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Report of the Task Force on Improving Project Quality : V. Implications and Monitoring Arrangements
C. Budgetary Implications and Trade-Offs128. The agenda proposed by the T ask Force to improve and sustain the quality of Bank operations will have significant budget resource implications. Improved project quality will depend partly on enhanced staff quality, but there will also be budgetary implications relating to more and wider staff inputs at the project inception stages; more thorough, direct and explicit consideration of lessons learned from completed and ongoing related projects; increased use of the more staff-intensive process-oriented approach to projects; intensified and more continuous staff involvement in project administration; increased staff training and development; expanded and intensified frequency, composition and duration of mission travel at all stages of the project cycle; and strengthening and better utilization of the ROs. 129. Comprehensive implementation of the Task Force's recommendations will call for significant adjustments and increments to the Budget. It will also call for managers to be given authority to make trade-off decisions among allocated line items, to encourage them to become more efficient, effective and results-oriented. While redirection of existing budgetary resources and more responsive budget planning and utilization will be necessary, growth in the Budget — as appropriate — will need to be considered carefully. 130. The 1994 Budget, recently approved by the Board, was formulated without the availability of the Task Force's report. To the extent possible, therefore, efforts should be made during 1994 to utilize the approved provisions to support the implementation of the Task Force's recommendations. More substantially, the 1995-1997 Medium-Term Work Program and Budget Framework paper to be presented to the Board in the third quarter of 1994, and the 1995 Budget, should aim to capture the budgetary implications of the Task Force's recommendations. 131. It is also considered that multiyear programming and budgeting (with indicative annual milestones) could provide a framework for the Bank to move away from the approval culture, which is characterized by an undue emphasis on obtaining loan approvals and which results in an annual "bunching" problem for the Bank's Board of Directors. The translation of this concept into practical and meaningful performance measurement and accountability will, however, require further study prior to implementation. 132. The implementation of the Task Force's recommendations on better project preparation will result in lengthening project processing schedules. At the early stage, this could mean a reduction in the number of projects approved in a particular year. However, if the rolling three-year IPF recommended is also implemented, the slippages in project approvals will be carried over to the subsequent periods within the three-year time frame. In particular, if it is decided to implement these recommendations immediately, there could be some decline in the level of loan approvals in 1994. It will be necessary to explain to the DMCs the implications of implementing the recommendations. 133. At this stage, it is difficult to estimate fully the resource requirements stemming from the recommendations of the Task Force. However, there will be substantial costs in making the transition from the present situation to the preferred state if all the recommendations are fully implemented. In this exercise, it will be necessary to compare the costs with the expected improvements and to assess the affordability of the latter. First, organizational improvements and reforms that will likely result from the work of the Steering Committee may release resources that will then be available for deployment. Higher productivity is also expected from improvements in business practices in the future. To the extent that excess resources can thus be realized, they can be utilized for improving project quality .If the resource requirements of improving project quality are in excess of this potential, two possible alternatives remain: either additional resources should be mobilized or the volume of activity should be scaled back. The Task Force does not prefer the second alternative, since it would mean a diminished involvement of the Bank in the Region's socioeconomic development at a time when the Bank has been called upon to playa more proactive role in it. This whole area requires detailed examination and ultimate decision by Management and the Board.
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