used in the resources schedule in the ACTIVITY DOCUMENTATION. b Australian financial year is shown in this example. All months should be shown.

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Table A4 Cost schedule

Code a Narrative summary b Unit Cost note c Qty Year 1 Total Recurrent cost
Jul Aug Sep … Apr May Jun

Component 1
Outputs
1.1
1.2
Personnel
P1
Total cost – personnel
Procurement
E1
Total cost – procurement
Training
T1
Total cost – training
Other
O1
Total cost – other

Total cost of component 1

a Codes from the implementation, resource and cost schedules in the ACTIVITY DOCUMENTATION. b As in the ACTIVITY DOCUMENTATION cost schedule. c Cross reference to the cost note in the
ACTIVITY DOCUMENTATION cost assumptions schedule.
Note: Only the outline of one component is shown in this table and not all months are shown.

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B Indicative implementation and resource schedule for an annual plan

Guidance on the compilation of an implementation and resource schedule can be found in AusGuideline 3.8 Preparing activity schedules. Depending
on the complexity of the activity and the level of detail, it may be preferable to present separate implementation and resource schedules and/or present
separate schedules for the Australian and partner government contributions.

Table B1 Implementation and resource schedule

Category/code Description Unit Qty Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

Component 1

Output 1.1
Tasks
1.1.1
1.1.2
1.1.3
Resources
Personnel
P1.1.1
P1.1.2
P1.1.3
Procurement
E1.1.1
E1.1.1
E1.1.2
Partner government
P1.1.1
E1.1.1
(Continued on next page)

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Table B1 Implementation and resource schedule (continued)

Category/code Description Unit Qty Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

Component 1 (continued)

Output 1.2
Tasks
1.2.1
1.2.2
1.2.3
1.2.4
Resources
Personnel
P1.2.2
Partner government
P1.2.2

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Shortened forms

FMA 9 Financial Management and Accountability Act, Regulation 9

JMC joint management committee

logframe logical framework matrix

MOU memorandum of understanding

SMT simplified monitoring toolbox

TAG technical advisory group

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