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Report of the Task Force on Improving Project Quality : II. Key Variables Affecting Project Quality
E. Institutional Capacity Assessments
29. Specific institutional assessments, particularly with respect to project
implementation capacity, must be an important and intrinsic aspect of any feasibility study
and an essential basis for establishing an effective institutional framework for project
implementation. However, Bank projects are sometimes based on optimistic scenarios
regarding the capacities of implementing institutions. Such capacities are overestimated in
terms of management capabilities, staff and budget availability, technology absorption, and
the capacity and willingness of government implementing agencies to collaborate with each
other and with the private sector, NGOs and beneficiaries. Usually, the result of such an
overestimation is a less-than-successful project.
30. The thoroughness of Bank institutional assessments is sometimes
compromised by the pressure of the approval culture and by inadequate resources. The
expertise required to undertake such assessments professionally and effectively is relatively
scarce, both within the Bank and among consulting firms. The assessments are often
undertaken as an addendum to the feasibility study or loan fact-finding rather than being a
key determinant of project design. Given the approval culture, there is sometimes a
tendency to shortcut such assessments and use the scarce resources for other processing
activities. These assessments should be an essential component of the PPTA.
Box 1 – Main Features of Capacity Building In DMCs
- Government Capacity for Policy Analysis, Formulation and Management. More than
any other factor, it is domestic economic and social policies that are responsible for
accelerating or constraining the development process of a country. Critical policies range
from those affecting monetary and fiscal management, exchange rates and external debt
to population and pollution control and the protection of the country's natural resources.
Governments have learned that "good" projects are unlikely in a "poor" policy
environment. Thus, if project investments are to have sustainable impact, the Bank must
equally focus on the strengthening of capacities for policy analysis, formulation and
management within the recipient country.
- Public Sector Management. A strong policy framework must be supported by sound
and efficient public sector management. The Bank must encourage governments to shed
roles and functions that can be fulfilled by the private and nongovernment sectors with
greater efficiency and effectiveness. On the other hand, the Bank should assist in the
reform and strengthening of public sector management, particularly in its functions of the
establishment and maintenance of public infrastructure, the delivery of public services,
the mobilization and management of domestic resources, and the creation and
enforcement of an appropriate legal framework. Government capacity to fulfill these
administrative and management functions efficiently and effectively influences in large
measure the development process.
- Participation. Some of the faster growing economies of the Asia and Pacific region have
demonstrated the value of private sector participation in socioeconomic development.
This is now being extended to the involvement of voluntary nongovernment and peoples'
organizations as well. It is a recognition of the fact that government's resources and
capacities are limited; that some functions are best done by the private and
nongovernment sector; and that beyond the values of efficiency and sustainability,
participation is a value in itself and enriches the development process of a country. Thus,
participation has come to be accepted as a valid capacity-building objective by both
governments and aid agencies.
| 31. A related issue is the need to approach capacity building in the DMCs on a
systematic and disciplined basis (see Box 1 above). This can be done through the use of advisory
technical assistance (ADTA) to finance formal capacity building programs in selected DMCs,
by the introduction of experimental and pilot projects into the Bank's program, and through
the use of process-oriented approaches (see Box 2) in some cases to build and strengthen
institutional capacity .The Bank has, in the form of its ADT A facility, a potentially powerful
instrument to assist institutional capacity building. Such TAs are being used increasingly as
precursors to project approval, to prepare and strengthen the concerned agency/ies for
implementation responsibilities; but this potential remains underutilized. Experimental and
pilot projects can be similarly used as a learning-by-doing strategy to build capacity with
minimal risks. Adopting the process-oriented approach will be more difficult and challenging,
particularly in view of the institutional exigencies of both governments and the Bank for clear
accountability on budgetary allocations, schedules of inputs and outputs, and the timely
delivery of tangible benefits to justify the investment.
Box 2 – Process Projects
The Bank is committed to the gradual adoption of process projects, or elements of
such projects, in certain situations: particularly to address cross cutting-issues such as
poverty, the status of women and environmental rehabilitation. Some of the more significant
reasons and objectives behind this decision are the following:
- to build local, self-reliant and self-sustaining capacities;
- to achieve a better match among project designs, beneficiary needs and the
capacities of executing agencies;
- to help achieve more effective ownership of the project on the part of government
implementing agencies and the beneficiaries; and
- to enhance the prospects of post-project sustainability.
The features of process projects include (i) being generally experimental and pilot in
nature, (ii) emphasizing an action learning process and substantial beneficiary participation,
and (iii) focusing primarily on institution building. Thus, the project becomes the means and
occasion for acquiring learning and transferring capacity. Process projects require very
different approaches to their design and implementation. Project design is generally open-ended,
with only goals and purposes specified. Implementation processes are often iterative
and therefore require extensive flexibility in schedules, budget categories and staffing. By its
very nature and purpose, the process approach is suitable primarily for projects in the
agriculture, natural resources and social sectors.
While the Bank's commitment to process projects is appropriate in the context of the
newly emphasized strategic objectives of poverty reduction, women in development (WID)
and environment rehabilitation, the effective adoption of such process approaches will
require substantial creativity, innovation and reorientation of current Bank systems.
Process projects may require more flexibility in the application of Bank systems and
procedures. More experience with these projects is necessary before it is decided to expand
their application.
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