70142 LISP Pilot Implementation in Kirov Region: Analysis and Recommendations for Improvement in 2011 A Review Pursuant to the Agreement on Advisory Services Provision between the Department of Social Development of Kirov Region and the IBRD dated April 15, 2010 July 2010 1. Introduction 1.1 This report has been developed pursuant to the Agreement between the Department of Social Development of Kirov Region (DSD KR) and the World Bank (WB) “On Technical Assistance in Implementing the Local Initiatives Support Project (LISP) in Kirov Region� dated April 15, 2010 (Agreement) established under the Memorandum on Strategic Partnership between the regional government and the Bank dated July 14, 2009. This is the first of the two Bank monitoring reports to be produced before the end of 2010 and it will be used to develop recommendations for improving the Local Initiatives Support Project (Project) in 2011. 1.2 The key objectives of the report are to evaluate the quality of the Project implementation processes and engagement of the population in the Project, describe activities implemented with support from the Bank as well as preliminary outcomes and lessons learned. 1.3 In the course of producing the report, data and information obtained by the staff and consultants of the Bank during visits to municipalities and training workshops as well as microprojects documentation submitted to the tender were used. The latest monitoring visit of project municipalities by the Bank team took place in early June. Respectively, the report describes the works performed by the DSD, the PIU and the WB team between December 2009 and May 31, 2010. 1.4 The report comprises the following sections: • Capacity building events • Citizens’ participation in microprojects identification • Development of competitive bids • Selection of microprojects by the LISP Tender Commission • Signing microproject contracts and provision of subsidies • Microprojects co-financing • Annexes Despite the fact that by the end of the reporting period the development of tender documentation and procurement of contactors’ services had started, they will be covered in the second monitoring report. 1.5 Pursuant to the Agreement, at the reporting stage of the Project implementation (before selecting contractors and implementing microprojects) the Bank was to provide advice and information support in arranging and implementing the Project, including: • Assistance in preparation and delivery of community meetings, identification and prioritization of issues at the settlement level and development of competitive bids by municipalities; • Assistance in analyzing competitive bids and developing materials for the competitive selection of microprojects. 1.6 The Bank provided such assistance primarily through (i) capacity building which to some degree embraced almost all participating stakeholders, (ii) consultations to representatives of participating settlements and (iii) expert advice to the working bodies of the Project, - Steering Committee, DSD, and Tender Commission. 2. Capacity Building Events 2.1 The experience with implementing LISP in Stavropol region as well as lessons from implementing similar projects in other countries suggest that all stakeholders must have a clear understanding of principles, approaches and key procedures of the Project if it is to be successful. Therefore, in September-December 2009, the Bank team made a series of presentations and held discussions of the Project design with all entities of the regional government involved in the Project, including the Project Preparation Unit, DSD and other departments and agencies. 2.2 In addition, the Bank team together with the LISP team designed and delivered workshops on the following topics: Development and Implementation of Participatory Microprojects: December 10-14, 2009 2.3 Two two-day capacity building events were delivered for the representatives of settlements and district municipalities. The workshops were delivered by a team of Bank consultants. Participation was very high: the activity was attended by 43 of 44 settlement-level municipalities that had been invited as well as almost all district-level municipalities. The workshop was attended by 80 participants. Just like in subsequent capacity building events, a mix of presentations, small groups and case studies was used. 2.4 A no-name survey suggested that the workshop was highly useful (average score of 4.9 at a 5-point scale). 2.5 This delivery format allowed to successfully identify and develop microprojects and finally to come up with high quality microproject bids. The pattern of delivering similar workshops immediately before engaging the settlements should be further used in the districts that will be involved in the LISP implementation. Citizens’ participation in microproject implementation, its monitoring and evaluation: April 10- 14, 2010. 2.6 The capacity building event was targeted to municipalities/settlements – winners of the tender. Representatives of 18 settlement-level (21 settlements) municipalities were invited. The audience comprised 38 participants representing approximately 75% of municipalities/settlements. Such participation rate was sufficiently high; however, it was lower than during the first workshop delivered in December. There was an objective reason, though: the first day of the event coincided with a religious festivity. Yet, in the course of designing capacity building events in the future the importance of the training should be better conveyed to the invitees. 2.7 The audience was more engaged and active in the first part of the event which covered participation/co-financing arrangements, and less interested in the portion dealing with monitoring and evaluation. In the future – for new districts - this portion should be made as simple and hands-down as possible. Procurement arrangements under LISP microprojects: April 29, 2010 2.8 One important stage in microprojects implementation is holding a tender to select contractors for works pursuant to provisions of Federal Law 94-FZ. Importance of this capacity- building event for Kirov region municipalities was caused by the fact that heads of municipalities had practically no experience in procuring goods and services for municipal needs. 2.9 The workshop was delivered on April 29, 2010 in Kirov. Heads of winning municipalities were invited to attend. The event had a 100 per cent participation rate. In addition, representatives of relevant municipal districts and staff of the Department of Public Procurement of the Kirov region attended the event. 2.10 Staff of the Department of Public Procurement of the Kirov region (T.Maltzeva, Head of Department, D.Novikov and E.Perestorina – heads of units) described procedures for an open tender, open auction (open e-auction), requirements to bidders and documentation. E-auction was reviewed in the on-line mode. The second part of the workshop covered case studies based on questions from the audience; a procedure for interaction and consultations regarding auctions and quotations was established. Mr. S.Gridin, a WB consultant, took part in the workshop; he presented lessons based on 3 years of LISP implementation in Stavropol region. 3. Citizens’ Participation in Microprojects Identification 3.1 Almost all municipalities of Yaransk district applied for participation. Almost half of the municipalities submitted more than one application. This means that awareness-raising and capacity-building events delivered in September-December 2009 by the PIU and the Bank team managed to bring the key information on the Project across to all settlements of the Yaransk district and that the core principles and approaches of the Project highly correspond to the objectives pursued by municipalities and residents of participating settlements. 3.2 Pursuant to the agreed LISP implementation plan (see Annex 1), in January-February 2010 municipalities that applied for participation in the Project (i.e. almost all settlement of the Yaransk district) held community meetings. 3.3 WB consultants attended almost all 55 community meetings. Both the course and outcomes of such meetings (i.e. high quality bids) demonstrated that such participation of the WB consultants was instrumental in identifying and prioritizing settlement-level issues and developing tender bids. 3.4 The objective of consultants’ participation was not so much monitoring but providing practical advice to heads of settlements in designing and delivery of such activities, and in developing tender bids. This assistance and advice bolstered up the skills and knowledge obtained during December workshops held in Yaransk. Based on the outcomes of each visit, the consultants produced reports using a special form (see Annex 2). See Annex 3 for a summary of the visits outcomes. 3.5 The schedule of the meetings and visits by WB consultants was agreed both with the DSD and district municipalities which played a major role in promoting the Project. Representatives of district authorities attended some meetings but never put any pressure in the course of such meetings or during decision-making. 3.6 Capacity building and active engagement of municipalities and community groups with citizens prior to the meetings ensured a high turn-out rate: on average, 10-15% of the population attended the meetings, suggesting that 30-40% of households were represented. In two cases (Kugalsk and Verkhotula rural settlements) meetings were attended by more than one half of residents. Given that the Project does not have a minimum participation rate target (unlike many similar projects in other countries) such representation can be considered very high. 3.7 The meetings were rather engaged, sometimes heated, but in all instances constructive. According to c consultants, those projects were selected that the meeting participants regarded as priority ones. One important indicator demonstrating that people indeed regarded the selected projects as priority was the fact that the size of cash contribution suggested by settlement authorities or by community groups upon suggestions from the meeting participants increased several times. As a result of such meetings, the share of co-financing reached about 12% of the microprojects cost. A nice example of such meetings is the one held in Karakash. Despite internal conflicts, disagreements and dissatisfaction of some residents with the settlement authorities, lack of trust and high expected cost of the project, people started to believe in the project as the meeting proceeded. The desire to improve their lives brought people together and sparked their activity. This resulted in a situation when some participants that sabotaged any decision had to leave. No one of participants nominated to the community group declined. The initial amount of voluntary cash contributions proposed by the settlement head was increased several times and the decision was taken almost unanimously. Everybody realized that if the project is implemented, they no longer will have to carry high boots in the mud season to be able to reach the road or a bus stop. 3.8 Lessons learned • Consultants’ participation in the preparation and delivery of all or at least of majority of community meetings should continue in the districts that will be involved in the Project in 2011. • Consultants participating in such meetings are key to the Project. Therefore, if the Project is expanded and new districts are included, a timely selection and training of consultants is needed so that they participate in all activities (capacity building etc.) held in settlements before the meetings campaign starts. • Such participation requires significant financial, time, human and other inputs. The campaign should be planned in advance together with district/settlement representatives in order to ensure efficient use of such inputs. • One unexpected lesson learned during such meetings was that if the project concept and methodology are explained to the public clearly and precisely, people are ready to contribute not only in kind (free labor) but also come up with significant financial resources which with respect to not-so-well-off villages of Yaransk district came somewhat as a surprise. 4. Development of Tender Bids 4.1 All settlements where community meetings were held developed and submitted tender bids; in all, 55 microproject bids were submitted. 4.2 Overall, given the tough deadline for development and submission, the quality of such bids was satisfactory. Some settlements where community meetings were held in February had only 2-3 weeks to come up with required documentation. With this in mind, the DSD and the Tender Commission Secretariat provided all possible assistance to allow the settlements to finalize their bids. In particular, in some instances the bids were returned with comments and feedback from the DSD and additional time to remedy the situation was allocated. However, even in such cases not all settlements managed to finalize their bids in line with the LISP requirements. The “Opytnoje Polje� municipality project which received the highest score among all bids based on the LISP evaluation/selection criteria was not selected by the Tender commission since the community group and the municipality failed to come up with the project cost estimates on time. The key issue was not so much lack of time (DSD allowed to finalize the bid after it had been formally submitted) but the fact that the community group which did not know how to develop cost estimates, never turned to district specialists or Bank consultants. Regardless, residents of the settlement consider such outcome fair. After completion of the tender, people performed some works on their own and intend to participate in the project next year. 4.3 Medium-term development plans integral to the bid documentation proved a major weakness of almost all bids. Representatives of municipalities/community groups do not possess required skills and knowledge for designing such plans. The limited time allocated to this issue during December workshops was utterly insufficient. Besides, settlement representatives do not take planning serious enough since settlement budgets normally do not have resources to support implementation. 4.4 Lack of or poor quality of the required design, budget and technical documentation appeared to be one of the key stumbling blocks in the course of microprojects consideration by the Tender Commission. Despite the fact that approved projects mainly dealt with simple reconstruction or repairs, in some cases they lacked sufficient engineering design. Three factors contributed to such outcome: (i) lack of time, - some settlements had 2-3 weeks to develop the bid, (ii) lack of capacity/experience at the settlement or district municipality, and (iii) lack of financial resources. 4.5 Lessons learned • Since there is a good chance that the LISP implementation in the Kirov region will continue for several years, more emphasis should be put on designing medium-term development plans for settlements. In particular, capacity building in development planning should be enhanced and relevant advice at the bid preparation stage should be provided. • In the course of planning the Project implementation for 2011, settlements should receive significantly more time and benefit from technical assistance in designing budgets and technical documentation. • One of the problems in developing technical designs is their fairly high cost. Settlements are reluctant to invest in such designs as they are uncertain whether they will receive financial resources to support project implementation. As microprojects become increasingly sophisticated, this issue will grow to be pressing. One solution might be to introduce a two-stage selection approach: preliminary (based on public discussions and perhaps partial designs) and final (once the budget and design have been completed). • If the Project is dramatically expanded in 2011, there should be an engineer hired by the Project on a full-time basis to coordinate technical support to the microproject bids and preparation of budgets/design documentation. 5. Selection of Microprojects by the LISP Tender Commission 5.1 The DSD and the TC Secretariat jointly with the Bank made a major effort to specify evaluation criteria and methodology as well as competitive selection procedure. The key objective was to achieve maximum transparency and fairness of the selection system. The criteria and their application methodology were submitted to, and discussed by, the Tender Commission members with their feedback reflected in the final version of the selection methodology. 5.2 Tender bids with attached documentation were screened by the LISP PIU members and DSD staff. The Bank consultants provided a lot of input as well. A table summarizing key parameters of microprojects based on established criteria was developed. In fact, the members of the Commission were required to simply indicate their scores against several subjective criteria based on the materials attached to the bids, reports of the Bank consultants and discussions of the Tender Commission. 5.3 All the required microprojects-related materials were mailed to the Commission members seven days before the Commission meeting, this allowing sufficient time for familiarization. However, representatives of the Department of Economic Development came up with strong objections, since they believed that the technical designs were inadequate and could not serve as the basis for financing construction works. The Commission took this opinion into consideration but refused to postpone decision-making with respect to microproject selection. 5.4 Heads of district municipalities attended the meeting of the Tender Commission and could provide clarifications with respect to projects. This allowed to obtain additional information on the projects and to make the meeting and its decision more transparent. The latter is crucial to build settlements’ trust to the Project without which it cannot be successfully implemented. 5.5 Overall, the selection methodology (including criteria) allowed picking up the best projects indeed. A testimony to this is the fact that there were virtually no objections either on the part of settlements that failed to be selected or from district authorities. However, the methodology is rather labor-intensive and in 2011 when some 400-500 bids will have to be considered, this may pose serious problems. 5.6 The Tender Commission approved 21 microproject coming from 18 settlements, i.e. three settlements had two of their projects approved. See Table 1 for the typology of submitted and approved bids. Project type Submitted Approved Water supply 24 8 Road repairs/rehabilitation 16 7 Sports facilities 5 2 Community centers rehabilitation 3 2 Area development 5 1 Heating 1 1 Bridge 1 - Total 55 21 5.7 Lessons learned • Even at the pilot stage with only 10% of all settlements participating in the LISP, the DSD and Tender Commission had no technical capacity to perform an adequate and comprehensive evaluation of the bids’ technical side. Should the Project scope increase significantly with many or all districts participating, the volume of technical work in terms of evaluating microprojects and getting them ready for the tender will increase by an order of magnitude. If the DSD/ Tender Commission Secretariat are to be ready to do the job in time and with required quality, the Project preparation for 2011 should ensure ways of engaging necessary expertise to expediently check and assess the efficiency of selected solutions and technical designs. • Processing information on 55 bids submitted in 2010 required a lot of time and effort of the LISP PIU, DSD and the Bank consultants. It is expected that in 2011 the Tender Commission will receive already several hundreds of bids. It would be next to impossible to process the resulting volume of information unless a project management information system (MIS) - a system to record and process information at all stages of the Project – is in place. 6. Signing Microproject Contracts and Provision of Subsidies 6.1 The signing of microproject Contracts between the DSD and settlements was free of any significant issues. Given that this was a pilot/demo Project, at the signing stage the DSD staff assumed a rather tough approach to settlements regarding their compliance with conditions. In particular, availability of cash contributions from the public was monitored strictly. This resulted in some delays in signing some of the Contracts, and the signing on average took 20-25 days. 6.2 Lessons learned • Contracts preparation and signing is a fairly labor-intensive process and in 2011 when contracts for 150-200 projects will have to be developed and signed, an automated system to compile the language of the contract and monitor compliance wit the contract terms (e.g., MIS) should be provided. • Since collecting/ensuring community contributions will stay as a condition for signing, sufficient time for contract preparation and signing needs to be allocated in the course of microproject cycle planning. 7. Microprojects co-financing 7.1 One unexpected outcome at the first stage of the LISP implementation was very high level of local (municipality, public, sponsors) co-financing. Overall, for approved projects (based on the decisions taken at community meetings that later were included into Contracts) it reached 21.4% of microprojects cost, or 27% of the financial resources received from the regional budget. It is expected (based on experience with similar projects in Stavropol region and other countries) that the levels will go up as microprojects implementation proceeds. 7.2 Co-financing by the public proved especially high (11.4% of the Project cost). In some instances it reaches 18-23%, while in Tuzhino urban settlement it appeared as high as 33%. Considering rather low levels of income of the population and the fact that the Project does not have a minimum target for co-financing (unlike many other similar projects in other countries), such level of co-financing is very high. 7.3 The above level of co-financing was set at community meetings, and in many instances the public suggested to increase the level dramatically compared to the one suggested by the municipality/community group. When outcomes of the rural meetings campaign were reviewed, the high level of co-financing was regarded as a most significant implementation risk. However, by now almost all settlements have met their commitments. 7.4 Lessons learned • With a careful and aggressive awareness-building campaign, the public is ready to provide significant co-financing of the Project, and the level of such co-financing only marginally depends on people’s income levels. The high level of public contribution means that (i) selected microprojects are indeed relevant, (ii) people are ready to help attack the issues they are facing and (iii) the degree of trust that the local authorities enjoy is fairly high. • In 2011 and subsequent years, the level of co-financing should be given more weight as an evaluation criteria, especially for settlements that used to receive subsidies from the Project before. 8. Annexes