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NEPAL PORTFOLIOPERFORMANCE REVIEW

NPPR 2009

RESULT-BASED MANAGEMENT FORPORTFOLIO PERFORMANCE AND

DEVELOPMENT EFFECTIVENESS

December 3-4, 2009

Ministry of FinanceGovernment of Nepal

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CCOONNTTEENNTTSS

MESSAGE FROM THEFINANCESECRETARY

MAIN REPORT

GGOOVVEERRNNMMEENNTTOOFFNNEEPPAALL

BBAACCKKGGRROOUUNNDDPPAAPPEERR

ATTACHMENT 1

ADBBACKGROUNDPAPER

ATTACHMENT 2

DFID BACKGROUNDPAPER

ATTACHMENT 3

WORLDBANKBACKGROUNDPAPER

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MAIN REPORT

GGOOVVEERRNNMMEENNTTOOFFNNEEPPAALL

BBAACCKKGGRROOUUNNDDPPAAPPEERR

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Nepal Portfolio Performance Review 2009

Result-based Management for PortfolioPerformance and Development Effectiveness

A Vision Paper of the Government of Nepal

Ministry of FinanceSingh Durbar, Kathmandu

December 3-4, 2009

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Table of Contents

1. Conceptual Outlook2. Result-based Practice in Nepal3. Nepals Result-based Initiatives in Key Areas

3.1. Reforms in Budgeting System

3.2. Reforms in Public Financial Management (PFM)

3.3. Reforms in Procurement System

3.4. Reforms in Monitoring & Evaluation System

3.5. Reforms in Human Resources Management

3.6. Quality -at -Projects Entry

4. Nepal on the Path of Aid Harmonization: Enhancing Commitments

5. Future NPPR Mechanism making more Result focused

6. Major Challenges in Key Areas

7. A Way Forward

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Nepal Portfolio Performance Review (NPPR) 2009 Page No. 1

Nepal Portfolio Performance Review - 2009

Result-based Management for Portfolio Performance and

Development Effectiveness

Part - I

1. Conceptual OutlookThe Result based management (RBM) approach has emerged as a

centerpiece of global efforts to improve the effectiveness of public

management and is widely seen as representing best practice in this field. It is

increasingly applied in developing countries. It is also known as Managing for

Development Result (MfDR) in many countries.

RBM centres on gearing all human, financial, technological, and natural

resources domestic and external - to achieve desired development results. It

shifts the focus from inputs (how much money will I get, how much money can I

spend?) to measurable outputs (what can I achieve with the money?) at all

phases of the development process. At the same time, RBM focuses on

providing sound information to improve dec ision-making. This entails tracking

progress and managing business on the basis of solid evidence and in a way

that will maximize the achievement of results.

It implies that goals are specific, measurable, achievable, and concrete,with time bound targets. At the same time, they must be expressed in human

terms (i.e., as development outcomes). For this reason, RBM is more than a

methodology: it is a way of thinking and acting, built on a prac tical toolbox for

improved public management.

The RBM cycle involves five core components or stages:

setting goals and agreeing on targets and strategies; allocating the available resources to activities that will contribute to

the achievement ofthe desired results;

monitoring and evaluating whether the resources allocated aremaking the intended

difference;

reporting on performance to the public; feeding back information into dec ision-making.

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The development of a performance culture and the full implementation

of RBM are not easy. A lot of effort is required to create the internal

preconditions for results management through targeted organizational and

human resource development. However, capacity development is not enough.

Firm leadership and political will - over a prolonged period of time - are alsoessential if these capacities are to be developed and used in the pursuit of RBM.

Though, the role of leadership in setting the course and constantly clarifying the

core functions and objec tives of an organization is fundamental, but more

important, it is vital in providing the model for the behavior and attitude that are

needed to support the results orientation.

The push for results in International Initiatives

In the international arena, numerous initiatives have underpinned this push

for results. The Millennium Development Goals (MDGs) are probably the best

known and most ambitious global commitment to results-based povertyreduction. The agreed MDG goals, targets, and indicators provide the basis for

measuring progress and the effectiveness of aid.

The Monterrey Consensus, adopted in 2002, encompasses a commitment

by developed countries to increase levels of aid in conjunction with better

governance, policy reform, and a greater focus on development effectiveness

on the part of the developing countries.

A growing number of national poverty reduction strategies (PRSPs) alsotestify to a strong international commitment to provide more and better aid in

parallel with improvements in policymaking in developing countries. Within this

framework, all development partners are bound to mutual accountability,

transparency, and achievement of measurable results.

The Paris Declaration on Aid Effectiveness, adopted in 2005, reflects a

broad consensus on how best to reform aid to contribute to these commitments.

The most distinguishing feature of the Declaration is the shared nature of the

commitments, including an emphasis on the way in which improvements in

donor practices go hand-in-hand with the strengthening of country systems andinstitutions.

Several important elements emerge from the lessons to the success of

RBM efforts in various parts of the world:

Strong support from both the top and lower levels is needed; RBM reforms must be prioritized by the state and must complement

existing initiatives, strategies and national development plans;

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It is crucial to build the capacity of RBM practitioners by providingtraining and access to sufficient operational capacity and suitable

business systems, and by empowering organization leaders to test out

new approaches that may enhance RBM in their organization;

The availability of reliable data and Monitoring and Evaluation (M&E)systems has proved to be a very important and consistently

challenging aspect for many of the countries, agencies and

individuals.

RBM in the context of Aid Effectiveness

The focus on results makes RBM central to the entire aid effectiveness

agenda. It means that stakeholders push partner country governments and

donor agencies to demonstrate results. It means that development partnersand recipients oblige each other to demonstrate that they are meeting their

commitments and promises. The accountability of partner country governments

and donor agencies to their respective publics is complemented by mutual

accountability between donors and rec ipients and it is RBM that serves as the

crucial basis to make this mutual relationship rea l. With relation to the aid

management and effec tiveness principles that form the basis for the Paris

Declaration, MfDR is closely linked to ownership, alignment, and harmonization.

But RBM reaches far beyond aid management. It addresses the entire

development process in partner countries and guides the allocation of all

development resources in the most effective way. Independent of aid

relationships, RBM comes to bear direc tly on domestic issues of leadership,governance, and accountability, making it a fundamental political axis instead

of a simple planning and management tool.

There is growing agreement that RBM should form the basis for country-

owned systems that donors and partners are jointly committed to support.

Country-based monitoring and evaluation, and the underlying statistical

capacity, are essential to make these systems strong. Reliable performance

monitoring frameworks not only permit greater accountability and more

credible feedback on the effectiveness of aid; they also encourage donors to

refrain from imposing their own monitoring and reporting requirements, relyinginstead on sound country defined criteria.

The establishment of a stronger performance culture remains a

challenge not only for developing country governments, but also for donor

organizations. In responding to this challenge, donor agencies are increasingly

pushed to establish consistent sets of internal proc edures and incentives that will

reward their employees for achieving sustainable and long-term return oninvestments, and not simply for accounting for the use of donor resources.

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2. Result- based Management Practice in NepalNepal is slowly but steadily moving towards result-based management in

a number of areas. Following the reform attempts made in various areas in

Nepal in its bid to fulfill the commitment towards achieving MillenniumDevelopment Goals (MDGs), Nepal introduced a Poverty Reduction Strategy

Paper (PRSP) as a backbone of Tenth Five Year Plan supported by introduction

of MTEF, Immediate Action Plan (IAP), introduction of separate Poverty

Monitoring and Analysis System (PMAS) and later District Poverty Monitoring andAnalysis System (DPMAS). The National Planning Commission (NPC) and other

key ministries (finance, education, physical planning and works, local

development, Energy, Agriculture) have taken lead role in adopting a results

based approach in public sector management. Support from development

partners for key components of RBM include assistance by the World Bank, DFID

and others in preparing the Medium Term Expenditure Framework, UNDPssupport for the Poverty Monitoring and Analysis System, ADBs assistance for the

Governance Reform Program, and DANIDAs support for results-based

education management.

The government is committed to implement this approach in budgeting,

monitoring & evaluation and human resources management. Following the

establishment of a poverty monitoring and analysis (PMAS) system at the central

level, the government has prepared a district poverty monitoring and analysis

(DPMAS) for assessing development interventions and their local impact, which

is a sound basis for result based M&E. The Three Year Interim Plan (TYIP) has

adopted a results-framework for its sector and thematic areas and hasemphasized the importance of adopting results approached in the line ministries

and of disseminating it down to the district level. The government has taken

some encouraging steps to develop core elements of results-based

management for planning, budgeting, implementation and monitoring in

scattered way. The government has started poverty based resource allocation

to local bodies, strengthening M&E units in key ministries.

National Planning Commission, with the support of ADB, is implementing a

projec t Strengthening Capacity for MfDR (2008)" to internalize the approach

in key agencies such as National Planning Commission(NPC), Ministry of PhysicalPlanning and Works (MOPPW), Ministry of Loc al Development(MOLD), Ministry of

Education(MOE), Ministry of Energy and Ministry of Agriculture and

Cooperatives. These agencies have developed MfDR tools and techniques such

as, results frameworks and indicators, business plans, guidelines on projec t

prioritization, and a manual on MfDR operationalization. The projec t will help

create a result based management culture in these agencies and the country.

Steering C ommittee formed under the chairmanship of the Vice Chairman,

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National Planning Commission oversights the implementation of the result-based

management in Nepal.

Recognizing the importance of results-based management (RBM) for

improving portfolio performance and development effectiveness, theGovernment and participating development partners (DPs) agreed to make it

as a main theme for Nepal Portfolio Performance Review (NPPR) 2009. Under

this theme, four key areas are identified: (i) reforms in budgeting system; (ii)

improving human resource management; (iii) improving projec ts' quality-at-

entry; and (iv) strengthening monitoring and evaluation system.

RBM aims to shift the focus of budgeting from internal control and inputs

to outcomes and efficiency. Public expenditure management is an integral part

of the RBM and performance based budgeting system. In this context,recommendations made under Public Expenditure and Financial Accountability

(PEFA) report and recently approved Public Financial Management Strategy

could provide a good guidance for selecting immediate budgetary reform

measures. It is also anticipated that a few sectoral agencies will agree on to

implement the RBM with a clear linkage to improved portfolio performance and

development effectiveness indicators. The mechanism will be discussed during

the 2009 NPPR and an action plan will be prepared for adopting RBM

approach.

The annual NPPRs led by the Government with joint participation of

development partners such as ADB, DFID, J ICA and the World Bank have been

monitoring progress towards results-based management at the sec tor levels

through a bottom-up monitoring process. In this context, Sector Results Profiles

have been prepared for the priority sec tors under ADB portfolio, which include

(i) agriculture and rural development; (ii) energy; (iii) education; (iv) finance (v)

governance; (vi) transport and communication; and (vii) water supply,

sanitation and urban development. Further, the assessment of cross-cutting

issues, including (i) gender and soc ial inclusion; (ii) proc urement; and (iii)

environment and social safeguard has been carried out. As a part of

preparation for 2009 NPPR, ADB has conducted a workshop to discuss sectoral

issues, based on its portfolio, and develop action plan with deliverable results for

monitoring throughout the year. It is anticipated that such exercise will help

facilitate in the overall discussion at NPPR.

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3. Nepals Result based Reform Initiatives in some Key Areas3.1. Reforms in Budgeting System

Concept of Result-based Budgeting (RBB)

Results-based Budgeting (RBB) is a strategic management tool

designed to improve resource management and public sector

accountability. The core of the RBB system is the performance

management framework, and it focuses primarily on performance

measurement and linkages with policy-making and resource

management. It targets the results of programs and activities undertaken

by government agencies using public monies. The RBB results are c lassified

under various performance components: inputs, processes, outputs,

outcomes, and impact. Though traditionally there is overwhelmingemphasis on outputs and outcomes measurement, RBB also focuses on

purposive input application and activity completion, recognizing the

close relationship between input use and output performance. Various

dimensions of output performance also affect the desired outcome of the

program or activity. Therefore, the RBB measures results achieved atalmost every stage of the project from input application, activity

completion, outputs delivery and impact achievement. Ongoing

performance measurement and periodic evaluation are key tools through

which progress is determined. Performance measurement and evaluation

present valuable opportunities to learn and adjust so that the desiredresults may be achieved.

Challenges of Budgeting System

The Government of Nepal has engaged in planning and budgeting

exercise for half a century, a period during which foreign assistance and

budgetary outlays have increased significantly. Overall performance hasbeen mixed, however, with major improvements in some areas but

disappointing outcomes in others. Some of the causes may be

summarized as: dominance of political agenda, over centralization

bureaucratic structures with limited implementation capacities,dominance of top-down planning, underdeveloped private sector,inadequate harmonization and coordination among development

partners and the government.

Further, there are various issues across the budgeting cycle, which pose

further challenge in budget administration, as follows:

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In budget planning exercise, sectoral ceiling is, normally,prepared on incremental basis.

Normally, projec ts are included in budget without prior detailedstudy and with performance indicators

Although MOF issues expenditure authorization invariably on thefirst day of fiscal year, most ministries takes months to send

authorization to their spending units. Expenditure tracking is poor.

Allocation may not be consistent with national plan goals,targets and priorities.

As of present provisions, the virement up to 25% within mainheads of recurrent expenditure of a project is authorized to the

concerned ministry. In many cases, the appropriated amount in

certain sub-heads remains idle being other sub-heads running

out of fund. More flexibility and authority at the project level may

be needed on the basis of result indicators (to be developed in

advance) except a few line items such as salary, rent, utility

charges which can be assessed realistically in budget planning.

In case of donor funded projec ts, reimbursement is not soughton time by the project management, which puts pressure on

government budget resulting distortion in budget execution.

Similarly, re-imbursement is not authorized timely on the part of

donors.

Reform Initiatives in RBB

As part of its result-based management initiatives, the Ministry of

Finance (MOF) has implemented fully developed performance based

incentive scheme in its tax and customs offices which is entirely tied to

results they achieve. The government is now planning to introduce results-

based incentive scheme in public sector agencies that are directly

responsible for delivery of public goods and services. Based on the

learning and experiences of the pilots of these incentive schemes and the

sec toral budgeting reforms, MOF intends to implement results-basedbudgeting on a wider scale. The current year budget presents critical

results of some sectors and the budget appropriation is tied to those

results. Long term institutional and human capacity development as well

as concrete management support will be essential to institutionalize results

based budgeting in public sector management.

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Without having a full scale integrated and comprehensive RBB plan,

which needs a rigorous efforts and resources, several steps have been

taken to improve the project performance in Nepal, amongst them some

are:

Performance based incentive system planned for some selectedbig development projects.

Medium-term budget framework has been presented toParliament with a promise that future financing for projects will

be ensured and multi-year contracting promoted for all

government projects.

The bidding of multi-year projects can be done in a singlepackage,

The virement up to 25% within the main heads of recurrentexpenditure of a project is authorized to its relevant ministry,

Additional funding has been committed, if required, for megaprojec ts like Kathmandu- Nijgadh fast track, Upper Seti Hydro-

power Project.

A Government Budget Management and Expenditure ReviewCommission is to be formed under the chairmanship of member

of the Public Accounts Committee of the Legislative- Parliament

to examine and recommend measures to improve budget

management and expenditure system.

Piloting of Result based Budgeting

As a component of the MfDR project, supported by ADB, there will

be a technical support to pilot RBB in two government agencies that are

directly engaged in public service delivery. Potential agencies include the

Transport Management Office and the Traffic Management Office (of

Nepal Police). In addition, as an outcome of the NPPR 2009, there may be

other agencies, which could show their eagerness, to launch the RBB

mechanism. The projec t will assist the government to develop criteria toassess the readiness of agencies and/or selection of the projects for the

implementation of RBB (using MfDR readiness assessment tool) and also

facilitate the selection of the pilot agencies, either the two mentioned

above or other viable ones. The project, in close collaboration with MOF

and pilot agencies, will develop implementation modalities, which will

include key results areas and monitor able performance indicators on

service delivery that are organization- spec ific. The projec t will support the

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implementation of the two pilots, as well as monitor and publicize the

results of the pilots.

Medium Term Budget Framework (MTBF)

Nepal's MTBF, supposed to be revised annually, contains priorities,

programs and projects, and sets annual targets at national and sector

levels for a three-year period. For each sec tor and subsec tor, the MTBF

shows expenditures of the previous year, estimates for current year

budget allocations for the forthcoming year, and forecasts for two

additional years. Implementing agencies prepare detailed work

plan/programs with performance indicators. Release of budgeted

allocations is contingent on demonstrated performance. For few years,

MTBF proc ess has not been followed properly. Current year budget (FY2009/10) has revived MTBF process again with added values by

incorporating resources estimate for three year as a significant departure

in this process. The government is now working on to institutionalize the

MTBF, enhance the quality of the process, including developing

comprehensive manuals and guidelines.

3.2. Reforms in Public Financial Management (PFM)Various studies by the development partners and the Nepal Public

Expenditure and Financial Accountability (PEFA) assessment show that

despite the satisfactory fiscal discipline, the overall risk related to public

financial management in Nepal is high. The assessment further concludes

that the system is generally designed but unevenly implemented and

despite advanced set of laws and regulations and processes in place,

there are gaps in the control framework and implementation. In 2005, the

Government and the World Bank with participation of a number of other

development partners carried out a Public Expenditure and Financial

Accountability (PEFA) assessment based on the PEFA framework. This

assessment covers 31 indicators that were assessed and benchmarked

covering six core dimensions. A significant output of the PEFA assessment

was a detailed list of approximately 150 actions to be undertaken over

the short and medium term to improve PFM performance (the

Development Action Plan - DAP). Since the PEFA Report was published in

February 2008, there are some delays in the implementation of the

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(PFMRP) which requires strong political will and commitment which will

contribute to reducing fiduciary risks and improve transparency and

accountability of public financial management (PFM). Public financial

management strategy has been finalized for next three years for Nepals

Public Financial Reform Program. This strategy comprises six program

outcomes, eighteen outputs, thirty eight activities and performance

indicatorsand targets.

Nep a l Pub l ic Sec tor Ac c ou nt ing Stand a rd (NEPSAS)

In the rec ent pa st, Nep al ha s in it ia ted a num be r of me asures to imp rove/ streng then the

f inanc ia l ma nag em ent system . Ce rta in area s c ove r ing som e of the func t ions of FCGO

have, however, got l i t t le or no attent ion in these in i t ia t ives. Fund Management,

Reimbursement/ Investment and Appropr iat ion funct ions of FCGO did not get any

p riori ty in these reform ini t iatives. In the c onte xt of estab l ishm ent o f TSA reg ime a nd

imp leme ntat ion of new f inanc ia l m ana ge m ent system s, streng thening of Inform at ion is

also c rucia l . This c arr ies signi fica nc e in view of GO Ns c om m itm ent to m ove to IPSAS

c ash based ac c ount ing system a nd to imp leme nt Nepa l Pub l ic Sec tor Ac c ount ing

Stand ard (NEPSAS). The go vernm ent ha s tak en a de c ision to imp lem ent p ubl ic sec tor

c ash b asis of ac c ount ing system in l ine wi th internat ional a c c ount ing stand ards (IPSAS).

The government has committed in the PFM agenda with a separate

Sec retariat for PEFA which is govern by the steering committee chaired by

the Finance Secretary. This is a gesture of commitment to implement thePFM reforms. This Secretariat plays a coordinating and facilitating role to

monitor the implementation of PEFA actions and to establish a central

monitoring system to track the progress against each PEFA indicator.

3.3. Reforms in Procurement SystemIn recent times, wide spread perception amongst the stakeholders

and the reports in the media have indicated that malpractices in public

procurement, including intimidation and collusion/cartelling amongst thebidders are on the steep rise, both at the central level and in the districts.

Cases have not only been reported in the media but also seen when the

bidders were prevented from bidding through intimidation and use of

physical force by individuals and groups hired by a few unscrupulous

bidders. This malfunctioning of the public procurement is of national

concern. Given these problems of fraud, cartelling and intimidation, a

joint GON/DfID/ADB/WB Procurement Review Team (JRT) was constituted

under the convenorship of the Ministry of Finance (MoF) to review the

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current procurement issues, including laws, regulations and procedures in

public procurement that are impeding economic and transparent project

implementation and recommend the measures to address them. It was

expected that the review exercise would provide a common forum where

procurement-related issues and problems could be openly discussedbetween GON line agencies and the development partners and to

identify issues and remedial measures that would help enhance

transparency and competitiveness in the GON public procurement. The

Team submitted its report to the Steering Committee (SC) recently, and

also suggested various measures to improve the situation.

Struc tural Refo rms in Proc urem en t System & its Cha lleng es in Nep a l

The proc ureme nt regulatory fram ew ork c onsists of the Publ ic Procurem ent A c t, Publ ic

Procurement Regulat ions, and General Contract Law and Construct ion

Entrepren eurship A c t. The Pub l ic Proc urem ent A c t, 2007, the suprem e law on

proc ureme nt, broa dly b ased o n the UNCITRAL m od el law , was enac ted in Janua ry 2007

and Reg ulat ions issued in August of the sam e y ea r. The p rocurem ent law is ap pl ica ble

to a l l ent it ies inc luding the pa rastata ls. The Law c ove rs al l area s of proc ureme nt

including works, goods, consul t ing and other services and appl icable to al l

go vernment p roc urem ent i rrespec t ive of c ont rac t va lue . These are g enera l ly ad eq uate

instrum ents but for a few m inor shortcom ings. New law has imp ortant provisions suc h

as: review of proc ureme nt de c isions, crea t ion o f reg ulatory bo dy , PPMO though also

invo lved in de c ision m ak ing on va ria t ions re fe rred to the Ca b ine t , c od e o f co nduc t fo r

bidders and publ ic off ic ia ls handl ing procurement and blackl is t ing of defaul t ing

c ontrac tors. These instrum ents are b eing fo l low ed as they are m and atory b ut the

effec t ive imp lem entat ion, in pa rticu lar of the ab ove m ent ioned p rovisions, lac ks and

m ay som ew hat imp rove only after the doc um ents, including Publ ic Works Direct ives

and Standa rd Bidd ing Docum ents are rev ised and deve lop ed to be in conform i ty w ith

the Ac t and the Reg u la t ions and PPMO be c om es act i ve as mand ated by the Law . As of

now , the c ap ac i ty o f the PPMO nee ds to b e strengthene d. Tec hnica l assistanc e

prog ram s provide d b y A DB and World Ban k a re c urrent ly in plac e to suppo rt PPMO for

imp lem ent ing the Proc urem ent Law which inc ludes ca pa c ity bu i ld ing on p roc urem ent

in the c ount ry . The jo in t rep or t s rec om m enda t ions are e xpec ted to be imp lem ented to

reduce col lusion, coercion and int imidat ion in bidding process. Another issue, a

prod uc t of the new Proc ureme nt Law is "Var iat ion" to co ntrac t . The ne w law requi res

var ia t ion exc eed ing 15% of the c ont rac t pr ic e a pp rova l o f the Ca b ine t wh ich is be ing

c r it ic ized b y var ious de velop m ent pa rtners as a problem in imp leme ntat ion of large

works contracts as no amount of deta i led invest igat ions would stop var iat ions

pa rt ic u la r ly a ga inst the ba c kdrop of the c om plex g eo logy of the c ount ry . Var ia t ions,

c aused for co ntrac tors prof itab i li ty involvem ent and his ineff ic ienc y in ma nag ing in

terms f inanc e, equip m ent do involve p rospe c ts for c orrupt ion.

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Some of the major recommendations of J RT are as follows:

a. Procurement capacity enhancement plan of PPMO and otherexecuting agencies will be introduced.

b. Implementation of e-bidding should be explored as an option toavoid the physical obstruction in submitting tenders and thus

reduce the chance of collusion

c. Multi-plac ed bid submission could be tried in governmentfunded projec ts with amendment in the Ac t.

d. User groups should be allowed to bid contract only in the locallevel works where they are the users. Also, capacity is enhanced

of the local bodies to monitor the work of user groups.

e. Constructive engagement with local construction industries.f. Detailed criteria for blacklisting the Contractor/supplier/user

groups/NGOs should be developed and enforced.g. NGO should not be awarded any work without properqualification and screening.

h. GON to ensure security and get cooperation from all politicalparties to prevent alleged involvement of their sister

organizations in hooliganism and collusion and also persuade

district contractors associations to refrain from promoting

collusion among its members.

The Steering Committee, established to oversight the implementation of

the report, has accepted the report and has sent to PPMO for further

implementation. PPMO circulated to all related public entities focusing onthe issues like development of Contract Agreement Monitoring systems,

allocation of budget for procurement training and penalize to the person

or groups involved in bidding related criminal activities. Ministries and

departments are positive to develop Contract Agreement Monitoring

System software and proposing budget for the training.

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Introd uc tion of E- Proc urem ent

The G ove rnm ent of Nep al ha s announc ed throug h i ts Annua l Budg et of FY2009/ 10 for

a rran ge m ents for e- tend ering in big infrastruc ture projec ts. The revision in Proc urem en tAc t wi ll inc orporate the m ul tip le plac e b id subm ission unt il the fu l l f led ge d e -tend er ing

system in plac e. As a p rogress, prepa rat ion of e- b idd ing strateg y repo rt has bee n

c om pleted and c onsultat ion is unde rgoing for its imp lem entat ion. The World Bank

c arr ied out a d eta i led rea diness assessm ent for im plem ent ing e-p rocu rem ent in 2007

and a number o f rec om me nda t ions have b een m ad e to imp lem en t e -p roc u rem en t . As

a m ed ium to long term so lu tion , rev iew o f the reco mm enda t ions and im p lem enta t ion of

such recommendat ions should be a pr ior i ty which provides technical solut ion to

p ossible c ol lusion.

Support from the development partners is instrumental toinstitutional strengthening of the PPMO in the areas where new ideas,

technologies and system development is required, such as e-procurement

system, contract management system improvement and contract

administration. The World Bank and ADB are helping the Office in

identifying the capacity gaps and help in implementing the reforms in this

area to attract qualified and competent staff. Transitional Standard

Bidding Document are issued and are put in the PPMO website and

finalization of this Document, which covers SBD draft for civil works, goods

and consulting services, is underway. Preparation of e-procurement

proposal and software development is planned during this year.

3.4. Reforms in Monitoring & EvaluationNepals Monitoring and Evaluation( M&E) is relatively weak and low

priority area in terms of reform initiatives resulting slow progress in reforms

despite some important milestones have been laid. There is a wide

recognition that institutional capacity for monitoring and evaluation is

limited across monitoring units. Although, there are M&E units established

in most ministries, these are often under-funded and under-staffed and

low incentives to work in these units. There is also growing c oncern to have

more localized system of monitoring and evaluation to minimize thegeneral overlook from the centre in these areas.

The importance of soc ial accountability tools such as periodic

Citizen Performance Score Cards for different service delivery units and

Citizen Report Cards enhance community participation is felt. They

provide a more realistic assessment of institutional and regulatory

weaknesses in monitoring and evaluation that affect implementation.

These tools are now being increasingly popular in many governments.

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Nepal is also in line with this reform in medium term as the overall

information system is improved.

Result b a sed Mo nitoring & Eva luation

The Results-Based Monitoring a nd Eva luation (M&E) System is used for system atic an d

focused program p lann ing , per fo rmance mon i to r ing , per fo rmance eva lua t ion ,

pe rforma nc e rep orting and inform at ion ut il izat ion for prog ram imp rovem ents and p ol ic y

de c ision-m ak ing. This fac tor helps to e nsure system at ic and struc tured pe rform anc e

p lann ing , m ana ge m ent , and m ea surem ent under the RBM a nd he lps to fo rge t igh te r

l inkag es between resource use and po l i cy imp leme nta t ion .

Nepals monitoring and analysis system has historically treated as

input monitoring. Also, there is a lack in required expertise with the

implementing agencies to verify the report submitted by the consultants.Timely and appropriate assessment of the projects contribution toward

attainment of outputs and outcomes is not accomplished. The necessity

of establishing result based M&E system, with spec ific indicators, in each

projec t before start up is vital. Effectiveness of aid and local resources

pose a serious challenge in Nepal. Sec tor programs like Health and

Education have relatively good monitoring and evaluation frameworks in

place. The rollover of such frameworks to other ministries could be helpful.

However, further progress could be made in this area with the use of the

poverty monitoring assessment systems (PMAS).

At the foremost, separate M&E policy is lacking in Nepal. The use of

IT in M& E is certainly important to have better efficiency. Network

establishment among executing agencies and National Planning

Commission is vital. There is some progress made in this front as Optical

fiber link between the ministries within Singh Durbar have been

established. Setting up of a Projec t Performance Information System at

National Planning Commission is another area where progress now is

picking up. Additional resources are required to operationalization the

PMAS/DPMA including disaggregation of data in medium term.

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Result b a sed Mon itoring & Eva luatio n- A Suc c ess Story in Nige r

In order to revise the Ac c elerated Develop m ent a nd Pove rty Red uc t ion Strateg y (SDRP)

in Niger, the go vernm ent forme d a n Inform a t ion a nd M oni toring and Evaluat ion

Them atic Group whic h is c om po sed pr ima r ily of M&E spe c ia l ists wo rking wi th the

c entra l gov ernme nt, pro jec ts, and c oo pe rat ion insti tu t ions. For effic ienc y, the g roup

wa s orga nized into three sub g roup s: Statist ic s, Too ls a nd M etho d olog ies, a nd Sup p ort

and Ad visory Services to Them atic G roups. The them atic g roups ma nda te wa s to help

the other 14 thematic groups to develop sector strategies, including ident i fy ing

ob jec t ives and o utco m es. The g roup wa s also exp ec ted to b e respo nsib le for the

ove ral l c oherenc e of the strateg y and for ensuring that the intervent ion ap proa c h

ad hered to RBM pr incip les. To c arry o ut i ts ma nd ate, the Inform at ion a nd Mo ni tor ing

and Evalua t ion ha d to p romo te the co nc ep ts, pr incip les, and tools of RBM a nd m ak e

RBM a real i ty und er the ne w SDRP. The M&E grou p wo rked for six m onths, inc luding two

to th ree m onths on the d eve lopm ent o f me thodo log ica l too ls such as the d esign of aresul ts-b ased logica l fram ew ork, indic ator d ata c ards, and the resul ts c hain. The

group s m ain ac hievem ents we re p rovid ing supp ort , ad visory servic es, a nd tra in ing to

sector groups. Development of the SDRP results chain, which was entrusted to a

subg roup, After ap proxim ately on e ye ar s wo rk, the new SDRP do c um ent wa s val ida ted

b y the Go ve rnment in Sep tem b er 2007. Its intervention ra tionale is set o ut, fi rst, throug h

a h ie ra rc hy of ob jec t i ves co m pr ising a ge nera l ob jec t i ve , a spe c i fi c ob jec t i ve , and

seve n a reas of intervent ion; and , sec ond , through the resul ts hierarchy , which inc ludes

44 outputs, 7 spe c i fic o utco m es, 3 gene ral outc om es, and one imp ac t. For the di fferent

l inks of the resul ts chain, the methodological approach helped ident i fy 8

assum ptions/ r isks, including 5 for outputs and spe c i fic o utco m es and 2 for spe c i fic

outcomes and general outcomes; and 126 indicators, including 10346 for theoutco m e leve l , 15 for the spe c i fic outc om es level , 7 for the ge neral outco m e

level , and one for the im pa c t level .

In 2007, the w ork of the M &E Them atic G roup w as rew arde d w hen the fo llowing

signif ic an t results we re a ttained : 1) Training in stra teg ic RBM for 60 staff involve d in the

revision of the PRS. 2) De ve lop m en t of the SDRP results c ha in, de fined a s a set of results

a t ta ined wi th in a t ime per iod and l inked to each other in a cause-and-e f fec t

relationship (o utpu ts, outc om es, and imp ac t). The spe c ifici ty o f this results c ha in

l ies in the breakd own of outcom es in to spe c i fi c o u tcom es and g enera l ou tcom es. 3)

Develop m ent of the logic al fram ew ork of the SDRP ba sed on a m atr ix integrat ing the

RBM a pp roac h, which is ac hieved by taking into a c c ount four di fferent levels of results:

ou tpu ts, spe c i f ic ou tco m es (sec to r) , genera l ou tco m es, and long- te rm impa c t .4 )Deve lop m ent o f per fo rma nce ind ica to r da ta c ards in the form of proo f ind ica t ing tha t

the d esired results we re atta ined at a l l levels of the c hain. The d ata c ard for ea c h

indica tor presents the resul ts in q uestion, the indica t ive g oa ls targeted , the t ime l im i t

envisag ed for atta in ing the resul t, the source of the d ata , and the en t ity respo nsib le. 5)

A prop osed repo rting fram ew ork for the reg ional and na t iona l levels, whic h would

re f lec t an RBM ap proac h .

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Further, the government, recently, has announced to create a

mechanism under the chairmanship of National Planning Commission to

monitor the budget ac tion plan. This mec hanism will carry out the site visit

of selec ted big infrastructure projects in every two months and prepare

reports. These reports will be submitted in a regular ministerial review

meeting and the special committee meeting in every three months under

the chairmanship of the Prime Minister. The government has also

announced to introduce the Independent evaluation of the programs as

prioritize by National Planning Commission.

3.5. Reforms in Human Resources ManagementSome of the generic issues in human resources management,

particularly for the effec tive portfolio performance, are outlined as timely

non-fulfilling of vacant positions, inadequate staffing, frequent transfer of

project staff, absence of institutional memory due to the absence of

compliance of handover/takeover mechanisms, lacking capacity and

incentives mechanism. These are hampering project implementation and

portfolio performance and need to be addressed urgently. In regards to

the issue of transfer of projec t staff at the center and district level without

the proper hand over of responsibilities is a major conc ern that has been

repeatedly raised in past NPPRs. Although the Ministry of General

Administration confirms that the staff transfer has been carried out in

accordance with the Civil Service Act, frequent changes of key

implementing staff have occurred resulting in further implementation

delays, disruption in the project implementation momentum and loss of

institutional memory. Likewise, the frequent changes of the local

development officers of the districts, chief executive officers at the

municipalities, sec toral district chief and district technical officers and

assoc iated staff have significantly hampered the implementation of many

projec ts. The situation is equally challenging in accounting human

resource management front as well.

Hiring

Timely fulfillment of vacant positions and deployment of projec t

staff has been raised as a critical issue since long time. The government

has time and again expressed its commitment to unbridle the issues

particularly for the projec ts financed by development partners. In order to

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expedite the proc ess (i.e. hiring the personnel for the projec ts), the

government has been developing a procedural guidelines for creating

temporary job post. These posts can be filled through transfer from other

permanent government agencies, hiring only for the project duration, and

contracting out the job or services through agreement. The project that

needs the staff, may ask for it with clear statement of the intended supply

modalities. The Ministry of General Administration has finalized the

guidelines for creating the temporary position and recruitment. In the

meantime, the governed has also formed a Task Force, comprised of J oint

Sec retaries from Public Service Commission, Ministry of General

Administration and Ministry of Finance, to develop common selection

guidelines.

Transfer and Retention

At present, there are various authorities at various levels for

transferring the staff. The untimely and frequent transfer of the project

personnel hampered the projec ts implementation negatively resulting

time and cost overrun. As the issue has been raised in various fora by

different stakeholders, the Ministry of General Administration (MOGA) has

paid great attention to it. As the organizational reform of MOGA itself is in

the process with added duties and authorities as a Central Personnel

Agency of the government, the Ministry has developed a proposal to

authorize the task of personnel transfer to the concerned ministries with

clear common guidelines. With this provision, when implemented, it will

improve the situation better. The government has clear rules and

regulation for the handover/takeover process to maintain the institutional

memories in offices. The compliance is very weak and needs to be

improved with strong commitments.

Performance-based Incentives

As the government is concerned about the performance andincentive of the employees, the government has announced through the

current year budget speech that performance based incentive system

will be put in plac e in selected big infrastructure projec ts. Some of the

Ministries have already been implementing it satisfactorily, such as Ministry

of Finance. Some ministries are preparing for introducing this scheme to

enhance the performance of the projects.

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During this NPPR 2009, there will be a discussion as how to address

the human resource management issues and develop a concrete actions

such as (i) adherence to two years tenure of all project staff of donor

financed projec ts and possibility of retention of good staff for project

period (ii) fulfillment/deputation of required number of project

implementation staff at the district level for donor supported projec t; (iii)

review the performance based incentive scheme implemented in

Department of Revenue and consider replication to other major line

ministries such as the Ministry of Physical Planning and Works and Ministry

of Local Development where donor funded projects are high and (iv)

capacity enhancement particularly in specialized areas such as

procurement, safeguards, M&E and explore the possibility of outsourcing.

3.6. Quality at EntryThe assessment done by some of the development partners and

other observations show that projec t start-up period is too long in Nepal

partly because of a lack of sufficient implementation readiness at the

time of loan approval. Average time taken to achieve 20% disbursement

in 2008 is 49 months. This has further carried over into broader

implementation delays and ultimately in the extension of projec ts. As a

result, the average age of portfolio in Nepal is 52 months, higher than the

ADB wide averages of 41 months (Ref. ADB supported projects). These

data indicate that Nepal portfolio suffer from poor quality of entry of

projec ts. A focus on projec t readiness is critical for quick start-up.

To reduce common start up delays and ensure quality at entry,

there was a discussion on project readiness filter during the 2005 NPPR with

an aim of completing prerequisite actions for a quick start-up after the

loan approval. The filter was streamlined to indicate the actions required

in the areas of land acquisition; environmental assessment; procurement

of goods, works and services; and preparation of detailed design and

bidding documents at various stages of projec t cycle. Despite the use of

readiness filter, its effec t is very limited. Now, it has bec ome necessary to

refocus on this issue during this NPPR 2009, revisited the filters and agreed

upon with strong commitments from both government and DPs. While

discussing on the readiness filters, it is expected to concentrate the

discussion on the following major activities:

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Projec t implementation units established and projec t staffassigned/deputed

Provision of budget for the first year of implementation Establish financial management system, auditing arrangement,

fund flow arrangement, and oversight system Bid invitation for works and goods issued for the first 12 months of

projec t implementation and request for proposals issued for

consultants

Process/administrative clearance for temporary use of land, e.g,right of the way for the first two years of projec t implementation

completed

Compensation determination committees established and atleast 20% land acquisition completed

All statutory clearances like environment/forest clearances forthe first two years of project implementation completed

4. Nepal on path of Aid Harmonization: Enhancing CommitmentsMore than ever, citizens and taxpayers of all countries expect to see

tangible results of development efforts. Both development partners and the

government wish that their actions translate into positive impacts on peoples

lives. Reaffirming the commitments for better aid and its utilization, various

international commitments have been reflec ted through many forums such as

Paris Declaration, Accra Agenda for Action. Nepal participatedin the 2nd

High-

Level Forum on Aid effectiveness held in Paris in March 2005 and became

signatory to the Paris Declaration. Since then Nepal has moved forward with a

number of milestones as its commitment for aid effec tiveness.

Ministry of Finance conducted a survey on Monitoring theImplementation of Paris Dec laration in 2007, which revealed interesting

findings. Table -1 summarizes the status of implementation of the Paris

Declaration in Nepal.

Ta b le- 1: Nep a l Survey on M on ito ring the Pa ris De c la ra t ion : Summa ry of

f indings

Indicators Results

Aid on Budget 74 %

Technical assistance 34 %

Coordinated Technical Assistance 14 %

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Using Procurement system 59 %

Using country Public Financial Management system 68 %

Parallel Project Implementation Units- PIUs (number) 106

Predictability 47 %Program-based Approach: Budgetary support and

others

32 %

J oint Country Analytic Work (CAW) 37 %

Ministry of Finance disseminated the above findings in various national,regional and international forums, including the 3rd

In line with the Paris Principles, Nepal is revising Foreign Aid Policy.Currently, it is being floated among the stakeholders.

High-Level Forum in

Accra itself. In Accra, Nepal was the first presenter in "Marketplace of

Ideas" session that showcased the success story in area of aid

harmonization - particularly in education and health SWAP, and peace

proc ess.

With a view to localizing Paris principles, Nepal has developed a draftNational Action Plan on Aid Effectiveness (NAP) and shared with

development partners as well as government agencies. The NAP will

continue to identify Nepal-specific, doable actions that help to

implement Paris principles on ground, which revolve around 5

overarching themes of aid harmonization- ownership, alignment,

harmonization, managing for development results (MfDR), and mutual

accountability.

After Accra, Nepal has been actively participating in various jointventures, task forces, and initiatives, for example on 'Cluster-B: Public

Financial Management', 'Cluster-C: Conditionality, Accountability, and

Transparency', 'International Aid Transparency Initiative (IATI)' etc.

Finance secretary level participation in the first annual conference ofIATI held in the Netherlands in Oc tober 2009 further reaffirmed Nepal's

commitment towards better and transparent aid. The IATI intends to

publish all aid-related information in a consistent format so that the

traceability of aid transaction is improved resulting in visible and

effec tive results.

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In line with commitment made in the Paris Dec laration, the secondround of evaluation of Paris Declaration is being conducted at country

level in 2010. Recently, Nepal volunteered to participate in the

second round of Paris Declaration Evaluation (PDE-II).

To materialize all the above mentioned initiatives, Nepal realizes theemergent need of local capacity. Capacity existent at individual level

needs to be retained in organizations and institutionalized through

various incentive systems. Capacity so developed needs strong back

up of information and policy. For this, Ministry of Finance is

implementing a project, with the support of UNDP, to develop

capacity of Ministry of Finance along with five key developmentMinistries. The project has three major components- developing and

operationalizing Aid Information Management System (AIMS),

developing and sustaining individual, organizational and institutional

capacity for aid management, and supporting implementation of aid

effectiveness principles in Nepal through revised policy instruments and

action plans. Need assessment exercises for the former two

components have just been completed.

We hope this

engagement will be another milestone on the way to identify baseline

information on effectiveness of Paris Declaration in Nepal.

5. Future NPPR mechanism making more Result FocusedMovement to a transparent result based performance framework for the

NPPR is felt necessary. A mutually accountable results framework could be

developed which focuses on key indicators and be formulated around an

annual cycle which is linked to the preparation and execution of the budget.

The framework could be based around a manageable number of annual

performance indicators which would measure progress towards agreed sec toral

level targets and monitor key macro-economic, PFM and governance basedindicators. In order to keep the implementation focus of the NPPR, each

indicator and annual target will have direc tly linked actions which are

supportive policy or implementation changes that are required to make

progress towards annual targets. A good target would be around 20 indicators

(covering more than 70% of the budget). This framework would be the focus of

all dialogue on government performance.

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Development partners progress towards their Paris and Accra

commitments also needs to be measured annually to establish a truly mutually

accountable framework. Indicators can be derived from internationally agreed

targets and adjusted to the Nepali context. Selec tion of 10-15 indicators should

be sufficient to adequately measure progress. The possibility of merging NAP

indicators with the NPPR also needs to be explored. Currently, there are two big

challenges in this area, which are- aid information database and agreeing on

achievable annual targets. This new approach could be developed by a joint

team of development partners and government.

Similarly, the progress follow ups of NPPR periodic progress also needs to

adopt more participatory approach. Conducting reviews at the concerned

lead agencies premises will generate more ownership than asking for the

progress and inviting at a plac e in a formal fashion. This can be discussed whilefinalizing the implementation and follow up modalities after the NPPR meeting.

6. Major Challenges in Key AreasThere have been various challenges in enhancing project portfolio

performances and achieving the development effec tiveness. For the purpose of

steadily addressing some of the major challenges through this NPPR mechanism,

the followings are outlined as summary:

I. The sectoral ceiling is normally prepared on incremental basis.Budgeting Reforms

II. Projects are included in the budget without detailed study.III. Sectoral target/indicators have not been prepared in advanceIV. Budget allocation is not linked with the sectoral targets and priorities.V. Lack of enough flexibility for the projec t manager to mobilize the fund

within allocated budget head (virement).

VI. Conc entration of capital expenditure at the last trimester of thebudget year.

VII. Consistently guarantee of fund for a projec t without hindrances in anybudget year.

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I. Inadequate staff for the projects against the required number.Human Resources Management

II.

Frequent transfer, not fully complied with 2 years tenure, and transferdone at the middle of the projec ts life.

III. Lack of incentive resulted slow progress of the projects which over runthe costs and also undermined the national capacity building.

IV. Capacity gaps in various areas, particularly in proc urement, monitoringand evaluation, safeguards, etc.

V. Lack of institutional memory in the projec ts after the movement of thestaff due to inadequate technical support (IT systems, data) and non-

compliance of handover/takeover mechanism.

I. Generally, weak commitment on the monitoring and evaluationaspect of the project.

Monitoring and Evaluation

II. Absence of separate monitoring and evaluation policy.III. Non-provisioning of budget for M&E activities in each project.IV. Lack of integrated information systems established at the c entre andlinking it to the line agencies and the districts.V. Insufficient capacity building efforts.

I. Outdated Projects readiness filterProjects Quality at Entry

II. Preparation delays for a quick start-up of the projec ts resulteddemands for projec t extension. Delays oc curred in PIUs establishment

and staffing, land compensation committees formation, environmental

clearances, preparation of detailed design and bidding documents,

etc.

III. Lack of enough budget, in some projec ts, for the first year ofimplementation

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IV. Weak compliance of the Project readiness filter from both side GONand DPs.

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7. A Way ForwardThe Government of Nepal is committed to overcome these challenges

through the continuation of the reform, initiated in different times and through

the new measures in various areas in order to improve the performance of the

projec ts and achieve the development results. Spec ifically, to address the

above mentioned challenges, following key ac tions are identified:

I. Implementing the result based budgeting (RBM) to further improve thebudgeting system, by selec ting pilot sec tors/projec ts, where following

possibilities will be explored:

Budgeting Reforms

a. Provide flexible ceilings in selected pilot sec tor/projec tsb. Projects are included in the budget with detailed study with

measurable sectoral performance indicators

c. Provide enough flexibility in mobilizing the fund within the budgethead

d.Timely approve the annual work plan and ensure the fundauthorization on time

II. Advance the budget approval process to allow more time for earlyimplementation of the projects.

III. Budget allocation is aligned with the sec toral targets and priorities.IV. Continuation of multi-year budgeting initiated in FY 2009/10

I. Full compliance of Civil Service Acts 2 years tenure provision for allprojects staff.

Human Resources Management

II. Explore the possibility of deployment through the projec t period forgood performing staff.

III. Launching the performance based incentive system in majorspending ministries like Ministry of Physical Planning and Works,

Ministry of Local Development, etc.

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IV. Explore the possibility of outsourcing in some of the areas likeprocurement, M&E, safeguards.

V. Provision of creation of temporary posts to fill up the vacancy ontime.

VI. Exercise the possibility of transferring the personnel transfer authorityfrom Ministry of General Administration to the line ministries with

certain guidelines.

I. Develop a separate monitoring and evaluation policyMonitoring and Evaluation

II. Rollover the sector wide M &E framework in other ministriesIII. Establish the integrated information system for M&E at the NPC and link

them with other ministries

IV. Make mandatorily the provision of M&E budget in each projec t.

I. GON is committed to update and implement Project Readiness Filteralong with the development partners.

Quality at Projects Entry

II. GON is committed to ensure enough budgets at the first year of theprojec ts.

III. GON is committed to minimize the project start up delays.IV. GON is committed to expedite the process for provisions like

environment/forest.

V. GON is committed to set up PIUs and assigned the projec t staff timely.

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Part II

Implementation Status of NPPR 2008 Action Plan

The Government of Nepal has organized its annual Nepal PortfolioPerformance Review Meeting (NPPR) in November, 2008 after it took full

ownership of the meeting since 2006. The theme of the meeting was selected as

Use of Country Systems for Improved Portfolio Performance. Five sub-themes

were selected on which several short term and longer term ac tions identified

with measurable indicators. The sub-themes were: (1) result-based

management, (2) public financial management (3) public procurement (4)

monitoring and evaluation and (5) donor harmonization, coordination and

project management.

Various actions were developed with role defined to the responsible

agencies and timeline as an outcome of the discussion in the review meeting

attended by project managers, development partners, government agencies.

As an improved implementation strategy, five champions were identified and

given job for follow up of implementation for each sub-theme. Trimester progress

review meetings were held in February, May and November. Due to the

countrys situation at transition, the reforms implementation through this

mechanism was affected caused slow progress in many areas. However, the

overall progress of NPPR 2008 was mixed. Out of the identified 31 short term

indicators, 10 were c omplied, 18 were work in progress and 3 were due.

Ministry of Finance has followed up the implementation progress as stipulated

schedule and shared with all Development Partners. Details of the

implementation status of the action plans are presented in the attached matrix.

National Planning Commission led this sub-theme supporting by other

government agencies and development partners. Seven actions were identified

and followed up for its implementation. As the MfDR Technical Assistance wasdelayed, the progress of this theme was slowed. However, some progress was

seen. High level committee has been formed under the chairmanship of Vice

Chairman, National Planning Commission to guide and implement the results

frameworks such as capacity building framework, revision of reporting formats,

program and budgeting framework. The concrete progress is yet to be made.

Result based management

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Public Financial Management

Financial Comptroller Generals Office was given led role for this sub-theme. Ten key actions were identified and implemented during a year. Some

of the progress made is as follows: the Education and Health sec tors are

connected with FCGO database; PFM strategy document has been approved

by PEFA steering c ommittee; the preparation of implementation plan is

underway; PEFA implementation unit has been established in 15 ministries for the

implementation of the strategy; the PEFA action plan has been sequenced and

prioritized and Phase I of the PFM Strategy has been prepared by the

government with the overall government development objectives.

Public Procurement Management

Public Procurement Monitoring Office (PPMO) was given a lead role on

this Sub-theme. There were five key ac tions were identified. As a progress, GON

and Development partners J oint Review Panel prepared a report on collusion,

coercion and intimidation practices in bidding process and submitted to the

steering committee. The c ommittee has approved the report and sent to PPMO

for its implementation. Relevant recommendations of the report will be

incorporated in the proposed revision of the Proc urement Act. Likewise, some

capacity building activities in PPMO has been done. Restructuring and furthercapacity enhancement of PPMO is felt necessary. Similarly, transitional Standard

Bidding Doc ument has been issued and is posted in the website. Final SBD draft

is being consulted with Development Partners.

Monitoring and Evaluation System

Three short term actions were developed and given the implementation

role to National Planning Commission. Regarding the progress, in order to

incorporate the M& E budget while approving the projec t/annual work plan,

NPC issued the guidelines to all ministries as TYIP focus to allocate 0.5 percent oftotal budget for M&E. Preparation of M&E action plan is underway.

Donor Harmonization, Aid Coordination and Project/Program Management

Six actions were identified and implemented. Some of the key actions

were related to the holding of National Development Forum (NDF) whereby the

plan was to formalize the new Foreign Aid Policy and Aid Effectiveness National

Action plan (NAAP). As the NDF postponed, these two major activities were

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delayed. Aid mapping exercise was completed. However, further updating and

revision is necessary. To establish Aid Information Management system, need

assessment has been completed by Gateway Foundation. Service provider for

software has been selected. The issues of staff transfer were discussed in almost

all progress review meeting. For the adoption of Standard Operating Procedure

in each agency for incorporation of proper mechanism of handover and

takeover, MOF has requested to all line agencies.

Regarding Longer term action plan matrix, it was not feasible to focus on

implementation and follow up as the nature of the issues has longer timeframe.

It is also felt that NPPR should focus only on shorter term doable actions to be

implemented within a year.

Attachment: Ac tion Plan Matrices with updated progress as of November, 2009

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Updated:November2009

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NNPPPPRR))

AACCTTIIOONNPPLLAANNFFOORRIIMMPPRROOVVIINNGGPPOORRTTFFOOLLIIOOPPEERRFFOORRMMAANNCCEE

((SShhoorrtt--tteerrmm

AAccttiioonnPPllaann))

PPrrooggrreessssaassoo

ffNNoovveemmbbeerr22000099

FocusSub-

Theme

Challenges

AgreedActions

Responsible

Agencies

PerformanceIndicators

Target

Dates

Revised

Target

date

Progress

1.Results-

Based

Management

(RBM)

Expected

Outcome:

Efficiencyand

Effectivenessof

theGovernment

ofNepalin

achievingdesired

results

Champion:

DivisionChief,

Poverty

Monitoring

Division,NPC

Internalizationof

RBMbygovernment

agencies

Developacapacitybuilding

framework(conceptualization,

procedures,resources,

logistics)

NPC,

MOF,

sectoralline

ministries

Capacitybuilding

frameworkdeveloped

March

2009

June09

Due.

AstheMfDRTAdelayed,

thisactionhas

alsobeendelayed.

Capacitybuildingframeworkis

plannedtobedoneundertheproject.Theproject

hasbeenoperationalizedfromJuly22,

2009.

NPCiscommittedtopreparethisframework.

Reviewandrevisereporting

formatforresult-based

reporting

Prepareresultbasedannual

/programandbudget

framework.

NPCandsectoral

lineministries

NPCandsectoral

lineministries.

Revisedformatprepared

RBM-informedprogram

andbudget.

May

2009

July

2009

Complied.

Existingreportingformatsare

re

viewedandrevisedbythecommittee.

Itis

approvedbyNPCandcirculated.

Printingisbeing

donefordistribution.

Itwillbeuploadedinthe

website.

Complied:

GuidelinesarealreadyissuedbyNPC

to

thelineMinistriesforresultbasedAWPforFY

2066/67.

NeedforGON-

Donorharmonization

inplanning,

programmingand

monitoringresults

Formahigh-levelsteering

committeechairedbyNPC

ViceChairmanand

representedbyMOF,relevant

lineministriesand

developmentpartners.

Developaframeworkand

implementationplanforRBM

NPC

NPC/MOF/line

ministries/DPs

Regularminutesof

meeting

Frameworkand

implementationplan

finalized

January

2009

June

2009

April,

09

Complied.

Thecommitteehasbeenformedon

24June09underthechairmanshipofVC,

NPC

re

presentedbysomesecretariesoflineministries

includingMOFsecretaryasJointSecretaryof

NPCmembersecretary.

Due.

ThisactionisrelatedtotheNo.1action.

As

th

eMfDRTAhasbeendelayed,

thisactionisalso

affected.

Ineffective

development

impacts/results

tracking

Reviewthesystemof

PMAS/DPMASatcentral,

districtandsectorallevelfor

furtherstrengthening

RolloutMfDRprocesstoother

lineagencies

NPCandMOLD

NPC/concernedline

agencies/ADB

Reviewreports

(trimester,MDAC,

NDACreports)

Shareprogressand

lessonslearntofthe

currentMFDRprocess

July

2009

June

2009

W

orkinprogress.

SteeringCommitteeis

fo

rmedundertheChairmanshipofSecretary,

NPCandCoordinationCommitteeisformed

un

derthechairmanshipofJointSecretary,

NPC

to

reviewthesystem.

W

orkinProgress:Processhasbeenstarted

underADBTA.

Consultantsselected.

Consultationshavebeendonewithlineministries.

In

ceptionworkshophasbeendoneasplanned.

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FocusSub-

Theme

Challenges

AgreedActions

Responsible

Agencies


Target

Dates

Revised

Target

date

Progress

2.

Public

Financial

Management

(PFM)

Expected

Outcome:

Transparent,

Accountableand

RobustFinancial

Management

System

Champion:

Mr.DevRaj

Pathak,Joint

FCG,FCGO

Delayinfundrelease

duetodelayin

programapproval

MOFtoincreasetheadvance

releasefrom1/3rdtoan

appropriatelevelforP1

projectsbasedonperformance

orfundingneeds,andpriority

ofthegovernment

MOF,

NPC,

Line

Ministries

Timelyfundreleaseto

P1projects

Decisiononincreasing

theproportionfor

advancefrom1/3rdto

appropriatelevelforP1

projects

July

2009

C

omplied:Currentadvancereleasesystemis

enoughand

P1projectsgetthefundsasthey

need.

Prepareaconceptnotefor

advancingthetimeforwork

programandbudget

discussionandensurethat

theyareapprovedpriorto

budgetingofnewfiscalyear

MOF,

NPC,

Line

Ministries

ConceptNoteprepared,

disseminatedand

discussedwiththeCA

members

March

2009

N

otcomplied:GONhasprincipallyagreedto

advancethebudgetspeech.

Lastyear,MOFwas

preparedtoannouncebudgetspeechinJune,

09.

H

owever,duetothesuddenchangesinthe

government,thiswasnotpossible.

Lackofsubmission

ofProcurementPlan

withBudget

Submission

Forensuringbetterfinancial

discipline,

GONtoissue

directivesfor"budget

surrender"inmid-yearreview

ofthebudgetifthereisno

progressinimplementationof

programasperprocurement

plan

MOF/NPC/line

ministries

Budgetmanagement

basedonperformance

April

2009

Aug,

09

W

orkinProgress:

TheNPChasmadeaprovisiontosubmitthe

workplanatthetimeofapprovalofprograms.

Provisionhasbeenproposedforreviewingthe

clauserelatedtothebudgetsurrenderinFinancial

ProceduralAct.

TheActisunderdiscussionin

parliamentarycommittee.

InadequateAccounts

Staffandissueof

AccountsStaff

transfer

GONtomakedecisiontofill

thevacantpositionsof500

stafftoaddresstheissueof

inadequateaccountspool

MOF,

FCGO

500staffrecruited

Transferpolicy

reinforced

Implementationnot

affectedbytransferof

staff

March

2009

June09

W

orkinprogress

Transferpolicyhasbeenfollowed.

.Therearestillvarious

positionsneedtobefulfilled.

Outof85officers,

31

officersandmorethan200accountantshave

alreadyjoinedtheservice.

Nonofficersandrestof

th

etotalpersonnelwillbefulfilledwithin2009.

R

equesthasbeenplacedtoPublicService

C

ommissionforfulfilling50temporarystaff.

FCGOtoensurethepolicyof

adheringtoCivilServiceAct

regardingstafftransfer

includingthattheaccountstaff

willnotbetransferredinthe

lasttrimesteroffiscalyearand

iftheproject/programisinthe

finalyear,duetoaccountability

ofclosingfinalaccounts

FCGO

Governmentaccounts

smoothlyreconciled

ProjectAccounts

preparedontime

Ongoing

C

omplied.

FCGOhasfollowedthecriteriaofCivil

ServiceAct.

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FocusSub-

Theme

Challenges

AgreedActions

Responsible

Agencies


Target

Dates

Revised

Target

date

Progress

Weakcapacityof

accountsstaffand

capacitybuilding

Revisethetrainingcurriculum

basedoncurrentneedsand

prepareatraining

implementationplanand

trainingpackagetoimplement

firstroundoftrainingwithin

FY2008/09,

tocoverthe

followingschemes:(1)

GeneralAdministrationand

FinancialManagementfornew

entriesfor3monthsand(2)

RefresherTrainingfor2weeks

beforestaffaredeputedto

project/program.

MOF,

FCGO

PreparationofTraining

ImplementationPlan.

Implementationof

trainingprogram.

Capacityofaccounts

staffenhanced.

Timelypreparationof

financialstatements.

Implementat

ionPlanby

Jan2009

Implement

firstroundo

trainingby

mid-July

Continue

thisevery

year

June09

Sept

09

W

orkinProgress:Curriculumofinduction

traininghasbeenfinalized.

TrainingonFinancial

M

anagementfornewentriesofficershasbeen

doneinSeptember.

In

ductiontrainingfornonofficers(Accountants)

hasalsobeenstartedinNovember2009.

OutdatedCash

BasisAccounting

System

GONtomakedecisionto

adoptcashbasisaccounting

standardsasperinternational

standards(IPSASbased),and

implementroadmapsubmitted

bytheASB.

MOF,

FCGO,

OAG

AdoptionofIPSAS-

basedaccounting

standards

Harmonizationofcash

basedaccounting

systemwithinternational

standardswhichis

transparentandmeet

IMFbenchmarks

July

2009

W

orkinProgress.

AsacommitmenttomovethePFMAgenda

fo

rward,

theBudgetSpeechofFY2009/10has

givenprioritytoImplementpublicsectorcash

basisofaccountingsysteminlinewith

in

ternationalaccountingstandards(IPSAS).

G

oNapprovedtoimplementtheNepalPublic

SectorAccountingStandardBoardundercash

basisaccountingsysteminlinewithinternational

accountingstandards(IPSAS)onSeptember15,

2009.

Lackofinfrastructure

andconnectivityfor

promptreporting

Atleastforsectorsoperating

onSWApbasis,

GONtomake

decisiontoimmediately

provideconnectivitytoFCGO

databasetoenabletheline

agenciestopromptlyaccess

theinformationsystem.

Also,ensurecapacitybuilding

actionintegratedinthe

decision.

MOF,

FCGO

Decisiontoprovideon-

lineconnectivityto

sectorsoperatingon

SWApbasis

Timelyconsolidationof

financialstatements.

April

2009

C

omplied.

Thecurrentsectors(educationand

health)implementingSWApareconnectedwith

FCGO

database.

Asthesectorsoperatingin

SWApapproachincreases,

FCGO

willprovide

connectivity.

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FocusSub-

Theme

Challenges

AgreedActions

Responsible

Agencies


Target

Dates

Revised

Target

date

Progress

Slowimplementation

ofPEFAActionPlan

GONtoprepareanapproach

paperforJointWB/DFID/ADB

andGONmissiontoprepare

PFMStrategyDocumentto

sequenceandprioritizethe

PEFAActionPlanlinkingwith

overallgovernment

developmentobjectives.

MOF,

FCGO,

World

Bank,

DFID,

ADB

Jointmissionlaunched

andagreementon

prioritizedPFMprogram.

Agreementon

implementationplanand

developmentpartner

supportinSWAp

approach.

Approach

Paperby

Mid-Jan.

2008

Complied.

WorkshoponExperiencesharingof

Single

Treasury

Account

and

International

AccountingStandardsinPublicSectorhasbeen

co

nductedinFebruarybyPEFAsecretariatwith

su

pport

from

the

WB.

The

PFM

Strategy

DocumentPhaseIhasbeenprepared.

A

budgetprovision

has

been

made

in

the

governments

budgetforFY2009/10

undera

se

paratebudgetheadof35-3

/4-2

00forPublic

FinancialManagementReformandatotalbudget

ofRs.17.5millionhasbeenallocatedmainlyfor

re

currentexpenses.

PEFA

Implementation

Unit(PIU)

has

been

establishedin15ministriesfortheimplementation

ofthestrategy.

BasedonPFMStrategy

Document,preparea

Project/ProgramConceptNote

followingSWApapproach

throughwiderdonor

consultation.

PFMStrategyDocument

PreparationofPFM

SWApprogramto

implementPFMStrategy

Document

Joint

Mission

byMarch

2009

PFM

Strategy

Document

byMay

2009

W

orkinProgress:PFMStrategyDocumenthas

beenapprovedbyPEFAsteeringcommitteeon

Ju

ly6,

2009.

Preparationofimplementationplan

is

ontheschedule.

Supporthasbeensoughtfrom

W

B/DFIDforitsimplementation.

3.

Public

Procurement

Management

(PPM)

Expected

Outcome:

Efficientand

EffectiveUseof

PublicMoneyfor

BetterService

Delivery

Champion:

Director,PPMO

Collusion,

Coercion

andIntimidationin

thebiddingprocess

Studythecausesandeffects

oftheissueanddefinethe

collusionandcoercion

practice,suggestforthe

necessaryamendmentinthe

PPAandPPRthroughaGON-

DevelopmentPartnersJoint

ReviewPanel

MOF,

PPMO,

DPs

ReportbytheStudy

Team

Enhancecompetition

(Numberofcompetitors)

Complaintsreduced

July

2009

Complied.

GON-

DevelopmentPartnersJoint

ReviewPanelpreparedthereportandsubmitted

to

thesteeringcommittee.

SChasapprovedthe

re

port,preparedanactionplanandsenttoPPMO

fo

rimplementation.

Relevantrecommendations

willbeincorporatedintheproposedrevisionof

procurementact.Preparationofe-procurement

proposal,arrangementoffunding,manpowerand

so

ftwaredevelopmentisplannedinthisyear.

WeakCapacityof

PPMOand

Stakeholdersin

implementingPublic

Fulloperationalization

(includingstaffing)ofthe

PublicProcurementMonitoring

Office(PPMO)

OPMCM/MOGA

PPMOfullystaffedand

operationalized

March

2009

W

orkinProgress:RestructuringofPPMOisfelt

andprocessofstrengtheningisundergoing.

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FocusSub-

Theme

Challenges

AgreedActions

Responsible

Agencies


Target

Dates

Revised

Target

date

Progress

ProcurementLaw

Carryoutmassivetrainingand

awarenesscampaigntothe

vigilanceagencies,

procurementunits,highlevel

govt.officials,

bidders

communityandcivilsociety

PPMO/MOGA

Numberofworkshops,

trainingandawareness

campaignandtraining

materials

Familiaritywith

procurementlaw,

effectiveprocurement

procedure

First

program

byMarch

2009

Continue

eachyear

inPPMO

program

W

orkinProgress:Awarenessworkshopfor

SeniorTrainerheld,

includingparticipantsfrom

co

rporations.

TAcoverscostofdeveloping

trainingmaterialsandmodules.

Trainingfor

DTCOchiefshasbeencompleted.

Massive

trainingswillbeconductedunderWBTA.

AgreedactionsaretobecompletedunderIDF

grantwithintheprojectperiod.

IssuanceofStandardBidding

Documentsforworks,goods

andconsultantservices

(TransitionalandFinal)

PPMO

IssueofStandardBid

Documents(Transitional

andFinal)

Transitio

nalby

Decemb

er2008

Finalby

July

2009

Complied:TransitionalSBDsissuedandarein

th

ewebsitewww.ppmo.gov.np.

W

orkinProgress:FinalSBDsdraftofcivil

works,goodsandconsultingserviceshavebeen

se

nttoDevelopmentPartnersfortheircomments/

su

ggestions.
http://www.ppmo.gov.np/http://www.ppmo.gov.np/http://www.ppmo.gov.np/http://www.ppmo.gov.np/http://www.ppmo.gov.np/http://www.ppmo.gov.np/http://www.ppmo.gov.np/http://www.ppmo.gov.np/http://www.ppmo.gov.np/http://www.ppmo.gov.np/http://www.ppmo.gov.np/http://www.ppmo.gov.np/http://www.ppmo.gov.np/http://www.ppmo.gov.np/http://www.ppmo.gov.np/http://www.ppmo.gov.np/http://www.ppmo.gov.np/

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FocusSub-

Theme

Challenges

AgreedActions

Responsible

Agencies


Target

Dates

Revised

Target

date

Progress

VariationOrder

Studytheproblemsof

Variationorderofexecuting

agenciesandrecommend

necessaryactionfor

amendmentinPublic

ProcurementLaw

PPMO,

Procuring

Entities

ReportofPPMO

Smoothcontract

Administration,savingin

costandtimeofproject

July

2009

W

orkinprogress.

Consultationswithline

m

inistriesareunderwayinordertoincorporate

th

isissueintheproposedamendmentof

ProcurementAct/regulation.

4.

Monitoring

andEvaluation

System

(M&E)

Expected

Outcome:

EfficientM&E

Systemin

Operation