PART 1: WINDASI APPLICATION

Introduction
Organization of the Users' Manual
Installation
1. Overview of the Software
2. Inserting Project Data
3. Editing and Printing Data
4. Calculations Carried out by WinDASI
5. Project Data Management

Introduction

WinDASI is a new upgraded version of the Project Data and Simulation (DASI) program, computer software developed in the 1980s by FAO. DASI was conceived as a tool to facilitate financial and economic analyses of agricultural investment projects, and in particular, as a training tool for use in courses organized by FAO for project analysts.

The new WinDASI, developed by FAO in cooperation with the Institut Agronomique Méditerranéen (IAM) of Montpellier, maintains the main characteristics of the original DASI program while incorporating the technical facilities offered by the WINDOWS environment, particularly for data entry, which was rather tedious in the DOS environment.

The program is designed to perform most of the calculations required in project analysis. It computes:

· produced and consumed commodities in volume by period at various levels of analysis, such as farm, project component and whole-project

· flows of costs and benefits in value

· incremental flows of costs and benefits in the with-project scenario with respect to the without-project scenario

· present values and net present values

· internal rates of return

· switching values

· cost benefit ratios

· sensitivity tests.

Organization of the Users' Manual

The manual has three main parts:

· the first part explains how to install the program on a PC and how to operate it. It then explains how the data should be organised and entered into the computer, and how to obtain various results;

· the second part illustrates how calculations are carried out by the program; and

· the third part illustrates how to use WinDASI to analyse a real project, through a number of exercises and a project case study.

Installation

You may run WinDASI under Windows 3.11, Windows95 and subsequent versions.

The WinDASI program comes either on CD or on 5 diskettes¹. If you have the CD version, follow the instructions below:

1. Insert the CD. Open Windows Explorer and click on the corresponding CD drive.

There you will see 5 folders, named, Disk 1, Disk 2, Disk 3, Exedisk1 and ExeDisk 2.

2. Open the folder Disk 1 by double clicking on it. Then double click on Set-up and follow the instructions prompted on the screen.

3. Open the folder Disk 3 and double click on Install and follow the instructions prompted on the screen.

This will install the WinDASI program.

4. Drag and drop the WinDASI icon on the desktop.

5. In the WinDASI directory (generated by the Set-up and Install programs), create a new folder calling it Exercise.

6. Copy into this Exercise folder the two folders called Exedisk 1 and Exedisk 2.

¹ The CD is attached to the manual, while the set of 5 diskettes can be obtained from:

Lorenzo Bellù, Agricultural Policy Support Service (TCAS), Policy Assistance Division, Food and Agriculture Organization, Via delle Terme di Caracalla, 00100 Roma, Italia. Fax: +(39) 06 570551 07 E-mail: [email protected].

1. Insert the first diskette, WinDASI 1. Open File Manager (if you are using Windows 3.11) or open Start (if you are using later versions of Windows) and click Run.

Type: A:\SETUP in the command line and then click OK. (If the diskette is a drive other than A:\, write in the appropriate drive letter).

2. Upon request, insert the second diskette: WinDASI 2.

3. Insert the third diskette, WinDASI 3. Open File Manager (if you are using Windows 3.1) or open Start (if you are using later versions of Windows) and click Run.

Type: A:\INSTALL in the command line and then click OK. (If the diskette is a drive other than A:\, write in the appropriate drive letter).

4. Drag and drop the WinDASI icon on the desktop.

5. Open the File Manager (if you are using Windows 3.11) or Windows Explorer (if you are using later versions of Windows) and create a new sub-directory under the WinDASI directory and call it Exercise.

6. Copy into this directory the fourth and fifth diskettes called "Exercise". See Point 6 for CD instruction.

² If using Windows 3.11 open Program Manager and then click Start Þ Programs Þ WinDASI.

To remove (uninstall) WinDASI from your computer:

· delete the WinDASI directory and its sub-directories: Data and Exercises;

· delete the IDAPI directory; and

· delete the WinDASI icon by clicking on it with the right-hand mouse button and selecting Delete.

1. Overview of the Software

1.1 The structure of the Data
1.2 The "Without Project" Facility of WinDASI

1.1 The structure of the Data

(i) Commodities
(ii) Activities
(iii) Investments
(iv) Plans
(v) Zones
(vi) Project

WinDASI allows you to perform financial and economic analyses of agricultural projects.

To make a model of a project in WinDASI, the user has to start by defining the basic elements of the project (e.g. inputs and outputs). Then he/she has to combine them to create more complex project elements (e.g. project activities), that in turn may be combined to build more and more complex elements (e.g. project components, project geographical zones, groups of stakeholders etc). In fact, the WinDASI approach is to go from simple to complex³ element, as illustrated in the following paragraphs.

³ Note that when a project is conceived and formulated, the formulation team usually starts by defining the objectives of the project, then production plans, activities, outputs and inputs, following a path "from general to particular". When making a model of a project with WinDASI this path is reversed; the analyst first inserts data on inputs and outputs, then activities, production plans, until the model of the whole project is obtained.

(i) Commodities

The basic elements in WinDASI are inputs and outputs, which in the WinDASI terminology are called "commodities". For example, in an agricultural project, they may be seeds, hay, fertilisers, wheat, milk etc. In WinDASI each commodity is defined by:

· a code (max 11 characters, e.g. WHEAT, STRAW, SEEDS, MILK, HAY)
· a unit of measure (e.g. TONS, KILOS, LITRES)
· a unit price, that may be constant or variable over the time span of the project.

Commodities are inserted in WinDASI by following the procedures illustrated in Chapter 2.

(ii) Activities

Inputs and outputs (commodities) are basic elements that, appropriately combined, are used to model project activities. For an agricultural project, an activity may be, for example, wheat production. An "activity" is defined by:

· a code (max 11 characters, e.g. WHEAT-PROD, COWS-MILK)

· a unit of measure (e.g. HECTARE, HEAD)

· a set of inputs, each of them specified as a physical quantity per unit of activity, for each year⁴ of the project (e.g.: kilograms of seeds per hectare of wheat production per year; tons of hay per head of cow per year)

⁴ The unit of time is usually the year. However it is up to the user to choose it, i.e semester, quarter, month, etc. There is also the possibility of combyning different units of time in the same project. For example, one may choose to use the year as unit of time for his project and at the same time use monthly water inputs. In this case he will specify twelve water inputs (water1, water2,....) one for each month, rather than a single water input item for the whole year.

· a set of outputs, specified as above.

⁵ Note that the same commodity (let's say, hay) may enter two or more different activities (e.g., milk production, goat breeding and so on) without any need to duplicate the insertion of the commodity in WinDASI.

(iii) Investments

Besides inputs and outputs, other basic elements are "investments". These are a specific category of project costs. For an agricultural project an investment could be a tractor. An investment, in WinDASI is essentially defined by:

· a code (max 11 characters, e.g. TRACTOR, IRRIGATION)
· a unit price (that may vary over the project span)
· the duration of the economic life, expressed in number of years
· a set of other parameters (e.g. maintenance costs, residual value etc.)

Investments are inserted in WinDASI by following the procedures illustrated in Chapter 2.

(iv) Plans

Basic elements such as commodities and investments and more complex elements such as activities can be combined to create plans. For an agricultural project, a plan may be a farm model.

In WinDASI a plan is defined as:

· a code (max 11 characters, e.g. UPLAND-FARM)

· a unit of measure (e.g. one farm)

· a set of activities, each of them specified as quantity of activity units per period, for each period of the project (e.g.: number of hectares of wheat, number of cows)

· a set of commodities, specified as physical units per each period of the project span.

· a set of investments, defined as physical units of capital goods purchased in each period of the project span.

⁶ Note that the same activity (e.g. wheat production) or the same investment (e.g. tractor) may enter two or more different plans (e.g. upland farm and lowland farm) without any need to duplicate the insertion of the activity or the investment in WinDASI.

(v) Zones

Following the same logic illustrated to create plans; plans and investments can be combined to create more complex aggregates, called "zones". For an agricultural project, a zone may be, for example, a geographical zone of the project.

In WinDASI a zone is defined as:

· a code (max 11 characters, e.g. UPLAND-AREA)

· a unit of measure (e.g. one zone)

· a set of plans, each of them specified as a quantity of plans per period, for each period of the project (e.g.: number of upland farms)

· a set of investments, defined as number of investment goods required in each period of the project span

(vi) Project

The overall project results from a combination of zones and investments.

In WinDASI, a project is defined by:

· a code (max 11 characters, e.g. IMPROVED-AGRI)

· the project length (e.g. in years)

· a set of zones, each of them specified as a quantity of zones per period, for each period of the project (e.g. number upland areas)

· a set of investments, defined as number of investment goods required in each period of the project span

The data set of the project is organised according to the schematic layout shown in Figure 1.

Figure 1: Hierarchy of the WinDASI components

1.2 The "Without Project" Facility of WinDASI

To analyse the viability of a project, the analyst usually looks at the incremental Net Benefits of the project, calculated with respect to the "without project situation" (WoP), i.e. the situation most likely to occur if the project is not implemented.

Whenever the WoP is assumed to be constant for all the estimated time span of the project, the project analyst may use the WoP column, present in every data entry window, for inserting data like commodities, activities, plans etc. WinDASI will automatically provide the incremental Net Benefits and related indicators once the calculations are performed.

In case the WoP situation cannot be assumed constant, the WoP facility of WinDASI cannot be used. Nevertheless, WinDASI allows easy calculations of incremental benefits by modelling the WoP situation year by year.

2. Inserting Project Data

2.1 The main toolbar
2.2 Observations
2.3 Definitions of the units used in the project
2.4 Data Entry

2.1 The main toolbar

The Main Toolbar of the WinDASI software is shown in Figure 2. It provides access to the most common operations that you will need.

Firstly, through the Main Toolbar Menu, you must select the language in which you want to work (French or English), by selecting: File, Language.

Secondly, if you have a data set related to a project, you must open the related data file by selecting: File, Open. You will notice that the WinDASI data files have the extension .WDS. If you wish to introduce the data of a new project, you must first select File, New; you will then create the various Components (i.e., Commodity, Investment, Activity, Plan, Zone or Project) and finally, you will execute the relevant calculations.

Figure 2: The Main Toolbar

2.2 Observations

All icons that enable you to carry out operations are equipped with textual aid. When you point to an icon on a button, its name and function are displayed as a Tool Tip, and the same information is also displayed in the Status Bar, located at the bottom of the main window.

All operations may be executed either by using your mouse or by using the keyboard directly.

2.3 Definitions of the units used in the project

Before inserting commodities, investments, activities, etc, it is advisable to define the most common units in which consumed or produced commodities are measured.

To insert these, click on the Preferences icon (6^th from the right in the Main Toolbar). A dialogue box appears, allowing you to enter the units commonly used (see Figure 3).

Figure 3: The preferences window

2.4 Data Entry

2.4.1 The Components window
2.4.2 Creation of a component

2.4.1 The Components window

The Components window allows you to enter data for a given project. An icon on the Main Toolbar (Figure 4), gives you access to this window at any time. Figure 4 shows the Components window, with the six components within which data for an investment project are organized: Comm. (Commodities); Activities; Invest. (Investments); Plans; Zones; and Projects.

Figure 4: The components window

2.4.2 Creation of a component

As shown in Figure 4, to create a component, highlight the button of the relevant component (Projects, Zones, Plans, Comm., Activities or Invest.) and then click on Create.

A window for data entry is then displayed, allowing the insertion of different parameters relative to each individual component.

(i) Commodities

For Commodities you must insert the name, unit and the price for each year of the project's life, including the prices related to the without-project (WoP) situation. When the price is constant between years, this time series can be easily entered by clicking on the button with the Red Arrow, which then automatically repeats the price for the rest of the time series.

Prices can be entered for both financial and economic analyses. To enter for economic analyses click the Economic prices tab at the bottom of the Commodity window (see Figure 5).

Figure 5: The commodity window

(ii) Investments

In addition to financial and economic prices, supplementary information is necessary for the insertion of investments, including the life duration of the investment - Life (in years); lag of annual maintenance - M.Lag (in years); rate of maintenance - Maintenance; contingency rate - Unexpected cost; and rate of residual value - Residual value (for more information on the meaning of these items, see Part 2, Box 1). These are illustrated in Figure 6.

Figure 6: The investment window

(iii) Activities

Activities are entered through the Activities window. As shown in Figure 7, an activity has a name and a unit in which inputs and outputs of the activity are specified. In general, the unit hectare (symbol: ha) is the most frequently used unit for a crop, because yield and input coefficients are usually expressed on a per hectare basis. However, the user can choose the units he prefers. The inputs (commodities used) appear in the Type column in the window as C and a P indicates the outputs (products).

In order to add a commodity to an activity, click the button in the Activities window.

One very useful feature of the Activities window is the duplication facility. Once you have introduced an activity, you just click the button indicated in Figure 7 to duplicate it and then edit it to adapt the input and output coefficients to another, similar activity.

Figure 7: The activities window

(iv) Plans

Each plan has a name and a unit. It may contain activities, as in Figure 8, and investments and commodities. To select investment or commodity items, click the relevant tab at the bottom of the window.

Figure 8: Activities contained in a plan

For the activities there is a Mode column, where you must indicate whether Normal or Phased calculations are to be applied. The letter N indicates that the Normal mode has been selected, while C indicates that the Phased Mode of calculation has been selected (see Part 2 for an explanation of the differences in the calculations).

In order to add a commodity to an activity; click the button in the Activities window.

As already mentioned, a plan can contain investments (see Figure 9).

Figure 9: An example of a investment in a plan

A plan may contain commodities. The commodities included in the plan in Figure 10 are all costs since they have C in the "Type" column. If you wish to include benefits in a plan, you need to enter a P in the "Type" column.

Figure 10: An example of commodities contained in a plan

(v) Zones

A zone is composed of plans (Figure 11) and investments (Figure 12). It is defined by a name and a unit. The aggregation level of zones coincides with the top level of many projects, as is the case for the NGAMO 3 exercise in Part 3.

Figure 11: An example of a zone containing two plans

The Mode column allows you to specify either Normal mode, N, or Phased Mode, C, for the calculations, as we have already seen under Activities.

Figure 12: An example of a zone containing an investment

(vi) Projects

A project allows you to aggregate Zones and Investments, as shown in Figures 13 and 14.

Figure 13: An example of a project containing two zones

Figure 14: An example of a project containing an investment

3. Editing and Printing Data

3.1 To view a component on the screen
3.2 To edit, modify or remove a component
3.3 Duplication of a commodity or an investment
3.4 Printing data

Once you have entered the project data, you must check it for mistakes, such as data omitted or entered incorrectly, and ensure that the plans, activities, etc., selected are those required.

To this end, the WinDASI program offers a number of facilities.

3.1 To view a component on the screen

From the Components window, click the icon corresponding to the selected component (i.e., commodities, activities, plans, etc.). A list of the types of components will appear. Then double-click on the name of the component you wish to consult, or click the Open to display the window, which allows you to see the data of the component.

3.2 To edit, modify or remove a component

Once the window of the data is displayed, you may modify or suppress a given component by simply carrying out the following steps:

· click on the Edit icon;
· modify the data as required; and then,
· validate the modifications by clicking on the Save button.

In order to add a Commodity to an Activity, an Activity to a Plan, or an Investment to a Plan or to a Zone, click on the button in the respective window.

To suppress a full line of coefficients, you must first highlight the line, and then click on the button.

3.3 Duplication of a commodity or an investment

To duplicate a Commodity, an Investment or an Activity, you simply click on the Duplicate button, and validate it by clicking Save (see Figure 16).

Figure 16: The duplication command

3.4 Printing data

The Print icon is present in all windows, and it is thus possible to print data at any given moment. The printout of a project will contain all the data of the project: Project, Zones, Plans, Activities, Commodities and Investments.

4. Calculations Carried out by WinDASI

4.1 How to carry out a calculation
4.2 The Results window

WinDASI allows you to compute costs, benefits, total inputs and outputs consumed and produced, and project indicators such as Internal Rate of Return (IRR), Benefit/Cost ratio, Switching values and Sensitivity tests.

These calculations can be carried out for each of the project components: Plan, Zone or Project.

4.1 How to carry out a calculation

There are two ways of carrying out a calculation:

· either click on the Calculation button on the Main Toolbar; or
· click on the Calculation button in the window of a Plan, Zone or a Project.

Figure 17: The calculation window

Step 1

Choose the component for which you wish to carry out the calculation: Plan, Zone or Project, by clicking the calculation button.

Step 2

Select the type of calculation you wish to carry out from amongst the list of possible calculations.

Specify, as requested, whether the calculation should be carried out in quantities or in values (see Figure 17), the number of years - Life - over which the calculation should be carried out and indicate whether the results should be printed in thousands, millions, etc., under Conversion. If the Values option is chosen and you wish to have the Net Benefit and the Net Present Value, you need to specify the discount rate at which the values should be actualized (Discount rate; specified as a percentage).

Then click on Next.

Step 3

Give a name and description to the results of the calculation, although a default name is suggested automatically.

Click on Execute.

WinDASI will carry out the requested calculation.

4.2 The Results window

4.2.1 Use of the aggregate feature
4.2.2 Project indicators
4.2.3 Sensitivity test
4.2.4 Comparison

The window showing the results opens automatically after a calculation is complete.

The following buttons appear on the Main Toolbar of the Results window:

· Delete allows you to delete the results.

· Save allows you to save the results.

· Print allows you to print the results.

· Copy allows you to copy the results and insert them into a spreadsheet. This is a very important facility, as will be demonstrated in the exercises.

· Close allows you to exit the Results window.

Figure 18 shows the results of the calculations carried out by WinDASI for the full Project, which has two components: Plans AN-FARM and MEC-FARM, as listed in the small Contents window. The table shows that a discount rate of 12% has been used for the actualization of the costs and benefits, that the figures shown in the table are expressed in millions of monetary units, and the calculations are expressed using economic prices.

In the table in Figure 18, the benefits are shown under the heading Outputs. Costs are separated into two categories. Annual inputs are shown under Inputs and the various investment items, with their related costs, are included under Investments.

As already mentioned, a table of results can easily be imported into a spreadsheet to facilitate further analysis and allow for a better presentation of the results through the use of graphics and tables.

The results shown in the table in Figure 18 can also be further analysed by the WinDASI program by clicking on the buttons Aggregates, Switching Values, Sensitivity or Comparisons.

4.2.1 Use of the aggregate feature

Once the calculation of values of commodities consumed and produced by a given plan has been carried out, it is often useful to define aggregations of specific commodities to group the costs and benefits into larger categories. The aggregation is carried out in value terms and could be done to calculate Total Fertilizer used (aggregations of various types of fertilizers), total value of labour used (aggregation of monthly labour costs), etc. Each aggregation (AG) is a linear combination of the existing inputs and outputs commodities.

Mathematically, we have:

AG = a₁V₁ + a₂V₂ + ... + a_nV_n

Where:

AG	is the Aggregate;
a1, a2, ... an	are the coefficients (positive or negative) by which the variables
V1, V2, ... Vn	are multiplied before the addition; and
V1, V2, ... Vn	are the commodities produced or consumed within a given plan.

Before being able to use the aggregates you need to define them. The Aggregate button is located in the Components window, and it allows you to define an aggregate of commodities or investments. This facility allows you to summarize the items of the benefits and costs by categories.

Commodities or investments may be added to an aggregate by:

1. clicking on Create to create a new aggregate;

2. clicking on to add a new component to the aggregate;

3. calling the commodities or investments windows;

4. selecting the required commodities and inserting the chosen commodity into the aggregate; and

5. clicking the button to delete a component from the aggregate.

The coefficient of the component in the aggregate is initialized at 1. You may modify it if you so wish.

Figure 19: An example of the definition of an aggregate (FERTIL)

Figure 20: Results using the aggregates facility

4.2.2 Project indicators

These can be obtained by clicking on the Switching Value button. WinDASI computes, for each item, the present value of the change due to the project (incremental cost or incremental benefit with respect to the WoP situation) and the Switching value. As shown in Figure 21, the program also computes the Net present value, the internal rate of return (IRR) and the benefit/cost ratio (ben/cost). In order to get meaningful switching values, the user has to group project costs and benefits into categories so that the present value of each category is neither too small nor too large with respect to the total present value.

It is also important to note that in Figure 21 the Net Present Value is negative (equal to -0.62 million) since the values in the previous table were expressed in millions and the discount factor was set to 12%, which is a little larger than the computed internal rate of return (11.72%).

Figure 21: Project indicators

At the bottom of the table in Figure 21, you can see the Copy button, which is used to transfer the project indicators to a spreadsheet.

4.2.3 Sensitivity test

This feature allows you to vary the components of a balance by a given percentage. It is accessible by clicking on the Sensitivity test button. When you click on this button, a window appears where you select the items on which to conduct a sensitivity test, and to insert the percentage. This percentage indicates the increase (or decrease if it is negative) applied to the selected item. For example, if you enter a value of 100, this will cause an increase of 100%; a value of -50 will cause a decrease of 50%.

In Figure 22, a sensitivity test has been carried out to see the change in project indicators if irrigation costs are increased by 10%. To make it is easier to detect the impact of each variable on project results; it is recommended that you carry out sensitivity tests on very few variables (one or two).

Figure 22: The sensitivity test window

4.2.4 Comparison

By clicking on the Comparison button you get a window where the results of with- and without-project situations are summarized.

5. Project Data Management

5.1 Saving project data in a data file and loading project data from a data file
5.2 Quitting WinDASI
5.3 The use of WinDASI in conjunction with a spreadsheet

5.1 Saving project data in a data file and loading project data from a data file

It is possible to save the data of a project in a data file by selecting File from the Main Toolbar, and then selecting Save as and giving a name to the file. The WinDASI data file will be stored with a .WDS extension.

Similarly, you can load a .WDS data file by selecting File from the Main Toolbar, and then selecting the option Open.

This procedure can facilitate the work of project analysts, particularly when they need to analyse the financial and economic viability of different options. They can store different options in separate files, compare them, and then choose those options that are to be retained.

The same procedure can be used for the entry of data for a new project. Since many prices and agricultural activities are similar and need few changes for their adaptation to a new project, it is much easier to save the data file of an old project with the name of the new project and then make the necessary changes, rather than enter all the new data set.

5.2 Quitting WinDASI

The user can leave the program by clicking the Quit button on the Main Toolbar, or by clicking on Quit in the File menu.

5.3 The use of WinDASI in conjunction with a spreadsheet

In general, the results produced by WinDASI are presented in a form designed for project analysts, and so the results are not suitable for direct inclusion in a report, for which purpose tables and graphics have to be specifically designed. For this reason, the user might wish to work further on the results obtained through WinDASI in order to improve their readability and presentation before inclusion in a report.

It is possible to click on the Copy button in the Results Window, whereupon the results are transferred to the clipboard. After opening Excel, you can paste these results from the clipboard to a spreadsheet.