Creating project readiness checklists and certification programs on procurement, financial management, and safeguards will help ensure effective project implementation.
September ushered in the 18th-month mark of the coronavirus disease (COVID-19) pandemic. Despite the ongoing challenges of quarantines, lockdowns, travel restrictions, and precarious global supply chains, the Asian Development Bank (ADB) delivered strong results in 2020. Sovereign and nonsovereign operations increased by $14.7 billion (16.8%) and $500 million (4%), respectively, compared with 2019.
Setting the direction for 2021, President Masatsugu Asakawa stressed the importance of strengthening the quality of project design and readiness for project implementation. This is particularly relevant against the backdrop of disruption in ADB’s planned operations by the completely unexpected and unprecedented pandemic.
Until the world reaches a “new normal,” it is important to be agile and proactive in coping with portfolio challenges for ongoing and new projects and in striking a balance between operational volume and quality. The One-ADB approach(link is external), which promotes closer partnerships with development partners and the private sector, is instrumental in ensuring fast and impactful delivery of much needed support to developing member countries—both for COVID-19 and non-COVID-19 projects and programs.
Addressing the Challenges
Drawing experience from projects in the Central and West Asia region where economies range from the poorest to the upper-middle income, various challenges arise at different stages of a project cycle, so countermeasures need to be implemented.
To address these challenges at an early stage, it is critical for projects to have a fit-for-purpose project design and to ensure project readiness and effective implementation.
Project design. Aid effectiveness is a cornerstone of development work, but good design is a critical factor to improve project outcomes.
- Project design and formulation should stay away from using “the more complex, the more eye-catching” or “the simpler, the better” practices. Instead, there should be a balance between the “survive” versus “thrive” thinking behind a country’s project request. Project team leaders during the project design should check to avoid the following: (i) use of the wrong modality, (ii) overambitious scope and timeframe, (iii) inappropriate or unclear implementation arrangements, and (iv) over-the-top incentives for capacity building.
- Project ownership should include all key stakeholders and not just stay at the level of the executing agency. This is particularly important for investment projects involving state-owned enterprises (e.g., energy transmission or distribution companies, utility companies, national transport operators), which has autonomous authority although still under the government’s regulatory or policy control.
- In designing and formulating projects, consider factors beyond the technical nature, such as broader implications on related sector policies and possible resistance from key stakeholders.
- Project design should not be confined to embedding soft component of sector reforms or institutional capacity into physical investment component under a standalone project, particularly in cases where continuing interventions in a specific sector are planned over a period of time. This will give project team leaders flexibility in tackling common issues, such as sector policy, reforms, or an institutional strengthening agenda in a comprehensive and integrated fashion (e.g., multitranche financing facility(link is external), sector loan(link is external) or sector development program(link is external)).
Project readiness. Loans and grants will not have an impact on development until funding is disbursed. Ensuring project readiness will expedite awarding of contracts so the project can begin immediately, leading to accelerated disbursements and achieving project outputs on time and within budget.
- Create a time-bound project readiness checklist. Work with government to put together the checklist—which can be country or sector-specific—based on estimates after reviewing specific project features and analysis of past performances in such areas as engineering design, procurement, land acquisition and resettlement, and environment management plan. This can serve as a precondition to various loan processing milestones or loan negotiations. This will also synchronize project-starting activities with financial activities, and have the project “shovel-ready” upon loan signing.
- Use the appropriate project preparation facility (e.g., project readiness financing(link is external), small expenditure financing facility(link is external)) that can provide responsiveness and flexibility to a client’s diverse project development needs and can help ensure project quality at entry, including implementation readiness.
- Ensure that a government internal approval procedure is in place for the selected project preparation financing instrument, especially when it features revolving and refinancing options.
- Develop a comprehensive understanding of a country’s operational environment (e.g., political, institutional, economic, project level) with the help of the resident missions (ADB overseas offices), especially with the COVID-19 travel restrictions.
- Establish a co-leadership arrangement between the home office and the resident missions for both loan processing and implementation procedures. This combines physical and virtual presence in overseeing a project and provides resident mission staff more opportunities for professional growth and a larger contribution to a project. Resident missions will play a critical role throughout the project cycle including the conduct of in-person meetings with government and other key stakeholders, consultations, and site condition verification. It may be difficult for the project team leader to ensure a full buy-in of the project design because people favor face-to-face discussions instead of virtual meetings.
Project implementation. Experience shows that no matter how well a project is designed, it will need some adjustments. Implementing projects can reveal new challenges that may not have been anticipated in the design stage. Without effective implementation, projects and programs are unlikely to meet the budget, quality, time, and development objectives.
- Hire key staff (e.g., director) for the project implementation units based on open competitiveness instead of appointing a staff through deputation from the government. It is critical to ensure the availability of skilled staff and prevent a high turnover of people. Employees of line ministries and departments will be allowed to apply and upon appointment should take a special leave from government for the duration of the project and will be entitled to salary at market rate.
- Resident missions should discuss with governments the possibility of establishing a dedicated unit in their agencies for foreign-funded projects, with several staff who are fully trained on donor processes. They will be responsible for land acquisition or utilities relocation implementation to limit the delays in project implementation.
- Resident missions should work with governments to implement certification programs on procurement, financial management, and safeguards to facilitate the decision-making process on project management. The slow decision or inaction of project implementation units or executing agencies are usually because of liability concerns and fear of inquiries from government anti-corruption agency, audit agency, and some media entities.
- Establish a project steering committee mandated to meet quarterly or at least biannually to improve the collective decision-making environment and oversight.