Author Topic: Minimum Standards for PIM in Low Capacity Environments  (Read 398 times)

petagny

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Minimum Standards for PIM in Low Capacity Environments
« on: January 14, 2011, 12:37:48 GMT »
Rajaram et al. (see attached) have developed some 'must-have' features for a functioning PIM system, but many of these are probably too advanced for some low income-low capacity countries, especially post-conflict states. What are the 'basic-basics' of the most rudimentary PIM system? A recent World Bank global conference on PIM in Hanoi suggested the following:

•   Clearly stated expenditure priorities (some planning or PFM process)
•   Database for investment projects
•   Simple but clear criteria for screening and selection
•   Independent project review
•   Budget for O&M
•   Monitoring implementation (progress of works and disbursements)

This seems like a good starting point, but it also opens up some further questions. What would simple but clear criteria for screening projects look like in an environment where there is probably no capacity for cost-benefit analysis or cost-effectiveness analysis? What sort of systems need to be in place to ensure that O&M is budgeted?

It would be interesting to hear what others see as the bare minimum for a functioning PIM system.

John Short

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Re: Minimum Standards for PIM in Low Capacity Environments
« Reply #1 on: January 14, 2011, 13:23:39 GMT »
The checklist seems appropriate and achievable using a sieve type process where the holes get smaller at different stages of the process and the level of scrutiny becomes more intense.  I wonder if more could be added on procurement and political aspects of getting projects suggested and carried out which tends to lead to a by-pass or watering down of the technical process.  This is often one of the biggest issues in investment selection. 

harnett

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Re: Minimum Standards for PIM in Low Capacity Environments
« Reply #2 on: October 23, 2012, 11:10:24 GMT »
Very useful couple of posts.  I'm confronting such issues right now and am wondering what criteria should be used for screening and selection - obviously compatibility to the gov. policy but then if CBA or CEA capacity is not there then what appraisal techniques can be used?  Given that my present country's investment is almost all donor driven then instead of training to conduct CBA etc then train to be able to analyse the results of donors' CBA analysis.

Interesting that there is no evaluation mentioned here (obviously the last link in the PIM chain).  If there is a reasonably functioning Supreme Audit Institution then evaluation could start from there for the largest projects.

Napodano

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Re: Minimum Standards for PIM in Low Capacity Environments
« Reply #3 on: October 23, 2012, 14:59:23 GMT »
Interesting that there is no evaluation mentioned here (obviously the last link in the PIM chain).  If there is a reasonably functioning Supreme Audit Institution then evaluation could start from there for the largest projects.

Largest Projects; this is key in my opinion. Get the biggest projects under tight oversight all the way through the project cycle. Make them as examples to avoid future mistakes. I am not talking about pointing fingers but a stock taking exercise, which then feeds into the MTEF (or, even beyyer,  it is part of the MTEF) .

To this end, this is what the Brazilain MoF was doing in 2005 (file attached) and the Albanian MoF is currently doing on a lower scale. Similar approach to the UK Gateway system launched under Blair (attached brochure of the service), with the added value of PIM supporting services from a central agency to sector ministries.
« Last Edit: October 23, 2012, 15:04:39 GMT by Napodano »

Napodano

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Re: Minimum Standards for PIM in Low Capacity Environments
« Reply #4 on: October 23, 2012, 15:09:30 GMT »
... and one more thing:

- get an existing  Parliamentary Committee involved.

In countries where the economic crisis has made  talks of 'cost-efficiency/effectiveness' popular with politicians, I would ride the wave and get Parliament involved.

petagny

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Re: Minimum Standards for PIM in Low Capacity Environments
« Reply #5 on: October 24, 2012, 06:31:19 GMT »
Making sure that there is demand for the services to be provided by the facility and that the costs of meeting this demand are not exorbitant are good starting points. If the project proposers are unable to provide a reasonable estimate of the number of users and their likely consumption of the public service(s) to be offered, then this is already a significant warning sign. If an estimate can be provided, this should be supported by evidence from other similar facilities (if available).

Once a demand estimate is available, then a capital cost per user and per unit of output can be estimated. This is not an ideal measure, but can still give an indication of value for money by bench-marking against other similar projects. For example, if the capital cost per user or unit of output is double recent experience, then this is already an interesting piece of information for making a judgement on feasibility. This obviously gets easier as a database of information is built up.

Of course, looking at discounted life-cycle costs (capital and current) would be better, but this is cost-effectiveness analysis (CEA) and might stretch capacities. Assuming CEA is a step too far, absence of estimates of operating and maintenance costs and of explanations of how these will be covered are obvious signs that there may be a problem with the viability of the project.

Multi-criteria analysis (MCA) can be useful in systematizing subjective estimates of benefits and arriving at a decision about about value for money. It's probably best suited to assessing similar projects against each other though, e.g., rural road projects or water supply projects. Projects can be required to achieve minimum scores to have a positive appraisal or MCA can be used to rank projects. This is obviously somewhat arbitrary, but may be better than nothing. Care needs to be taken to ensure that scoring is done by disinterested parties (easier said than done!) or else every project ends up meeting the threshold. I've seen proposals for using MCA-based appraisal systems that cut across sectors and type of project, but I'm not convinced by these: amongst other weaknesses, they tend to favour multi-purpose projects that tick all the boxes whereas in reality these are usually the most problematic (the best projects have a limited number of purposes - one being best!).

Remember also that where similar projects are being replicated, there is no need to do CBA/CEA for each project: it's OK just to do the analysis of a 'model' project to be sure that the programme is viable. Benchmarks can also be established for model cases and used to justify investment, e.g., the traffic level at which it becomes viable to upgrade a gravel road to asphalt, or the minimum size of settlement for which a waste-water treatment plant can be justified. This approach is helpful where there are some skills in CBA, but these are in short supply.

I attach one of my recent attempts to define screening and selection criteria. In a low capacity environment, it may not be possible to go beyond the preliminary screening criteria in appraising the project. The difference between preliminary screening and appraisal would then rest more on the quality and accuracy of the information. Better information at appraisal stage would allow a second round of filtering out poor projects (to use John's analogy).

petagny

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Re: Minimum Standards for PIM in Low Capacity Environments
« Reply #6 on: October 24, 2012, 07:05:23 GMT »
I certainly agree with Napodano's suggestion to focus scarce analytical resources on major projects, beginning with the very biggest, say the top 5 or 10 depending on what can be managed. Then lower the threshold as expertise develops. As an example, Ireland began with a CBA threshold of euro 50 million, but this has been gradually lowered to euro 20 million, partly reflecting experience, but probably also reflecting improving capacities (both public and private).

As Harnett suggests, the capacity to understand and analyse donor appraisals is also important. Donors are as much prone to optimism bias as spending ministries and all too often recipient countries are too ready to accept the results of feasibility studies without question. Donors too are not necessarily consistent in their application of CBA as the attached note from the World Bank's Independent Evaluation Group indicates.

pfmkaro

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Re: Minimum Standards for PIM in Low Capacity Environments
« Reply #7 on: January 30, 2014, 23:48:47 GMT »
Napodano, petagny, john short and others

I am looking for one or possibly two experienced and thoughtful PIM practitioners to serve as resource persons at a workshop on PIM in developing countries sometime in March/April location tbd.  If interested, could you contact me at aramkaro@yahoo.com ?   Since this topic has been little visited I may repeat this message in a more recent posting. 

pfmkaro

STONE

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Re: Minimum Standards for PIM in Low Capacity Environments
« Reply #8 on: August 19, 2014, 17:02:39 GMT »
Maybe not the best place to post this, but....

I see that the UK's Public Accounts Committee has published its report on the Major Projects Authority.  My read of the report is that the UK seems to qualify as a low capacity environment.

 

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