Publications

1. Project Inception

69. Project inception is the transit point from processing to implementation and can have significant impact on the successful initiation of project implementation. It is at this point that the Bank's and the DMC's commitment to successful project administration is most tested. During this early stage, conditions for loan effectiveness need to be complied with; new implementing agency staff need to be appointed and appropriately briefed about the project concept, Bank procedures and implementation arrangements; and consultants are recruited, work plans developed, procurement documents prepared, and contracts tendered and let. Yet it is precisely during this crucial start-up period that Bank staff who have conceptualized the project and carried it through to approval are often transferred to another project preparation assignment. Thus, many Bank-financed projects begin implementation with slippages in schedules.

70. The Task Force considers that, while the PAM should be initiated and drafted during appraisal, it should be finalized and discussed in detail with the implementing agencies by the inception mission. Clear understandings should be arrived at on the respective roles of the implementing agencies, the consultants and the Bank. The Task Force further considers that a project inception mission should be led by the project's appraisal mission chief; he/she should ensure complete understanding on the part of the government of implementation procedures, and should assist the government in getting the project off the ground (see Box 6).

71. The Task Force recommends the following improvements to this stage in the project cycle:

• The PAM must be formalized and serve as the basic reference document for the implementing agencies.

• The PAM should include the logical framework description of the project wherever relevant, supported by adequate explanations of the project concept; work schedules for each key activity; a detailed description of contract packaging and the terms of reference for consultants; and specification of the roles of the government agencies, the beneficiaries, the consultants and the Bank.

• The appraisal mission chief should also be responsible for project inception, and should continue supervising and supporting project implementation for at least one year after loan effectiveness.

2. Project Supervision

72. In terms of resource allocation, project supervision and administration consistently receive less priority than project processing and preparation. In principle, each ongoing project should be reviewed in the field at least twice a year. In fact, the number of project review missions has been falling — from an average of 1.38 missions per project in 1987 to 1.17 in 1992, with average person-days per project review mission falling from 10.45 in 1987 to 7.38 in 1992. Further, the reviews are frequently relatively limited exercises, often consisting of a visit to the implementing agencies to discuss and collect data on financial and physical progress, with only a few days in the field. Inadequate time is often devoted to assisting implementing agencies to analyze and resolve major issues, address deficiencies in quality of implementation and consult with beneficiaries.

73. A more basic issue is the general focus within the Bank on project administration. While issues such as physical progress, costs and loan covenants are indeed important and are therefore monitored closely, inadequate attention is given to monitoring the more substantive aspects of a project such as the achievement of objectives, beneficiary involvement, project agency capacity enhancement and evolving development impact. A major reason for this inappropriate emphasis of project administration within the Bank is that projects are generally not administered by the staff who conceptualized them and who are usually the best informed about their objectives, focus and intended impacts. Another is that constrained budgets do not allow for a larger range of skills to be involved in project review missions. In view of their limited institutional capacity, project implementation in PIDCs is even more challenging (see Box 7).

74. Based on the above, the Task Force has the following recommendations:

• The President should clearly signify the equal importance of project administration and project processing through a formal policy statement.

• Management should become more actively involved in monitoring project administration.

• Country portfolio review missions should be intensified and should be led by a Vice President, a Department Director or the Chief, CPSO as much as possible.

• A one-time spring cleaning of the Bank's portfolio of projects in each country should be undertaken in partnership with the government in conjunction with the implementation of the recommendations of this report.

• Budgetary allocation should be made to allow for two weeks of field time per year for review missions of an ongoing project.

• A full and comprehensive mid-term review should be mounted at least once during implementation, and if required, this should also comprise a reappraisal of the project.

• Departmental work should be rationalized so that professional staff generally handle not more than four projects a year requiring active attention.

• Incentive systems within the Bank should be adopted to offer project administration staff adequate incentives and recognition for their work.

• The Bank should experiment with in-country project advisors, who would be responsible for facilitating day-to-day administration in the field and would report to the Bank regularly.

• Systematic action should be taken to upgrade the skills and expertise of project administration staff in the Bank.

• Implementation review missions should have authority to take decisions in the field except in the case of project reformulation or cancellation.

3. Project Administration Procedures

75. The Bank's guidelines and procedures for disbursement and procurement have evolved over the years and are basically sound. However, they tend to emphasize control rather than effectiveness and efficiency. Also, in the period since the Bank began its operations, many EAs have progressed to a level such that they now need less administrative support from the Bank. In line with the Bank's desire to promote greater ownership by DMCs of their projects, mature EAs should be encouraged to undertake implementation with relatively less involvement by the Bank. At the same time, there are other DMCs and EAs, especially in the PIDCs, that are new and still have weak institutional capacities; these will continue to require assistance from the Bank in project implementation. Hence, there is a need to distinguish between DMCs, and within each DMC, among various agencies, in the application of Bank procedures. Encouraging strong EAs to implement projects with minimal supervision by Bank staff will necessarily involve risks, but these are worth taking if there is a partnership and trust between the Bank and the agencies concerned. In effect, the Task Force considers that a substantive change in corporate culture with respect to project administration is required. This change should be from a predominantly narrow focus on rules and regulations to an emphasis on the broader objective of capacity building, the achievement of project benefits and the introduction of administrative reforms within the country concerned.

76. In 1993, the Bank set up an Interdepartmental Committee for Review of Disbursement Policies and Procedures and Related Procurement Functions. The objective was to streamline loan and TA disbursement and contract administration in order to achieve greater cost effectiveness. The Committee's recommendations were accepted by Management in September 1993. The Task Force considers that project administration will be substantially improved by the implementation of these recommendations.

77. Given the above, the Task Force recommends the following:

• Authority for contract approvals to divisional project managers should be increased.

• Authority for approving minor changes in project scope and implementation arrangements should be delegated to divisional project managers.

• Concerned departments and offices should have the authority to allocate available budgetary resources across line items, and to recruit staff consultants.

• The Bank's business practices relating to project administration should be reviewed and streamlined.

4. Project Administration Units (PAUs)

78. Opinions vary within the Bank on whether there should be a "core group" of staff within a project division assigned solely to project administration and called the "project i administration unit." Some project divisions within the Bank have adopted this structure. In their view the structure has important merits. It allows for the assignment of a Head, PAU, who coordinates project administration for the division as a whole on behalf of the manager and who acts as the focal point for processing all documents received from EAs, thereby ensuring prompt attention to these documents, and timely follow-up action on delays. It also allows for giving r distinct recognition to project administration activities. On the other hand, it encourages the separation of project administration from processing activities such that staff in the PAU are not usually Involved In project processing and vice versa. This Implication of the PAU structure has some important demerits. As mentioned earlier, the continuity of staff from project formulation into implementation is critical. It is also important that Bank staff be generally involved in both sets of activities so that experience and learning acquired in one area can be usefully applied to the other.

79. Given the above, the Task Force recommends the following:

• The Bank should adopt the PAU structure. While the head of a PAU should remain stable in terms of position and responsibilities, there should be greater flexibility for other staff to be involved in both project processing and administration.

• The position of Head, PAU should be formalized, at an appropriate level.

5. Regional/Resident Offices

80. The Bank has established ROs in six DMCs. The primary rationale for setting up these ROs was, in most cases, to facilitate the Bank's activities in the DMC concerned in a cost-effective manner, as well as to improve project quality. In theory, the ROs could contribute to every stage of the project cycle beginning with ESW and on into post-evaluation; in practice, their comparative advantage is particularly in facilitating and/or supporting project administration.

81. The Bank's experience with ROs has been uniformly positive to date, although their potential for facilitating project implementation has not been fully realized. Some are more directly involved in project administration than others. However, it is expected that in time ROs will find it more productive and appropriate to focus primarily on project administration. A key to using the ROs more productively is the selection of the right projects to delegate to them. In the view of the Task Force, two criteria should be applied in this regard: (i) projects that call for close and frequent contact with the government and its implementing agencies, and (ii) projects that require considerable coordination of activities among a number of agencies. In some cases it may be worthwhile considering delegating parts of a project for administration by the RO, e.g., follow-up on the policy agenda of a program loan.

82. The Task Force recommends as follows:

• The Bank should delegate more responsibility, accountability and authority to the ROs, particularly for project administration.

• A program of assigning more projects to the ROs should be introduced.

• The staffing of the ROs should be reviewed, and options for strengthening these offices should be considered, including the engagement of more national staff.