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Annual Report 2003 : Maximizing Institutional Effectiveness

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Streamlining Organizational and Business Processes

Within the context of the first Medium-Term Strategy 2001–2005 of the Long-Term Strategic Framework 2001–2015, ADB implemented major structural and systemic changes aimed at maximizing its effectiveness as a development partner. ADB’s inherent advantage—that it is physically close to its developing member countries (DMCs)—has been enhanced through an expanded regional and resident mission network and the country-focused structure of the organization. New business processes support this structure with greater emphasis on delegating responsibilities and on strengthening team-based approaches. To maximize effectiveness, ADB aims to ensure that (i) programs and projects are of high quality from their inception, (ii) people and the environment are safe from adverse impacts of proposed operations, (iii) standards for portfolio performance are high, and (iv) results and impacts are objectively measured and lessons learned are properly gauged and fed back into the development process.

Quality assurance mechanisms must meet the highest standards. ADB continued to streamline quality review to enhance the value added by sector and thematic committee contributions to important crosscutting areas such as gender, governance, and social development. These efforts aim to improve the quality of analytical and diagnostic work, policy dialogue, and project and program design. In addition, ADB continued to emphasize and to improve economic analysis in policy formulation and in program and project design.

All programs and projects complied with the institution’s rigorous environmental and social safeguards. Legal services reinforced the quality of ADB operations by focusing on due diligence, structuring, documentation, and negotiation of ADB’s public and private sector lending, guarantee, and equity operations. Policy compliance requirements were scrutinized during project preparation and administration and were reflected in the transaction documents.

While DMCs are primarily responsible for implementing interventions, ADB was actively engaged as a supportive partner. During implementation, monitoring compliance with safeguards continued particularly at critical junctures. Portfolio management was increasingly shared between headquarters and the regional offices and resident missions, allowing for intensified in-country cooperation with stakeholders and improved monitoring of operations, both key elements for successful implementation.

ADB enhanced its monitoring systems to track and analyze the performance of individual loan and grant-financed projects, increasing emphasis on monitoring and measuring results and impacts. The project performance reporting system for loan-financed projects was expanded to (i) cover records of major issues, problems, actions taken, design changes, and ratings; and (ii) extend DMC access to the information in the project performance report. A technical assistance performance reporting system was pilot tested in 2003 and will be operational in early 2004.

A review in the first half of 2003 of ADB’s 2002 reorganization concluded that disruption to ADB’s operations and deliverables was minimal and that DMCs benefited from the single operational focal point provided by the integration of programs and projects at the department level. The review noted that while ADB’s capacity to deliver its strategic agenda had improved, this could be strengthened further. It also noted that changed management initiatives may not have been as effective as expected and that institutional work arrangements and environment and incentive structures need to be resolved.

The review identified several areas that required attention—the span of control of directors in some of the larger sector divisions, the distribution of assignments among sector divisions and regional departments, and quality assurance mechanisms in the Regional and Sustainable Development Department. The issue of control in large sector divisions in the South Asia and the East and Central Asia departments was resolved. Some regional departments and the Regional and Sustainable Development Department addressed the necessary distribution and balance of work through a change in mix of skills and redeployment, and options to enhance quality assurance mechanisms were considered. An independent assessment of the effectiveness of the reorganization will be undertaken in 2004.

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