BILATERAL PROJECT AND MULTILATERAL PROJECT AND THEIR DIFFERENCES

BILATERAL PROJECT AND MULTILATERAL PROJECT

There was frequent searches upon this topic by different students pursuing the course of project management of different universities of the world.

So, it made me interested to help such students under this topic.

As we know that a project is a set of one-time set of activities. They are designed to create a unique product within the constraints of time, cost and quality. Among the various types of projects which are categorized on the basis of funding source of projects, we can find out that projects can be indigenous project and foreign project.

 Among the various types of foreign project classified on the basis of funding source of project, bilateral projects and multilateral projects can be found under the same roof.

BILATERAL PROJECT:

Simply speaking, all the projects which are carried on under the agreement of two countries are called bilateral projects. It involves both technology as well as capital. These projects are mostly funded through the financial resources of the donor. They could be in the form of grants. These grants may be in cash or in kind. Such grants do not involves repayment obligation as well as interest payment obligations. Therefore, these projects are said to be the wheels of development.

However, people working under this projects are found to misuse the resources, increase corruption and creates the uncertainty. Some of the agencies funding these projects are:

• Japan International Co-operation Agency (JICA)
• Department for International Development (DFID)
• German Agency of Technical Co-operation (GTZ)
• Danish International Development Agency (DANIDA)
• European Union (EU) and so on

MULTILATERAL PROJECT:

All the projects which involves the funding of projects through the resources directed by the donors through multilateral agencies are called multilateral projects. These projects funding are considered as a concessional loan. These loans are to be paid back with interest as per the terms and condition agreed thereto.

These projects are mega and major projects. Due to its large size and structure, these project have potential force to increase the economic growth of the developing countries. Some of the agencies funding these projects are:

• World Bank
• Asian Development Bank
• World Health Organization (WHO)
• International Finance Corporation (IFC)
• United Nation Development Program (UNDP) and so on.

However, to make the concept easy to understand, I have made a sincere effort by 
differentiating between the bilateral project and multilateral projects.

BILATERAL PROJECT Vs MULTILATERAL PROJECT

In order to understand the concept more easily, i have made both the terms comparable. This comparative study will make your vision more clear regarding this topic. The basic differences between Labor Intensive Bilateral and Multilateral Project are as follows:

1. Bilateral project is the result of an agreement made between two friendly countries. Whereas, multilateral project is the result of an agreement made between multilateral agency and recipient country.
2. In bilateral project grants are given. Whereas, in multilateral project loans are given.
3. Bilateral projects are small in size. Whereas,  multilateral projects are large in size.
4. In bilateral project grants do not involve repayment obligation and interest payments. But, in multilateral project the loan involves repayment obligation and interest payment.
5. Bilateral projects are not implemented through global bidding. Whereas, multilateral projects are implemented through global bidding.
6. For bilateral projects, grants are given. So, there is no debt servicing burden to the country. Whereas, for multilateral projects loan is given. So, there is debt servicing burden to the country.
7. In bilateral project we can find that resources are not properly utilized because there is no system of payback of grant. Whereas, in multilateral projects the resources tends to be highly utilized because the payback loan is necessary.
8. Bilateral projects are donors grant based. So there is very few procedural requirements to be complied with. Whereas, multilateral projects are loan based. So there are complex and cumbersome procedural requirements to be complied with.
9. Donors may themselves execute bilateral projects. Whereas, multilateral agencies cannot execute multilateral projects themselves.
10. Mostly developing and underdeveloped countries are the beneficiaries or recipient of bilateral projects. Whereas, all the developed, underdeveloped and developing countries are the beneficiaries or recipient of multilateral projects.
11. Bilateral projects are probably uncertain as the withdrawal of the aid is possible at any time. Whereas, in multilateral projects withdrawal of the aid is possible only after the expiration of specific period with interest thereto.