Lao People Democratic Republic Peace Independence Democracy Unity Prosperity

Ministry of Agriculture and Forestry

Programme of Capitalisation in Support of Rural Development Policy (PCADR)

Central Unit (UC)

REVIEW OF PROJECT IMPLEMENTATION STRUCTURES (PIU)

Sector Working Group on Agriculture, Rural Development and Natural Resources Management (SWG ANR)

Final Report

Kenneth Nicholson

January 2010

Table of Contents Executive Summary..................................................................................................9 

1. The role of Project Implementation Units .........................................................11 

A. Introduction.......................................................................................................11 

B. Project Implementation Units............................................................................12 

C. Key issues that determine if a PIU is parallel .....................................................14 

D. Steps to reducing parallel functions of PIU and encourage integration ............16 

The organization of ODA in Lao PDR......................................................................16 

2. Results of the review of PIU functions in Projects interviewed .........................20 

A. Description of the current situation ..................................................................20 

Projects included in the survey ..............................................................................20 

Documents reviewed .............................................................................................20 

B. Results of assessment of PIU from 15 Projects..................................................21 

Description of Projects at MAF ..............................................................................21 

Characteristics of Line Departments in MAF..........................................................21 

Initiatives to harmonize .........................................................................................22 

C. Staffing requirements of PIU .............................................................................22 

D. Conclusions from the results of the questionnaire ...........................................23 

3. How to make ODA more effective? ...................................................................24 

A. CAP Issue 1 Staffing: TA Recruitment and Roles................................................24 

B. CAP Issue 1 Staffing: GoL staff salary structure .................................................25 

C. CAP Issue 1 Staffing: Work plans of GoL staff ....................................................26 

D. CAP Issue 2 Operational Responsibility: Consultation processes ......................27 

E. CAP Issue 2: Operational Responsibility.............................................................27 

F. CAP Issue 2 Operational Responsibility, Support Function: Financial systems ..29 

3  

G. CAP Issue 2 Operational Responsibility, Support Function: Procurement systems ..................................................................................................................30 

H. CAP Issue 3 Reporting Relationship: accountability, M&E, information management..........................................................................................................30 

4. Discussion ..........................................................................................................31 

A. Cost effectiveness of central level PIU...............................................................32 

B. National level integrated PIU: Decentralization or recentralization? ................33 

C. Case studies: Examples of successful PIU integration........................................34 

Country examples ..................................................................................................36 

D. Recommendations.............................................................................................38 

Development Partner’s interest and commitment to alignment with MAF ..........38 

General Recommendations ...................................................................................40 

Best Practices.........................................................................................................41 

Planning for reducing parallel functions of PIU: the road map..............................44 

Annex .....................................................................................................................49 

1. VD CAP Matrix describing PIU functions ............................................................49 

2. Documents reviewed .........................................................................................50 

3. Minutes of the Inauguration Workshop.............................................................51 

4. Definitions..........................................................................................................52 

5. Linkages between recommendations for reducing parallel PIU functions and activities in the CAP ...............................................................................................54 

6. Description of Projects at MAF implemented through Line Departments at Central Level ..........................................................................................................55 

7. Examples of successful PIU integration..............................................................58 

A. LAO Extension Approach (LEAP/NAFES) ............................................................59 

B. Centralization of functions: Model of MPWT ....................................................60 

C. Example of institutional set up of MRC..............................................................64 

4  

D. Example of PBA Model in SNRMPEP..................................................................66 

E. Example of MOE Educational Sector Development Framework ........................68 

F. Recommended institutional set up in MAF for a centralized project management unit...................................................................................................69 

Recommended mandate for a centralized project management unit...................70 

8. Method used for analysis of PIU ........................................................................71 

Questionnaire format ............................................................................................74 

9. Terms of Reference............................................................................................83 

10. Work Plan for the PIU Review at MAF .............................................................88 

11. Standard Financial Management Manual  (SFMM) .........................................91 

12. The Standard Operational Plan (SOP) ..............................................................94 

13. Ministry of Foreign Affairs – main role and responsibility ...............................95 

14. Roles of MPI .....................................................................................................95 

15. Official Development Assistance (ODA) ...........................................................96 

16. Poverty Reduction and Agricultural Management regional bachelor degree program .................................................................................................................98 

17. Study of EC Technical Cooperation and PIUs ...................................................98 

18. UNDP 1990.  Rethinking Technical Cooperation ............................................100 

19. Main challenges to technical cooperation .....................................................100 

20. Eight Guiding Principles to technical cooperation .........................................102 

21. Action Plan for the implementation of measures reducing the need for parallel PIU........................................................................................................................105 

22. People interviewed by Ken Nicholson............................................................117 

23. Participants at the inauguration and the debriefing workshops....................120 

5  

Figures Figure 1: The 5 key Principles of the VD for aid effectiveness .............................17 

Figure 2: Factors that result in the creation of parallel PIUs ..................................18 

Figure 3: Relationship between capacity building and ownership .........................19 

Figure 4: Fund Flow Diagram for Designated Project Accounts ...........................93 

Tables Table 1: Goals and Objectives described in the CAP.............................................20 

Table 2: Road Map.................................................................................................47 

Table 3. Summary of the questionnaire result........................................................79 

Table 4. Projects included in the survey ................................................................81 

6  

Abbreviations AAA Accra Agenda for Action BESDP Basic Education Sector Development Programme BoL Bank of Lao PDR CAP Country Action Plan CTA Chief Technical Adviser DIDM Decentralized Irrigation DLF Department of Livestock and Fisheries DoA Department of Agriculture DoF Department of Forestry DoI Department of Irrigation DoP Department of Planning DoR Department of Roads DP Development Partner DSA Daily Subsistence Allowance EA Executing Agency ECDPM European Centre for Development Policy Management FORCOM Forestry GoL Government of Lao PDR IA Implementing Agency IPM Integrated Pest Management LEAP Lao Extension Approach Programme MAF Ministry of Agriculture and Forestry MoE Minister of Education MoF Ministry of Finance MPWT Ministry of Public Works and Transport MRC Mekong River Commission NAFES National Agriculture and Forestry Extension Service NCMI Northern Community Managed Irrigation NPD National Project Director NRSLLP Northern Region Sustainable Livelihoods through Livestock Development NSEDP National Social Economic Development Plan NURDP Northern Uplands Rural Development Programme NURIFAR Northern Upland Rice Based Farming Systems Research project of Lao PDR NUSDP Northern Uplands Sustainable Development Programme ODA Official Development Assistance PBA Program Based Approach PCADR Projet de Capitalisation en Appui à la politique de Développement Rural PIP Public Investment Programmes (See VD, NSEDP) PIU Project Implementation Unit PRAM Poverty Reduction and Agricultural Management professional degree program RISEP Rice Seed Multiplication and Distribution System Improvement Project SFMM Standard Financial Management Manual SNRMPEP Sustainable Natural Resource Management Productivity Enhancement Project

7  

SOP Standard Operating Procedure SUFORD Sustainable Forestry and Rural Development Project SURAFCO Support to Reform of Agriculture and Forestry of the Luang Prabang College SWG Sector Working Group TA Technical Adviser TABI The Agricultural Biodiversity Initiative VD Vientiane Declaration WA Withdrawal Application

8  

Executive Summary At the Ninth Round Table Meeting (RTM) in Vientiane in November 2006, the Government of Lao PDR (GoL) and 22 partner countries and organizations signed the Vientiane Declaration (VD) on Aid Effectiveness. GoL and its Development Partners (DPs) prepared the Country Action Plan (CAP) in 2007 to accompany the Vientiane Declaration. Within the area of reform of Alignment, the Vientiane Declaration proposes that DPs base their overall support on Lao PDR’s National development strategies, institutions and procedures. In this respect one of the goals formulated by the CAP is that DPs do not create Project Implementation Units (PIUs) for implementing ODA-funded projects that are parallel to GoL structures. In this context, the MAF/DOP (Department of Planning) and AFD (Agence Française de Development), the ANR-SWG (Agricultural and Natural Resources Sector Working Group) co-chairs, organized this joint review of ODA-funded implementation structures within MAF. Approaches and methodologies for the study within the SWG – ANR were developed jointly with the ESWG (Education SWG) in order for the experience to contribute to developing the method for other sectors. The study reviewed studies and policy papers on Aid Effectiveness worldwide and the questionnaire method for interviews was developed based on experiences both worldwide and in Lao PDR in the ESWG. Information was collected on a total of 15 Project of which 11 were interviewed. Representatives of line Departments of MAF were interviewed as well as key informants representing DPs. Information was also collected about project management mechanisms in the Ministries of Public Works and Transport, the Ministry of Education and the Mekong River Commission. This review found that rather than characterizing PIU as parallel or integrated, one needs to identify the functions of PIU and analyze each function separately. The CAP identifies both Project core activities on the one hand and one the other hand support functions which include financial management, procurement and M&E. 8 principal groups of functions were identified and organized using the CAP framework. They all fall under either Issue 1 of CAP which is Staffing composition, work plans and salary structure for GoL staff and external consultants, Issue 2 which is Operational Responsibility, Consultation processes and financial systems and procurement or Issue 3 which is Reporting relationships (accountability, M&E and information management). Using the questionnaire, the consultants together with the respondents agreed on whether a function was parallel, semi integrated, almost fully integrated or integrated. The review of all ODA in MAF showed that if several line departments with similar ODA budgets are compared, there are some departments with much higher number of projects than others even though the total funding volume is similar. The trend now is to reduce the number of individual Projects or Programmes and to commit more funding to Programmes with common arrangements such as PBA. The goal is to minimize administrative burdens by grouping several donors into one Project.

9  

There is a significant number of staff in MAF at Central Level that is supporting ODA Projects. Given this, there is an urgent need to ensure the human resource management for these staff is systematic and integrated into the MAF institutional system. The challenges to be overcome in order to reduce parallel functions of PIU are in several cases already addressed with respective recommendations in other sections of the CAP addressing various aspects of Alignment, Ownership, Harmonization and Simplification and Managing for Results. This study therefore establishes linkages between its recommendations and the relevant sections of the CAP. Two broad principles have emerged from this survey in order to reduce parallel functions of PIU. These principles should be applied at every stage of the project cycle. On the one hand the diversity and heterogeneity of PIU at MAF needs to be reduced using all the existing initiatives. Secondly core support functions need to be centralized and provide services to projects without seeking to control them.

10  

1. The role of Project Implementation Units A. Introduction GoL leads in developing and implementing the National Social Economic Development Plan (NSEDP) through a broad consultative process that integrates Official Development Assistance (ODA) into mainstream planning and translates the NSEDP into priority areas and annual budgets. GoL uses Sector Working Groups (SWGs) where appropriate to decide on a timetable for introducing costed sector plans and build consensus around sectoral priorities (see Vientiane Declaration Country Action Plan Section 1, Ownership) The Ministry of Agriculture and Forestry (MAF) has formulated 4 Goals and 13 Measures to execute the resolution of the 8th Party Congress and achieve NSEDP targets under its responsibility. At the Ninth Round Table Meeting (RTM) in Vientiane in November 2006, the Government of Lao PDR (GoL) and 22 partner countries and organizations signed the Vientiane Declaration (VD) on Aid Effectiveness. The Vientiane Declaration effectively customizes the Paris Declaration for Lao PDR’s country – specific circumstances and aims to improve the effectiveness of aid by focusing reforms in five areas: host country ownership, alignment of Development Partner's (i.e. donors) support to national policies and plans, harmonization and simplification of Development Partner's (DP’s) procedures and activities, managing for results and lastly mutual accountability for reporting. GoL and its DPs prepared the CAP in 2007 to accompany the Vientiane Declaration. Activities in the CAP are implemented by the 8 Sector Working Groups and progress on achieving the goals in the CAP is reviewed at annual Round Table Meetings (RTM) (For more details on the RTM and VD also see Background Section in the TOR in the Annex). Within the area of reform of Alignment, the Vientiane Declaration proposes that DPs base their overall support on Lao PDR’s National development strategies, institutions and procedures. In this respect one of the goals formulated by the CAP is that DPs do not create Project Implementation Units (PIUs) for implementing ODA-funded projects that are parallel to GoL structures. The objective set out in the CAP is that all SWGs will agree on guidance for integrating project implementation functions within their sector. The specific target, set for 2010/2011 is that no new parallel PIUs will be created after 2010, unless endorsed by relevant GoL agencies. In order to facilitate arriving at this goal, the Education Sector Working Group (ESWG) has taken the lead in reviewing PIU across all sectors. MAF/DOP (Department of Planning) and AFD (Agence Française de Development) proposed to carry out this joint review of PIU and their functions within MAF as part of their contribution to the output of the SWG – ANR (Agriculture and Natural Resources). Approaches and methodologies for the study within the SWG – ANR were developed jointly with the ESWG in order for the experience to contribute to developing the method for other sectors. The main objectives of the joint review are (see TOR in Annex):

11  

(i) Identify and classify existing PIUs within MAF and define whether the PIUs and their functions fall under the categories or parallel (i.e. non integrated), semi integrated or integrated.

(ii) Better understand the functions covered by the PIUs including planning and budgeting, financial management, procurement, monitoring and evaluation, the motivations for establishing functions that are non integrated, and the challenges presented by eliminating these functions.

(iii) Analyze lessons learned in PIU integration from other sectors in Lao PDR (in particular lessons learned in the transport and education sectors) and elsewhere worldwide.

(iv) Make recommendations to MAF and DPs (through SWG - ANR) on a specific road map or “code of conduct” which will result in a reduced incidence of parallel PIUs or PIU functions at MAF.

To achieve these objectives, the following activities were included in the study: 1. conduct a document review of experiences both in Lao PDR and worldwide, 2. develop an analytical framework and a questionnaire in collaboration with the ESWG

representatives 3. interview PIUs leaders, DPs and Technical Advisers both within the ANR sector and in

other sectors with experiences in PIU integration 4. Findings will be shared in a workshop at the end of the mission and through the SWG

network of the RTP (Round Table Process) B. Project Implementation Units Project Implementation Units (also referred to as ODA implementation structures in the CAP) refer to all project implementation arrangements, which rely on a group of staff members designated officially to work together full-time or almost full-time, with separate accountability, to coordinate and manage project implementation. PIU are also commonly referred to as project management units (PMU), project management consultants, project management offices, project coordination offices, central units or even the Office of the National Project Director and so on. These are dedicated management units designed to support the implementation and administration of projects or programmes (in this report, the terms project and programmes will be used interchangeably. Similarly the terms PIU and PMU are both used in this report without implying a difference in mandate). The tasks of the PIU include all the activities needed to lead and coordinate project implementation including administration, monitoring and reporting on project progress, finance, and accounting, procurement tasks, and recruitment and supervision of consultants. Implementation structures can be categorized as parallel, semi-integrated or integrated. Parallel or integrated PIU: Based on the Paris Declaration and the CAP of the Vientiane Declaration, a PIU’s function can be characterized as integrated, semi integrated or parallel depending on the degree to which a PIU’s functions are carried out outside of the Government system. In the past, PIU were designed as special vehicles to bypass local bureaucracies and ensure timely delivery of project outputs. They were perpetuated as an implementation

12  

mechanism simply because they were a known and tested arrangement for implementation. The trend now is to move beyond PIU and address country institutional capacity development. Donors/DPs have by and large subscribed to these principles which have been reinforced by the Accra Agenda for Action (AAA). As can be seen from the box below, the issue of PIU ranks highly as a challenge to improved aid effectiveness. EC 2009, Reforming Technical Cooperation In this report by the EC, parallel PIU are listed as one of the five main challenges in Technical Cooperation (see Annex). Also mentioned in this report is compliance with the AAA (Accra Agenda for Action). The Accra Agenda for Action (AAA) 2008

• Capacity development is the responsibility of developing countries, with donors playing a supportive role.

• Donors’ support for capacity development will be demand-driven and designed to support country ownership. Technical cooperation is one means among others to develop capacity.

• Developing countries and donors will jointly select and manage technical cooperation. • Donors agree to use country systems as the first option for aid programmes in support of

activities managed by the public sector. Should donors choose to use another option and rely on aid delivery mechanisms outside country systems (including parallel project implementation units), they will transparently state the rationale for this and will review their positions at regular intervals.

• Promote the provision of technical cooperation by local and regional resources, including through South-South Cooperation.

However it remains a challenge for donors to change their well worn practices of implementing directly in order to attain higher efficiency (see box below, Study of EC Technical Cooperation and PIUs. European Centre for Development Policy Management (ECDPM) 2008). Study of EC Technical Cooperation and PIUs: Review of the Regulations and Guidelines applicable to Technical Cooperation and Project Implementation Units 2008. European Centre for Development Policy Management (ECDPM). The EC is signatory party to the Paris Declaration (PD) and has, together with the EU member states, agreed to achieve the EU aid effectiveness targets. Key underlying notions to these agreements are that Partner Governments (PGs) should be supported by their external collaborators to take full ownership of the development process. The donors should assist PGs to develop their capacities, align with PG procedures and make use of their systems once these are robust enough to shoulder the responsibilities. Moreover, donors should better coordinate their activities to support this process. Many of these notions run up against the very character of the regulations, procedures and

13  

guidelines driving the day-to-day work flow of any donor organisation, which exist to mitigate risks and to control the proper use of resources, to ensure accountability and efficient operations. The Ministry of Planning and Investment (MPI) has developed a Standard Operating Procedure for Projects in which the following principle is listed: Standard Operation Procedures (SOP) WB/MPI DPs will rationalize their own regulations and procedures as far as possible so as to achieve common and harmonized activities for the different stages of the aid cycle – planning, design, funding, procurement, disbursement, monitoring and evaluation and reporting to the Government on their activities and aid flows (refer to the VD). PIU typically perform several types of functions needed for the implementation of a Programme. In order to determine if PIU are parallel or integrated one needs to break down the broad functions of the PIU into detailed activities and assess whether those activities are integrated with GoL processes as well as the extent of GoL decision making and accountability for each activity.

MPI/UNDP Definition of Parallel implementation structures

Parallel structures typically share the following features:

• They are accountable to the external funding agencies rather than to the country implementing agencies (ministries, departments, agencies etc).

• Terms of reference for externally appointed staff are determined by the development partner rather than by the country implementing agencies.

• Most of the professional staff of parallel implementation structures is appointed by the development partner rather than the country implementing agencies.

• The salary structure of staff of parallel implementation structures often exceeds those of civil service personnel.

C. Key issues that determine if a PIU is parallel According to the VD and CAP (2007) the roles of PIU have been grouped into the following 3 broad categories (see Matrix of the CAP definition of PIU in the Annex)

• 1. Staffing composition and salary structure

• 2. Operational Responsibility

• 3. Reporting relationships

Using the frame work of the CAP, one can break down these broad functions into the following specific activities which take place at Central Level PIU:

14  

CAP Category 1 Staffing composition and salary structure 1. Development of ToRs, recruitment and supervision of contracts for externally appointed

consultants of the Project 2. Work plans of GoL staff assigned to support the Project 3. Salaries and incentives for GoL staff

CAP Category 2 Operational Responsibility 4. Project core activity: Consultation processes for Project identification and appraisal 5. Project core activities: Design and execution of activities, information management,

Steering Committee, coordinating stakeholders, strategy formulation, planning and organizing the Steering Committee,

6. Support functions: Procurement 7. Support functions: Financial management

CAP Category 3 Reporting Relationship 8. Reporting on Project activities (accountability, M&E, information management)

The following Table give some general examples of integrated functions of PIU based on the situation in Lao PDR as described in the CAP (a detailed table from the CAP illustrating all PIU functions is in the Annex).

EXAMPLES OF INTEGRATED FUNCTIONS (BASED ON CAP)

Staffing composition and salary structure:

– Mainly civil servants with regular salaries assisted by few consultants, if any (e.g. DOI DIDM)

• Operational Responsibility – line departments/unit of concerned government ministry/agency are involved in the

design and execution of core project activities - most support functions executed by existing relevant departments/units - or support functions are executed by a special unit dedicated to supporting most

projects (e.g. MPWT) financed by various development partners (e.g. MRC) Reporting relationship

Functional Manager in line department responsible for reporting to relevant manager and development partners (e.g. NAFRI URDP)

15  

In MAF, as regards operational responsibility there are no instances of integration as described in the CAP, i.e. most support functions executed by existing relevant departments/units or support functions are executed by a special unit dedicated to supporting most projects or financed by various development partners. Rather than ruling the integration experiences that do exist in MAF, the criteria were adjusted for the purposes of this study. Therefore the first three categories from the CAP were used but the final category was divided into two (Almost fully integrated and Integrated) and the criteria below were used:

PIU categories Characteristics

Non-Integrated Parallel Functions outside of GoL systems Semi-Integrated Functions partially within the GoL system

Almost fully integrated

Donors harmonize their systems between them and these are in turn aligned with GoL

Integrated Accountability and decision making with GoL D. Steps to reducing parallel functions of PIU and encourage integration The organization of ODA in Lao PDR The organization of ODA in Lao PDR (from SFMM) The Prime Minister Decree No.75, dated 20/03/2009 has provided a policy guideline for dealing the ODA. Ministry of Foreign Affairs (MoFA) is to be the focal point for interacting with other countries and take leading role in collaboration with Ministry of Planning and Investment (MPI), Ministry of Finance (MoF), and Line Ministries and agencies as well as relevant local administration on the interpretation of government’s policies and directions regarding the mobilization of ODA. The MPI is overall responsible for creating investment environment, attracting foreign investment and making strategy for medium to long term planning. These development plans have to merge with the Annual Budget prepared by Ministry of Finance. MPI has to coordinate with MoF and Line Ministries to ensure that proper project management function is placed before starting the project, The MoF plays an important role in the overall financial affairs of the country through Budget, Accounting, National Treasury, Fiscal Policy and External Finance Departments. External Finance Department (EFD) has been established to manage and monitor the external funding and has four divisions responsible for looking after Loan and Grant Management and receiving all data regarding external finances including Financial Management Reports (FMR). They will ensure implementation of SFMM at all line ministries and projects/programs in Lao PDR.

Harmonization and simplification: (between donors and donors) common arrangements, simplify procedures and share information. This is the first step in order to effectively ensure capacity building of GoL

16  

Alignment (between donors and GoL) through sector based planning and identifying centralized functions, GoL improves planning and increases effectiveness of human resources and budgets

Ownership (GoL sets the agenda): As capacity increases, quality and transparency also increase which results in trust and increased accountability (stakeholders assume responsibility and do not blame each other when problems arise)

• Figure 1 below illustrates the relationship between the 5 key Principles of the VD for

promoting aid effectiveness which should result in the integration of PIU (see : Aid effectiveness in extension, Schmidt P. 2009 (NAFES, LEAP)

Figure 1: The 5 key Principles of the VD for aid effectiveness The ADB 2005 Report on PIU mentions that the characteristics of a PIU depend on the following four factors: the donor, the parent agency (MAF and the concerned Line Department), the project and the country context. Figure 2 below illustrates how these and other factors contribute to the creation of parallel functions in PIU in Lao PDR and the relationship with the 5 key Principles of the VD.

17  

Figure 2: Factors that result in the creation of parallel PIUs

PARALLEL PIU

LACK OF AWARENESS AND LACK OF UNDERSTANDING OF GOL SYSTEMS 

LACK OF CONFIDENCE OF DPs 

 LACK OF CAPACITY OF GOL 

 DP SYSTEMS NOT HARMONIZED 

HIGH DIVERSITY OF PROGRAMME MANAGEMENT OPTIONS 

LIMITED ALIGNMENT WITH GOL SYSTEMS

DPS USE COUNTRY BASED PROCEDURES AND REQUIRE COMPLEX SYSTEMS 

OWNERSHIP  HARMONIZATION AND SIMPLIFICATION 

ALIGNMENT MUTUAL ACCOUNTABILITY 

MANAGING FOR RESULTS 

18  

Capacity building, financial management, procurement and systems for reporting are all also addressed under respective Goals of Section 2 on Alignment. Figure 3 below illustrates how the degree of ownership is directly related to capacity building. A discussion on integrating the functions of PIU is therefore also relevant to other sections of the CAP. (see Table 1 below with the goals of the CAP and in particular Section 2 on Alignment). Figure 3: Relationship between capacity building and ownership

Other challenges that were identified as part of the review of parallel PIU have also already been described under other Sections of the CAP particularly under Section 3, Harmonization and Simplification. The table of Linkages between parallel issues and CAP activities in the Annex identifies the issues raised in the course of this PIU study and the corresponding section in the CAP where these issues are addressed with an Action Plan. Any new recommendations arising from this study should therefore be integrated into the existing Action Plan corresponding to this issue.

19  

Table 1: Goals and Objectives described in the CAP CAP Section 2. Alignment: Donors base their overall support on partner countries' national development strategies, institutions and procedures

DPs Align with the GoL's Strategies GoL Strengthens Regulations and Procedures with support from DPs, which DPs

Increasingly Use GoL strengthens development capacity with support from DPs Strengthening Financial Management Strengthening National Procurement Regulations and Procedures Strengthening Environmental and Social Standards for ODA-Funded Projects

CAP Section 3. Harmonization and simplification CAP Section 4. Managing for Results

2. Results of the review of PIU functions in Projects interviewed A. Description of the current situation The following GoL agencies were visited: DoI, DLF, DoF, DoP, NAFES, NAFRI, MPI, MPWT and MOE. In addition information was collected on the following DPs and development organizations: ADB, WB, UNICEF, UNDP, AFD, FAO, SDC, JICA, MRC, GTZ and WCS Projects included in the survey (See annex for database of each Project) In total information was collected about the following 15 Projects including 11 Projects that were interviewed using the questionnaire

DoI: DIDM (ADB), NCMI (ADB) DLF: NRSLLP (ADB) DoF: SUFORD (WB/Finland) DoP: PCADR (AFD), NUCCP (Northern Uplands Core Coherent Programme - AFD,

EC, SDC, GTZ), SNRMPEP (Sustainable Natural Resource Management and Productivity Enhancement Project - ADB/IFAD), TABI (SDC)

NAFES: LEAP (SDC), FORCOM (JICA), RISEP (JICA) NAFRI: URDP (Ramboll), NURIFAR (SDC), SURAFCO (SDC) DoA: IPM (FAO)

Documents reviewed

The Annex gives a listing of the documents reviewed in this survey. They include PIU reviews by ADB of 152 projects worldwide and EC, UNDP and WB papers on strategies of technical cooperation and analysis of PIU management roles. Within Lao PDR, documents relevant to parallel PIU include drafts of the MPI and MoF standardized management systems as well as a document reviewing existing systems for incentives in NAFRI and a report for LEAP on aid

20  

effectiveness and extension.

B. Results of assessment of PIU from 15 Projects Description of Projects at MAF (See Database summarizing Project profiles in the Annex)

Total committed budget of ODA for a 10 year period in 72 multilateral and bilateral funded Projects: 295,060,729 US$ (based on Project Agreement and includes GoL contribution)

Total for 34 NGO projects during the same period: 15,683,738 US$ Total budget joint ODA and GoL: 310,744,467 US$ 48 multilateral and bilateral projects are implemented through Central Level Technical

Departments mostly with some kind of PIU. These projects represent a total of US$ 235,653,720 or 75.9% of the total ODA

9 NGO projects are implemented through Central Level Technical Departments mostly with some kind of PIU (US$ 4,060,042 or 1.4% of total ODA)

The total ODA of 48 multilateral and bilateral projects and 9 NGO projects all with some kind of central PIU (i.e. a total of 57 PIU at central level) represents US$ 239713762 or 77.1% of the total ODA

Some interesting observations can be made regarding the distribution of funding across all MAF Departments (see Annex 6):

The total ODA budget in DoI (37,100,000 US$) is almost the same as for DLF (36,023,667 US$) but DoI only has 2 projects, one of which (DIDMP) is using a PBA modality. On the other hand, DLF is managing 14 smaller Projects implemented in the traditional way each with its own PIU

The SNRMPEP implemented by DoP represents a total of 36,800,000 US$ but using basket funding. This reflects the trend to improving Programme management and aid effectiveness by consolidating funding.

These figures are indicative of a trend to commit more funding to Programmes with common arrangements such as PBA. The goal is to minimize administrative burdens by grouping several donors into one Project. One can argue that this is more feasible for Line Departments such as DoI which principally use loan funding for infrastructure for irrigation support and can achieve a bigger scale and replication across the country than projects with greater emphasis on social components. Characteristics of Line Departments in MAF One of the main issues that emerged during this review is that MAF is different from other Ministries because of the diversity of activities it is expected to implement. Unlike other Ministries such as Health or Education, MAF has to take into account the regional, geographical and ethnic differences as well as the market trends that are becoming more and more of a priority for planning. This diversity and the need for innovation may seem like a justification for using parallel PIU in order to keep a Project agile and innovative, ensure results and effective reporting

21  

of lessons learned. However experiences such as with LEAP and NAFES are showing that even if the first Phase of such types of Project has a parallel PIU, subsequent phases can gradually integrate PIU functions into the Department implementing the Project as long as there is systematic capacity building and retention of GoL staff familiar with the Project objectives. The highly diverse and independent spirited Departments in MAF are necessary in order to address the diverse challenges facing agricultural and forestry development however there is also rivalry between these departments that needs to be overcome in order to promote good coordination. Experiences such as with SUFORD showed that Projects which include several Departments into their Project Document (DoF, NAFES) and assign separate budgets to each Department can be successfully implemented. The database of ODA investments in MAF shows that the sheer number of projects and the volume of funding is a significant challenge for GoL to manage. This multitude of Projects and donors all with different approaches is reducing the availability of qualified staff for the management of any one project (this was also a finding of the worldwide ADB 2005 Special Evaluation Study on the role of PIU). Initiatives to harmonize There are at present several initiatives to standardize and harmonize procedures, rules and regulations for a variety of PIU functions. These include the Finance and Administration Manual and Manual of Operations (Poverty Reduction Fund. 2003), Guidelines for Technical Reporting (MPI) and the Standard Operation Procedures Manual (SOP) and Standard Financial Management Manual (SFMM) developed together with MoF and MPI respectively. In addition several Projects in different line departments aim to develop an M&E system. These initiatives in themselves are expensive and time consuming and rather than duplicating each other’s effort, there needs to be coordination so that the results of the effort can be adopted as National Standardized Systems. C. Staffing requirements of PIU Generally most PIU are comprised of the following staff positions which are often drawn from a mixture of GoL staff and external consultants: NPD, NPM, Programme Officer, Procurement Officer, M&E Officer, Administration Manager, accountant and secretarial support staff which is a total of 8 or 9 staff. As the table below shows and given that at the present moment there are 57 Central level PIU, one can infer that 50% of staff in MAF at Central Level are supporting ODA Projects. This is a significant volume and there is therefore an urgent need to ensure the human resource management for these staff is systematic and integrated into the MAF institutional system such as through capacity development, performance reviews and merit based pay scales. Estimated staff requirements of Central Level PIU 57 PIU, 9 staff ea. 513Total staff at MAF Central Level (approximately) 1000Percentage requirements of existing PIU 50%

22  

D. Conclusions from the results of the questionnaire

Using two criteria to distinguish between almost fully integrated and integrated was useful during the interviews in order to identify with more precision the existing capacity of GoL in managing Projects. Quantitatively it was not so useful because projects were divided about equally between the two criteria

A relatively small number of PIU functions are either parallel or semi integrated. The majority are between almost fully integrated and integrated

Under the issue of Operational Responsibility, the CAP matrix includes the following criteria to define support functions that are integrated: support functions executed by a special unit dedicated to supporting most projects financed by various development partners. At present there is no project which falls under this category but on the other hand several projects fall under the alternative criteria proposed in the CAP matrix which is that most support functions are executed by existing relevant departments/units. However even in this case many Projects also recruit additional external staff to oversee these support functions such as for financial reporting and for procurement. This still falls under the criteria of integrated as described under the issue of Staffing composition, i.e. Mainly civil servants with regular salaries assisted by few consultants, if any. In order to achieve further integration, support is needed especially in developing standardized systems, harmonizing processes between donors and capacity building of GoL staff. The possibility of setting up a centralized unit in each Line Department which takes over some support function should also be explored by MAF

In other PIU functions such as developing work plans of GoL staff and operational responsibility, there is a higher degree of integration in certain line departments that are experienced in project management and full integration will be dependent mainly on capacity building and increasing alignment with GoL time frames and planning

Interviews with each organization indicated that there is no systematic capacity building of GoL staff working on a PIU. Senior staff are expected to “learn by doing” and junior staff rarely have opportunities for administration training beyond workshops on specific topics relevant to the Project such as formulation of M&E system or development of Annual Work Plans (the lack of capacity building for staff of PIU is a worldwide phenomenon identified in the ADB 2005 report of PIU)

There are indications that in certain Departments, institutional capacity for managing projects has increased during the last 10 years, however the number of experienced senior staff who can adequately manage projects is limited and their workload is increasing due to the establishment of Central level coordination mechanisms such as the SWG. The trends in ODA in the NRM sector as well as the institutional landscape in Lao PDR are frequently changing and this is reflected in Project design which implies that GoL staff has to continuously be upgrading their management and administration skills. In many respects the work undertaken for the management of a Project often overlaps with the mandate of the GoL line department yet if there is a lack of integration, staff end up having to duplicate work or end up doing it only for the PIU and neglecting the same tasks for their department

Most PIU interviewed do not have an exit strategy which plans for the integration of PIU functions into the GoL line department or for recurring costs to maintain activities beyond the Project. The exception is when Projects implement several phases over a long

23  

period and gradually decrease donor inputs over time with the aim of building capacity and planning budgets for GoL to take over those functions

3. How to make ODA more effective? Recommendations based on the framework of VD CAP A. CAP Issue 1 Staffing: TA Recruitment and Roles In a parallel PIU, the selection/recruitment process and management of external staff does not require GoL involvement. In an almost fully integrated PIU, the selection/recruitment and management processes are jointly determined and final decision is by both Government and donors together. In a fully integrated PIU, GoL takes full responsibility for recruitment and management of any external PIU staff. Parallel situation:

• GoL staff are not improving their management skills since they leave Administration up to the TA

• TA are not integrated within a MAF strategic framework for capacity building of GoL staff (lack of alignment)

• GoL is not consulted by some donors on selection of TA because of donor consultant recruitment regulations based on their country offices (lack of ownership)

• TA are supporting administration (capacity substitution) but their priority should be to increase technical and management capacity of GoL staff and reduce the need for external consultants in administrative functions

• Unclear line of accountability of TA. Short term TA work quality not always competent but GoL has limited roles in enforcing improvements of outputs (especially if the TA is international and not based in country)

• There are too many long term TA positions • Counterparts for TA are not selected based on a systematic policy of integrating Project

inputs into long term capacity building for GoL Integration Experiences:

• TA work under the direction of the NPD (URDP NAFRI) Recommendations:

• The formulation of TOR for TA should include objectives not only for deliverables but also for successful transfer of know how (EC 2008)

• TA for administration support should be assigned to a unit within MAF departments and provide capacity building in the form of on the job training to GoL staff based on a human resources development plan and coordinated with the Department of Personnel

• There should be one standardized system for recruiting international consultants instead of each donor having their own guidelines

• CTA should only support technical components and not administration unless this is integrated into a capacity strengthening strategy or clearly accepted because of language barriers with the donor (this can gradually be reduced through PBA, basket funding and harmonized reporting)

• TA should be split visits of short or medium term with specific inputs so that their contribution can match the absorption capacity of the beneficiaries

24  

• Instead of long term TA encourage a gradual reduction of a TA’s inputs over the Project duration to be replaced by increasing responsibility for the counterpart

B. CAP Issue 1 Staffing: GoL staff salary structure In a parallel PIU, the salary structures of externally appointed technical staff of the PIU exceeds those of GoL staff although salaries or at least salaries of externally appointed administration staff might be similar to Government rates. In a semi integrated PIU, all technical and administrative staff salaries are the same as those of GoL staff but technical staff can receive incentives or can be recruited as short term consultants. In an integrated PIU, the salary structure of GoL staff of the PIU is equal to those of other GoL staff. Parallel situation:

• DSA are often not in-line with government rates and salary premiums are provided which are not transparent. This is creating rivalries and competition among staff to work with certain projects which are known to provide premiums

EU 2008. Review of Donor Agencies’ Policies and Guidelines on TC and PIUs. The absence of country and sector capacity development plans/strategies limits opportunities for coherent and coordinated responses Integration Experiences:

• NAFRI Draft report on system of staff salary incentives (Ramboll 2008) • No premium allowed but consulting is permitted with a contribution to the parent agency

(NAFRI) • DSA supplement to compensate for inflation (NAFRI) • GoL from one Ministry can be recruited to work as consultants in a different Ministry • MPI is working on developing a system of incentives and develop a transparent system to

acknowledge good performance

As part of public financial management reform in Cambodia, EU and WB are exploring avenues for supporting salary increases of Government staff working on Projects. WB proposes to provide half the starter funding (the other half from government) on a merit-based pay initiative, which is effectively introducing new civil service salary scales for good performers, starting with those involved on WB - financed projects. The half funding from WB decreases linearly to zero over the life of the project, with the government thereafter taking on 100%. On the other hand in Vietnam, there is a surplus of local consultants which implies more selection is possible by Projects. There is an intermediate capacity level between GoL staff and international consultants. Government is mainly concerned with administration of Projects and National consultants provide technical backstopping and prepare technical reports. All donors have agreed to apply the same salary scale to national consultants who in turn pay a percentage to Government.

25  

Recommendations: If Projects are integrated into sector planning and the GoL annual planning there is a

better chance of using GoL DSA pay scales for field work as long as there is a clear directive from leaders in positions of authority (i.e., the Minister’s Office) at the Central level to the field (see link to CAP 1 Ownership and implementation of NSEDP with costed sector plans)

There should be agreement between donors on harmonizing DSA rates and other interim solutions that minimize distortions such as non salary incentives (see CAP 3. Harmonization and Simplification)

Formulate an exit strategy which includes paying DSA from the National budget in order to maintain activities initiating during the Project

Formulate a project based on experience in the region to gradually increase GoL pay scales (e.g. Cambodia and Vietnam) or elsewhere (e.g. Tanzania mentioned in WB 2005)

C. CAP Issue 1 Staffing: Work plans of GoL staff In a parallel PIU there are no government staff assigned to the PIU or there may be some GoL staff but they work exclusively on project activities which are not integrated into their ordinary Government activities. In a semi integrated PIU, GoL staff deputed to the PIU work principally on Govt. responsibilities as part of the project. In a fully integrated PIU, GoL staff integrate all project activities into their Govt. activities. Parallel situation:

• It takes a minimum of three years to merge work plans of the GoL and a Project unless a PBA is used

• Lack of systematic method for selecting GoL staff to support Projects based on job description or capacity building plan

• GoL staff are on too many Steering Committees • GoL staff are transferred to different Departments and the capacity building is lost to the

original department • Drainage of human resources from GoL to Projects and overload of GoL staff who work

part time for the PIU but still have their other work to take care of and are not compensated

• GoL staff are not evaluated systematically within their organization for their performance in Projects

• Ad hoc capacity building that is not systematic or cost effective • MAF staff have capacity but it is not systematically identified and used by Projects • Counterparts for TA are not selected based on a systematic policy of integrating Project

inputs into long term capacity building for GoL • Duplicative missions create administrative burdens

Integration Experiences:

MPWT (Project Monitoring Division in the Dpt. of Roads) Integrated planning (URDP) and location of CTA in GoL unit (LEAP, NAFES and GTZ

RDMA CTA within DIC of MPI)

26  

Recommendations: Work with donors to anticipate and plan human resources based on multi year Sector

Planning and PBA (see link to CAP 1 Ownership and implementation of NSEDP with costed sector plans)

Organize joint training and missions where applicable by using PBA (see CAP 3 Harmonization and Simplification)

D. CAP Issue 2 Operational Responsibility: Consultation processes Parallel situation:

• MAF Departments have only limited opportunities for consultation and they are not sufficiently well informed about the project in advance (MAF and MPI make agreements with Donors and Technical Departments are then asked to implement components)

• Consultation processes during Project formulation are not linked to staffing during implementation. i.e. GoL might be involved during the project identification Phase but during the Project inception Phase different staff are involved

• Lack of transfer of knowledge between the field and the National Level which is needed for budget planning and policy formulation

• Lack of capacity in the diagnosis of situations (inadequacy or absence of surveys, feasibility studies or impact assessment in the decision making process)

Integration Experiences: • Consultation: In loan components GoL has major role in decision making (e.g.

SUFORD/DOF, DIDM and NCMI/DOI) • Information management e.g. NAFRI Information Management System and DoP

databases of Projects Recommendations:

• Reduce the number of Projects by using PBA and anticipate staffing priorities so that the same staff that involved in the Project design phase are involved in the implementation of the Project (see link to CAP 1 Ownership and implementation of NSEDP with costed sector plans)

• Develop information management and dissemination systems so that when new Programmes are formulated they build on the lessons learned from the previous ones

E. CAP Issue 2: Operational Responsibility (Review of Progress and formulation of Annual Work plan, execution of activities, coordinating stakeholders, strategy formulation, roles of the Steering Committee, M&E) In a parallel PIU, donors manage all aspects in the execution of project activities and GoL involvement is limited to sharing of information. In an almost fully integrated PIU, the GoL Director and line Departments are executing the Project activities and the donor external staff such as the CTA are backstopping. Once a PIU is fully integrated, the donor funded staff have decreasing roles in supporting implementation of the Project. Projects that are being implemented in a Phase wise manner (e.g. LEAP is now in its fourth Phase) gradually hand over more and more responsibility to GoL as systems are improved and capacity of GoL is improved. In most cases, GoL is leading the Steering Committee however the donor may still have a lead influence on key strategic decisions and policies although that influence may only be exerted

27  

outside of SC meetings. The SC only meets at most once or twice a year and it is therefore not a significant factor in determining whether a PIU is parallel or integrated. (Personal quote) Lao PDR management culture places a lot of emphasis on the individual rather than relying on a system to achieve results. Therefore a successful Project is 90% dependent on the qualities and skills of the National Project Manager and only 10% are related to the system itself. The management style and the role of the NPM are crucial in guaranteeing aid effectiveness. Good NPMs are individuals who have had extensive field experience as part of their career and understand the realities of implementing the Project at all levels thereby are able to ensure close supervision of the field level and devise appropriate incentives to motivate staff (quote based on an interview conducted as part of this survey) Parallel situation:

• The project is not aligned with the GoL annual planning time frame. • If there is direct implementation at the Province level the National level is not receiving

information about progress. • The implementation plans for a Project are not based on the Project Document • There is a lack of mechanisms for inter- departmental and inter-ministerial collaboration

and cooperation (membership on the SC is insufficient to ensure this takes place) Integration Experiences: • PBA implemented with DIDM (DOI) • An executive board under the SC meets more frequently and addresses operational issues

in Project implementation (MRC) • Components of a Project and the respective budget are allocated to different Departments

(e.g. SUFORD is implemented by DoF but the Village Development Component is under NAFES)

• Development of SOP by MPI and of other Project Management manuals (e.g. URDP) Recommendations: • Reduce the number of Projects with separate PIU and use PBA which are synchronized

with GoL planning cycles (see link to CAP 1 Ownership and implementation of NSEDP with costed sector plans)

• Instead of relying on the PIU, establish a centralized function at Ministry Level which has authority to coordinate planning with several Ministries and build capacity based on long term planning needs for such types of coordination including linkages with Poverty Reduction and Agricultural Management or PRAM professional degree programme (see Annex)

• Even if the Project is implemented directly at the Province level there needs to M&E by a unit of MAF at National level

• M&E needs to be done using a GoL standardized system instead of being done by donors which are external agencies

• The database which is the foundation of an information management system for M&E needs to be developed with Lao GoL participation in order to be fully accepted and integrated

28  

• Establish a task force under the Project SC composed of Line Department Directors or their representatives with a mandate from Minister’s Office to ensure working linkages with other Departments

• Allocate Project components and budgets to each department from which cooperation is expected

F. CAP Issue 2 Operational Responsibility, Support Function: Financial systems In a parallel PIU, financial systems are selected based on donor preferences and the PIU is headed by a CTA who approves releasing funds. Audit reports are either not shared with the Government or shared with the GoL but GoL has no decision making authority. In a partially parallel PIU, financial systems are selected based on donor preferences and only Donor staff signature is needed for releasing funds but GoL can veto financial decisions. A more fully integrated PIU implies that financial systems selected for the Project are compatible with those used by Government (i.e. GoL has some prior experience in using the systems) and both Donor and GoL have to sign authorizations for release of funds (specify which stage of funds transfer). Ultimately GoL makes all decisions on choice of financial systems and has full authority in releasing funds and conducts its own audit of accounts. Unless reforms take place, when funds flows take place through the GoL system the process for obtaining funds may be considerably slower than if funds flow directly through a parallel PIU imprest account with the CTA and NPD managing the fund. Parallel situation:

• A consultant is usually recruited by each project to act as financial officer (lack of ownership by GoL)

• Lack of harmonization between donors on guidelines for financial management. • Although some Guidelines are now available there has been little progress on

implementing the use of standardized operational and financial management systems Integration Experiences:

• Standard Operations Manual and Standard Financial Management Manual developed (WB and MoF)

• MRC Programmatic planning and 11% contribution to administration unit • Standardized systems are used with which GoL is familiar and a centralized system for

funding request and funding flows exists (DIDM/DOI/MAF and MPWT/DoR). Recommendations:

• Simplify reporting requirements by using a Programme Based Approach with basket funding (see link to CAP 1 Ownership and implementation of NSEDP with costed sector plans)

• Encourage Projects/Programmes to adopt the standardized system for financial management (see link to CAP 2 Alignment, Sub Goal: Strengthening Financial Management: GoL and DPs jointly review and decide on acceptable criteria for PFM regulations and procedures)

• Establish a permanent administration unit in the Division of Planning of each Department which receives capacity building from Projects on standardized system for financial management and on specific requirements of each donor

• Each Project/Programme makes a contribution towards the running costs of the administration unit

29  

G. CAP Issue 2 Operational Responsibility, Support Function: Procurement systems On multilateral funded Projects, Procurement guidelines dictate the procedures and the assets are negotiated with GoL during the formulation of the Project Document. If procurement is parallel, this implies that the PIU Director makes all decisions on purchasing. If it is integrated, GoL and the donors make joint decisions on procurement or that procurement is entirely organized through a central dedicated unit in the Ministry. Project preparation work includes preparing tender documents, inviting bids, evaluating bids, awarding the contract, and procuring equipment. Upon Project completion, assets are accounted and reported to the State Assets Management Department (SAMD)/MoF for reallocation to the concerned ministry/entity. SOP: DPs are expected to integrate their procurement procedures with those of the GoL over a reasonable period of time, recognizing that this integration may not be easily achievable in the short term. Parallel situation:

A project which is funded both by grant and by loan each from a different donor will have two sets of procurement guidelines

Projects often recruit their own procurement officer who is familiar with the guidelines of each donor (lack of harmonization)

GoL only has limited decision making Integration Experiences:

ADB guidelines are harmonized since they are used by IFAD and WB Recommendations:

Harmonize procurement regulations where possible. (See CAP 2. Alignment: Sub Goal: Strengthening National Procurement Regulations and Procedures)

Establish a function in MAF responsible for assets and works directly with MoF and receives capacity building from procurement consultants recruited under a Project. This division could eventually supply the required expertise for each Project

Raise the upper limit of Competitive Local Bidding so that GoL has more decision making authority

H. CAP Issue 3 Reporting Relationship: accountability, M&E, information management Based on the matrix in the CAP an integrated PIU is where: The functional Manager in line department (or Project Manager/Director fitting into the existing organizational structure of the Government) and responsible for reporting to relevant manager and development partners. This was the case for the majority of the PIU interviewed. In other words the Director does not exist in isolation from its Department and is still assessed on his or her performance within the GoL system. As regards the criteria used in the questionnaire, the majority of the respondents felt GoL used their own reporting system as well as providing periodic reporting for the donor and that GoL was in the driving seat and accountable to both their Department and to the donor using TA only as backstopping and not as capacity substitution. Only 2 projects felt reporting was dependent on

30  

TA and reports were submitted directly to donors without passing through the line department. No PIU were in the extreme of being parallel in which the TA is leading the process or there is no sharing at all with GoL. Parallel situation:

• Some donors do not regularly or systematically inform the host Line Agency of progress of the Project since there is a lack of a GoL reporting system or their reporting might be in a different language from English or Lao

• There were few instances where TA report directly back to their donors without notifying the line Department. It sometimes happens when reports are prepared in a language other than English. If that is the case, then the reports disseminated back to the line department by the donor are not usually sufficiently informative

• The Division of Planning in each Department is not well informed of the progress of each Project/Programme

Integration Experiences • GoL leads information collection and reporting and approves final draft using

standardized systems and only uses TA as necessary for improving standards and building capacity of reporting (URDP (NAFRI), LEAP (NAFES))

• Initiatives to try and develop M&E systems in NAFRI (URDP) and NAFES (LEAP) Recommendations:

• TA support preparation of reports but do it jointly with GoL staff and build their capacity to report systematically based on Project objectives (see CAP 4. Managing For Results: Managing Resources and Improving Decision-Making For Results)

• GoL Director always signs final approval of report before handing it over to the donor • Establish guidelines for M&E data collection and build the capacity of a centralized

information management unit in each Department and in MAF DoP

4. Discussion The ADB 2005 SES Report on the role of PIU mentions several studies worldwide that highlight disadvantages of parallel PIU including the following: • Some donors actually require isolation of projects from Government systems thereby limiting

the positive impact of ODA to the individual agency • Programme Officers and Managers of the donor organization resort to parallel PIU as a

means to ensure efficient project management and faster disbursement and instead they should be should be encouraged to opt for integration of PIU and work to overcome problems with implementation (WB 2005)

• Delays in implementation can take place because of the donor insistence on being included in the hierarchy of decision making

• Some projects have a PIU both at National Level and at Province level and this leads to disagreements on Project planning and contributes to lack of reporting

• The many separate requirements of PIU impose high transaction costs on recipient countries and strain their administrative resources

• Parallel PIU are donor driven and undermine established structures and chains of command and divert scarce skilled human resources from mainstream administration

• An exit strategy is missing in many PIU

31  

• PIU contribute more to capacity substitution than capacity building The UNDP prepared a Practice Note on PIUs in 2003 and will soon prepare new corporate guidance on reducing the use of PIU. In 2005 the World Bank produced its own guidance note on the use of PIUs arguing that working through existing country institutions should be the “default” mode, and PIUs—especially parallel “stand-alone” PIUs—should be phased out. The majority of Bilateral Organizations surveyed appear to have a specific policy or to have taken a position on the use of PIUs at that time. The WB noted back in the early 1980s that parallel PIU as inconsistent with capacity building and institutional strengthening (WB 2005). In addition in 2003 the WB noted that capacity building within the PIU was not being transmitted to the Ministries hosting PIUs and that the selection and composition of TA through PIU reflected donor rather than Government preferences. However WB financed Projects continue to use PIU since they safeguard project fiduciary and performance objectives. The WB informant interviewed for this report did not necessarily condemn PIU but rather emphasized the importance of focusing attention on institution building and systematic capacity building. Signatories of the VD have committed to try and reduce and avoid to the extent possible the incidence of parallel PIU. The aim is to maintain or improve project implementation efficiency while at the same time ensuring ownership of GoL. The findings of this survey indicate that the issues mentioned above are indeed true in certain cases in Lao PDR but there are also numerous examples where progress has been made in overcoming these problems. These will be summarized in the section below. A. Cost effectiveness of central level PIU Implementation efficiency is described in the ADB 2005 Report of PIU as: “the degree to which project tasks can be completed in accordance with time limits, available resources and quality standards. It incorporates the level of economy with which inputs are transformed into outputs” With respect to complying with time limits, this survey was not able to specify whether parallel or integrated PIU are more time bound. However the ADB Report does point out that in general, integrated PIU have lower expectations as to being on time and within budgets possibly because of the work load implied and the need for increased capacity. In this respect, cost effectiveness was addressed in this study as a measure of efficiency. The following are indicators that give an insight into the impact of PIU:

Vehicles: If PIU are parallel, there is always at least one vehicle requested in order to accomplish monitoring visits and coordination at National Level. This is clearly inefficient use of ODA funds and even more so if they are loan funds but it benefits the GoL in the short term since a provision for PIU to obtain a motor vehicle is always included in Project budgets

Office equipment: Every PIU purchases office equipment which becomes GoL property after the Project. However it is questionable if it makes sense for GoL to pay maintenance after the Project on a wide variety of equipment all from different manufacturers. (for instance only photocopiers that use local rechargeable ink should be used instead of

32  

having to buy expensive replacement cartridges, and only computers made in the region should be used, preferably those assembled in Laos)

Office running costs: Includes rent, furniture, remodeling, utilities, paper. If the PIU is within a GoL building this is preferable since it can contribute to running costs of MAF. Maintenance should be organized by the MAF maintenance Department even if sub contracted to the private sector

Personnel for office support: Includes secretary, driver, guard. Should be systematically selected and monitored through the MAF personnel office

B. National level integrated PIU: Decentralization or recentralization? Decentralization implies delegating project management functions to agencies such as PAFO which have less capacity than the National level for support functions such as financial management and procurement as well as technical reporting. PIU may be created at Province level that are parallel offices but the trend seems to be to supply national consultants to support the local project management which is embedded within PAFO. However there may be ineffective communication between the National consultants and their counterparts at the Province level and tensions due to the wide difference in salary levels. Decentralization needs to be accompanied by capacity building in order to be effective. This needs to result in increased voice of civil society, a broad public policy dialogue, increased access to information and accountability to the clients of service provision. In some cases DPs avoid setting up a National level PIU and work directly with the Provincial level in the name of decentralization. Reporting takes places directly back to the donor and the National Level has a limited management function. This is easier when there are few Provinces and few donors. There is concern that if management functions are centralized, this will reverse the decentralization process and create “super PIU” which take over all the Project Management functions The National Level technical Departments need to retain their relevance and value added in supporting field Projects (as in the case of MPWT) with a focus on roles such as building capacity of the Provinces in administration, efficient procurement and financial management, M&E, coordination between Projects, Ministries and between DPs, facilitating access to National and international Level networks and information GoL stakeholders are concerned that their benefits will be reduced if they integrate parallel functions of PIU. Generally it is believed that maintaining parallel PIU functions provides both GoL and DPs with a means to circumvent bureaucracy in order to guarantee achieving Project results within specified time frames. Maintaining independence from GoL in Project management allows some degree of flexibility in the provision of salary premiums and perhaps additional supplementary benefits during the Project lifetime to the core costs of the host line department in terms of office and logistics support. Therefore the long term benefits in term of more systematic human resource development and work planning and increased ownership by GoL need to be clearly perceived in order for there to be support in reducing parallel functions.

33  

A significant challenge to integrating parallel functions of PIU is to develop mechanisms that promote coordination between Departments and between Ministries, without having to depend on the PIU external staff to do this. There are no designated Divisions within each Department with the role of coordinating with other Departments and because of the nature of the hierarchy it requires staff of a higher position such as DG level or Minister level. Central structures such as the SWG have been established for this purpose, however these mechanisms require significant human resources and time in order to function effectively. They tend to have a high level membership of Ministry leaders and therefore typically only meet once or twice a year. The main challenge is to ensure there is follow – up to the issues that are brought forward in these venues. Otherwise there is concern that these mechanisms lose their relevance. Some projects think it is more effective to bypass the Central Level and work directly at Province Levels. Therefore the information flow between local level and National Level is very important in order for the National Level decision makers to be able to allocate resources effectively. In addition, sister partnerships between Provinces in Laos and cities overseas cause aid flows that are not even reported at the Central Level to MOF or to MPI. If smaller NGO projects all work only at Province Level there is duplication and lack of planning and coordination by the Province. ODA becomes donor driven instead of needs based. Decentralization has resulted in a loss of budget at the Central Level. Given the shortage of capable human resources at National Level. MPI plays a significant role in the management of ODA. This agency is responsible for establishing standards that all Ministries are supposed to follow for procedures and rules and regulations in managing ODA investments. On the other hand, Line Ministries are in charge of coordinating research, training and education, technical assistance, planning between Provinces and providing information to MPI and MOF for budget allocations and National Social Economic Plans. This report recommends that administration support functions could be accomplished in specialized centralized units within MAF and these units should receive systematic support from MPI in order to apply the standardized guidelines which they have developed together with MoF. C. Case studies: Examples of successful PIU integration (A full description of each case study is in the Annex) The LAO Extension Approach Project (LEAP) is executed by NAFES line Department by Helvetas with SDC funding and is currently in its Fourth Phase. It has gradually been handing over responsibility for execution of Project core activities to NAFES and is now in the Phase of developing standardized systems which will allow it to also handover support functions such as financial management, procurement and M&E. Similarly, RDMA (GTZ/MPI) has eliminated the PIU structure in its second Phase. The CTA will be based physically in MPI and activities will be implemented directly through PAFO at the field level.

34  

The Education Ministry is moving towards integration with the ESDF using a sector wide approach and pooled funding as a transition phase. There are several donors involved such as WB, Aus Aid, UNICEF and WFP that will be coordinated through one central GoL office that will include planning, financial reporting, M&E, procurement and disbursements. Other donors that are not participating in the pooled funding are aligning their TA with the Project. Unlike MAF and MPWT, the MOE does not manage fund flows itself. Instead the funds are disbursement to imprest accounts directly from the MOF. The management experience of top level officials is strong as well as good reporting systems and strong leadership of the ESWG. The Ministry of Public Works and Transport (MPWT) has eliminated parallel PIU since 2001 by institutionalizing all their functions through the establishment of a centralized Project Management Unit (Programme Management Division or PMD) within each Department of the Ministry. Details of the mandate of that Unit can be seen in the Annex. The characteristics that were key to effectiveness of such a unit included committed leadership from the Ministry, a well defined mandate, adequate budget support and staffing. The PMD for each Department report to the DPIC which in turn maintains a relationship with the Infrastructure SWG. These key principles are essential in order to overcome initial resistance to change from GoL and DP stakeholders by making it clear that the benefits outweigh the perceived costs. There are always concerns with centralization of functions yet these concerns can be mitigated if the best practices outlined above are followed. The case study of the Mekong River Commission demonstrates the potential to establish mechanisms where individual Projects or Programmes contribute to the operating expense budget of a centralized unit which provides administrative services including financial management, procurement and M&E. The examples of PBA in this report illustrate the expected objectives that hope to be realized through such implementation structures. In general it is expected that by formulating Programmes as opposed to Projects development initiatives are more coordinated and integrated into the host institution. In addition basket funding mechanisms can also be designed as part of the PBA. Nam Teun 2 is the first example of a Project in Lao PDR where the donors have agreed to give GoL full responsibility for financial management. The Watershed Management Protection Authority (WMPA) does the selection of consultants. SNRMPEP includes a SC composed of MAF, NAFRI, NAFES, MPI, NLMA and WREA. This project expects to strengthen such type of coordination both within MAF and with other Ministries and in addition uses basket funding mechanisms in order to simplify planning and reporting. The SDC funded project Support to Agricultural Colleges (SURAFCO) implemented through Helvetas is an example of MAF leadership where Project identification and design took place entirely under the leadership of the DoP supported by SDC consultants. SURAFCO was

35  

integrated into the National strategy for Agricultural colleges. It is expected that once the capacity of colleges increases, integration will take place without the need of Helvetas support. Another SDC supported project implemented by NAFRI is NURIFAR which aims to be a pilot in establishing GoL ownership of a Project. GoL takes the lead in evaluating performance of TA and SDC backstopping and financial management is entirely under the responsibility of the NPD and the NAFRI financial officer. However the drawback is that the NPD is absent, then funds cannot be released for execution of activities. The main challenge NURIFAR is facing are lack of capacity and limited time of GoL staff since they are on 50% assignment to the Project. The SUFORD Project implemented in DoF and NAFES is both a WB loan programme and grant aid from the Government of Finland. In its second Phase, the grant aid is 4 years but the loan programme is only 3 years with the understanding that in the last year of the Project GoL will take over the budget for those same activities including provision of DSA to extension staff. Coordination between the Departments implementing the Project is entirely dependent on the leadership of the NPD. There are no mechanisms built into the PIU to facilitate coordination. TABI will be a pioneer in promoting coordinating mechanisms within Government ministries. The Central Unit (as the PIU is called) is located in DoP. TABI aims to mainstream biodiversity planning into agencies concerned with management of natural resources. It will be a pioneer in promoting coordinating mechanisms within Government ministries and MAF departments including MAF, WREA and NLMA and NAFRI and the Central Unit (as the PIU is called) is located in DoP. It plans to establish an “Advanced Group” which will be a database of National consultants that can be called upon when needed. This will provide a transparent and equitable way of identifying and recruiting national experts. Country examples Cambodia manages ODA through a Council Development of Cambodia (CDC) which is an independent unit under the MoF (instead of the MPI as in Lao PDR) (www.cdc-crdb.gov.kh). Donors aim to increase Government salaries over time using aid funds during the transition until the Government can take on the budget themselves. In the meantime they have agreed on a system of premiums. Vietnam has implemented a decentralization process and built up capacity of civil service, including project management capacity. The Government favors salary top ups of its staff working on Projects. However as a result of decentralization, problems were experienced with management of Projects at the field level. In addition implementation delays took place because of the complex hierarchy and the Party’s dominance. in decision making. Vietnam has PIU integrated into their Government system. Government staff are assigned to a PIU and are rotated through the PIU in order to promote equal opportunities. Vietnam has a surplus of local consultants which fulfill the intermediate capacity level roles between the international level of TA and the Government staff and produce reports. All donors have agreed to apply the same salary to National consultants and the local consulting company pays a percentage fee to the Government.

36  

Malaysia was documented in the ADB 2005 study of PIU and it was noted that most projects were government – funded and managed through integrated PIU primarily staffed by regular Government officers and with little reliance on contractual staff with respect to project management functions. The Tanzania health sector has introduced basket financing to provide mechanisms for continuous policy dialogue, communication and coordination for more than 15 donors. This is mainstreamed into a Sector Wide Approach (SWAp) overseen by a Committee financed through parallel or pooled funds. The SWAp Committee oversees the pooled funds including approval of work plans, budgets and quarterly release of funds, quarterly reporting and monitoring of achievements against performance indicators (WB 2005).

37  

D. Recommendations

Development Partner’s interest and commitment to alignment with MAF Overall, there is consensus amongst DPs that ODA should be managed more effectively within MAF and there is a shared awareness of the reasons which lead to the creation of parallel functions of PIU. There is a perception that parallel PIU ensure a mechanism for defining accountability to the donors and a chain of command and decision making which would not exist if they were fully integrated. PIU provide an alternative to managing funds through the GoL system and can thereby provide greater flexibility and facilitate agile decision making where GoL staff leading a Project can afford to take risks and be innovation that would not otherwise be possible within a GoL structure. Similarly, international TA can be more objective than National consultants. EU 2008. Review of Donor Agencies’ Policies and Guidelines on TC and PIUs: Developing a EUROPEAID strategy to meet the EU aid effectiveness targets on Technical Cooperation and Project Implementation Units. AIDCO 2008 The Paris Declaration action plans vary in content and level of detail. While they all emphasize a commitment to the overriding principles of ownership, harmonization, alignment, management-for-results and mutual accountability, they differ in terms of specifying how the indicators will be tackled. The action plans suggest a commitment to harmonize and align support around country driven agendas and to work through national systems and structures. In so doing, there is an undertaking to channel resources through national budgets, to utilize country public financial management systems and to work with national procurement systems. While making these commitments, all the agencies signal that the extent and pace of reform will depend on the local context especially as regards issues of governance, capacity and fiduciary risk. Where conditions are considered inadequate, then agencies reserve the right to continue to manage aid resources themselves while at the same time providing support to strengthen core capabilities, especially in the area of public financial management. Adoption of programme based approaches and alignment behind country strategies is likely to encourage greater coordination of technical cooperation inputs among agencies and will make the continued use of parallel PIUs, typically associated with stand-alone projects, less relevant. Specific TA reforms should not therefore be looked at in isolation as much of what needs to be done depends on the implementation of other elements of the Paris agenda. On the other hand, some DPs are trying to avoid the creation of Central Level PIU and are implementing directly at Province Level. They also see this as a way of contributing to the decentralization policy of GoL. The Province level PIU tend to be smaller in scale and are often located within the offices of the Line Department acting as the IA for the Project. However there tends to be duplication and a lack of strategic planning and investments are opportunistic and not

38  

need based. Reporting from the Province level also needs strengthening and needs to be integrated within Province level reporting systems while at the same time annual core budgets are not dependable from one year to the next so planning is difficult. The GoL in its 7th NSEDP which started in 2009 has shown interest in defining a division in each Line Department of MAF which can act as a focal point for the overall management of Projects. The general trend is to move towards a more programmatic approach and strategic sector planning which implies multipartner efforts and a coherent program of loans, grants and TA products and services. In addition, there are several efforts underway to standardize and harmonize project management systems and to experiment with pooled funding in order to reduce administrative burdens on GoL. DPs also understand the importance of delegating authority from their home headquarters or from the regional office to the Country Mission. They are restricted however by rules and procedures which originate from their home countries and are applied universally in all the beneficiary countries of that DP. This can be an obstacle to adapting to a particular country’s systems and harmonizing with other DPs within the country. The models of MPWT and MRC and the implications for reducing parallel PIU functions in MAF are not understood in depth by the majority of DP. This survey and the PIU review of the Education Sector which will take place under the coordination of the ESWG, will help to raise awareness about the lessons learned from such types of case studies. The next step will be to explore options within each Department and with the leadership of MAF for applying these management models within the context of this Ministry. The challenge for MAF is to devise a way to reduce duplication by centralizing certain functions while at the same time ensuring decision making authority is still firmly assigned to Department leaders. The SWG is the mechanism for encouraging discussion amongst DP. However MAF needs to initiate the process by formulating a clear strategy for reducing parallel functions of PIU. One Department of MAF should be selected as a pilot and all the DPs funding initiatives in that Department need to be committed to the new management style. The benefits need to be clear of adopting a new approach and support must be in place to ensure Project results will still be obtained within time frames that are set forth in Project Documents. DPs will naturally be concerned that the efficiency of support functions such as financial disbursements and procurement should not be adversely affected by establishing management reforms The CAP mentions that “pilots would be undertaken beginning in PBA sectors: Transport, Education, and Health” however MAF could also decide to spearhead taking action on some of these issues. In order for financial management to become more integrated in the GoL, Projects will need to design a long term time frame that gradually hands over responsibility while at the same time building capacity in reporting, oversight and auditing. As regards procurement, some donors do not plan on transferring authority to GoL but GoL could still fulfill an important role in the consultation and negotiation process as well as ensuring the mechanisms for procurement take

39  

place smoothly. There is also concern that there could be favoritism and political interests could interfere with a fair process. The delegation of authority for grant aid depends entirely on the donor. In some cases the donor is encouraging a process of capacity building that systematically increases transparency and accountability before handing over full control of grant aid funds. This report gives recommendations of specific steps which can be taken to address the reasons that lead to parallel functions of PIU based on experiences with DP in Lao PDR. The road map below illustrates a step wise manner in which these recommended actions can be implemented. General Recommendations

• Use the experience from questionnaires for PIU reviews in order to revise the matrix in the VD CAP describing parallel and integrated PIU and improve the criteria differentiating parallel from integrated functions. In particular, add criteria with reference to the role of TA.

• Organize a task force to formulate the methods for implementing the recommendations from this joint review taking into account the linkages between this issue and other proposed actions of the CAP

• MPI is in a strong position to provide coordination and capacity building since it is the entry point for all DPs investing ODA in Lao PDR. Therefore MPI should be strengthened so that it becomes the main agency responsible for documenting via the SWG the lessons learned in the process of integrating PIU. MPI should be formulating best practices for DPs, producing standardized guidelines and providing capacity building of centralized units in each Line Ministry which aim to integrate the support functions of parallel PIU (financial management, procurement and M&E as well as basic skills in the Project Cycle such as analysis and diagnosis, TOR formulation and reporting formats )

• Identify the key competencies that need to be improved in order to integrate PIU functions. Capacity building efforts of MAF need to be systematic and include strengthening analytical processes and reflective understanding

Harmonization:

Formulate multi-year Sector based Planning Frameworks (SPF) so that DPs can shape their strategies around it and mainstream their activities

Support the adaptation and mainstreaming of the SOP and SFMM in MAF Reach agreements to standardize DSA and salary incentives

Alignment:

Formulate capacity strengthening plans which include the Personnel Dpt. of MAF and the needs of each technical Department based on a multi-year vision to bring about integration of PIU functions. Then link up with ongoing training activities and curricula in the region for strengthening Programme Management and Administration

New Programmes are mainstreamed into the SPF When DPs do not use English as their official language, technical reports should be

written in Lao language first for review by the GoL partners before being translated into the DP’s language for review by TA and Donors. Eventually, an English language

40  

version of reports should also be available based on a format developed in a centralized M&E system.

Ownership:

• Assess existing planning and management functions within divisions of DoP and explore options for centralizing certain existing parallel functions of PIU within MAF and within each Dpt. (e.g. identification and formulation of new Programmes, financial reporting, procurement and M&E)

Best Practices DPs

• DPs should manage projects directly from their country mission and discourage regional management

• When designing projects with integrated PIU, the donor needs to be aware that there should be lower expectations with regards to complying with time limits and budgets and plan accordingly

• When designing Project implementation arrangements the need for a PIU should be addressed at the outset and should take into consideration funding modality, outputs expected of the Project, government policies, the mandate of the implementing line department, its capacity and its plans for capacity development

Consultation

• The Department and staff ultimately responsible for the implementation of a Project should always participate actively in its planning phase.

External TA

• Job descriptions and selection of counterparts should be in line with the capacity development plan for the Line Department and should not duplicate or substitute the roles of that Department

• The need for long term TA should always be critically assessed taking into account the exit strategy and capacity building of the Government staff

• TA should be supervised directly by the NPD Example of Good Practices The story of CaPAS in India – a good model on recruitment of Technical services The presence of a well functioning Contract and Procurement Advice Section (CaPAS) in DFID India with delegated authority up to £500,000 has gone a long way towards improving the office’s use of the national TC market since 2000, as well as national procurement systems. There has been a significant turnaround from using mostly expatriate TC providers to using nationals. CaPAS has saved some £13m since its establishment in 1999, of which £8m was for TC. This is a result of encouraging greater use of the national TC market and negotiating on fee rates. CaPAS functions include provision of advice to government on procurement as well as to DFID offices in the region with weaker in-house procurement capacity. It also advises on multilaterals’ procurement capacity when DFID is considering cofinancing.

41  

Source: DFID How to Guide in EU 2008. Review of Donor Agencies’ Policies and Guidelines on TC and PIUs

GoL staff work plans

• Project preparation should include an adequate assessment of institutional capacity • Projects should be mainstreamed into existing Sector Plans and frameworks • A dedicated unit in each line department should be able to access qualified staff who can

assume the post of Project Director. If a staff member from one department is assigned to lead a Project which is under a different Department, it should be clear under whose direction that staff is working and the procedure for the performance assessment for that staff should be clear

GoL salaries and incentives • Harmonize DSA and pay scales amongst donors • Salary incentives should be embedded in a performance based system for the Department

as a whole. This is preferable to encouraging staff to take a leave of absence or resigning from Government work in order to work as consultants

The WB 2005 Guidance for Project Management suggests that at a minimum, varying levels of PIU salaries across projects in a sector can be rationalized on standard scales in order to help minimize distortions in the system and discrepancies across projects (e.g. given of the Philippines). In the long term systems of merit based pay should be introduced (see CAP 3. Harmonization and Simplification). The WB suggests that rather than financing PIU salaries, a project could incorporate necessary operational costs for the project related incremental expenses of Government staff with the levels determined on the basis of project needs and the country’s parameters.

Procurement

• A centralized assets management system should be established within MAF which can provide services to Project in order to avoid having to recruit a procurement officer for every Project

Financial management

• Centralize functions and capacity within financial management divisions of each Dpt. Monitoring & Evaluation

• A good information management system is needed in order to be able to monitor performance

• M&E is usually only external for midterm review and final evaluation. There needs to be a GoL system within the DOP to oversee Project activities and maintain databases on Projects which should be available to all Departments

• The goal is to establish a uniform Monitoring and Evaluation System which is applied by the government and donor supported projects.

42  

• Use National consultants who understand the needs of GoL Learning from Projects: A post evaluation mission is undertaken by the DPs agencies at an appropriate interval after project completion. The mission reviews the preparation, design, appraisal, and implementation aspects of the project/program, the costs and benefits, and the outcome of the project/program in relation to its initial objectives. The mission also identifies lessons learned from the project. The mission’s findings, together with the project completion report, form the basis of the project performance audit report.

43  

Planning for reducing parallel functions of PIU: the road map The immediate goal for MAF should not be the elimination of all existing PIU, but rather to develop means of reducing the incidence of parallel functions. New Projects should avoid creating parallel PIU unless there are clear justifications for doing so. Even if it is deemed necessary, the parallel functions of the PIU should only be a temporary measure and clear strategies should be devised that will allow those functions to eventually be integrated. Two broad principles have emerged from this survey in order to reduce parallel functions of PIU. These principles should be applied at every stage of the project cycle. The two principles can be summarized as the following: 1. The first principle is to reduce the diversity and heterogeneity of PIU at MAF using all the

existing initiatives including the SOP, SFMM standard procurement manual, programme planning approaches and a budget framework

Additional initiatives could include standardized TOR for NPD, standard model for PIU including norms fore budget allocations of the different functions within a PIU and standard costs and norms for evaluations and audits

2. The second principle is to centralize core support functions such as procurement, M&E,

human resource development, inter ministry coordination, coordination with donors, integration of the Department of inspection of MAF in evaluations of projects. The idea is that MAF provides service units to Projects but does not seek to control their operations (also see Annex 7F, Suggested mandate for a centralized project management unit).

The road map below proposes short term and medium term activities which will enable the implementation of the two principles mentioned above (the activities listed in italics are those that are already planned in the CAP therefore have been repeated here to indicate the linkages with all goals of the CAP): Short term

MAF DoP organizes Task force composed of representatives of Line Departments and SWG - ANR to review consultant’s report and agree on the follow up activities and time frame

Representatives of each Line Department receive a briefing on existing models of centralized management functions such as MPWT and MRC and MAF formulates a strategy for adopting these models

Assess existing and potential priority planning and management functions within divisions of DoP (ODA database, M&E, project design)

Explore options for centralizing certain existing parallel functions of PIU within MAF and within each line Department (e.g. identification and formulation of new Programmes, financial reporting, procurement and M&E)

Task force develops guidelines with MPI and other SWG for preventing the establishment of new parallel PIU

44  

Capacity building programme is developed with Dpt of Personnel taking into account the strategy for centralizing certain functions and the needs of each technical Department based on a multi-year vision to bring about integration of PIU functions. Then link up with ongoing training activities and curricula in the region for strengthening Programme Management and Administration

CAP Section 3. Harmonization and Simplification, Goal 2. (VD 19,22) Action ii) MAF

and DPs decide on, and document core principles / good practices regarding missions and training scheduling, including consideration of mission free periods

CAP Section 3. Harmonization and Simplification, Goal 1. (VD 18), Action iii) GoL and DPs (through the SWGs, where appropriate) share their training and mission plans and organize harmonized and/or joint training and missions where applicable;

Specific plans are formulated for MAF to adopt existing SOP and SFMM and a capacity building programme is formulated

Existing ODA databases in DoP and NAFRI are consolidated and are used as a basis for a MAF information management system and M&E system (VD CAP viii)

MAF DoP task force gathers experiences on methods to use salary and DSA as incentives CAP Section 3. Harmonization and Simplification, Goal 2. (VD 19,22) Action ii) MAF

and DPs decide on, and document core principles / good practices regarding missions and training scheduling, including consideration of mission free periods

CAP Section 3. Harmonization and Simplification, Goal 2. (VD 19,22) Action iii) GoL and DPs (through the SWGs, where appropriate) share their training and mission plans and organize harmonized and/or joint training and missions where applicable;

CAP Section 4. Managing For Results, Goal 1. (26, 28) iv) DPs work with GoL to prepare joint formats for periodic reporting and align to above results oriented frameworks;

CAP Section 2. Alignment, Strengthening Financial Management, Goal 4. (VD 6, 8, 12, 14), Strengthening national PFM systems, Action (iv) MAF with MoF strengthens internal control framework by establishing internal audit functions and associated enforcement mechanisms

CAP Section 1. Ownership Goal 1. (VD 1,2, 30), Action v) Develop / implement plan to strengthen coordination between ministries, central and local governments in the preparation of sector plans and move towards programme based approaches; Medium term

Agreements are reached with respective donors on using Lao Language as the primary basis for reporting

A Sector wide Planning Framework for MAF is formulated (costed sector plans and build consensus around sectoral priorities)

Job descriptions and selection of counterparts should be in line with the capacity development plan for the Line Department and should not duplicate or substitute the roles of that Department

The need for long term TA should always be critically assessed taking into account the exit strategy and capacity building of the Government staff

CAP Section 2. Alignment, Goal: Strengthening National Procurement Regulations and Procedures, 6. (VD 6, 8, 15, 16) Action i) DPs clarify and share with GoL and other DPs

45  

their respective legal and policy regulations for the use of national procurement systems and standards to deliver ODA;

CAP Section 2. Alignment, Goal: Strengthening National Procurement Regulations and Procedures, 6. (VD 6, 8, 15, 16) Action ii) GoL and DPs jointly review and decide on acceptable criteria on procurement regulations and procedures;

CAP Section 2. Alignment, Goal: Strengthening National Procurement Regulations and Procedures, 6. (VD 6, 8, 15, 16) Action iii) GoL Procurement Manual and Standard Bidding Documents are distributed to DPs;

CAP Section 2. Alignment, Goal: Strengthening National Procurement Regulations and Procedures, 6. (VD 6, 8, 15, 16) Action xi) GoL fully implements new procurement decree;

CAP Section 2. Alignment, Goal: Strengthening National Procurement Regulations and Procedures, 6. (VD 6, 8, 15, 16) Action xii) GoL recruits and trains sufficient number of staff at the PrMO;

CAP Section 2. Alignment, Goal: Strengthening National Procurement Regulations and Procedures, 6. (VD 6, 8, 15, 16) Action xiii) Systematic collection of procurement information and monitoring of performance and outcomes (through PrMO);

CAP Section 2. Alignment, Goal: Strengthening National Procurement Regulations and Procedures, 6. (VD 6, 8, 15, 16) Action xiv) DPs increasingly adopt GoL procedures, rules and regulations to manage ODA-related procurement.

Introduction of Merit based pay initiaves DSA is brought in line with inflation rates and strategies are formulated to increase salary

scales for GOL staff CAP Section 1. Ownership, 1. (VD 1,2, 30), Action x) Develop / implement a consultation

plan that facilitates consultation between central policy ministries (CPI, MoF, MoFA), Line Ministries, local government, private sector, DPs and NGOs;

The road map below for reducing parallel functions of PIU uses the fundamental principles of the CAP which are harmonization and simplification, alignment and finally ownership (also see Figure 1). A brief summary of the implication of each of these three principles and the relevance to the road map is given below (based on the VD CAP). Harmonization (between Donors) and simplification implies that GoL & DPs rationalize regulations, procedures & incentives and increase aid effectiveness through coordinated approaches such as pooled funding Alignment implies that DP policies, activities and aid flows are aligned with GoL strategies and plans, regulations and procedures and that DPs do not create structures for implementing ODA-funded projects that are parallel to GoL structures; Ownership implies that GoL takes an effective leadership role in coordinating aid at macro and sectoral levels through RTM and SWG and that GoL identifies specific capacity constraints to its leadership of the aid effectiveness agenda at the macro levels and decides with DPs on a program of support

46  

The section below uses the VD CAP as the framework for planning and integrates the recommendations of this report into each of the relevant activities in the VD CAP (in italics). Table 2: Road Map (This matrix is based on the framework in the VD CAP)

Harmonization and simplification

(donor to donor)

Alignment (between donors and GoL)

Ownership (GoL sets the agenda)

Function of PIUs

Step 1 (short term)

Step 2 (short to medium term)

Step 3 (medium to long term)

Issue 1 Staffing External TA

• Reach agreement with DPs that TA should be supervised directly by the NPD

• Capacity building plan used as a framework for identifying needs for TA

• Counterparts for TA are strategically selected

• Develop guidelines for reducing the number of long term TA positions in new projects

• Administration TA are assigned to strengthen a centralized project management unit

• DPs reach consensus that TA roles should be separated based on whether they are defined as support functions (administration) or technical functions

Issue 1 Staffing GoL incentives, salaries

• DPs agree on using DSA rates based on PACSA and to include a supplement to compensate for inflation

• Establish best practices to ensure an exit strategy for recurrent cost of DSA after the project ends

• Assess the experiences in Vietnam and Cambodia and relevance for Lao PDR

• Formulate standardized guidelines for recruiting GoL staff as consultants

• Develop a system of standardized incentives system for staff of an centralized integrated management unit based on model of MPWT

• Merit based pay initiatives with GoL performance reviews

Issue 1 Staffing GoL annual work plans

• Formulate sector planning frameworks (SPF) for MAF and for each Line Department

• New Projects are integrated into long range strategic frameworks of MAF

• Use SPF to assimilate Project calendars with the time frame of GoL

• New Projects are integrated into long range sector planning frameworks of MAF

Issue 2 Operational responsibility/ Consultation processes

• A centralized project management unit in each Department is responsible for identifying needs and proposing new Projects based on an analysis of previous initiatives

Issue 2 Operational

• Assess on-going experiences with pooled

• Project work plans are integrated into the host Line

• Line departments/unit of concerned government

47  

Harmonization and simplification

(donor to donor)

Alignment (between donors and GoL)

Ownership (GoL sets the agenda)

responsibility/ Management of Project implementation

funding mechanisms and PBA with harmonized work plans

• Reduce administrative burden of GoL related to the number of duplicative missions

• Pilot the SOP and share experiences using the SWG

Department • A capacity building plan is

formulated for MAF in order to reduce parallel PIU functions and training programmes on project management are integrated within this plan (including linkages with PRAM described in annex)

• Delegate responsibility for organizing SC to a centralized project management unit

ministry/agency are involved in the design and execution of core project activities

Issue 2 Operational responsibility/ Financial management

• Present experiences of integrated PIU to MAF and formulate an agreement on the road map

• Pilot the SFMM and share experiences using the SWG

• Formulate a Project which aims to establish a centralized project management unit in one of the line Departments as a pilot and build capacity of staff using external TA where necessary

• GoL is given increased responsibility for integrating financial management instead of parallel management by the PIU

Issue 2 Operational responsibility/ Procurement

• Develop a set of guidelines with donors and raise the threshold for local competitive bidding

• GoL has established standardized rules and procedures for procurement

Issue 3 Reporting relationship/ M&E, accountability

• Information management systems are developed for sharing information

• Reporting systems are standardized using MPI formats and harmonized for multiple donors through pooled funding mechanisms

• GoL timetable for reporting is taken into account

• Training on M&E is coordinated within MAF

• Transparency is increased through databases at DOP with information on budgets and personnel in ODA projects

• TA support preparation of reports but do it jointly with GoL staff and build their capacity to report systematically based on Project objectives

48  

Annex 1. VD CAP Matrix describing PIU functions (From the Country Action Plan of the Vientiane Declaration on Aid Effectiveness)

Key features Non-Integrated / Parallel

Semi-Integrated Integrated* (almost fully integrated and integrated)

Staffing composition and salary structure

- Mainly consultants - Maybe a civil servant with premium salary as Director (or as counterpart)

- Mix of civil servants with premium salaries and consultants.

-Mainly civil servants with regular salaries assisted by few consultants, if any.

Operational Responsibility

-Project core activities under the control of the parallel implementation structure -Support functions: Planning, procurement. Financial Mgt, M&E and reporting also executed by implementation structure.

-line departments/units of concerned ministry/agency are involved in the design and execution of core project activities. - Support functions mainly executed by the implementation structure.

-line departments/unit of concerned government ministry/agency are involved in the design and execution of core project activities. - most support functions executed by existing relevant departments/units (i.e. support functions are solely under the responsibility of GoL) or - support functions executed by a special unit dedicated to supporting most projects financed by various development partners.

Reporting relationship

Head reports to development partner or Minister or Vice-Minister

Head reports to Director General of relevant department/unit

Functional Manager in line department (or Project Manager/Director fitting into the existing organizational structure of the Government) and responsible for reporting to relevant manager and development partners.

* In this situation the term parallel implementation structure loses its sense as the work is done by the relevant Government departments.

49  

2. Documents reviewed

• ADB 2005. Special Evaluation Study on the Role of Project Implementation Units • ADB 2008. Technical Assistance Report, LAO PDR Capacity Strengthening for

Enhancing Aid Effectiveness • EC 2008. Preparation of the Strategy on Technical Cooperation and PIU:

Delegation’s voice: current practices and exploratory ideas • EC 2009. Reforming Technical Cooperation: The Backbone Strategy on TC. • ECDPM 2008. Study of EC Technical Cooperation and PIUs: Review of the

Regulations and Guidelines applicable to Technical Cooperation and Project Implementation Units. European Centre for Development Policy Management (ECDPM).

• EU 2008. Review of Donor Agencies’ Policies and Guidelines on TC and PIUs: Developing a EUROPEAID strategy to meet the EU aid effectiveness targets on Technical Cooperation and Project Implementation Units. AIDCO 2008

• MoF Standard Financial Management Manual (SFMM) • Mossberg and Sisongkham 2008. Incentives provided by projects at NAFRI

Summary of situation and an outline of a NAFRI Incentive system. • MPI, WB Standard Operating Procedures (SOP) • Poverty Reduction Fund. 2003. Finance and Administration Manual. Lao PDR. • Schmidt P., 2009 Aid effectiveness in extension, (NAFES, LEAP) • UNDP. Rethinking Technical Cooperation • URDP NAFRI 2007. Accounting Procedures Manual. • WB 2005. Guidance for Project Management: Strengthening Institutional Capacity

during Project Implementation. • WB 2005. Lao PDR: Road Sector – New Implementation Paradigm in: Guidance

Note for Project Management: Strengthening Institutional Capacity during Project Implementation

• WB. MPWT. 2007 Paving the Road for Better Capacity. • WB. Report of mission to assist MAF in developing strategies for (i) capacity

development, and (ii) phasing out of project implementation units (Verbal communication)

50  

3. Minutes of the Inauguration Workshop (Held 11 August 2009 at Central Hall, MAF) The workshop was successful in describing the functions of PIU and explaining the difference between parallel and integrated functions. The TOR and work plan of the joint review were presented and stakeholders indicated their interest in contributing and sharing experiences during the course of the mission. During the discussion following the presentation the following issues were raised:

1. The role of TA within the PIU should be included in the matrix classifying the integrated and parallel functions

2. The Irrigation Sub Sector has experience with implementing Projects without establishing a PIU.

3. It’s important to describe the relationships or coordination mechanisms which already exist between PIUs at MAF

4. When analyzing parallel and integrated functions, it is important to differentiate between processes for harmonizing systems and for ensuring ownership in decision making. Harmonization of systems might be the first step of integration before arriving at fully integrated decision making

5. Simplifying and standardizing systems as well as capacity building is a key priority for all the PIU within MAF in order to increase ownership by GoL and reduce the number of parallel functions

6. DPs need to explore options for harmonizing their policies in order to reduce the number of PIU

7. The SWG are already facing challenges since Donors themselves are not harmonized with the needs and goals of the GoL. In order to comply with the Vientiane Declaration we need to be more GoL driven and less donor driven

8. PIU is needed in order to facilitate coordination with the host agency but the TOR of the PIU are very important. It is important to recognize that the PIU in different agencies can have different mandates but regardless they should be harmonized on the mandate of their host organization

9. We need to assess the priority function of PIU, i.e. whether it is capacity building or operation responsibility only

10. There have been other commitments between Donors and GoL and we need to coordinate the activities carried out under the umbrella of the Vientiane Declaration with those other commitments

11. PIU are important for multi donor projects but in order to avoid parallel functions we need to assess why each Donor expresses a need for a PIU

51  

4. Definitions

Definitions from Ulf G. Hägglund, 2008. Program Approaches and a Suggestion for the Way Ahead for a PBA for Upland Development. Project: Usually donor driven, donor controlled financing and management Programs: A way of bringing together a set of incoherent scattered projects in one or more sectors, with financial contributions from multiple donors who either selected specific interventions or pooled their money or used a basket fund. Sector Based Programme Planning: Move toward country ownership and less donor driven and implies more coordination between donors. The development of the sector or sub-sector needs to follow an approved policy document or overall strategic framework (i.e. framework planning). This then allows donors to pick and choose which aspect they want to support and ensures the Project is mainstreamed within the framework. Program Based Approach (PBA) PBA is Sector Based Programme Planning with the addition of the following three components:

A performance monitoring system A systematic mechanism of consultation with clients and beneficiaries An agreed process for moving towards harmonized systems for reporting,

budgeting, financial management, and procurement. PBA also include the following four elements:

Leadership by the host country or organization A single program and budget framework Donor coordination and harmonization of procedures Efforts to increase the use of local procedures over time with regards to

program design and implementation, financial management, and monitoring and evaluation.

EU 2008. Review of Donor Agencies’ Policies and Guidelines on TC and PIUs. Programme-based approaches open up the opportunity to think beyond the requirement of discrete projects, to broaden analysis in terms of capacity assessment and to explore options for programme management that work within national structures. The absence of country and sector capacity development plans/strategies however limits opportunities for coherent and coordinated responses, and there are no proposals for how donors can meet indicators 4 and 6 in the absence of capacity development plans.

52  

Implementation efficiency: The degree to which project tasks are completed in accordance with time limits, available resources, and quality standards. Executing Agency: The Government Department which is holding the Project. This is different from the Implementing Agency which is the organization which is actually responsible for carrying out the activities of the Project. It might be sub contracted by the Executing Agency or it might be a line agency Imprest Account: This is a dedicated account replenished with new funds as it goes to zero. The procedures for reimbursing the imprest require that a Withdrawal Application be prepared by the PIU accompanied by an expenditures statement that reconciles to the value of the imprest.

53  

5. Linkages between recommendations for reducing parallel PIU functions and activities in the CAP

CAP Issue Recommendation Link to CAP Staffing: GoL staff salary structure

Projects are integrated into sector planning and the GoL annual planning

CAP 1 Ownership and implementation of NSEDP with costed sector plans

Staffing: GoL staff salary structure

Agreement between donors on harmonizing DSA rates and if possible systems of merit based pay

CAP 3. Harmonization and Simplification)

Staffing: Work plans of GoL staff

Work with donors to anticipate and plan human resources based on multi-year Sector Planning and PBA

CAP 1 Ownership and implementation of NSEDP with costed sector plans)

Operational Responsibility: Consultation processes

Reduce the number of Projects by using PBA and anticipate staffing priorities so that the same staff that involved in the Project design phase are involved in the implementation of the Project

CAP 1 Ownership and implementation of NSEDP with costed sector plans)

Operational Responsibility: Consultation processes

Reduce the number of Projects by using PBA and anticipate staffing priorities so that the same staff that involved in the Project design phase are involved in the implementation of the Project

CAP 1 Ownership and implementation of NSEDP with costed sector plans

Operational Responsibility

Reduce the number of Projects with separate PIU and use PBA which are synchronized with GoL planning cycle

CAP 1 Ownership and implementation of NSEDP with costed sector plans)

Reporting Relationship TA support preparation of reports but do it jointly with GoL staff and build their capacity to report systematically based on Project objectives

CAP 4. Managing For Results: Managing Resources and Improving Decision-Making For Results)

Reporting Relationship Simplify reporting requirements by using a Programme Based Approach with basket funding

CAP 1 Ownership and implementation of NSEDP with costed sector plans

Reporting Relationship Encourage Projects/ Programmes to adopt the standardized system for financial management

CAP 2 Alignment, Sub Goal: Strengthening Financial Management: GoL and DPs jointly review and decide on acceptable criteria for PFM regulations and procedures

Procurement systems Harmonize procurement regulations where possible

CAP 2. Alignment: Sub Goal: Strengthening National Procurement Regulations and Procedures

54  

6. Description of Projects at MAF implemented through Line Departments at Central Level One can also analyze differences between the mandate and past history of each Line Department. For instance, NAFRI’s strength is that research skills are commonly found as part of the training of agricultural officers (unlike extension – see section below). Agricultural technical services were initially under the Ministry of Economy and extension was only carried out within aid projects particularly with US AID. The MoA was created in 1985. Technical services were delivered through the medium of state farm collectives. In 1986 new economic mechanisms were introduced including family production units. In 1990 ADB attempted to integrate research and extension in the DoA. Within agriculture, irrigation, forestry and livestock, only agriculture had a research component. NAFRI and NAFES were then created in the late 90s with the objective of decentralizing technical services. However it was not effective at that time because of unclear management roles of Province Governors with respect to MAF central management. Extension is therefore a new field of expertise in Lao PDR with almost no facilities available for training in extension management and skills. NAFES staff are transferred from other Departments. Staff for Projects are negotiated with donors during Programme Design and is part of the GoL contribution. Part time staff can be drawn from Nabon University. There is therefore a need for administration education adapted to the needs of poverty reduction and agricultural management. HRD is the backbone of poverty reduction. DoF is implementing the Forestry Development Fund which is a GoL mechanism for long term funding of research and field activities executed by DoF beyond the lifetime of a Project. DoF will need a capable centralized unit to manage and monitor this fund and ensure coordination and planning with NAFES and NAFRI. DoP is a relatively recently formed Department of MAF. It consists of 6 Divisions including the Division of Rural Development Cooperation (DRDC) which is implementing PCADR, the Division of International Cooperation (DIC) which is responsible for strategy development, information management and preparation of MOU. The Division of Planning is responsible for M&E, procurement and project accounts and the Division of Finance is responsible for financial reporting and audits. In addition there is a statistical Unit. It seems that there is a perception that there is currently a lack of coordination and communication between divisions of DoP and it is not clear why a Project is assigned to a particular division. It would seem logical for certain support functions to be centralized at DoP such as M&E. There is some debate as to whether procurement should be under the direction of DoP and there is concern of delays in processing requests as well potential favoritism and nepotism. However it would seem that by centralizing procurement, selection of valuable assets such as vehicles could be systematized.

55  

Department Funding multilateral and bilateral projects

(US$)

Number of multilateral and bilateral projects

Funding NGO projects (US$)

Number of NGO projects

DOP 84,669,610 8 0 0

DOF 20,007,002 5 1,977,042 3

DOA 8,394,907 6 1,197,371 3

DOI 37,100,000 2 0 0

DLF 36,023,667 14 740,075 2

NAFES 27,072,750 5 0 0

NAFRI 22,385,784 8 145,554 1

Total 235,653,720 48 4,060,042 9 Based on database of multilateral and bilateral ODA, Draft in preparation, DIC/DoP

56  

DOP

NAFRI

NAFES

DLF

DOI DOA DOF

57  

7. Examples of successful PIU integration

Integrating PIU functions: Experiences in Lao PDR The study identified several successful initiatives that have already been initiated for integrating PIU functions in Lao PDR

Harmonization: Standard Operations Manual and Standard Financial Management Manual

(WB, MoF and MPI) Harmonization: Initiatives to try and develop M&E systems in NAFRI (URDP) and NAFES

(LEAP) Harmonization: NAFRI Draft report on system of staff salary incentives (Ramboll 2008) Harmonization: ADB, IFAD and WB all use the UN formats and procedures for reporting Simplification: ADB is managing the IFAD loan funds in the SNRMPEP PBA Harmonization and alignment: PBA implemented with DIDM (DOI) and the SNRMPEP PBA Harmonization and alignment: MoE PBA approach (BESDP) Harmonization: MoF Procurement Manual 2009 Centralizing administration: MPWT (Project Monitoring Division in the Dpt. of Roads) Centralizing administration: MRC Programmatic planning and 11% contribution to

administration unit Ownership: Information management e.g. NAFRI and DoP databases of Projects Ownership: NAFRI develops a strategy which is in line with GoL long term planning priorities

and which provides a framework for donor alignment and takes responsibility for its own successes and weaknesses

Ownership: URDP is seen by MPI as a good model Ownership: SUFORD is using mainly National consultants in all its Province level

implementation offices and only uses TA for specific technical backstopping where innovation and capacity building are needed

Consultation: In loan components GoL has major role in decision making (e.g. SUFORD implemented by DoF)

Reporting: GoL leads information collection and reporting and approves final draft using standardized systems and only uses TA as necessary for improving standards and building capacity of reporting (URDP (NAFRI), LEAP (NAFES)

TA selection and management: TA work under the direction of the NPD (URDP NAFRI) GoL work plans: integrated planning (URDP) and location of CTA in GoL unit (LEAP, NAFES

and GTZ RDMA CTA within DIC of DOP) Alignment, GoL salaries and incentives: no tops up but consulting is permitted with a

contribution to the parent agency (NAFRI) Alignment, GoL salaries and incentives: MPI is developing an incentives system that includes

training that acknowledges good performance Operational responsibility: GoL is fully in charge of implementing the AWP Procurement: MoFa has its own procurement guidelines and they are similar to those used by

WB. MoFA guidelines are used for National Competitive Bidding while WB guidelines are used for International Competitive Bidding.

Financial management: Standardized systems are used with which GoL is familiar and a centralized system for funding request and funding flows exists (DIDM/DoI/MAF and MPWT/DoR).

58  

A. LAO Extension Approach (LEAP/NAFES) LEAP began to implement its first Phase at the same time as NAFES was created. The two entities are therefore intricately linked. This has enabled LEAP has taken a range of measures to make use of partner’s systems. LEAP has taken a range of measures to make use of partner’s systems location of LEAP in the compound of NAFES, National Project Director, Joint Steering Committee, transparent reporting LEAP transfers funds to the implementing partners

A transfer of financial responsibility to the partners using partner’s system for the disbursement of funds needs a careful assessment of the fiduciary risk. Key factors are a) partners’ capacity, b) reliability of partner’s system, c) trust

LEAP demonstrates that a gradual approach can be used in order to transfer PIU functions from parallel to integrated. Initially LEAP was implemented through a parallel PIU and later it was transferred to a new Division which was established (CETDU). Although LEAP does use international consultants, GoL remains as the driving force of the Project. The CTA retains important roles even if the PIU is integrated because the CTA are familiar with the donor environment while on the other hand the NPD is well informed about the GoL institutional landscape and organizational culture in MAF. The NPD can also use the PIU structure as a mechanisms for implementing unpopular measures and provides a face saving solution for avoiding yielding to pressure to give in to favoritism.

59  

B. Centralization of functions: Model of MPWT

MOF MPI ISWG

Dpt of Roads Programme Monitoring

Division

Dpt. Housing and Urban Planning

Unit within the Division of Finance

DOPC

(Dpt of Planning and Cooperation)

Dpt .of Personnel (capacity building

plan)

Project PIUs (mainly field

based)

Project PIUs (mainly field

based)

60  

Financial management system of MPWT

Direct

Payments

Payments to

imprest accounts

BoL

MOF

Dpt of Roads Programme Monitoring

Division

Dpt. Housing and Urban Planning

Unit within the Division of Finance

DOPC (Dpt of Planning and Cooperation)

Division of Finance

Project PIUs (mainly field

based)

Project PIUs (mainly field

based)

61  

Project Monitoring Division within the Department of Roads (14 PIU in DOR, 25 total in MPWT) 30 permanent staff Functions of PMD Directors of each Project and PIU drawn from PMD staff Consultation on programme formulation Planning and budgeting, preparation of requests for replenishments Operational management of Project Preparation of procurement documents and manage the bidding and approval process Organize separate committees for each Project There are no top ups to salaries. Only leave of absence to work for Projects is permitted

but staff lose opportunities for promotion Standardized MoF financial reporting system where donor agrees

Disbursement Division of DOR: Management of imprest accounts Training of Province level PIU staff

Personnel Department Budget of each Project from capacity building goes to Personnel Department Permanent staff drawn from existing quota: Director of Division Deputy Director Staff

The PMD is separate from the Division of Planning because there are too many projects (although in the DHUP the PMD is a unit within the Technology and Environment Division). Once a project is completed, staff of each PIU return to their positions in PMD, usually not DG or DDG level staff The Projects are integrated into a 5 year plan and staffing requirements are planned in advance. Needs for coordination between Departments or between MPWT and other ministries is not very extensive and is done by the ISWG

62  

Lessons learnt In order for a centralized unit to be effective it needs: Adequate operating budget Adequate staffing Clear vision of its roles and capacity development

63  

C. Example of institutional set up of MRC (Centralized administration, 11% contribution to OEB and programmatic planning)

64  

Expenditure Part 1 Regular Budget: 3.0 mill US$

OEB (Operating Expenses Budget includes management, financial and admin services and monitoring):2.0 mill US$

Services and core functions: 1.0 mill US$ Part 2 Technical Cooperation Budget: 12 mill US$ Total Annual Budget (2005): 15 mill US$ OEB income Contributions of Governments: 1.1 mill US$ 11% mgt. and admin fee (levied on actual Project expenditures): 0.9 mill US$ Total OEB income: 2.0mill US$ 11% contribution Administrative Services (CEO of MRC Secretariat, division Directors in 4 countries,

professional staff, admin staff, meetings, travel) Financial management Procurement Logistics and admin IT services such as software support (but monthly internet fee are charged to each

Programme based on usage) Human resources services (recruitment, contracting etc) Maintenance costs Audit costs

Other services paid on the basis of service agreements: Specialized technical services from the Technical Support Division funded by pooled

Programme resources in order to reduce duplication of work and maximize economies of scale

65  

D. Example of PBA Model in SNRMPEP Sustainable Natural Resource Management and Productivity Enhancement Programme (ADB/IFAD) Program Management Office within DOP

Consolidating the AWP and procurement plans for each Province and submitting to Donors

Overall reporting Financial Management Preparation of Withdrawal Applications Training Programme, recruitment Procurement and management of assets Oversight of the implementation of sub projects (45 sub projects of 100,000 – 500,000

US$ ea., 25 sub projects of 20,000 US$ ea) Project Performance Monitoring System Secretarial to NPSC

Staff: NPD, NPM, Implementation Officer, Procurement Officer, M&E Officer, Admin Manager, assistant, accountant and secretarial support staff

66  

Funding flows management system in SNRMPEP

ADB (also manages IFAD fund)

MOF

ADB imprest account

Request for Authorization of

payment

IFAD imprest account

MAF PMO

Project Advance Account for PPO

Provincial Project

Advance Accounts

Project Advance Account for PPO

67  

E. Example of MOE Educational Sector Development Framework MOE has very limited GoL core funding and is very dependent on Projects Step 1: Pooled funding

(Using GoL systems for financial management and disbursement, reporting, procurement and M&E) Flexible provision for donors who do not want to pool their funding can at least align their TA) Step 2: Sector wide approach

68  

F. Recommended institutional set up in MAF for a centralized project management unit RECOMMENDED INSTITUTIONAL SET UP IN MAF

FOR PROJECT ADMINISTRATION AND MANAGEMENT OF TECHNICAL SUPPORT

MOF

MPI

SWG ANR and SSWG

DPs/Donors

(represented at SC level)

MAF Dpt

of Personnel

DoI DoP

Unit for administrat

ion of projects

SC

DOF DoP

Unit for administrat

ion of projects

SC

NAFES DoP

Unit for administrat

ion of projects

SC

DOP SC

NAFRI DoP

Unit for administrat

ion of projects

SC

DOA DoP

Unit for administration of projects

SC

DLF DoP

Unit for administrati

on of projects

SC

Integrated Project PIUs 

Integrated Project PIUs 

Integrated Project PIUs 

Integrated Project PIUs 

Integrated Project PIUs 

Integrated Project PIUs 

69  

Recommended mandate for a centralized project management unit This unit could be established within the Division of Planning of all technical Departments of MAF (DOI, DOF, DLF, DOA, NAFES and NAFRI). It would be a permanent organizational structure staffed by GoL staff and contracted TA staff assigned to Projects. The roles of this unit include:

• Project identification • Project formulation and appraisal • Inputs to MPI in the preparation of agreements with donors • Project inception phase, strategy development • Planning and coordination with other Departments and with other Ministries • Preparation of procurement requests, maintaining register of fixed assets and submit

details of assets to the State Assets Management Department of MoF • Maintenance of fixed assets • Ensuring compliance with documentation of fixed assets • Organize meetings of Steering Committees for all projects and prepare minutes • Develop job descriptions, recruit external staff, monitor their performance and manage

time sheets and payrolls • Assessing performance of GoL staff assigned to support each Project from within the unit • Project financial management including monthly cash flow estimates, requesting MoF for

replenishment of imprest account, direct payments to suppliers/service providers, authorizing and monitoring disbursements, accounting and reporting to donor, liaison with auditors during audits, managing and reporting on petty cash for specified activities

• Monitoring budgets and annual budget preparation • Prepare requests for replenishments • Preparation of TOR for TA, joint recruitment with donor, supervision of TA performance • TA for capacity building on Project management and administration • Project completion including disposing of fixed assets • Support post project evaluation missions with donors • Information management • Information Technology (IT) • Coordination of training for GoL staff through the Department of Personnel Staff composition: staff with existing experience or potential in project management and project financial management as well as in information management, National Project Managers for each Project in that Department Goal of establishing a permanent unit for administration of projects:

• Duplication of management training is reduced • GoL staff receive capacity building from all projects • Management systems are harmonized • NPDs can make more effective use of their time

Role of Project PIUs

70  

This is a temporary structure, or team within the unit for administration of projects. It is headed by the NPD assigned within the administration unit. The roles of the PIU include:

• Planning, management and review of Project implementation activities and budgets • Supervision of Project staff (both GoL and contracted external staff) • Support to PAFO and DAFEO for technical inputs • Technical reporting (monthly, quarterly and annual) to MPI, MoF, MoFA and Donors • TA for technical inputs • Secretarial support to TA

Role of DoP

• Management and reporting on ODA in all departments • Receives withdrawal applications from each department, reviews, approves and processes

with BoL • Database of Projects • Project Evaluation (except for Projects implemented by DOP) • M&E in collaboration with MPI • Support to technical Departments for procurement and financial management • Internal audit • Preparation of contracts for international TA recruited in MAF and support for their

personal logistics and documentation • Organize with MPI and MoF provision of training to GoL staff in the unit for Project

Administration Other MAF Departments with roles in supporting Projects: Dpt. of Personnel

• Organize capacity building training to GoL staff on administration and management 8. Method used for analysis of PIU

Review of background documents A comprehensive collection of reports describing past and recent experiences with PIU was compiled. These experiences were useful particularly for the development of the questionnaire format. Most of the lessons learned from international studies help to point out the weaknesses inherent in parallel PIU and provide a few general recommendations of the best practices which could be adopted by Lao PDR. The most useful material from the perspective of providing a road map was case studies of various types of management systems which are being implemented in Lao PDR itself such as experiences of MPWT and MRC.

Inauguration workshop A workshop was held at the beginning of this review with the following objectives:

Review of database at DoP The DIC of DoP has a detailed database on each of the ODA activities implemented at MAF. This information was used in order to prioritize the most representative Projects and organizations to interview for this study.

71  

Interviews with key informants This included interviews with representatives at WB, ADB, UNDP, heads of Departments familiar with the goals and VD and RTM and other key informants

Structured interviews and Questionnaire A questionnaire was used to collect information about all different types of PIU or project management units (see Annex). The objective was to gather information on past or current experiences within the Department with PIU and to try to classify the functions of a PIU as parallel, semi-parallel, partially-integrated or integrated. A copy of the questionnaire was sent to respondents ahead of time. Several members of the Department who have had experience in implementing projects both with or without PIU were included in the interview. Each interview included a description of the PIU review methods and an introduction to functions of PIU and the differences between parallel and integrated functions.

During the interviews, as the situation became clearer, adjustments and improvements were continually made to the options given in the multiple choices so as to reflect the actual situation more precisely.

The selection of subjects for interview were based on the following criteria:

• At least one programme or project in each Department of MAF was selected. The programme should be of significant scale in order to be representative (i.e. more than US$500,000 total ODA) and should be implemented through a National Level PIU. Province level PIU were not addressed in this study since in most respects PIU are either integrated under the Province level agency responsible for the Project (usually PAFO) or they are completely separate as in the case of small scale NGO projects.

• Interviews were conducted with at least one representative from each multilateral donor (WB, ADB, UNDP, FAO, UNICEF) and bilateral donors or implementing agencies with Projects in MAF (SDC, Aus Aid, AFD)

• Interviews were conducted with representative Development organizations with experience of PIU in MAF (GTZ, WCS)

• Key informants with knowledge of institutional issues in MAF

The analysis of PIU looked at the level of integration of the functions of a PIU rather than at the level of the PIU as an organization. The 3 areas of management in the CAP table were divided into 8 management functions that were ranked separately. Accountability, reporting and M&E were grouped as a joint theme for analysis and consultation processes were addressed as a separate function. The CAP framework was used to characterize if PIU functions were parallel or integrated but made a further subtle distinction between almost fully integrated and integrated. A fully integrated function implies that GoL fully assumes responsibility for that activity even though it may still use support from TA and indicates complete ownership by GoL. Externally appointed staff to the PIU are non GoL personnel and include international experts or advisers. On the other hand, GoL staff that take a leave of absence to work for a PIU are still considered GoL staff for the purpose of this analysis.

72  

Salary structure and pay scales for GoL staff is a complex topic which is beyond the scope of this review. Respondents were given a copy of the questionnaire before the interview. The basic principles of the VD were explained as well as the CAP table giving examples illustrating the difference between parallel and integrated functions. The 8 management functions used for the purpose of this study were described as well as the options for assessing each function as parallel or integrated. During the discussion, the options were improved where needed in order to more accurately reflect the existing situation in Lao PDR. There was no final conclusion with each respondent as to whether a PIU was parallel or integrated but rather there was a discussion on what are the steps needed in order to integrate existing parallel functions based on the precise nature of the existing weakness that were identified. There are different solutions for each weakness. Some solutions require more harmonization and simplification of systems of donors. Other solutions require additional alignment with existing GoL systems and policies.

73  

Questionnaire format Name of Organization: ……………………………………………………………………………………………………………

Date: ……………………………………………

People interviewed: Name Position 1. 2. 3.

Characteristics of the DP: What is the total number of Projects implemented with ODA in your Department at the moment? In the last five years (or pipeline Projects), has your Department implemented projects that use some kind of PIU at National or at Province Level?

Collection of information from MAF Departments Characteristics of the Department: What is the total number of Projects implemented with ODA in your Department at the moment? How many Projects are using a National level PIU (currently or in the last five years or planned in pipeline). If the Project has a National Level PIU, go to Question 11

Characteristics of the Projects: what are the characteristics of the Project (infrastructure, policy and reform or capacity development or a combination), who is (are) the donors. Are they bilateral or multilateral. Is it with a single donor or multi donor Project? Is there only a grant component, is it only a loan or a combination of both? what is the investment total? what is the time frame? who is the Head of the Project?, what Division is the Project under?

Is there a Steering Committee (SC) at either the National Level or at the Province Level? Who is the Head of the SC? What is the role of the Donor in decision making of the SC? How often does the SC meet?

GoL staff for the Project. How many GoL staff are supporting the Project at the National Level? How were these staff selected?

How many external TA are supporting the Project? How many are National? How many are International? Management capacity: Has the Donor provided any funding for training opportunities in order to improve the management capacity for this Project? is there any participation in annual country portfolio review missions carried out by the donor? Management efficiency: How would you qualify efficiency of this Project? (low, medium, quite good, very good). Do you think it would improve if the parallel functions were reduced? How? Questionnaire for Projects with a PIU Project profile (describe each Project selected for the review):

74  

What type of project is it? (grant aid/ infrastructure or Technical Cooperation). Is it loan or grant funding? Funding sources: Who is (are) the donors? Are they bilateral or multilateral? Is it with a single donor or multi donor Project? Is the authority and accountability for project administration delegated to the resident mission of the donor? What are the institutional/functional linkages in place between the PIU, the EA (host Department of the Project) and other institutions in GoL? Multiple choice questions Question 1: Accountability/ Reporting / monitoring and evaluation/information management Key question: Is your PIU accountable to the GoL or to the Donor? Is it reducing GoL ownership?

A. Parallel PIU: Accountability of the PIU activity to the Government is not considered (reporting is submitted to funding donor without any requirement to share with GoL or to follow GoL formats and timetables)

B. Semi Integrated PIU: Accountability of the PIU activity to the Government is limited (TA driven reporting with Limited GoL staff involvement in report preparation without any requirement to share with GoL or to follow GoL formats and timetables and GoL does not have a role in approving reports)

C. Almost fully integrated PIU: Accountability of Project activities to government is systematic (Govt. reporting formats, information management systems and reporting timetables are taken used wherever possible and both GoL and TA prepare and approve reports)

D. Integrated PIU: Accountability of the Project activities to GoL is fully integrated into GoL reporting systems (Province and National Level GoL is accountable for Project activities and responsible for reporting Project activities to its Line Agency, to SC and to donors using TA as needed)

Question 2: Consultation processes Key question: Was GoL consulted in the design and inception stages of the Project? Were decisions on PIU roles and modalities made only by the donor or jointly with GOL? Is the Project modality reducing GoL ownership?

A. Parallel PIU: Consultation with Government in identifying needs during Project design and during formulation of implementation strategy is neither required nor practiced

B. Semi Integrated PIU: TA and GoL teams conduct design missions, GoL is given opportunities to review and comment on project design and implementation strategy but final decisions are made by the donor

C. Almost fully integrated PIU: GoL staff and donor jointly prepare the Project design and implementation strategy and have equal decision making in negotiation process

D. Integrated PIU: GoL was in charge of the formulation of the Project design implementation strategy with TA when needed (fully GoL driven)

75  

Question 3: Development of ToRs and supervision of contracts for externally appointed TA (non Government employed) of the PIU Key question: Does your agency determine the ToRs for externally appointed staff of the PIU, or does Govt?

A. Parallel PIU: PIU staff selection/recruitment process does not require Government involvement.

B. Semi integrated PIU: PIU staff TORs and election/recruitment process jointly prepared but final decision is on donor side, with GoL offering "no objection".

C. Almost fully integrated PIU: PIU staff TORs and selection/recruitment processes are jointly determined taking into account GoL capacity building needs and strategies and final decision is by both GoL and donors together. Performance evaluation by both GoL and donor or IA

D. Integrated PIU: Government determines staff TORs and is in charge of selection/ recruitment processes and takes full responsibility for managing any TA assigned to the PIU or to the Project

Additional questions for discussion: Does your Agency have qualified internal staff for managing operational activities of this Project? Are the external staff substituting tasks that your existing staff is capable of fulfilling? Are the external staff GoL staff that have taken a leave of absence to work for the PIU? How are they ensuring that their normal duties are still adequately covered? Does this Project improve the management capacity of the GoL Department it is linked to or is it an obstacle to building capacity within the Department? Question 4: Functions of GoL staff supporting the PIU Key question: Are the activities for supporting Project implementation integrated into the annual work plans of GoL staff?

A. Parallel PIU: There are no government staff assigned to the PIU B. Semi integrated PIU: There is no systematic method for selecting GoL staff based on

job description, GoL assigned to support the PIU maintain their ordinary workload and project activities are an additional workload without being integrated into their annual work plans and without performance evaluation

C. Almost fully integrated PIU: GoL staff are assigned to support the PIU part time but they are not evaluated on their performance for the Project

D. Integrated PIU: GoL staff are assigned to support the PIU full time, their job descriptions take into account an institutional capacity needs assessment and all project activities are integrated into their annual work plans. They are evaluated on their performance in supporting the Project

Additional questions for discussion: Have GoL job descriptions taken into account an institutional capacity development strategy? Question 5: Salaries of GoL staff Key question: Does the salary structure of the GoL staff of the PIU exceed that of other GoL staff? What kind of incentives are given to GoL staff in order to support the Project activities?

A. Parallel PIU: GoL staff take a leave of absence in order to work for the Project and then receive Project salaries

76  

B. Semi integrated PIU: GoL staff maintain their original posts and receive salary top ups from the Projects

C. Almost fully integrated PIU: Salary structure of GoL staff assigned to the PIU is the same as those of other GoL staff but they receive non salary incentives from the Project

D. Integrated PIU: During the Project, GoL staff may receive incentives but there is also an exit strategy to ensure that after the Project, GoL will be responsible for providing DSA and sourcing new funds for financing activities needed to institutionalize the Project strategies

Question 6: Implementation/Operational Responsibility/AWP This includes roles of Steering Committee if it exists, preparation of work plan, oversight of budget and implementation of activities and management of reviews Key question: Does the donor manage all stages of project activity or is it the responsibility of GoL?

A. Parallel PIU: The PIU manage all stages of project activity but donor rules and regulations are followed for implementation of activities without GoL involvement and without sharing information with GoL

B. Semi integrated PIU: The project is not aligned with the GoL annual planning time frame. The TA/donor manages the implementation of the project and supervises GoL staff

C. Almost fully integrated PIU: Joint planning and integration of GoL work plans with the Project

D. Integrated PIU: Programmatic approach where the activities are integrated into an existing planning framework and the donor hands over all operational responsibility and decision making to GoL

Question 7: Procurement of high value equipment (vehicles etc) Key question: Does the Government have a role in procurement?

A. Parallel PIU: The Donor makes all decisions on procurement B. Semi integrated PIU: The PIU will consult GoL but will use its own procurement rules

and make final decisions C. Almost fully integrated PIU: The PIU and Government make joint decisions on

procurement using Donor procedures D. Integrated PIU: Procurement is entirely organized by GoL

Question 8: Funding flows, authorization of disbursements and financial reporting Key question: GoL role in authorizing disbursements and financial reporting

Parallel PIU: Financial reporting systems are selected based on donor preferences, Projects have an imprest account and funds do not flow through the MOF or through MAF. Only TA signature is needed for releasing funds. Financial reports are not shared with the Government

B. Semi integrated PIU: Financial systems are selected based on donor preferences, a project imprest account is used and only TA signature is needed for releasing funds. However financial reports are shared with the Government

C. Almost fully integrated PIU: Both donor and GoL standard financial management systems are used, funds flow directly from donor to PIU (or via IA) and GoL has the

77  

option of co signing authorizations for release of funds (GoL may not wish to exercise that option)

D. Integrated PIU: GoL standard financial management systems are used, funds may flow through MOF, GoL prepares financial reports and GoL has full authority in requesting replenishments and releasing funds

78  

Table 3. Summary of the questionnaire result Ranking of 10 Projects who filled out the questionnaire A: Parallel, B: Semi integrated, C: Almost fully integrated, D: Integrated

CAP Issue Description A B C D

• TA recruitment and roles 0 1 6 4

• GoL staff salary structure 0 1 5 5

CAP Issue 1 Staffing composition and salary structure

• Work plans of GoL staff 0 1 3 7

CAP Issue 2 Operational Responsibility

• Consultation processes 0 0 9 2

• Execution of Project activities 0 1 5 5

• Financial Management 1 2 5 (0), 3

• Procurement 0 2 3 (0), 6

Reporting Relationship

• Reporting relationship (accountability, M&E, information management)

0 0 2 (0), 9

79  

 

80

CAP Section 1 Ownership implies that GoL leads in developing and implementing the NSEDP through a broad consultative process; effective leadership role in coordinating aid at macro and sectoral levels through RTM and SWG; ODA regulations and procedures, such as MoUs, are developed and strengthened with support from DPs; and that GoL identifies specific capacity constraints to its leadership of the aid effectiveness agenda at the macro levels and decides with DPs on a program of support

CAP Section 2 Alignment implies that DP policies, activities and aid flows are aligned with GoL strategies and plans, GoL regulations and procedures and that DPs do not create structures for implementing ODA-funded projects that are parallel to GoL structures; DPs align their technical cooperation behind GoL CDFs; DPs increasingly use GoL financial management procedures and systems for their ODA; aid is more transparent and predictable; strengthening procurement regulations and procedures and enhance their efficiency, transparency and utilization; and Environmental and social standards

CAP Section 3 Harmonization and simplification implies that GoL & DPs carry out joint reviews & share results, DPs harmonize training and share findings from missions among DPs and with GoL, GoL & DPs rationalize regulations, procedures & incentives e.g. DSA, salaries; and GoL and DPs increase aid effectiveness through coordinated approaches such as pooled funding

Table 4. Projects included in the survey

Details of funding Project Time Frame IA Project Donor

Grant Loan GoL Total Start End

Northern Region Sustainable Livelihoods through Livestock Development

ADB 4,200,000 9,300,000 1,900,000 15,400,000 15.1.2007 9.7.2012 DLF

Phase II of the Inter- country Programme for Development and Application of IPM in Vegetable Growing in South and South East Asia

FAO 4,269,000 4,269,000 1.1.2005 1.3.2008 DOA

Sustainable Forestry and Rural Development Project (SUFORD)

WB 6,000,000 9,900,000 550000 16,450,000 1.2.2003 31.12.2008 DOF

Decentralize Irrigation Development and Management Project

ADB 2,700,000 15,500,000 6,000,000 24,200,000 8.5.2001 31.12.2008 DOI

Northern Community Managed Irrigation )

ADB 10,000,000 2,900,000 12,900,000 15.7.2004 31.10.2011 DOI

Sustainable Natural Resources Management and Agriculture Productivity Enhancement

ADB+IFAD

35,000,000 1,800,000 36,800,000 2009 2015 DOP

Programme de Capitalisation in Appui à la Politique de Développement Rural (PCADR)

AFD 13,684,618 13,684,618 1.9.2005 31.12.2009 DOP

TABI SIDA DOP

81  

82

NUSDP AFD, EC,

SDC, GTZ

DOP

Laos Extension for Agriculture Project, Phase IV (LEAP IV)

SDC 4,800,000 4,800,000 1.7.2008 1.6.2012 NAFES

Management and Community Support Project (FORCOM)

JICA 2,585,000 20,000 2,605,000 10.2.2004 9.2.2009 NAFES

Rice Seed Multiplication and Distribution System Improvement Project

JICA 2,928,750 2,928,750 1.8.2006 1.7.2011 NAFES

Upland Research and Capacity Development Programme

SIDA 12,875,797 1,522,388 14,398,185 1.4.2007 30.3.2012 NAFRI

Northern Upland Rice Based Farming Systems Research project of Lao PDR

SDC 2,456,784 2,456,784 1.10.2008 1.9.2012 NAFRI

SURAFCO SDC NAFRI

 

9. Terms of Reference Joint (GoL/DPs) review of ODA-funded implementation structures within the Agriculture, Rural Development and Natural Resources Management Sector General background Foreign aid is extremely important to the Lao PDR, financing 87 percent of the capital expenditure budget and 41 percent of the Government's total public expenditure in 2005/06 (Foreign Aid Report 2005/06).

The Government of the Lao PDR (GoL) recognizes that using and coordinating Official Development Assistance (ODA) more effectively will greatly increase the country's ability to meet its goal of graduating from Least Developed Country status by 2020 and achieving the Millennium Development Goals.

The Round Table Process (RTP) is a process led by GoL. Its goal is to improve the effectiveness of aid in order to achieve the objectives that matter most to the country's development.

The RTP comprises a series of meetings at the national and sectoral levels to promote in-depth dialogue on policy between the Government and development partners. The objectives of the meetings are to increase national ownership over the development process, build consensus on priorities, and improve the coordination of activities relating to these priorities including adequate financing. This is achieved through the Round Table Meetings and the Sector Working Groups, under the overall framework of the National Socio-Economic Development Plan and the Vientiane Declaration on Aid Effectiveness.

At the Ninth Round Table Meeting in Vientiane in November 2006, GoL and 22 partner countries and organizations signed the Vientiane Declaration on Aid Effectiveness—a localized version of the Paris Declaration to which Lao PDR is signatory. The Vientiane Declaration aims to improve the effectiveness of aid by focusing reforms in five areas:

• Increased country Ownership over policy and plan development, implementation and aid coordination

• Better Alignment of Development Partner's support to national policies and plans, and increased support to and use of national systems

• Harmonization and Simplification of Development Partner's procedures and activities • Managing for Results in order to ensure effective use of resources • Implementation is a responsibility of all signatories, and Government and Development

Partners will be Mutually Accountable for reporting on progress Between February and May 2007, the Government of Lao PDR and its Development Partners prepared the Country Action Plan (CAP) to accompany the Vientiane Declaration. The CAP is to be reviewed and updated on an annual basis, with findings shared with the broader government and development community at the Round Table meetings.

83  

SPECIFIC BACKGROUND

The Ministry of Foreign Affairs (MoFA) gave the Ministry of Agriculture and Forestry (MAF) the mandate to oversee the Sector Working Group on Agriculture, Rural Development and Natural Resource Management (SWG-ANR) in partnership with the Science, Technology and Environment Agency (STEA) and other concerned ministries, notably the Ministry of Energy and Mines.

The SWG-ANR was established in June 2005 along with seven other SWGs. It was initially set up with the Minister of Agriculture and Forestry and the Ambassador from France as co-chairmen, and that format still holds today. A major output of the first meeting was the decision to establish sub-working groups as a new institutional format for joint dialogue between GoL and its DPs. The first four sub-working groups are:

• The sub-working group on irrigation (ANR-SGI or SWGIr), including lowland and upland systems, with AFD as the facilitator, and ADB, GTZ, and JICA as key participants;

• The sub-working group on forestry (ANR-SGF or SWGF), covering forestry management in the lowlands and uplands, with SIDA as the facilitator, and the World Bank and JICA as key participants;

• The sub-working group on farm and agribusiness development (ANR-SGA or SWGAB), including extension and crop diversification, with SDC as the facilitator, and ADB and the World Bank as key participants; and

• The sub-working group on upland development (ANR-SGU or SWGUp), focused on the elaboration of Program Based Approaches for Uplands agriculture development

IMPLEMENTATION OF THE VD CAP IN THE ANR SECTOR

The SWG-ANR and the 4 sub-working groups are responsible for facilitating joint DP/GoL dialogue and implementing the CAP.

Progress in the ANR sector is reported on a regular basis to the MPI, and presented once a year at the Round Table Meeting. The CAP Matrix, annexed to the CAP, provides guidance to MAF on practical initiatives to progressively reach the objectives set out in the Vientiane Declaration.

The current implementation status of the CAP is given in an annex to this TOR (attachment: MAF/ VD CAP Matrix follow up Oct 2008).

The second pillar of the Vientiane Declaration is focused on Alignment, proposing that Development Partners base their overall support on Lao PDR’s national development strategies, institutions and procedures.

The CAP Matrix provides the following goal: Development Partners do not create structures for implementing ODA-funded projects that are parallel to GoL structures. It also proposes the following specific actions:

84  

i) GoL and DPs carry out a joint review of ODA-funded implementation structures in order to (a) classify them according to the agreed matrix, and (b) summarize lessons learned in integrating project implementation structures to date;

ii) SWGs build on lessons learned above to guide progress towards integrating project implementation functions within their sector and monitor progress towards this.

The performance milestones given in the CAP Matrix are:

• Complete a review of current implementation structures and lessons learned by end 2007. • All SWGs agree on guidance for integrating project implementation functions within

their sector by mid 2008. The specific target, set for 2010/2011 is: no new parallel implementation structures created after 2010, unless endorsed by relevant GoL agencies.

The following definition and analytical framework is provided by MPI/UNDP regarding “parallel implementation structures”:

Implementation structures can be categorized as non-integrated/parallel, semi-integrated or integrated.

When providing development assistance in a country some development partners establish parallel implementation structures (They are also commonly referred to as project management units, project implementation units, project management consultants, project management offices, project coordination offices etc.). These are dedicated management units designed to support the implementation and administration of projects or programs. Parallel implementation structures typically share the following key features:

They are not executing agencies; they are usually required to perform subsidiary (rather than principal) tasks with regard to the implementation of a project or program: monitoring and reporting on technical and/or financial progress, accounting, procurement of works, goods and services, drawing-up of terms of reference, contract supervision, detailed design or equipment specification.

Parallel implementation structures are often established at the request of a development partner following the inception of a project or program.

The staff of parallel implementation structures vary considerably in size and composition. Staff size can vary from 1 to as many as 200 but most count less than 10 professional staff. Although a significant number make use of government staff, most are externally recruited (e.g. long-term local consultants).

A distinction is made here between a parallel implementation structure and technical advice provided directly to national administrations.

An implementation structures is said to be non-integrated/parallel when it is created outside existing country institutional structures.

Parallel structures typically share the following features:

85  

• They are accountable to the external funding agencies rather than to the country implementing agencies (ministries, departments, agencies etc).

• Terms of reference for externally appointed staff are determined by the development partner rather than by the country implementing agencies.

• Most of the professional staff of parallel implementation structures are appointed by the development partner rather than the country implementing agencies.

• The salary structure of staff of parallel implementation structures often exceeds those of civil service personnel.

In this context, the MAF/DOP and AFD, the ANR-SWG co-chairs, are proposing to carry out a joint review of ODA-funded implementation structures within MAF.

OBJECTIVES OF THE JOINT REVIEW AND TASKS OF THE CONSULTANT

The main objectives of the joint review are:

(v) Identify and classify existing PIUs within the sector. (vi) Better understand the functions covered by the PIUs, the motivations for

establishing external PIUs, and the challenges presented by abandoning them. (vii) Analyze lessons learned in PIU integration from other sectors in Lao PDR. (viii) Make recommendations to MAF and DPs (through ANR-SWG) on a specific road

map for reducing the current number of parallel ODA-funded PIUs at MAF, and for avoiding the creation of new parallel implementation structures.

Approach:

A step by step approach starting with the most achievable steps should be adopted for alignment in the ANR sector and more specifically with MAF.

The consultancy will look into the commonality of issues which Development Partners’ need to see happen before they can move forward. The approach would thus be to define different target levels for alignment with the MAF to which appropriate categories of Development Partners could subscribe.

To achieve these objectives, the consultant will conduct document review, visit Development Partners and interact extensively with MAF officials. He/she will also share findings at relevant MAF/DPs meetings.

Tasks / scope of service of the consultant:

Referring to objective 1 (Identify and classify existing PIUs within the sector)

a) Preliminary rapid identification and quantitative analysis

Collate information on existing PIU structure and proceed to a first classification according to the simple analytical matrix provided by the MPI (see CAP Matrix annexes).

86  

Referring to objective 2 (Better understand the functions covered by the PIUs, the motivations for establishing external PIUs, and the challenges presented by abandoning them)

Conduct a more in-depth analysis of the roles played by PIUs within the sector based on a limited sample of PIUs. The consultant will:

(i) Develop a set of basic criteria to select within MAF a representative sample of PIUs.

(ii) Further elaborate and clear with MAF and DPs an ad hoc analytical framework for PIUs at MAF.

(iii) Conduct a functional analysis of the (agreed) selection of PIUs. The analysis will explore the different dimensions of integration into local systems, including planning and budgeting, financial management, procurement, monitoring and evaluation. In conducting this analysis, the consultant will explore the motivations for establishing external PIUs and the challenges presented by abandoning them.

The functional analysis could look at (and compare):

• To what extend the MAF procedures and regulations are used by the PIU (compare MAF and PIU programming, administrative and financial systems to identify similarities and differences)

• To what extent the procedures and regulations used by the PIU are complementary to, or are in opposition to, or deviate from MAF systems.

• The governance of the PIUs vis a vis the MAF decision system (Is there a steering committee? what types of decisions is the steering committee entitled to take? budget approval? etc.)

• The level of autonomy in decision making of the Technical Assistance • How are the PIUs financially accountable to MAF • How far the salary structure of the PIU exceeds those of civil service personnel. • The procedures used for fund mobilization and procurement • The level of relevance of the institutional linkages of the PIU (Functional links

established with Divisions/Departments? level of integration of the projects plans into the hosting institutions plans). Simple and indicative comparisons of the mandate of the hosting institutions and the main objectives of the program/project will be conducted.

• Types of staff: percentages of officials in the PIU team. Types of contracts. Coherence of recruitment and capacity building plan with MAF capacity building plan.

• The extent to which co-financing situation are existing (co-mobilization of MAF own budget and ODA)

• The level of contribution of the recipient institutions to the PIU operations (salaries, vehicles, etc.).

• How long did it take to establish the PIU? how PIU regulation have been discussed ? who decided what in the establishment of the PIU and PIU’s regulations ?

It is understood that consultant will propose further refinement of this analytical framework.

87  

Referring to objective 3 (Analyze lessons learned in PIUs integration from other sectors in Lao PDR), the consultant will review in particular lessons learned in the transport and education sectors.

Referring to objective 4 (Make recommendation to MAF and DPs (through SWG-ANR) on a specific road map for reducing the current number of parallel ODA-funded PIUs at MAF and for avoiding the creation of new supplementary parallel implementation structures).

The consultant will:

• Analyze and define the Development Partner’s interest, margins of maneuver, involvement and commitment to alignment with MAF; and define different categories of Development Partners according to their approach toward the process concerning specifically the case of the creation of (semi-)parallel PIUs.

• Provide recommendations on how to deal with the different categories of Development Partners and on how to keep all groups involved in the process.

• Further define modalities for a full integration of PIUs into MAF system in terms acceptable by most Development Partners. Recommend and develop a practical approach (road map, action, draft “code of conduct”) for implementing decisions as well as monitoring progress.

Reporting / Deliverables

a. A work plan and outline of methodology b. Prepare and clear a report and PowerPoint presentation outlining (i) the review of

the selected PIUs (ii) Development Partners’ interests, margins of maneuver, involvement and commitment (iii) Suggested target levels for alignment for appropriate categories of Developments Partners; (iv) Recommendations to manage the PIU alignment process

c. Report to the MAF and to Development Partners on the occasion of relevant meetings (notably ANR SWG)

d. Finalize the consultancy report and recommendations. Working principles/ Reporting line:

The consultant will report to the SWG-ANR co-chairs through the SWG-ANR Secretariat. The Consultant will work closely with the MAF Department of Planning.

Other parties, including SWG-ANR members, will be invited to review and comment the draft and final reports as well as presentations held.

Duration:

The consultant will be engaged full-time for a period of 30 days.

10. Work Plan for the PIU Review at MAF Activity Timeline Expected Outputs

88  

• Analysis and classification of DPs

• Plan the Inauguration

Workshop of the mission

Week 3 – 9 August

• Develop strategy and criteria for selection of a representative sample of DPs and PIUs within MAF

• Develop a strategy for ensuring participation of DPs, projects and GOL stakeholders

• Develop analytical framework

• Organize interviews and

send out questionnaires in advance

Week 3 – 9 August

• The method for collecting information and analysis is developed

• Meetings are organized with the appropriate individuals in the selected organizations

• Inauguration Workshop for the mission (August 11th)

• Conduct interviews of selected PIUs, DPs and TA

Week 10 – 16 August

• Stakeholders are aware about the PIU review at MAF and committed to the objective of reducing parallel PIUs and have the opportunity to offer their support in terms of existing documents of experiences of PIU modalities

• Information is collected from representative organizations and entered into the analytical framework

• Conduct interviews of selected PIUs, DPs and TA

• Compile preliminary

findings, analyze results

Week 17 - 23 August

• Information is collected from representative organizations and entered into the analytical framework

• Different modalities for integrating PIUs functions into MAF system in terms acceptable by most DPs are defined

• Conduct interviews of

selected PIUs, DPs and TA

• Compile preliminary

findings, analyze results

• Mission report is prepared

Week 24 – 30 August

• Information is collected from representative organizations and entered into the analytical framework

• Different modalities for integrating PIUs functions into MAF system in terms acceptable by most DPs are defined

• Preliminary recommendations are drafted for a practical approach for reducing the number of parallel functions of PIU

• (One week break)

• Mission report is Week 7 – • First draft of mission report delivered

89  

prepared

13 September

• Final workshop to present findings and conclusions of the mission

Week 14 – 20 September

• Final workshop is conducted in which the findings of the mission are summarized and presented to decision makers

• Presentation to SWG November •

• Comments received and integrated into report

Nov - Dec •

• Presentation of road map to representatives of MAF line departments

December •

90  

11. Standard Financial Management Manual (SFMM) The SFMM shall ensure that there is consistency, transparency and accountability on the part of those involved in managing and implementing the development projects/programs. The manual is devised so as to mitigate the risks associated with the degree of complexity related to the management and organization of projects/programs. The project management should study this document and the Finance and Accounting Staff dedicated for the project once on board may customize it to incorporate peculiar Finance and Accounting Staff aspects finalized during the project design and negotiation. This should specifically address any Financial Management covenants contained in the financing contract with a donor. The SFMM is intended:

a. to enhance transparency for approving and accounting of financial transactions in clear, simple, user-friendly and consistent manner;

b. to improve timeliness in financial reporting; c. to facilitate training of Project to Finance and Accounting Staff; d. to ensure application of funds only limited to the purposes for which they were provided;

and e. to facilitate the preparation of the project/program budget, periodical funds withdrawal

statements and financial management reports for the Government and DPs.

During the project implementation, the EA/IA is responsible for having sound financial management system which is subject to constant review of financial arrangements by DPs missions, including submission of FMR, interim and final audit reports.

Periodic monitoring reports, (monthly, quarterly, half-yearly and annual), are prepared to evaluate the project progress for reporting to MoF, MPI, MoFA and DPs

SFMM: Ministry of Finance (MoF) The MoF has overall responsibility for overseeing the financial performance of ODA projects/programs and supporting improved financial management performance. Various departments in MoF i.e., Accounting, Budget, Treasury and External Finance Department have their role and responsibilities in this respect. Specific responsibilities of the MoF are:

- Developing and maintaining policies, procedures and supporting Manuals for the ODA projects/programs;

- Ensuring dedicated/special/imprest bank accounts are maintained with BOL; - Proper budgeting for counterpart funds and making counterpart funds available to

projects on a timely basis;

91  

- Providing support and advice to the EAs in establishing and implementing sound accounting and financial management systems and procedures;

- Monitoring, and providing guidance on, withdrawal and replenishment applications by EAs;

- Authorising payments out of Dedicated/special imprest accounts; - Participating, as a committee member, in procurement/recruitment activities of

projects to ensure compliance with the guidelines and provisions governing the contractual relationship between the Government and DPs. and to assess and agree contract payment schedules as per Procurement List; and

- Monitoring and evaluating the financial performance of projects and portfolio performance.

Line Ministries/Entities receiving the ODA are Executing Agencies (EA) and have primary responsibility for ensuring projects are implemented in accordance with project plans and that resources are used efficiently and effectively and only for project purposes. EAs are accountable for all financial aspects of projects and must ensure there is compliance with all financial covenants and other obligations in the loan/credit/grant and technical assistance agreements. Specific responsibilities are:

- Establishing project management structures and staffing and ensuring financial staff are properly qualified and trained;

- Ensuring appropriate project bank accounts are established and signatories are maintained up-to-date;

- Maintaining proper financial accounting and management systems; - Implementing comprehensive and effective internal controls for project financial

operations; - Managing and safeguarding project assets; - Preparing and submitting timely applications for withdrawal and replenishment of

project funds; - Monitoring financial performance of projects and timely decision making to address

variances to plans/budgets; - Ensuring compliance with the project financial reporting requirements; - Monitoring audit results and ensuring appropriate response and actions are taken in

relation to audit findings and recommendations; and - Contributing to the centralised data base on projects maintained by MPI and MoF.

The PMUs within the EA is accountable for the financial management activities of projects and also of ensuring compliance with all financial covenants and other obligations in the loan/credit and grant agreements. Specific responsibilities are:

- Managing and administering the financial affairs of the project; - Ensuring compliance with the financial covenants of the project agreements with

DPs; - Establishing and maintaining project budgets to support the mobilization of resources

and as a management tool to support project management; - Managing the project bank accounts and flow of funds;

92  

- Establishing, maintaining and operating the project accounting and financial management systems and procedures;

- Administering the financial transactions of the project and maintaining proper accounts and records for the project;

- Undertaking all disbursement functions, tasks and activities of the project, in strict conformity with the guidelines and systems and procedures governing disbursements from the project account and the use of project resources;

- Making request to National Treasury at MoF for payments out of dedicated/special/imprest bank accounts to the supplier and transfer of fund to the project own accounts;

- Preparing request for withdrawal for direct payment to supplier/contractor and replenishment and submits the applications through the External Finance Department of MoF;

- Generating and distributing financial reports, evaluations and information necessary for effective and responsible financial management;

- Monitoring the financial performance of the project and taking actions to address variances to plans;

- Facilitating the audit of the project’s financial statements and financial operations; - Preparing and issuing all periodic FMRs to DPs; and

Undertaking all tasks and activities related to the procurement/recruitment are required by the project, in strict conformity with the laws, regulations, guidelines, systems and procedures, governing the use of project resources. Figure 4: Fund Flow Diagram for Designated Project Accounts (SFMM)

93  

Special /Imprest Accounts with BoL 

DPs (Process & Transfer) 

Loan & Grant Management Division, External Finance Department, MoF 

(Review & Verify WAs)  Explanation of Keys: WA   = Withdrawal Application BoL   = Bank of Lao PDR DPs  = Development Partners PMU  = Project Management Unit MoF  = Ministry of Finance 

PMU/EA  (Prepare & Submit WAs) 

12. The Standard Operational Plan (SOP) Manual on Standard Operating Procedures (SOP) Foreword by H.E. Dr Sinlavong Khoutphaythoune Minister of Planning and Investment Vientiane Capital September 2009 The Manual on Standard Operating Procedures (SOP) is an important milestone of the Government of Lao (GoL) in its efforts to improve the management and cost-effectiveness of Official Development Assistance (ODA). Development of the Manual has been undertaken by the Aid Effectiveness Division of the Department of International Cooperation (DIC), Ministry of Planning and Investment (MPI) in conjunction with a team of international and national experts. Funding has been provided by a World Bank grant. The SOP Manual follows closely the principles and goals of the Vientiane Declaration on Aid Effectiveness in emphasizing the importance of good governance of projects and programmes supported by ODA as well as ensuring clear ownership of such projects and programmes by the Government of Lao PDR. To ensure that the benefits of using SOP are clearly understood by GoL and DP personnel alike, and that SOP are routinely used throughout the GoL ODA system at all levels, central and provincial, a comprehensive training programme will be implemented by the MPI-DIC. The Manual is intended for use by all personnel working in development and external-aid assisted projects in Lao PDR, such as in Line and Core Ministries and other government institutions. It should also be used as a reference document by donors and Development Partners (DP) such as UN agencies, bilateral aid agencies, financial institutions and NGOs, to understand better the Lao PDR external aid needs, its processes and procedures, and so as to align their own systems as far as possible with those of the Government of Lao (GoL). The guiding principles of good management of ODA can be defined as:

1. Value for money 2. Quality assurance 3. Openness and transparency 4. Good governance 5. Accountability

The Standard Operating Procedures (SOP) reflect the important roles in external-aid (ODA) management by Line Ministries, Provincial Authorities and Core Ministries such as the Ministry of Planning and Investment, Ministry of Finance and Ministry of Foreign Affairs.

94  

The main objectives of the new SOP Manual are to provide:

• clear guidelines to GoL staff involved with ODA at central and provincial levels; and • information to Development Partners so that they can harmonize their own procedures

with those of the GoL. 13. Ministry of Foreign Affairs – main role and responsibility As per Article 7 of Decree 75/PM, the Ministry of Foreign Affairs (MOFA) is authorized to represent the GoL to sign a loan agreement with a foreign country. It also acts as the focal point for ODA proposals to foreign countries and takes the lead, in coordination and cooperation with the MPI and MoF as well as other concerned Ministries in the elaboration of ODA policy and preparing projects for approval. It takes the lead in the preparation, approvals and administrations of plans, programmes and projects for cooperation with NGOs, associations and private individuals. It issues letters of authorization or powers of attorney to the MPI and MoF as well as concerned Ministries and Agencies, to sign ODA agreements. The MoFA also participates in the monitoring and evaluation of ODA project implementation as well as summarizes results of implementation of ODA programmes and projects. The MoFA cooperates with, and participates in training of officials on administration and implementation of ODA projects as well as proposes awards to officials of embassies, international organizations and non-governmental organizations for outstanding achievements in the provision of ODA to Lao PDR. 14. Roles of MPI (From the Standard Operating Procedures) The Ministry of Planning and Investment (MPI) is responsible for preparing a plan for the seeking of ODA to support the National Socio-Economic Development Plan (NSEDP). It also takes the lead, in coordination with the MoFA and MoF in the elaboration of policy and political direction of the GoL in seeking ODA.

The MPI takes the lead, in cooperation and coordination with concerned Ministries and local authorities, in developing plans, projects and programmes and then to propose them to the GoL for approval and for ODA funding through the Round Table mechanism and other methods.

The MPI coordinates and cooperates with the MoF and MoFA each year to review and reconfirm loan projects and to inform concerned Ministries and agencies accordingly.

The MPI takes the lead, in coordination and cooperation with the MoF and MoFA, in preparing each stage of loan projects from the inception phase to final evaluation and to present them to the GoL for approval. This includes the development and implementation of a system for the monitoring and evaluation of ODA projects, with the collection of data and information to

95  

summarize results of implementation of such projects. These results are to be presented at regular meetings with fund providers and reported to the GoL.

The MPI has the responsibility for managing foreign missions and experts, and organizing training workshops for officers in charge of administration and implementation of ODA projects. As a key Department within the MPI, the Department of International Cooperation (DIC) is in charge of the coordination of donor funding together with Line and Core Ministries at central and provincial levels. 15. Official Development Assistance (ODA) Official Development Assistance (ODA) From SOP Management of ODA including roles, duties and responsibilities of Ministries in Lao is governed by the Government of Lao PDR former Decree No. 168/PM dated 22 November 2004 entitled Management and Use of Official Development Assistance, updated by Decree 75/PM of March 20, 2009, Prime Minister’s Decree on the Administration and Use of Official Development Assistance.

As a guiding principle, Article 9 of Decree 168 states that the “GoL is responsible for the management of ODA and its efficient use according to the National Socio-Economic Development Plan.”

The Decree also states that the GoL is responsible for the setting of direction, as well as the attraction and resource mobilization of ODA. ODA represents a very important component of the LAO PDR economy both in relation to overall public expenditure (36%) and the Public Investment Programme (PIP, 85%) (2006/07 planned figures, ref: Foreign Aid Report 2005/06).

In the fiscal year 2005/06 some US$420 million in aid was disbursed. This figure remained significant at $US413 million in the fiscal year 2007/08. Without this support from foreign donors and financial institutions, development and socio-economic goals of the country could hardly be realized.

Good management of external aid to achieve high effectiveness is therefore of paramount importance to Lao PDR’s economy and development. ODA in Lao PDR is provided in two main forms: grants and loans. Loans can either be soft, concessional or commercially-based. These may be further divided up into project and programme grants and loans or as Technical Assistance (TA). Grants-in-aid are the preferred form of ODA by Lao PDR and are its highest priority (refer to Decree 75/PM March 2009). Soft loans are the preferred form of loan arrangement.

96  

However it is important for recipients of ODA in any country to bear in mind that aid projects and programmes whether grants or loans may often generate additional domestic funding needs in terms of infrastructure costs (e.g. road maintenance), wages and salaries, transportation, fuel, interest payments etc which the country has to meet from the recurrent budget.

The heavy increases in Public Investment Projects as contained in the Public Investment Programme (PIP) over the past few years in Lao PDR are placing increasing demands upon the recurrent budget. This makes it all the more important that aid projects and programmes are carefully selected on a priority basis and efficiently managed.

97  

16. Poverty Reduction and Agricultural Management regional bachelor degree program

The Poverty Reduction and Agricultural Management (PRAM) is a professional degree program for local change agents in the Mekong region. This degree is being developed as part of a collaborative initiative of regional and local institutions in and around the Mekong region called the Wetlands Alliance Program (WAP). WAP aims to build capacity for improved management of wetlands and aquatic resources at the local level in Cambodia, Laos, Thailand and Vietnam.

The development of the PRAM professional degree is one way in which this capacity is being systematically developed under a collaborative program that involves universities, local vocational colleges as well as government line agencies and provincial authorities. Representatives from these institutions at regional, national and local levels are working together to develop a new and innovative curriculum which specifically targets the educational needs of district extension officers and grass-roots development workers. Through this collaboration and the collective experience and resources of the participating institutions, it is our aim to develop a radically different educational process that integrates capacity building, training and extension into one holistic educational approach aimed at poverty reduction.

17. Study of EC Technical Cooperation and PIUs Study of EC Technical Cooperation and PIUs: Review of the Regulations and Guidelines applicable to Technical Cooperation and Project Implementation Units 2008. European Centre for Development Policy Management (ECDPM). This review of the regulations and guidelines applicable to the use of technical cooperation within European Commission (EC) development cooperation feeds into the development of a ‘Europe Aid strategy to meet the EU aid effectiveness targets on technical cooperation and project implementation units’. Under decentralized management there might be opportunities to pursue the aid effectiveness agenda more pro-actively as the partner government can potentially have more say, and use its own rules and procedures, under certain (limited) conditions. However, at the same time decentralized management as it is foreseen and practiced at present does not mean a full decentralization of function to the partner government, but rather a transfer of tasks to the partner under the provision that it can comply with EC rules and procedures, while the EC retains at least ex post control. As such, decentralized management in fact imposes an extra burden on PG systems and is still a very complex and cumbersome management modality. [Decentralized management was well intended when it was introduced into ACP-EC cooperation. However, the EC reform process ‘rolled back’ the liberty of this management mode by introducing checks and controls by the EC at all stages of the project cycle to satisfy accountability and transparency requirements.] There appears to be some space for improvements, with a view to better meeting the Paris Declaration commitments and the EU’s aid effectiveness targets. This might entail entrusting more responsibilities to the partners (for instance, by enabling partner governments to use their

98  

own systems and procedures) or ensuring that TAs - in practice - are not used for management and control but for capacity development only (i.e. for advisory and accompanying work to empower the partner rather than for executing projects). But incentives to mitigate risks dominate … While there might be some openings and opportunities in the rules and procedures to pursue the aid effectiveness agenda more effectively, there also appears to be a considerable degree of ‘defensive management’ informed by a practice to avoid risks. Performance is ultimately assessed exclusively on the basis of the level of commitments, contracting and disbursements (i.e. criteria which provide no incentive for flexibility or risk-taking). Procurement of Technical Services There are many EC rules and procedures applicable to the procurement of TC which are complex and cumbersome to use. Among the procedures, the framework contract procedure in particular is subject to serious criticisms from a number of angles, including i) criticism of the de facto obligation to use it for service contracts below €200,000, ii) the perception that the procedure is not conducive to facilitating ownership by partner institutions or the mobilization of good experts, and iii) criticisms of a number of procedural issues. However, there do appear to be openings for some simplification, clarification and more flexible interpretation of certain rules and procedures. In line with its Paris commitments, and the goal of moving more towards country ownership and closer coordination with other donors, the EC also has the opportunity to allow the use of local procedures or those of other donors in certain circumstances. There is scope for these to be used more systematically throughout the different regions. Beyond their complexity, the EC procurement rules and procedures also - in practice - have the effect of limiting the sources and quality of TA which the EC or Partner Governments can draw on. At the same time, there is growing demand for new types of TA, including those with public sector management expertise, which can be difficult to mobilize through the existing channels. Project Implementation Units: There are no specific articles, explicit rules or guidance on PIUs in the financial regulations or similar documents. However, the documents do contain a number of basic stipulations on the delegation of powers and responsibilities by the EC or the PGs, including to structures like PIUs. In practice, whether or not a PIU is created, mostly appears to be a decision taken during the design phase (and there are certain types of designs which justify the establishment of PIUs). The length of the design process is another issue. Given that it is not unusual for the whole identification and formulation stage to take 2-3 years (during which time the project is ‘on hold’, waiting to be processed by the Delegation and Brussels), partner governments, especially those with low capacity, often simply do not have the time to stay closely involved, and by the time a project is approved the original project “owners” , who were party to the design process, may well have moved on due to staff turnover. Moreover, by the time the project starts, the original needs which the project and the TC provided with were designed to address may well have changed.

99  

As is the case for most donors, the EC faces also the pressure to quickly disburse aid funds. This results in a number of dilemmas, inter alia (a) the pressure to speed up the identification and design process wherever possible, whether or not this allows for the partner government’s wishes to be taken into account and (b) the need to ensure speedy implementation even if the PG is not ready, which is frequently ensured through the provision of technical assistance. 18. UNDP 1990. Rethinking Technical Cooperation UNDP 1990. Rethinking Technical Cooperation The report concludes that TC was marked by its "excessive reliance on one model of delivery for technical assistance - the resident expatriate-counterpart model, which has failed as an instrument for capacity building". A sensible "change in the mix of delivery modes" could include greater use of short-term advisors and coaching arrangements. Much greater use could be made of local consultants, and institutional twinning should become a much more favored instrument. All required fresh thinking about donor administrative organization and many pilot schemes to speed change.

The donor- or supply-driven nature of technical cooperation was seen as having led to inefficient allocation of resources, weak local ownership, and hence limited commitment. To strengthen local management of technical cooperation three main reform axes where discussed: voluntary donor transfer of managerial authority, stronger local management of TC, and comprehensive programming. While the adoption of programmatic approaches was accepted in principle as an excellent idea, it was also recognized that this requires more, not less, institutional competence.

A key problem for effective TC was poor incentives and working conditions in recipient country public sectors. This leads to low local staff job motivation and high turnover, creating a "Teflon-like work environment in which capacity-building and institutional development efforts fail to take hold." The report concluded that "coherent donor proposals to address this corrosive and spreading problem are few…" Improving the work environment would certainly imply that salary supplements should be avoided and should only be used on an exceptional basis. Proposals for pooling resources "from which salaries for strategic posts would be paid and salary supplements distributed" met with reluctance from donors and recipient governments alike.

Beyond the consensus, the argument was made for "gap-filling without shame": Posts requiring specialized and scarce skills should be filled with "technical assistants who would occupy line posts and hence be integrated into the national administration. The pretence about counterparts would be dropped, explicitly and frankly." Technical assistants would be integrated into existing structures, the determination of job needs be simplified and the transfer of control to recipient governments facilitated. 19. Main challenges to technical cooperation Main challenges to technical cooperation

100  

From: EC 2009. The key elements of the Backbone strategy on Reforming TC and its core components. Reforming Technical Cooperation

EuropeAid

2

Main challenges __________

Supply-driven

Not enough focuson results

Mixed standardof experts

quality

Overreliance onnorthern commercial

providersParallel PIUs- outside country

structures –absorb resources and

do not developcapacities

Unsatisfactory tracking

of TA performance …

101  

20. Eight Guiding Principles to technical cooperation Eight Guiding Principles From: EC 2009. The key elements of the Backbone strategy on Reforming TC and its core components. Reforming Technical Cooperation

EuropeAid

6

7. Avoid use of Parallel PIU & promote effective Project ImplementationArrangements

ECTechnical

Cooperation

1. Primary aim is Capacity Development

2.Demand led approach where TC is not provided by default

8. Consider innovative options for TC provision

3.Strong result orientation

6. Work through harmonized and aligned actions

5. Take account of country/sector requirements

4.Country owned & managed TC processes

Eight guiding principles __________

102  

103  

 

104

21. Action Plan for the implementation of measures reducing the need for parallel PIU Based on the CAP of the Vientiane Declaration on Aid Effectiveness 2007-2010 Red: Goals in the CAP relevant to PIU reform, Blue: Recommendations from the PIU: review

VD § Goal Action Performance Milestones

1. Ownership: GoL exercises effective leadership over their development policies, and strategies and co-ordinate development actions

1. (VD 1,2, 30)

GoL leads in developing and implementing the NSEDP through a broad consultative process that integrates ODA into mainstream planning and translates the NSEDP into prioritised and sequenced PIPs, and annual budgets.

NSEDP VI: implementation i) GoL uses SWGs where appropriate to

decide on a timetable for introducing costed sector plans and build consensus around sectoral priorities;

ii) As per decided timetable, develop

prioritized and costed sector/or sub-sector plans;

iii) Sectoral plans mainstream cross cutting

issues, beginning with gender; iv) Prepare costed Kumban development plans

for each of the 47 poorest districts and incorporate them into Annual NSEDP;

v) Develop / implement plan to strengthen

coordination between ministries, central and local governments in the preparation of sector plans and the move towards programme based approaches;

 vi) Develop prioritized and well-costed PIPs,

disaggregated by sector where available; vii) Identify domestic resources to finance PIPs

and incorporate in medium term expenditure

Line Ministries with support from SWGs (action i, ii) Lao NCAW, LWU, UN [UNFPA] (action iii) CPI, UN [UNDP] (action iv) CPI, (MoF), Japan (actions v, vi, vii)

6 sector strategies: - Transport - Trade

(Integrated Framework)

- UXO - PEMSP - AI - HIV/AIDS Add sector strategy for Agriculture (including institutional reform for MAF) 37 Kumban development plans developed but not linked to annual

- Timetable decided by October 2007. - 3 (sub) sector plans developed by end 2008 (Education, Health, and Agriculture). - Strengthening of MPI in standardizing and providing capacity building to GoL for support functions of PIU New Projects are integrated into long range sector planning frameworks of MAF - Line departments/unit of concerned government ministry/agency are involved in the design and execution of core project activities - GoL is given increased responsibility for integrating financial management instead of parallel management by the PIU - GoL has established standardized rules and procedures for procurement - TA support preparation of reports but do it jointly with GoL staff and build their capacity to report systematically based on Project objectives - Gender Mainstreaming Tool is developed / endorsed by GoL’s Line Ministries by 2008. - By end of 2007 all Kumban development plans developed. Mobilization of resources by 2008.

- 9 (sub)sector plans prepared. - Mainstream gender concerns in all sector plans & related monitoring in place. - 47 kumban development plans incorporated into the NSEDP and funds mobilized for implementation.

105  

VD §

Goal Action Performance Milestones

frameworks and annual budgets; viii) Remaining financing gaps identified and

discussed with DPs through the SWGs where appropriate and RTM.   

        

CPI, UN [UNDP]

NSEDP and funding sources not identified.

-\New Budget Law Decree and Instructions prepared and disseminated by 2008. - Rules or guidelines for program formulation process are drafted and approved by FY 2008. - Costed and prioritized PIPs, including 2 sectoral PIPs by 2008 (Education, Transport), including identification of over-funded and under-funded. - MTEF pilot by 2008. - Planned annual PIPs aligned to MTEF.

- Budget Law implemented by 2010. - Rules or guidelines for program formulation process are implemented by FY 2010. - MTEF full integration to national budget system by 2010. - X% of PIPs are clarified under the programme

NSEDP VII: formulation ix) Evaluate the process for formulating the

NSEDP; x) Develop / implement a consultation plan

that facilitates consultation between central policy ministries (CPI, MoF, MoFA), Line Ministries, local government, private sector, DPs and NGOs;

xi) Through SWGs where appropriate, identify diagnostic/ analytical work required to formulate the NSEDP;

xii) Undertake costing of recurrent and capital expenditures drawing on the PIP / MTEF process;

xiii) Prepare NSEDP VII based on evaluations, analytical work, consultations and other experiences identified above.   

CPI UN [UNDP WHO (Health)]

- Evaluation findings shared for comments and adopted 2008. - Consultation Findings Report shared at RTIM 2008/2009.

- A centralized project management unit in each Department is responsible for identifying needs and proposing new Projects based on an analysis of previous initiatives

- Research Plan prepared by end 2007, and research conducted by mid 2009.

NSEDP VII priorities and costings approved by National Assembly and endorsed by DPs.

2. (VD 3, 7)

GoL exercises effective leadership role in coordinating aid at macro and sectoral levels.

i) GoL convenes annual Round Table Implementation Meetings;

ii) GoL leads a review of the Sector

Working Groups, and recommendations implemented accordingly. The roles of the SWG in this CAP are considered and decided upon;

MoFA, UN [UNDP]

8 SWGs each meeting only once or twice from March 2006-March 2007, and zero had work plans.

RTIM held in Nov 2007 SWG Review Report shared and recommendations discussed May 2007. Mandate and minimum performance expectations for each SWG decided and roles in implementing CAP confirmed by October 2007. INGO and wider

All SWGs prepare annual work plans and budgets (where agreed in TORs). All SWGs oversee effective sector dialog that:

106  

VD §

Goal Action Performance Milestones

iii) GoL communicates policies and strategies

on ODA including VD and ODA Decree 168 to line ministries and local authorities;

iv) ODA regulations and procedures, such as

MoUs, are developed and strengthened with support from DPs;

v) GoL identifies specific capacity

constraints to its leadership of the aid effectiveness agenda at the macro levels and decides with DPs on a program of support to remedy this.

membership to SWGs is promoted. 4 SWG work plans incorporating simple Joint Monitoring Indicators (that allows measurement of their own progress) developed by Nov 2007 and progress reported at RTIM 2007 VD and CAP translated into Lao and distributed to GoL agencies through workshops by December 2007.

1. Builds consensus around clear priorities; 2. Aligns & harmonizes DP support around these priorities; and 3. Monitors progress within their sector. All SWGs meet their own standards.

3. (VD 4)

DPs support leadership of GoL and strengthen GoL's capacity to exercise leadership.

i) GoL prepares CDFs in key cross cutting areas and sectors of NSEDP.

PACSA WB, UN [UNDP] Line Ministries with support from SWGs, where appropriate.

Transport, Education and Public Health in process of developing CDF.

4 CDF (Transport, Education, Health and Agriculture) finalized by end 2008.

A further 2-3 CDF finalized by 2010.

2. Alignment: Donors base their overall support on partner countries' national development strategies, institutions and procedures

DPs Align with the GoL's Strategies

1. (VD 5)

DP policies, activities and aid flows are aligned with GoL strategies and plans.

1. Through the SWGs, DPs broadly align and harmonize their assistance strategies to sector strategies and the NSEDP;

ODA flows are aligned with the prioritized investments contained in sector strategies and PIPs with particular attention to the over- and under-funded sections of the PIP. (CAP 2009: synchronize with NSEDP Planning periods 2011 – 2015 etc)

)

CPI, UN [UNDP] Line Ministries with support from SWGs.

72 % of ODA is recorded on national budget (ODA Report 2005).

Unfunded parts of the PIP reduced from X to Y [note: data to be taken from the Ownership sections]. Pilot the SOP (MPI/WB) and share experiences using the SWG

By 2010 all DPs have broadly aligned their assistance strategies to the NSEDP and sector strategies. 85% of ODA is recorded on national budget (Global target: 85%).

107  

VD §

Goal Action Performance Milestones

GoL Strengthens Regulations and Procedures with support from DPs, which DPs Increasingly Use

2. (VD 8, 9)

DPs do not create structures for implementing ODA-funded projects that are parallel to GoL structures.

i) GoL and DPs carry out a joint review of ODA-funded implementation structures in order to a) classify them according to the agreed matrix (refer Definitions), and b) summarize lessons learned in integrating project implementation structures to date; ii) SWGs build on lessons learned above to

guide progress towards integrating project implementation functions within their sector and monitor progress towards this.

iii) Organize a task force to formulate the methods for implementing the recommendations from this joint review taking into account the linkages between this issue and other proposed actions of the CAP including reducing parallel functions of PIU

 

DIC, MoFA UN [UNDP] Line Ministries with support from SWGs.

66% of projects use PMUs/PIUs in 2005 (OECD-DAC survey). MCTPC has no PMUs/ PIUs. Education has made progress in reducing parallel project structures.

Review of current implementation structures and lessons learned by end 2007. All SWGs agree on guidance for integrating project implementation functions within their sector by mid 2008. - Formulate a Project which aims to establish a centralized project management unit in one of the line Departments as a pilot and build capacity of staff using external TA where necessary - Use the experience from questionnaires for PIU reviews in order to revise the matrix in the VD CAP - Describe parallel and integrated PIU and improve the criteria differentiating parallel from integrated functions - Organize a consultation meeting for all Line Departments of MAF in order to review the recommendations from the PIU review - Assess existing planning and management functions within divisions of DoP - Explore options for centralizing certain existing parallel functions of PIU within MAF and within each line Department - Formulate proposals of best practices for DPs to immediately integrate into their Projects

No new parallel implementation structures created after 2010, unless endorsed by relevant GoL agencies.

108  

VD §

Goal Action Performance Milestones

GoL strengthens development capacity with support from DPs

3. (VD 10, 11)

DPs align their technical cooperation behind GoL CDFs.

i) DPs provide technical cooperation and other capacity building interventions in alignment with GoL developed sector CDFs.

CPI, PACSA, WB

<10 % of total capacity building interventions aligned with CDFs (only MCTPC).

- Pilot the SOP and build capacity of GoL in administration of Projects based on these standards - For those sectors with CDF, 50% of new capacity building interventions align with CDFs by mid 2009.

50% of total capacity development interventions aligned with CDFs.

109  

VD §

Goal Action Performance Milestones

Strengthening Financial Management

4. (VD 6, 8, 12, 14)

GoL implements reforms to strengthen PFM to enable DPs to increasingly use GoL financial management procedures and systems for their ODA.

Strengthening national PFM systems: i) GoL and DPs jointly review and decide

on acceptable criteria for PFM regulations and procedures;

ii) GoL strengthens budget execution by

implementing the budgeting law/centralization of treasury; aligning budget execution with plan; and integrating ODA financing and other revenues into the budget;

iii) GoL produces quarterly financial reports on

consolidated GoL expenditure, and makes these compatible with GoL financial statistics standards over time;

iv) GoL strengthens internal control

framework by establishing internal audit functions and associated enforcement mechanisms;

v) GoL strengthens the State Audit

Organization so that it can provide independent audit opinions to INTOSAI standards in a timely manner;

vi) GoL introduces a comprehensive

intergovernmental fiscal transfer framework in order to better align policy priorities with the budget.

MoF, WB, ADB

No functional classification of the budget currently exists. More than 2,000 bank accounts operating outside the control of the MoF. Budget planning is not based on a normative system. Current reporting is on an annual basis, with the report published more than 5 months after end of fiscal year.

Budget classification aligns with IMF-GFS and functional classification of budget implemented. Pilot the SFMM (MoF/WB) TSA established and centralized treasury structure implemented. Budget norms developed for health and education sectors GoL Financial Information System fully established. New Audit Law is implemented.

Revised Chart of Accounts and functional classification system implemented in FY 2008/09 Budget. Consolidation of GoL accounts within a unified TSA structure is able to show consolidated GoL position in real time. Budgeting for health and education sector done based on a system of budget norms. Quality budget execution reports produced for 2008/2009. Budget Audits carried out to INTOSAI standards by 2010. Fiscal transfer framework exists

110  

VD §

Goal Action Performance Milestones

DPs supporting national PFM systems: vii) DPs clarify and share with GoL and

other DPs their respective legal and policy regulations for the use of national PFM systems and standards to deliver ODA;

viii) DPs increasingly align PFM support to

GoL priorities; ix) DPs increasingly adopt GoL procedures,

rules and regulations; x) DPs increase ODA delivered through aid

modalities, such as direct budget support, that best support PBAs and reduce transaction costs;

xi) DPs increase the percentage of untied aid

executed by GoL as encouraged by the 2001 DAC Recommendation on Untying Official Development Assistance to Least Developed Countries.

MoF, WB, ADB

34% of ODA to the public sector uses GoL PFM systems [OECD-DAC] - 45% ODA used Budget Execution Procedures-30 % ODA used Financial Reporting procedures - 28% ODA used State Audit procedures: 5% of total ODA disbursed through PBAs (including direct budget) [OECD-DAC]. 75-80% of ODA is untied (ODA Report 2005).

54% of ODA to the public sector uses GoL PFM systems (Global: 33% increase from baseline). 33% of total ODA disbursed through PBAs (including direct budget) [OECD-DAC]. 90% of ODA is untied (desk review DAC Survey).

5. (VD 13,31)

Aid is more transparent and predictable.

i) DPs and GoL develop a common format for reporting total, sectoral and project level aid flows over a multi-year period, compatible with revised ODA database;

ii) DPs strive to make indicative and

transparent commitments of ODA over annual or multi-year period, in line with Lao

MoFA, UN [UNDP]

Gap between DPs’ disbursed ODA and GoL recorded as disbursed is 30% (OECD-DAC

Common format decided by end 2008. Gap between DPs’ disbursed ODA and amount recorded by GoL as disbursed is 15%. All DPs use common format for either

111  

VD §

Goal Action Performance Milestones

Financial Year where possible; iii) DPs aid is predictable and released on time,

where mutually agreed conditions have been met;

iv) DPs work with GoL to strengthen

absorptive capacity of GoL to effectively follow up on / use ODA pledges;

v) GoL to present annual budget reports to the

National Assembly & citizens, which include ODA.

survey). annual or multi-year period.

Strengthening National Procurement Regulations and Procedures

6. (VD 6, 8, 15, 16)

GoL and DPs commit sufficient resources to strengthening procurement regulations and procedures and enhance their efficiency, transparency and utilization.

i) DPs clarify and share with GoL and other DPs their respective legal and policy regulations for the use of national procurement systems and standards to deliver ODA;

ii) GoL and DPs jointly review and decide

on acceptable criteria on procurement regulations and procedures;

iii) GoL Procurement Manual and Standard

Bidding Documents are distributed to DPs;

iv) GoL fully implements new procurement

decree; v) GoL recruits and trains sufficient

number of staff at the PrMO; vi) Systematic collection of procurement

information and monitoring of performance and outcomes (through PrMO);

vii) DPs increasingly adopt GoL procedures,

rules and regulations to manage ODA-

MoF, WB

[X%] of public procurements through competitive procedures (note: data from PrMO end 2007). [X%] of public procurements through Standard Bidding Documents (Note: data from PrMO end 2007). 17% of DPs use GoLs procurement procedures (OECD-DAC).

Recommendations from joint review shared with GoL and DPs by 2008. Procurement website developed by end 2007 (PrMO currently in process of developing). Procurement Manual and Standard Bidding Documents updated and made publicly accessible by 2008.

[X%] of public procurements through competitive procedures (PrMO). [X%] of public procurements through Standard Bidding Documents (PrMO). 40% of DPs use GoLs procurement procedures (OECD-DAC).

112  

VD §

Goal Action Performance Milestones

related procurement.

Strengthening Environmental and Social Standards for ODA-Funded Projects

7. (VD 17)

With DP support, GoL develops technical & policy capacity for social, gender & environmental impact analysis & enforcement legislation.

i) DPs clarify and share with GoL and other DPs their respective legal and policy regulations for the use of national environmental and social standards in ODA projects and programs;

ii) Review current guidelines, standards and

legislation for conducting social (including gender, HIV/AIDS and Employment, etc) and environmental impact analysis for ODA projects, and identify / implement areas that need improvement;

iii) Discussion and approval of new

guidelines/monitoring indicators for environmental and social impact analysis;

iv) Strengthen the capacity of relevant GoL

agencies to enforce the above regulations.

STEA, UN [FAO], Sweden/SIDA

Assessment completed by mid 2008. Revised guidelines/standards drafted and approved by end 2008. Development of joint monitoring indicators.

Guidelines implemented. Social impact assessments include gender assessment. Use of Joint Monitoring indicators Adoption of harmonized environmental and social standards at all levels of government. All applicable ODA projects adhere to social and environmental legislation that is monitored and enforced by GoL

3. Harmonization and Simplification: DPs’ Actions are more Harmonized, Transparent and Collectively Effective

1. (VD 18)

GoL & DPs conduct & use core diagnostic reviews, carry out joint reviews & share results.

i) Through the SWGs where appropriate, GoL and DPs share list of planned country analytical work; identify priority research gaps and areas for joint country analytical work;

EC UN [UNDP] Line Ministries with support

30% of CAW is joint (OECD/DAC) [Global: 30% of country

Consolidated list developed, disaggregated by sector/programme on annual or multi-annual basis. Joint research programme decided for 2 sectors by 2008

66% of CAW is joint. [global: 66%]

113  

VD §

Goal Action Performance Milestones

ii) GoL and DPs conduct joint analytical work wherever possible;

iii) Mechanisms identified and implemented to

share research/review results to DPs, line ministries and provincial GoL (e.g. RTM website or global CAW site).

from SWGs, where appropriate.

analytic work is joint (2004)]

(Health, Education).

2. (VD 19,22)

DPs harmonise training and reduce administrative burden of GoL related to the number of duplicative missions.

i) DPs pursue decentralization & delegation of authority to country offices;

ii) GoL and DPs decide on, and document

core principles / good practices regarding missions and training scheduling, including consideration of mission free period(s) (e.g. April to June - annual plan formulation);

iii) GoL and DPs (through the SWGs, where

appropriate) share their training and mission plans and organize harmonized and/or joint training and missions where applicable;

iv) DPs increasingly share findings from

missions among DPs and GoL (e.g. RTM Website).

DIC, MoFA, EC Line Ministries with support from SWGs, where appropriate.

550 Missions in 2005/06 (OECD/DAC). 12% of missions are joint (OECD/DAC).

- Best practices identified by December 2007. - Formulate capacity strengthening plans which include the Personnel Dpt. of MAF and the needs of each technical Department based on a multi-year vision to bring about integration of PIU functions. Then link up with ongoing training activities and curricula in the region for strengthening Programme Management and Administration - Harmonized and/or joint mission and training schedules introduced for pilot sectors (Transport, Education & Health) by 2008.

50% of missions are joint.

3. (VD 20, 25)

GoL & DPs rationalize regulations, procedures & incentives by implementing common arrangements.

i) GoL and DPs decide on which DP regulations and procedures should use common arrangements and timetable for implementation; DSA, salaries;

ii) DPs carry out an overall review of above identified current practices and recommend policy/practice to harmonize DP procedures & incentives;

PACSA, MoF, EC Line Ministries with support from SWGs, where appropriate.

- Identification of procedures and timetable by end 2007. - DSA and salaries of GoL staff on ODA projects harmonized by 2008. - Results of the on – going reviews of PIU at MAF and MoE are shared and discussed with GoL and DP stakeholders - Experiences of PBA are documented and shared with GoL and DP stakeholders - Pilot use of the SOP developed by MPI (WB) - Establish a centralized project

GoL Guidelines gradually introduced and, where possible, applied to on-going projects/ programmes.

114  

VD §

Goal Action Performance Milestones

iii) Common procedures implemented (beginning in PBA sectors: Transport, Education, and Health).

ADB (Transport) & MAF

management unit in one of the line Departments

4. (VD 21)

GoL and DPs increase aid effectiveness through coordinated approaches e.g. PBAs.

i) GoL reviews and improves (where necessary) national financial systems to channel budget support and pooled funding identified for PBA to relevant sector;

ii) DPs expand use of coordinated approaches

to programming and resource mobilization through SWG framework.

MoF, Line Ministries with support from SWGs.

5% of ODA disbursed to PBAs (including direct budget support). (OECD-DAC)

DPs coordinate programs in Health, Education and Transport sectors.

33% of ODA disbursed to PBAs (including direct budget support).

4. Managing For Results: Managing Resources and Improving Decision-Making For Results

1. (26, 28)

Results orientated frameworks, that both GoL and DPs use, enable monitoring of development results and of progress toward aid effectiveness.

i) Further strengthen the national statistical system by implementing the National Statistics Strategy 2006-10;

ii) Develop a set of indicators to monitor

progress at national and sectoral levels, and decide on surveys / studies to collect data for these indicators and their periodicity;

iii) Develop, train on and implement results

orientated frameworks to monitor and evaluate the 1) implementation and 2) impact of the NSEDP and sector programmes, using strengthened national statistical systems and other tools such as the LaoInfo database and MDG Report;

iv) DPs work with GoL to prepare joint

formats for periodic reporting and align to above results oriented frameworks;

v) Review progress of SWGs against their

own Joint Monitoring Indicators vi) Develop and implement mechanism to

monitor progress against aid-effectiveness

CPI, UN [UNDP], Sweden/SIDA

National Statistical Strategy for 2006-10 has been completed.

Develop & implement Master Plan. Statistical needs assessment by end 2007. National and sectoral indicators decided. LaoInfo is used by GoL as a monitoring tool for implementation of NSEDP. 2007 MDG Progress Report published. Results Frameworks for general NSEDP prepared and shared by end 2007: Sector Specific Results Frameworks for Transport by end 2007, and for Education and Health by end 2008. General simple joint format for monitoring and reporting endorsed by DPs by mid 2008. OECD-DAC Country Worksheet April 2009. Proposal for revised ODA database shared and endorsed by GoL and DPs by 2008.

Results Frameworks well advanced by 2010. All DPs use common formats for monitoring and reporting. ODA Database fully operational, data reliable and transparently available to GoL and DPs by 2010.

115  

 

VD §

116

Goal Action Performance Milestones

commitments set out in CAP; vii) Continue to participate in the OECD-DAC

Survey; viii) Revise the ODA Database to provide

transparent and accurate reports on ODA-financed projects and programmes showing financial inputs (commitments & disbursements) and output progress. Information is shared across MoFA, MoF, CPI and line ministries and with DPs.

5. Mutual Accountability: Both GoL and DPs are Accountable for Development Results

1. (VD 29)

Progress over decided commitments on aid effectiveness is assessed.

i) GoL and DPs report on and assess progress in CAP implementation at CAP Review Meetings, and outcomes of which are presented at RTIM;

ii) GoL and DPs undertake independent

evaluations / assessments of particular aid-effectiveness issues.

DIC, MoFA, UN [UNDP]

First CAP Review Meeting held in October/November 2007 CAP implementation reported at RTIM 2007. Identify topics and timetable for evaluations and funding arrangements by end 2007.

Regular mutual assessments shared.

22. People interviewed by Ken Nicholson  

First name Last name

Position Organization

Work tel Mob tel email

Stefan Ekelund

Senior Portfolio Management Specialist

ADB 021 250444 020 2226303 sekelund@adb.org

Sisavanh Phanouvong

Project Implementation Officer

ADB Environment and Natural Resources

021 250444 020 85544104

sphanouvong@adb.org

Aurelle De Romemont

Chargée d’études – Secteur rural

AFD 021 243295 020 2051159 deromemonta@afd.fr

Guy Francois

Charge de Mission AFD 021 243295 Afdvientiane@groupe-afd.org

Rebecca Host-Madsen

Food Security and Agricultural Development Officer

FAO 021 413205 020 7871840 hostmadsen@fao.org

Saly Khamsoukpanya

Secretary (programme)

FAO 021 413205 020 5394247 Saly. Khamsoukpanya@fao.org

Hans-Joachim Lipp Coordinator for the Priority Area Rural Development

GTZ 021 353605 ext. 117

020 5508236 Hans-joachim.lipp@gtz.de

Katarina Courtnadge-Kovadevic

Consultant Aid Effectiveness

HTSPE Katarina@k-des.com

Harumi Kobayashi

Project Formulation Adviser

JICA 021 241100 020 5526891 Kobayashi.harumi@jica.go.jp

Kotani Tadashi Representative Agriculture and rural Development

JICA 021 241100 020 5517851 Kotani.tadashi@jica.go.jp

Henry Tucker Agriculture and Rural Development Manager

LCG 021 313259 henrytk@laoconsulting.com

Chanthaboun Sirimanotham

Director Planning and Cooperation Division

MAF, DLF

021 215242 020 5715476 csirimanotham@yahoo.com

Phiphakhavong

Sithong Project Director LFSP

MAF, DLF

021 250731 020 5306356 laoeulfsp@laopdr.com, sithongp@yahoo.com

Oupakone Alounsavath

Director of Planning Division

MAF, DOF

021 460294 020 2229393 dofadm@gmail.com

Somphanh Phomma

Procurement Specialist, SUFORD

MAF, DOF

021 215002 020 5521369 S_phomma@yahoo.com

Esa Puustjärvi

CTA SUFORD MAF, DOF

021 215002 020 5526882 esa.puustjarvi@indufor.fi

Somnuk Chanthaseth

Director Planning and Cooperation Division

MAF, DOI

021 413469 020 2228948 snchanth@yahoo.com

Insisiengmay Pasonexay

NPD, Decentralized Irrigation

MAF, DOI

021 216712 020 5504070 ipasonexay@live.com

117  

First name Last name

Position Organization

Work tel Mob tel email

Development and Management Project (DIDM)

Nouanedeng Rajvong

Deputy Director General

MAF, DOI

021 264868 020 5400916 Rajvong_nd@yahoo.com

Oudet

Souvannavong

TA MAF, DOI

021 262958 020 5513507 Oudet.i3s@gmail.com

Inthadom Akkarath

DIC MAF, DOP

021 415358 020 5699758 iakkharath@yahoo.com

Iain Craig TABI, Ramboll MAF, DOP

020 2097725 iaincraig@talk21.com

Savanh Hanephom

Deputy Director General

MAF, DOP

021 415359 020 5401116

Panida Phommalisack

Bilateral Cooperation Sector, DIC

MAF, DOP

021 415358 020 2480808 Ph.panida@yahoo.com

Vinoth Vansy National Project Director Sustainable Natural Resource Management and Productivity Enhancement Project

MAF, DOP

021 415363

020 2244575 vinus_lao02@yahoo.com

Andrew Bartlett LEAP TA MAF, NAFES

021 740253 020 5509001 LEAP@Laoex.org

Thongsavath Boupha Deputy Head of Planning Division

MAF, NAFES

021 732072 020 2243480 thongsavathboupha@yahoo.com

Somxay Sisanonh

Deputy Director General

MAF, NAFES

021 740253 020 2210957 somxay@laoex.org

Carl Mossberg

Sr. Prog Mgt. Advisor, Lao-Swedish Upland Agriculture & Forestry Research Programme, Ramboll

MAF, NAFRI

021 770079 020 5512351 carl@laotel.com

Phouthone Sophathilath

Deputy Director Planning and Cooperation Division

MAF, NAFRI

021 770093 020 5507763 Phouthone.s@nafri.org.la

Michael Victor Lao-Swedish Upland Agriculture & Forestry Research Programme, Ramboll

MAF, NAFRI

021 770079 020 5526693 omichael@loxinfo.co.th

Mike Lally Education Consultant

MOE 020 5009838 lally@cscoms.com

Sengsomphone

Viravouth

Acting DG MOE, DPC

021 217795 020 5520912 Sengsomphone@yahoo.com

Anoupheng Keovongsa

MOE, PMD

021 217795 020 5610348 anoupheng@yahoo.com

Alounchanhsa Bounsa Department of MPWT 021 416568 020 2001226 alounsay@yahoo.com

118  

First name Last name

Position Organization

Work tel Mob tel email

y ythip Planning and Cooperation

Soumountha Somchanmavong

Director of Planning and Statistics Division

MPWT 021 416568 020 2108959 somvong@yahoo.com

Berangere Prince MRC 021 263263 Masa Kato Consultant PCADR 020 7442588 masakato@gmail.com

Masa Kato Consultant PCADR 020 7442588 masakato@gmail.com Anonh Khamh

oung Director General PCADR 021 415364 020 5303388 akhamhoung@yahoo.co

m

Sysanhouth Khamsone

Coordinator General PCADR 021 263210 pcadr@etllao.com

Niels Morel TA PCADR 020 4017971 nielsmr@laoconsulting.com

Somsack Chandara

SDC 021 240399 020 5707284 somsack.chandara@sdc.net

Phanthanousone

Khennavong

UNDP Poverty Reduction Unit

Phanthanousone.Khennavong@undp.org

Jane Davies Basic Education and Gender Equality

UNICEF 021 315200 020 5599830 jdavies@unicef.org

Richardson John Consultant WB 02 9179513 johnrbkk@truemail.co.th

Veronica Mendizabal

WB 021 450010 vmendizabal@worldbank.org

William Rex Lead Country Officer

WB 021 450010 020 2221301 wrex@worldbank.org

Troy Hansel Deputy Director WCS 021 215400 thansel@wcs.org PMD: Project Management Division DPC: Department of Planning and Cooperation  

119  

23. Participants at the inauguration and the debriefing workshops

No. Name & Surname Position Organization Mobile Office No. Email Address

MAF PIU Review Inauguration Workshop Participants 1 Savanh Hanphom DDG DOP/MAF

2 Ms.Katarina Coutnadge Kovacevic Consultant EC 7983094 katarina@k-des.com

3 Sibouneua Vathanakhamphan DD of Planning Div NAFES/MAF 5828499 shdp@laopdr.com

4 Anoupheng Keovongsa Academic staff MOE 5610548 anouphengp@yahoo.com

5 Ms. Vivanh Souvannamethy DD of CSI DOP/MAF 5604962 souvannamethy@yahoo.com

6 Pasonexay Insisiengmay PD DIDMP/DOI, MAF 5504070 ipasonexay@live.com

7 Saleumsy Phithayaphone DD of Planning Div DOA/MAF 2242155 planningdoa@hotmail.com

8 Khampha DDG, RMD NAFRI RF 5514591 chanthirath_kp@yahoo.com

9 Somnuk Chanthaseth Dir of Planning Div DOI/ MAF 2228948 snchanth@yahoo.com

10 Lamphanh Technical staff SUFORD/DOF 555011 11 Nouanedeng Rajvong DDG DOI/ MAF 2413145 rajvong_nd@yahoo.com

12 Aurelle de Romemont PO AFD 2051159 deromemonta@afd.fr

13 Somsack Chandara PO SDC 5707284 somsack.chandara@sdc.net

14 BouasavanhViengsomsath Technicien DLF/MAF 2050593 15 Souriyasack Chouyavong Deputy of Div DLF/MAF 2213699 souriyasack@yahoo.co.uk

16 Chanthone Keomanivong DoP/PWT 416568 chanthone_keomanivong@yahoo.com

17 Insone Saysombath Technicien SHDP 2439656 insonesaysombath@yahoo.com

18 Ms. Phrimmasone Xaymonth Technical officer

Planning div/DOP/MAF 5497311 s_phimmasone@yahoo.com

19 Ms. Halumi Kobayashi PO JICA 552689    Kobayashi.Harumi@jica.go.jp

20 Inthadom Akkharath DD of DIC Div DIC, DOP/MAF    415385 iakkharath@yahoo.com

21 Bounsouane Phongphichith DD of Div DOF/MAF 2439933 219561  bphongphichith@yahoo.com

22 Sithong Phiphakhavong NPD LFSP/ DLF 5306356    sithongp@yahoo.com

23 Phouthanousone Technicien DOP/MAF 2254263    phutthanousone@yahoo.com

24 Bounluane Xomsihapanya Dir of Div DIC/MPI 2222289 214062  bounluane@gtzrural.org 

25 Ms. Somsanouk Nouansyvong Officer PCADR 2249432 415364  nouk.swgup.pcadr@gmail.com

26 Ken Nicholson Consultant PCADR       ken@knicholson.net 27 Oudet Souvannavong Advisor DOI/ MAF 5513507    oudet_souvannavong@gmail.com

28 La ongdao Syzomephou staff Div of Coop/MAF 2559488    daozomephou@yahoo.com

120