Document ofThe World Bank

FOR OFFICIAL USE ONLY

Report No: 20391

IMPLEMENTATION COMPLETION REPORT(CR-20440)

ONA

CREDIT

IN THE AMOUNT OF 8.8 SDR MILLION (US$ 11.4 MILLION EQUIVALENT)

TO THE

KINGDOM OF NEPAL

FOR THE

ENGINEERING EDUCATION PROJECT

May 31, 2000

This document has a restricted distribution and may be used by recipients only in the performance of theirofficial duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

(Exchange Rate Effective December 1999)

Currency Unit = Nepalese Rupees (NRs.)NRs. 69.30 = US$ 1.00

US$ 1.00 = NRs. 0.0144

FISCAL YEARJuly 16 - July 15

ABBREVIATIONS AND ACRONYMS

CIDA - Canadian International Development AgencyCIMDU - Curriculum and Instructional Materials Development UnitCTEVT - Council for Technical Education and Vocational TrainingEEP - Engineering Education ProjectHMGN - His Majesty's Government of NepalIOE - Institute of EngineeringMDU - Manpower Development UnitMIS - Management Inforn-ation SystemNPC - National Planning CommissionPIU - Project Implementation UnitSAR - Staff Appraisal ReportSDC - Swiss Agency for Development and CooperationTU - Tribhuvan University

Vice President: Mieko NishimizuCountry Manager/Director: Hans M. Rothenbuhler

Sector Manager/Director: Emmanuel Y. JimenezTask Team Leader/Task Manager: Grant Sinclair/Brajesh Panth

FOR OFFICIL USE ONLY

CONTENTS

Page No.1. Project Data 12. Principal Performance Ratings 13. Assessment of Development Objective and Design, and of Quality at Entry 24. Achievement of Objective and Outputs 35. Major Factors Affecting Implementation and Outcome 106. Sustainability 117. Bank and Borrower Performance 138. Lessons Learned 159. Partner Comments 1610. Additional Information 19Annex 1. Key Performance Indicators/Log Frame Matrix 20Annex 2. Project Costs and Financing 22Annex 3. Economic Costs and Benefits 25Annex 4. Bank Inputs 26Annex 5. Ratings for Achievement of Objectives/Outputs of Components 28Annex 6. Ratings of Bank and Borrower Performance 29Annex 7. List of Supporting Documents 30Annex 8. Borrower's ICR 31Annex 9. SDC's Comments 39Annex 10. CIDA's Comments 41

This document has a restricted distribution and may be used by recipients only in theperformance of their official duties. Its contents may not be otherwise disclosed withoutWorld Bank authorization.

Project ID: P010333 Project Name: ENGINEERING EDUC.Team Leader: Brajesh Panth TL Unit: SASEDICR Type: Core ICR Report Date: June 12, 2000

1. Project Data

Name: ENGINEERING EDUC. L/C/TF Number: CR-20440CountryIDepartment: NEPAL Region: South Asia Regional

OfficeSector/subsector: EV - Vocational Education & Training

KEY DATESOriginal Revised/Actual

PCD: 01/29/86 Effective: 11/14/89Appraisal: 09/06/88 MTR:Approval: 06/22/89 Closing: 12/31/97 12/31/99

Borrower/lmplementing Agency: GOVERNMENT OF NEPAL/INSTITUTE OF ENGINEERING; TRIBHUVANUNIVERSITY

Other Partners: Canadian International Development Agency (CIDA) and Swiss Agency forDevelopment and Cooperation (SDC)

STAFF Current At AppraisalVice President: Mieko Nishimizu Attila KaraosmanogluCountry Manager: Hans M. Rothenbuhler Shinji AsanumaSector Manager: Emmanuel Y. Jimenez Martin KarcherTeam Leader at ICR: Grant Sinclair Joseph BredieICR Primary Author: Brajesh Panth; Madhav Mainali

2. Principal Performance Ratings

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly

Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)

Outcome: S

Sustainability: L

Institutional Development Impact: SU

Bank Performance: S

Borrower Performance: S

QAG (if available) ICR

Quality at Entry: SProject at Risk at Any Time: Yes

3. Assessment of Development Objective and Design, and of Qujality at Entry

3.1 Original Objective:Nepal experienced a critical shortage of technical manpower in almost all its development

endeavors. During the 1960s and the 1970s, a number of studies/reviews on the status of humanresources in Nepal, including IDA's (McEvers, 1983), highlighted mianpower shortage in anumber of skill areas, including engineering skills. As the development efforts expanded duringthe 1970s, the need to modernize engineering education was identified as one of the key prioritiesin Nepali education by HMGN. On account of its importance in Nepali development efforts, andas prioritized by HMGN, IDA provided support for two projects aimed at enabling the Institute ofEngineering (IOE), Tribhuvan University (TU) to expand and modernize engineering education inNepal, namely the Institute of Engineering Development Project (Cr. 772-NEP) and the WesternRegion Campus Project (Cr. 11 98-NEP). These projects contributed to the expansion andconsolidation of the technician training programs and helped the Institute of Engineering (IOE)initiate a degree program in civil engineering. Nepal, however, remained completely dependenton overseas training in electrical, electronics and mechanical engineering.

According to the National Planning Commission (NPC) the shortage of technical andprofessional manpower at the start of the Seventh 5-Year Plan (1985) had risen to 30 percent ofavailable stock. The apparent shortage of engineers and technicians was a reflection of Nepal'spast inability to develop an appropriate stock of technical personnel. The actual proportion ofengineering personnel (0.9%) in the economically active population was smaller than in othercountries in the region (for example, 3.8% in Bangladesh). Nepal's development efforts requiredtechnical personnel in the four basic engineering disciplines -civil, mechanical, electrical,electronics- and in architecture and rural planning. Given the developments in power andcommunications, the demand for electrical and electronics engineering personnel was expected torise significantly.

It was against this background that the Engineering Education Project (EEP), the thirdIDA-supported project in the series, was formulated. The development objective of EEP was toincrease the production of engineering manpower in order to meet the national demand generatedby the Government's investment in various sectors. The expectation was to meet 90 percent of theprojected demand and to train engineers and technicians specifically ifor Nepal's developmentneeds. The project assisted in: (a) expanding the enrollment capacity of the IOE to traintechnicians and engineers; (b) raising the quality of engineering education; and (c) improving themanagement of IOE. It was deemed important to remove the imbalances in the supply ofengineering manpower, reduce the shortages, and meet the demand generated by theGovernment's investment in water resources, hydropower, roads, bridges, telecommunicationsand industry.

Important lessons concerning deficiencies in project management, maintenance andimplementation learned from previous projects were taken into account in designing the project.Project objectives were clearly defined and directed towards building capacity for producingtechnical manpower in critical areas in Nepal. The objectives were very much in line with socialpriorities and long-term educational plans of the government, and also fitted well with IDA'scountry assistance strategy for Nepal.

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3.2 Revised Objective:No changes were made in the project's development objectives during the implementation period.

3.3 Original Components:The project components were:

(a) expanding enrollment in the technician training programns from 1,370 to about1,700 students and in the engineering (degree) programs from 360 to 920 studentsthrough the introduction of new programs and construction, rehabilitation andmaintenance of facilities;

(b) raising the quality of engineering education through training of staff, introducingnew curricula, improving existing curricula, providing education materials andequipment, and improving admission and exarnination to international standard; and

(c) improving management through strengthening the Office of the Dean, developinga Management Information System (MIS), establishing a Manpower DevelopmentUnit (MDU), training managerial and administrative staff, and establishingmaintenance capacity.

3.4 Revised Components:Project components were not restructured during project implementation.

3.5 Quality at Entry:The quality at entry is rated satisfactory in this ICR. As mentioned under Section 3.1

above, the project was designed to suit the technical manpower development needs of Nepal, andbenefitted from lessons learned in two earlier projects.

4. Achievement of Objective and Outputs

4.1 Outcome/achievement of objective:

The project not only achieved all its stated objectives satisfactorily, but also most of itsactual achievements exceeded the targets. Now the IOE has greater autonomy, is self-reliant inmany areas due to increased levels of cost recovery; it has well-trained manpower (administrativeand academic), and has acquired significant experience in project management. Hence, IOE hasbeen able to develop an efficient system for the delivery of both degree and diploma programs.Moreover, major policies have been adopted such as cost recovery and development researchcapabilities. The project benefited extensively from Canadian International Development Agency(CIDA) technical assistance and Swiss Agency for Development Cooperation (SDC) support.

As the project was able to complete all civil works, procure all equipment and enroll morestudents than targeted, the final project perfornance in achieving the capacity expansionobjectives has been rated satisfactory.

Similarly, as the project was able to train more staff than targeted, develop and revise

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curricula, develop instructional materials, procure books and reference materials, and improveadmission and examination standards, the EEP outcome in achieving the quality improvementobjective is rated satisfactory.

The management improvement objective of the project is also rated satisfactory, in viewof the establishment of (i) a Management and Development Council and an Executive Committeeto foster greater autonomy, (ii) a manpower development unit to provide training to staff andundertake tracer studies, and (iii) facilities management unit in each campus to institutionalize andsustain maintenance equipment and buildings.

Some unanticipated conditions (e.g., trade and transit dispute between India and Nepal,the transition to democratic government, conflict and delays in consultant selection, change inGovernment policy, procurement delays, etc.) adversely affected the project during initialimplementation, including weak project management which led to implementation delays duringthe first half of the project period. When project implementation picked up towards the secondhalf of the project as a result of greater focus and stronger leadership, the project exceeded mostof its objectives. Nevertheless, a two-year extension of the project was needed to allow the IOEto achieve all the project objectives. It is also important to recognize that while it took almost tenyears for the IOE to implement the project fully, the important institutional gains would have beenunachievable in a shorter time span given the need for substantial social, attitudinal and managerialchanges.

4.2 Outputs by components:A. Expanding the Capacity of IOE to Train More Technicians and Engineers

(i) Enrollment Capacity. The enrollment targets of the project have been fully achievedand in many cases exceeded the targets. With regard to degree programs, the EEP StaffAppraisal Report (SAR) projected a target of admitting 240 students as freshmen in five degreeprograms (Civil, Mechanical, Electrical, Electronic and Architecture) offered at Pulchowk(Central) Campus of IOE. By 1999/2000 IOE was able to admit 381 students in six degreeprograms (including computer engineering, not envisaged by EEP). This intake level will raise thetotal degree level enrollment to 1,572 students in its degree programs (SAR target 920),exceeding the project target by over 60 percent. This includes those who have enrolled in anumber of full fee-paying programs, with full cost recovery.

Regarding diploma programs, the appraisal target of EEP was to enroll 1,700 students, forwhich around 624 freshmen were expected to be admitted in three campuses every year includingmargins for dropouts. The three diploma campuses have admitted a total of 768 freshmen in1999/2000 for technician training programs thereby exceeding the project target by about 23percent. This includes full fee-paying students whose number is expected to increase to over 30percent of total enrollment in these campuses. These developments demonstrate first, thesignificant achievement made by EEP in expanding the capacity of technician training programs,and second, reveal the willingness of beneficiaries to pay for their training, which in the context ofNepal is important to note. However, while enrollment has continued to increase, low intemalefficiency in diploma programs warrants future targeted intervention.

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As a spin-off of the success of EEP, a number of private engineering colleges affiliated toTU/IOE have been established. The total enrollment capacity of degree programs of public andprivate engineering colleges has exceeded the target EEP enrollment capacity.

The last tracer studies of IOE graduates was conducted in 1993. Therefore there is norecent emperical evidence that all the IOE graduates are employeed in the country in the relevantfields. But based on the high demand for IOE seats and anectodal evidence that the country hasbeen largely able to fulfill its demand for engineering manpower gives a basis to infer that thedevelopment objective of EEP has been largely met.

Since enrollments in degree and diploma programs exceeded the target and additionalpost-graduate programs were introduced in four areas, a significantly greater number of teachersand instructors have been recruited than was originally planned. This resulted in less thansatisfactory faculty rationalization. The degree programs of IOE now have over 220 faculty for1,104 students with a faculty - student ratio of 1: 5.1 against the SAR target of 1:10. This isexpected to improve to 1:7 once these programs reach full enrollment of 1,572. The faculty-student ratio at the three diploma campuses is around 1:9, which is below the target of 1: 10because the TU has reduced the norn for teaching loads. Nevertheless, IOE is using the higherfaculty strength to provide a number of short courses.

(ii) Female Enrollment. EEP projected a target of increasing female enrollment to atleast 10 percent in both degree and technician training programs. Females were about 12.5percent of enrollments (137 of 1,104) in 1999/00 academic year, which exceeded the target.There was a significant increase in females enrollments at three of the four campuses under IOEwith Pulchowk (degree) campus admitting 17 percent (59 of 336), Thapathali (diploma) 20percent (29 of 144), and Paschimanchal (Western) campus 18 percent (70 of 384). All thesecampuses provided new girls' hostels with a combined capacity to accommodate 104 femalestudents. At the only campus, the Purwanchal (Eastern) campus, which lacks girls hostel facilitywithin its premises, female enrollment was only 6 percent (15 of 240) of the total. This campuswas not included in EEP initially, but was included only later on. The initial delays inimplementation and a subsequent reduction in SDC funding by about US$1.38 million led to areduction in the scope of the project, which included dropping the plan for hostel construction inthe Eastern campus.

(iii) New Programs. Exceeding by far the EEP targets, the IOE managed, withNorwegian assistance, to run post-graduate (Master's Degree) programs in three areas ofspecialization - Structural Engineering, Environmental Engineering and Urban Planning. Later aMaster's degree program in Water Resources Engineering was initiated without external support.The current enrollment capacity in the two-year Master's degree is 128. The IOE plans to offerseveral additional programs. The master's degree programs, which are self-sustaining, are demanddriven. Moreover, the IOE now has two research students working toward a Ph.D. These areimpressive achievements arising from enhanced IOE capacity. Under a mutually agreed separationarrangement, which was reached at a later stage of the project, the diploma programs ofPulchowk campus were transferred to three diploma campuses. The Pulchowk facilities are nowexclusively used for degree programs allowing room for enrolling additional batches of full

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fee-paying students, and for introducing post-graduate programs in a number of areas.

(iv) Construction. The construction of new facilities and the renovation of existing onesin Pulchowk Campus are all completed and are being used. With minor exceptions, the renovationand construction of facilities at the diploma campuses have also been completed satisfactorily. Thelaboratories and workshops, and the classrooms in all diploma campuses are utilized almost to thelevel targeted by the SAR (65% and 80%, respectively). The utilization of these facilities at thedegree campus, however, is significantly less than the above targets (39% and 650/0,respectively). This is largely a result of the transfer of diploma programs from the degree campus,leaving IOE room to increase enrollment, including additional enrollment of full fee-payingstudents and running of short courses.

(v) Equipment. Most equipment for the degree programs was procured before projectextension. Experts from the Consortium of Canadian Universities under CIDA support providedtechnical assistance in commissioning laboratory equipment for degree programs. The Consortiumcomprised University of Calagary, University of Saskatchewan, University of British Columbiaand University of Manitoba. However, the equipment for the technician training programs wasprocured late in the project extension period due to the decision to delay the procurement ofdiploma equipment until appropriate arrangements were made for transfer of diploma programs toCTEVT. The consequences of the delayed procurement and the revision of the equipment listsare explained later.

B. Raising the Quality of Engineering Education

(i) Staff Development. The training of staff, both of degree and diploma programs, wascarried out successfully. The fellowships were supported by CIDA and SDC. Against the targetsof 173.5 staff-years of fellowships (including 15 Ph.D., 32 M.Sc./ME, 37 staff-years of techniciantraining, and 21 staff-years of other training) some 193 staff-years of training was completed,which included 15 senior fellowships, 5 Ph.D., 38 M.Sc./ME fellowships, 67 staff-years oftechnician training, 15 administrative staff fellowships, and 90 short-term training. The trainingtargets were surpassed significantly in terms of persons covered. Over 220 teaching staff and 120junior/support staff (compared with the proposed target of 94 teaching staff and 25 support staff)received training. This was possible due to the cost saving efforts of project managers byorganizing training in India instead of expensive overseas institutions. The Technician Teachers'Training Institute at Bhopal, India which provided short-term (mostly of three-month duration)training for the diploma staff was substantially economical cost-wise without any compromise tothe quality of training. The Technical Instructors Training Institute, an SDC-supported trainingfacility at Kathmandu, also provided some short-term training to diploma staff with similar results.Moreover, the training is looked upon as relevant for the Nepali need. Training for the faculty ofthe degree programs started at the early phase of the project and most of them benefited fromoverseas training. Unfortunately, a significant percentage of those trained abroad (9 of 23 trainedfor M.Sc./M.E.) at a high cost did not return to Nepal. This warrants the serious attention of IOEmanagement.

(ii) Curriculum Development. Inpressive achievements were made in the areas of

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curriculum development. A total of 316 new courses were developed for the degree programswhich greatly benefited from technical assistance provided by experts from the Consortium ofCanadian Universities under CIDA funding. In addition to this, over 100 new courses weredeveloped for the Master's in Engineering programs. Curriculum for technician programs in civilengineering and architecture were prepared by the IOE faculty. Curriculum for five courses fortechnician training programs were developed by the ILO experts and later revised by the IOEfaculty. The revisions laid emphasis on augmenting the skill component in the curriculum. Thisexperience of curriculum development and revision will obviously be useful for IOE to accomplishsimilar tasks in the future.

The EEP resources were utilized efficiently for the development and distribution ofinstructional materials. The Curriculum and Instructional Materials Development Unit (CIMDU)of IOE is preparing and publishing manuals for courses and laboratory manuals. It has publisheda total of 103 courses and laboratory manuals for degree programs and almost a similar quantity(101) for diploma programs.

(iii) Books and Reference Materials. EEP funds were used to purchase a total of 37,828volumes of books, exceeding the target (23,300) substantially. IOE was much less successful inacquiring joumals. The libraries of all campuses now are in a better position to provide books,both text and reference, to students and teachers. Some relevant journals and reference materialsare also available at the Pulchowk campus library for post-graduate courses and research. Giventhat significant funds were underutilized under this category and not enough journals could beprocured, IOE engaged in installing a dedicated Intemet system to allow its faculty and studentsaccess to intemational resources. Being a technical institute of Tribhuvan University, IOE is alsomaking preparations to provide Internet access to the larger university faculty.

(iv) Admission Standard and Quality of IOE Education. The quality of studentsentering the degree and technician programs was already quite good before the project due to afair and effective student admission system. This quality was further enhanced through theimplementation of single entrance system. Technicians and Proficiency Certificate holders inscience are eligible for entry into degree programs by sitting in the same examination under thesingle entrance system. Due to high demand, there is keen competition to get admitted to IOE.Of the total applicants for degree programs, only the best 18 percent were admitted in 1999.Before the introduction of the full fee-paying scheme in 1997, the competition for entry into theIOE was greater. The smaller number of applicants competing for entry into the IOE after theintroduction of the full fee-paying scheme is associated with the increased capacity of IOE owingto higher utilization of resources. At the same time, the pool of applicants from the proficiencylevel in science/diploma in engineering did not increase. Although the minimum entryrequirements for full fee students are the same as that for regular students, the introduction of fullfee-paying students have somewhat lowered the quality of students admitted into the degreeprograms owing to the following factors: (i) slackening of competition due to the increasednumber of places at the degree level; and (ii) limited competition for full fee-paying seats.Therefore, it is highly desirable to supplement the full fee-paying scheme by a financial assistancescheme for financially weak students.

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Among the total applicants for diploma programs, only the top 17 percent of theapplicants were admitted in 1999. Although students are admitted after a rigorous selectionprocess, a majority of them fail in the first year examinations. This results in seriousdemoralization of students and leads to campus disturbances. However, diploma students withgood academic standing have been fairly successful in joining the degree programs in spite of theintroduction of a single entrance system.

The IOE degree graduates are competing intemationally for admissions into goodinstitutions and are admitted for further studies to well-known institutions abroad and haveperformed well. The Asian Institute of Technology has ranked IOE/TU as one of the ten bestinstitutions based on the performance of students admitted from different academic institutions.

(v) Complementary Strength. With the capacity and facilities developed, the IOE hasinitiated research programs, consultancy services and continuing education programs. Forpromotion of research and other services, autonomous organizations such as the Center forApplied Research and Development, the Center for Energy Studies and the Center forInformation Technology have been established. Continuing education programs are beingsuccessfully conducted through the Continuing Education Division. The Institute of EngineeringConsultancy Services, Departmental Research Consultancy and Training Units, Campus LevelTraining and Consultancy Units provide consultancy and training services. Through theseactivities the IOE provides a variety of specialist services to the country and has markedlyimproved the image of IOE. These are achievements beyond the expectations of the project.

C. Improving Management Capacity

(i) Strengthening the Office of the Dean. The management improvement objectives ofthe project have been largely achieved, although some targets require additional efforts to fullyrealize. The IOE became successful in assuring the participation of stakeholders in itsmanagement through the formation of an ad hoc Advisory Council. The success of thisexperiment laid the foundation for adoption of Decentralization Rules 1998, which paved the wayfor more decentralized management of Tribhuvan University. The IOE was the first institute toimplement TU Decentralization Rules in 1998. The implementation of these rules have furtherstrengthened the IOE's stakeholder participation in management. The Decentralization Ruleshave transferred some of the important central authorities (managerial and financial) from the TUcentral office to IOE. The provision in the rules for transferning activities from central office/IOEto campuses remains yet to be implemented.

(ii) Complementary Institutional Development Efforts. The Manpower DevelopmentUnit (MDU) has been established. It has been delivering short-term training and has organizedconsultative seminars and training workshops for IOE staff. MDU is expected to conduct tracerstudies periodically which are now critical to trace the employment status of IOE graduates. TheManagement Information System of IOE has become operational only recently on the Pulchowkcampus and needs to be extended to diploma programs using the equipment provided by theproject for this purpose. Facilities Management Units have been established in all campuses butthey require sustained support for a few more years to fully institutionalize them. The IOE has

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also established an Industrial Advisory Board and has formed Industrial Linkage Units in eachcampus. These important entities are not yet effective to the level expected, in spite of theimportance of their function to make engineering training relevant and successful.

The Unanticipated Project Results

The achievements of the project that have exceeded the projected targets are summed up below:

* Exceeding the SAR target, IOE built the capacity to admit 60% and 23% more students indegree and diploma programs, respectively.

* Beyond the target of the project, IOE now runs degree program in computer engineering, hasintroduced Post-Graduate programs in four areas of specialization and initiated a Ph.D.program.

* IOE has generated revenue from sources such as student fees, research and consultancyservices, which amounts to the equivalent of 50% of recurrent expenditure.

* IOE has developed formal linkages with well-known institutions in India, Canada, Norway,USA, Japan, Thailand and Indonesia for research and exchange.

* IOE has initiated a 20-year strategic planning exercise to develop a long-term vision for theInstitute to develop into a premier institution and a partner in national development with focuson sustainability, research and academic excellence.

_ IOE was able to install a dedicated Internet system, thereby giving its faculty and studentsinstant access to international resources.

4.3 Net Present Value/Economic rate of return:n.a.

4.4 Financial rate of return:n.a.

4 5 Institutional development impact:

The institutional development impact has been rated as substantial. The initial delays inproject implementation had to do with several factors, some of which were beyond the control ofIOE. Although IOE senior management came with experience from two earlier IDA-supportedprojects and provided stability, project management suffered from turnover of key staff(coordinators and several deputy coordinators) and inadequate staffing. This was largely trueduring the first half of the project. It was also felt that degree programs received more attentionthan diploma programs.

The situation turned around during the second half of the project leading to severalimprovements. Disbursement increased from less than 10 percent in 1995 to over 50 percent intwo years. IOE management made efforts to have very modest teaching loads of key PIU staff,put in more staff to look after critical areas that were lagging behind, improved project monitoringusing benchmarks and implementation schedules, and adopted a more strategic approach toaddress implementation bottlenecks.

With greater autonomy from TU achieved, the IOE management established an Executive

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Committee and Management and Development Council to improve internal management anddecision making structure. This helped to decentralize management functions to the departmentlevel. This was further reinforced by successful cost recovery which led to wider support offaculty members and department heads who saw potential for increased remuneration andincreased access to resources. IOE has made provision for institutional improvements andresources to ensure regular repair and maintenance physical facilities, established manpowerdevelopment unit for staff development and conducting tracer studies, and identified industrialliaison officers in each campus for industrial linkages to increase exposure of students to industry.In order to sustain these gains, there is an urgent need to promote strategies to raise staff moraleand motivation, retain good staff and strengthen the recruitment process to ensure intake of highlyqualified and competent staff.

TU has identified IOE as one of the institutes to receive block grants from FY2000/01 toallow further autonomy to IOE.

5. Major Factors Affecting Implementation and Outcome

5.1 Factors outside the control of government or implementing agency:

EEP implementation began in a period when India and Nepal were having problems ontrade and transit issues which lingered for about a year. Furtherrnore, there was a major politicalchange in 1990 which ushered in a democratic system with an interim Government in place. Thiswas followed by a very important general elections in 1991 and the formation of a newGovernment which began to formulate new policies and directions for development. These weremajor changes that affected all aspects of life in Nepal and made worse by a period of intensestudent activism and resistance.

5.2 Factors generally subject to government control:

Following the political changes in 1990, the Government established an EducationComrnission to advise on educational reforms. The Commission's recommendations led theGovernment to make a policy decision to transfer diploma programs of IOE to the Council forTechnical Education and Vocational Training (CTEVT) without carefully analyzing institutionalimplications. The decision did not materialize for over three years due to a lack of preparednessof CTEVT to bring IOE diploma programs under its umbrella. After this prolonged dilemma didnot produce any positive outcome, the Government agreed to continue with the original projectdesign and allowed diploma campuses to remain under IOE. In the process, valuable time waslost and project implementation of the diploma component suffered from delays in civil works andequipment procurement, staff recruitment and deployment, etc.

5.3 Factors generally subject to implementing agency control:

While the Project Implementation Unit (PIU) experienced a shortage of staff during theearly years of project implementation, it witnessed turnover of key staff throughout the projectperiod. In the absence of serious efforts to resolve conflicts, a prolonged disagreement betweenIOE and IDA over the selection of design consultant for civil works caused initial implementationdelays by about two years.

The process of equipment selection and procurement consumed much more time thanoriginally planned and, as a result, the project paid a higher cost, particularly for the diploma

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equipment. For the degree programs, the initial list prepared by Canadian experts was revised andfinalized by IOE faculty, many of whom were insufficiently familiar with the laboratory programsto carry out the task promptly. The procurement of diploma equipment was seriously delayed dueto uncertainities about the ownership of diploma programs. The cost escalation due to such delaysled to some reduction in the scope of diploma equipment. Diploma equipment lists prepared byIOE staff and reviewed by a Swiss consultant very late into the project were approved by head ofdepartments with inputs from concerned faculty members of different campuses. Giveninsufficient familiarity of IOE staff with preparing equipment specification and ICB procurementdocuments, the project contracted out the task to a foreign specialist firm. However, thisarrangement ended up consuming more time than expected for coordination and approvals.Substantial time might have been saved if IOE staff and/or national consultants had been able toperform the job; this would have possibly helped IOE to develop procurement expertise within itsown system. When given an opportunity to expedite diploma equipment procurement, the PIU didsuccessfully manage the ICB procurement of one of the diploma packages demonstrating itscapability and potential.

During the last four years of the project, the IOE made a series of positive decisions,which strengthened the PIU by providing adequate staff and injected commitment and motivationfor speedy project implementation. Delegating the Bank's project management responsibilities tothe Nepal Country Office also helped to expedite project activities through closer Bank/clientcontacts.

5.4 Costs andfinancing:The project was supported by three funding agencies - the Canadian International

Development Agency (CIDA) with US$3.95 million, the Swiss Agency for Development andCooperation (SDC) with US$7.15 million (scaled down from the original amount of US$8.53million), IDA with US$11.4 million and HMGN with US$2.11 million. The CIDA-flmded portionof the project was successfully completed in March 1997 and covered technical assistance andfellowships. The SDC portion of the fund was administered by IDA for a share of the costs ofcivil works, fellowhips, equipment and technical assistance. Due to project delays and constraintsin SDC fimding, the SDC portion of the financing had to be scaled down by about US$1.38million (about 16 percent of SDC funding). Reallocation of credit proceeds was required toincrease funding for equipment. In the light of substantial improvements in projectimplementation at a later stage of the project and to support the diploma component that waslagging behind, the project was provided two extensions of one year each based on the borrower'sdemonstrated commitrnent to project objectives.

6. Sustainability

6.1 Rationale for sustainability rating:

The project sustainability has been rated likely. The IOE has reached a stage where itenjoys a national status as a premium engineering institution. Its status and strength in (i)establishing a credible admission and examination process, (ii) retaining qualified faculty members,and (iii) possessing high quality physical facilities and well-equipped laboratories, which aresuperior to those owned by other institutions at the national level and in many cases at theregional level, contribute to the sustainability of IOE programs. Furthermore, a range of

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post-graduate programs and the beginning of a doctoral program in lOE help to reinforce itsprograms, and its expanding international linkages bring additional advantages.

A remarkable achievement of IOE has been in the generation of significant internalresources in a difficult environment and in a rather short period. Through sustained efforts andpatient negotiations, the active IOE leadership persuaded students to accept an increase in fees forregular students by a modest percentage (15% per year) with an understanding to continue thispractice for several years. It has also introduced a number of full fee-paying programs, whichrecover full recurrent costs of training. By offering continuing education programs, consultancyservices, and leasing campus facilities, IOE generates revenue of equivalent to 50 percent ofrecurrent expenditure, which in 1995 was less than 5 percent. This proportion is expected to risefurther. This helps to insure the sustainability of IOE programs at a time when public resources totertiary education are constrained and there is a critical need to reorient subsidies that currentlybenefit the better off students. This is supported by IOE's own study on student affordability.

However, despite impressive achievements in revenue generation, a major lacuna in IOE iscontinuing low faculty morale and motivation and serious difficulties in recruiting and retaininghigh quality professionals due to its inability to establish an attractive incentive structure. Most ofthe existing faculty members devote only a small percentage of their time to campus relatedactivities. With some exceptions, all hold another job to augment their income. They seem to beless motivated to find adequate time to help students. These indeed are crucial issues warrantingurgent treatment to sustain the gains made thus far. It is equally important to do away with thenegative effects of the politicized atmosphere particularly in diploma campuses and students'tendency to rely on strikes for unfair demands. These could undermine positive initiatives and thelarge investments made to improve the quality of teaching and learning.

Facilities management units were established on all four campuses. Most of themaintenance works through these units during the project period were funded from the projectand special Government grant tied to the project. In the context of low priority being accorded tomaintenance in Nepal, it would be crucial to supplement the TU regular allocations formaintenance with the revenues from internal resources. The policy of IOE to allocate 40% of therevenues from full-fee programs for equipment maintenance and upgrading is likely to enable IOEto reasonably maintain its physical facilities. It is to be noted that the annual cost of maintenanceof IOE facilities are estimated at Rs. 10 millions whereas the annual revenues from intemalresources exceeds Rs. 30 millions.

Compared to the diploma programs, the prospects for sustainability of degree programsare strong so far. In spite of the IOE's official position of supporting and strengthening thediploma programs within the IOE umbrella, an argument still exists that delivering techniciantraining should not be the responsibility of the university. If this sentiment prevails and gathersmomentum, diploma programs may be gradually replaced by new degree programs.

Although there is increasing recognition that most of the training delivered by IOE shouldremain relevant to the production process carried out in the industries and businesses, IOE has notyet been able to develop many functional linkages with industries.

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Judging from the success of IOE in mobilizing intemal resources its financial sustainabilityhas been fully assured in the short-term. The long-term financial sustainability of IOE, however,will be contingent upon its capability to continue to attract full fee students by maintaining thequality of its programs at a level higher than those of competing private institutions. In order tomaintain the quality of its programs, IOE will have to develop means for addressing the issue oflow faculty morale and commitment. This will entail serious reforms in the way the IOE is beingmanaged. The huge internal resources presently at the disposal of IOE need to be mobilized forsuccess of such reforms.

6.2 Transition arrangement to regular operations:IOE is part of a huge university system (TU) which provides enrollment to about 97

percent of all students enrolled in tertiary education in Nepal. In a highly centralized universitysystem, it is difficult to bring about management and financial reforms in only one institute when itis also part of the same system. However, the progress of IOE demonstrates that it is possible totrigger far reaching reforms when there is good leadership and willingness to initiate reforms. Asa result of these reforms, the IOE should be able to become a sustainable system for the followingreasons:

* First, the IOE was able to increase substantial cost recovery through sustained efforts andpatient negotiations with students and with support from politicians and universityofficials. Increased resources (from less than five percent of recurrent expenditure toabout 50 percent) now allow IOE to increase remuneration of faculty members, improverepair and maintenance, and improve expenditure on instructional materials andconsumables.

- Second, the IOE has been the first institution within the TU system to receive muchgreater autonomy. This came at a time when it was able to improve cost recoveryresulting in wider support from the faculty members and department heads whoseremuneration are likely to improve and who now have greater access to resources. TU isnow making necessary arrangements to provide block grant financing to IOE (amongother institutions and campuses) to provide further autonomy.

* Third, the IOE has been able to establish some important institutional arrangements(manpower development unit, facilities management unit, industrial liaison officers, etc.)to strengthen its management capacity.

* Finally, the IOE also has developed a 20-year strategic plan with priorities and strategiesto develop into a sustainable and strong teaching and research institution.

7. Bank and Borrower Performance

Bank7.] Lending:

Although the Bank was generally effective in project preparation, the Banks assessment ofthe level of preparedness of the project prior to Negotiations was overly optimistic, and as a resultproject start-up was much slower than anticipated. However, when IOE was able to substantially

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improve project implementation towards the second half, it took only a short time to realize thatsome of the early delays were largely an outcome of external and internal contingencies, whichwere difficult to anticipate and assess prior to its occurrence.

7.2 Supervision:

During the early period of sluggish project implementation, technical support from theBank became somehow minimal. Had the Bank been able to provide targeted support in conflictresolution and procurement during the early stages, the disagreement over the issue of selectingthe design consultant could have been resolved with less delays. The Bank personnel responsiblefor supervision changed in short intervals, which also may have had some effect on the project.

The then centralized decision-making of IDA in project management (first half of theproject) led to a longer processing time for procurement and disbursement-related issues therebycontributing to implementation delays. Subsequent decentralized decision-making policiesadopted by the Bank midway through the project greatly helped to accelerate implementation inlater years.

7.3 Overall Bankperformance.

The earlier delays were a combination of several factors. Project implementation began topick up well midway into the project. The Bank was able to maintain a very good relationshipwith the Borrower and donors (co-financiers), which helped to expedite project implementation indifferent formns. Since the Bank made it a point to carry out supervision every six months and theproject provided comprehensive reporting, including progress on benchmarks during eachmission, it was possible to identify all bottlenecks on tine and was possible to resolve anyoutstanding issues jointly. This helped to expedite implementation significantly. Finally, theBank's decision to grant two extensions of one year each came at a most crucial time withoutwhich the project would probably have been declared unsuccessful.

Borrower7.4 Preparation:

Project preparation was lengthy but the IOE presented its Ten-Year Development Plan.Negotiations had to be carried out to arrive at a cost-effective design that would meetGovernment needs. The IOE, with help from CIDA, developed an economical alternative withfocus on more efficient use and expansion of existing capacity. This was followed by preparationof a feasibility study which was also scaled down to arrive at a more affordable and economicaldesign. Thus, through several iterations, the borrower was able to negotiate a good design.

7.5 Government implementation performance:The Government was generally very supportive of the project. Midway into the project,

the Ministry of Finance increased its budgetary allocation to IOE maintenance from around NRs.150,000 annually to around NRs. 1.5 mnillion. The MOF was also instrumental in resolvingproblems relating to funds flow and currency adjustments pertaining to payments. But theGovernment policy regarding the transfer of diploma programs midway through the project andthe delay in articulating the policy, created considerable uncertainty for a long period of time(around three years) and led to considerable delays in the implementation of diploma component.

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7.6 Implementing Agency:

The integration of the PIU with the IOE had many benefits in terms of ensuring linkagesbetween project activities and inputs and the IOE's operations. But this relationship also haddisadvantages in that initially there was difficulty in attracting and retaining good staff to the PIUfrom the IOE. Most PIU staff were not full time (as most retained some teaching responsibilities),and this prevented the PIU from considering more effective implementation strategies that wereinconsistent or considered inappropriate by the IOE. Project monitoring remained less thansatisfactory throughout the project. However, as it became clear that the project was in seriousdanger of not being completed, changes in PIU staffing and strong leadership resulted inconsiderable improvement in project management and speed of implementatiorL

The overall financial management of the project was not entirely satisfactory. The projecthad a very weak monitoring system with respect to financial transactions. Due to inadequatecontract monitoring, payments to the parties were often delayed. Accounts team often wereunable to submit withdrawal applications in a timely manner due to delayed submission ofsupporting documents by the technical team to the accounts unit. The accounts unit was also notproactive to alert the management about the need to improve the financial management. Duringthe last year of the project, IDA supervision missions helped improve the accounting system. Theproject recruited a qualified accounting consultant to project's accounting system. On average,audit reports were submitted 10 to 12 months' after the end of the fiscal year. The audit reportfor FY1998/99 has not yet been received.

7.7 Overall Borrower performance:

The project benefited from continuity in the IOE senior management in terms of theirfamiliarity and support for the project design and objectives. Though there were five differentDeans of the IOE from project preparation through completion, all of them had been directlyinvolved in the early planning stages of the project and all maintained strong commitment andsupport for the project objectives and activities. Despite serious implementation delays during thefirst half of the project, some of which were beyond the control of the borrower, the borrowerwas not only able to improve implementation significantly but exceeded achievements in someareas. In the final analysis, the borrower demonstrated satisfactory performance in bringing thisproject to a successful closure.

8. Lessons Learned

8.1 The EEP benefited from proper coordination among the co-financiers. The IDA Creditcombined with CIDA and SDC grants furnished a greater probability of achieving targets of theproject due to the availability of wider support, financial flexibility and extemal technicalassistance. This reinforces the need for combining credit with grant assistance, and demonstratesthe value of good donor coordination.

8.2 The decision to alter the project design, consistent with the recommendations of theNational Education Commission 2049 (1991), without an in-depth analysis of the implicationsafter three years into implementation caused serious delays in project implementation. It was,therefore, critical to carry out in-depth institutional analyses before making what was a majorpolicy shift in the middle of a project.

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8.3 Stability in the leadership of the recipient organization and in the staffing of the PIU hadcrucial implications on project implementation. The project was delayed partly due to untimelychanges in key project staff. The EEP implementation also suffered due to an insufficient attemptto improve and coordinate procurement and particularly financial management. Although therewere improvements in later years, much valuable time was lost and the project would not havebeen able to accomplish all its objectives without a two year extension. To improve the financialand procurement management of future projects it is suggested that systematic training isprovided to all relevant staff of projects, and an effective coordination mechanism be establishedbetween technical and finance teams to ensure good monitoring of accounting transactions.

Significant delays were experienced in the flow of funds from the Government to theUniversity and from the University to IOE. In order to avoid these delays, the Ministry of Financeshould directly allocate the budget to the Project as it does with other projects. This will reduceone layer of bureaucracy and will have a positive impact on timely consolidation andreconciliation of accounts, and timely completion of audit reports.

8.4 The supervision skills in procurement and conflict resolution specified at the project designstage were inadequate, requiring additional expertise and resources. Without such targetedinputs, implementation delays could have persisted even longer.

8.5 With the decentralized supervision policy adopted by IDA, expeditious support inprocurement and disbursement, and rigorous technical support to expedite implementationbecame possible. Such support is critical for a project like EEP, which required deeperunderstanding of the political economy of implementation.

8.6 Substantial cost recovery amidst a difficult environment demonstrates that such reform ispossible when there is strong leadership, willingness to engage in serious negotiations with keystakeholders (in this case mostly students and politicians) and good support from the Governmentand TU management. This experience could greatly benefit other institutes and faculties of TU interms of reorienting subsidies, mobilizing more resources and improving organization andmanagement critical for improving the quality of education.

8.7 The achievements of EEP have been possible due to sustained borrower and donor effortsover a long period. This indicates that building an institution of a large magnitude, often underdifficult circumstances, consumes time and requires a long-term perspective and involvement. Ittook over two decades, and a continuous investment of efforts and resources under three IDAprojects to evolve IOE to a stage where it stands now giving much greater confidence thatachievement made thus far is likely to be sustained.

9. Partner Comments

(a) Borrower/implementing agency:The Borrower, after reviewing the Implementation Completion Report (ICR), had minor comments. Theseconmments were incorporated in this ICR and the full text of those comments are included as part of theBorrower's ICR, which is presented in Annex 8.

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(b) Cofinanciers:

SDC's comments:

These refer to the last 4 years of collaboration (1996-1999).

SDC agrees with the performnance rating of the project. In general, the results of the projectare promising, demonstrating that they can lead to a sustainable insitution with theunderstanding that:

* there is stability in the leadership;* the promised block grants are transfered to IOE;* the financial management improves; and* the motivation, the commitment and the accountability of the faculty members are

raised.

Until there is full conmmitment by teachers, instructors and faculty members, it will be difficultto make the IOE a sustainable institution. Despite these promising results, it has to beunderlined that the (high) satisfactory performance is mainly due to the two-year extension ofthe project. Two issues regarding sustainability are always critical: (i) maintenance that hasbeen carried out with project funds; and (ii) establishment of functional linkages with industry.

Collaboration WB-SDCSDC has appreciated the good working relationship with the WB Task Manager and themembers of the different review missions. SDC was always informed and included in themissions taking place. Informal discussions with the WB Task Manager took place whenneeded. Nevertheless, the influence of SDC in the steering of the project was rather small,even though people with the required qualification were available in SDC's CoordinationOffice.

* A bilateral donor in a co-financed project has little influence for steering the project.

Swiss Funds flowThe procedures regarding the Swiss funds flow were rather complicated (ProjectImplementation Unit PIU - World Bank Nepal - World Bank Washington - PIU). Changesmade in Washington were not always shared with the PIU, especially when the amountreimbursed was less than asked; clear indications and justifications were often missing. ThePIU then came to SDC asking for explanations.

* Improve and strengthen the information flow from WB-HQ back to the project.

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Reduction of SDC's commitmentSDC's portion of the financing had to be scaled down when an extension of two years wasagreed. The extension became necessary due to the unsatisfactory progress of the projectduring the early years of implementation. SDC was facing severe budget constraints due tothe difficult situation of the Swiss federal budget and therefore had to adjust its financialplanning. As no funds were planned for 1998/99 for this project, it was not possible for SDCto support the new request in a better way.

* Be more realistic regarding the time frame while planning such huge projects. There willalways be factors either outside or subject to the control of the government andimplementing agency - that will affect the implementation and control of a project.

Transfer Diploma ProgrammeSDC played a role in the anticipated transfer of the diploma courses to CTEVT. At that time,CTEVT was a very young institution that was not able to fulfil all the expectations and tasksdemanded of it. Knowing CTEVT and its organisational and managerial qualities, it wascertainly the wrong moment to push the Government for such a policy decision withoutcarrying out an independent analysis of the implications. We (SDC) are still convinced that theuniversity should not deliver technician level training. And if it is likely that degreeprogrammes may squeeze the diploma programmes, the issue has to be re-discussed.

* Once the objectives are set for a phase, the parties should stick to them before enteringinto discussions regarding institutional changes.

_ Avoid losing valuable time and delaying the implementation process.

The full text of SDC's comments is presented in Annex 9.

CIDA 's Comments:

Delays in project implementation in Nepal, usually caused by political developments and byadministrative problems internal to IOE and Tribhuvan University prevented certain assistanceto be completed as originally planned. Project implementation plans were reviewed andrevised in consultation with the parties concerned on a regular basis. New initiatives wereintroduced where needed. Thus three special training programs were implemented and twoworkshops were conducted that were not included in the original Project Management Plan.All five degree programs are now in operation at IOE's Pulchowk campus.

Cooperation and active support from IOE, the Consortium, World Bank and SDC haveenabled the CIDA funded NEEP to meet its principal objectives.

The full text of CIDA's comments is presented in Annex 10.

(c) Other partners (NGOs/private sector):

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10. Additional Information

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Annex 1. Key Performance Indicators/Log Frame Matrix

Outcome / Impact Indicators:

1. Enhanced capacity to substantially meet Yes 1. Actual achievement:the demands for technicians and engineers * from 1370 to 1968 (will reach 2304in Nepal: when full enrollment in two years) students

* to increase enrollment of technicians enrolled in diploma programs(enroll from 1370 to 1700 * from 360 to 1109 (will reach 1632 when

* to increase enrollment of engineering full enrollment in three years) studentsstudents from 320 to 920 enrolled in degree programs

• to enroll 10% female students ^ 12.5% female students enrolled* to introduce four new degree programs * five new degree, four new Masters and

in engineering Ph.D. programs started* of the total enrollment, 345 are full fee-

paying students.

2. Sustainabtility of facilites and their optimal SAR projection 2. Actual achievement:use: * facilities maintenance units established

* establish facilities maintenance units in all campuseslab utilizabon in degree programs to * lab utilization in degree around 40% and

65% and in diploma programs to 80% in diploma program to 64%* classroom utilization in degree programs * classroom utilization in degree programs

to 80% and in diploma to 80% to 61 % and in diploma to 79%* faculty - student ratio increased to 1:10 * faculty - student ratio stands at 1:5.1 in

from 1:5.6 with teaching loads of 14 degree programs but expected to reach 1:7hrs/week for lecturers and above and 18 once full enrollment is reached and 1:9 inhrs/week for instructors diploma programs. The average teaching

load has been brought down to 12 hrs/weekfor all faculty members as applied across theuniversity system.

. going beyond, cost recovery levelincreased to 50 percent of recurrentexpenditure from less than 5 percent,dedicated funding to maintenanceestablished, more funds allocated tomaintenance from HMGN, utilization ofinputs and facilities improved.

3. Improved quality of technician and SAR projection 3. Actual achievement:engineering programs:

* introduce single entrance test * single entrance test introduced whichimprove and strengthen examination has raised admission standard: about 18%provide staff training applicants are admitted to degree and 17%develop new curricula for new degree applicants to diploma programs

programs and revise diploma curricula * physical capacity enhanced and result* enhance physical leaming environment announced within fixed schedule

by providing and equipping new classrooms, * 97 teaching staff and 7 adminsitrativelaboratories, libraries and resource center staff trained under CIDA fellowship, 222

teaching staff and 19 adminstrative stafftrained under SDC fellowship

* all diploma curricula revised, newcurricula for five new degree programsdeveloped and implemented; curriculum forcivil engineering revised

* all laboratory equipment for degree anddiploma programs procured; textbooks andreference materials procured; 205 courseand lab manuals developed; computers andinstructional equipment procured

M IOEITU is ranked as one of the topuniversities of the region by AIT, Bangkok

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4. Increased institutional capacity and Yes 4. * Executive Committee and Managementimproved management with improved and and Development Council formed, andmore efficient decision making/planning at by-laws prepared to strengthen managementIOE: capacity as part of greater autonomy

* appoint three associate deans for provided to IOE by TU central managementdegree, diploma and administration * two assistant deans appointed for

t establish manpower development unit diploma and academic administration* establish MIS * Manpower Development Unit

established and staff training initiated* MIS established and dedicated intemet

access established* Industrial Cooperation Board formed* institutional linkages with various

intemational institutions established.

This project was retrofitted around 1996/97 with outcome indicators using logframe.

Output Indicators:

Inidbato - . - .Pjh Pl_d*nWiPSR ~mI*t......... -.- -t-Esb*Construct classrooms, resource centers, SAR projection Over 80% construction completed due tolabs, hostels for degree and diploma adjustments made during early part of theprograms and renovate facilities project due to diploma transfer from

Pulchowk campus and renovation ahievedbeyond the target.

Procure equipment worth US$7.0 million Yes Equipment worth over US$1 1.0 millionprocured.

Provide 173.5 staff-years of fellowship Yes 193 staff-years of fellowship provided andmany more staff received training.

About 12,000 books procured for degree and Yes About 24,728 books procured for degree and11,300 for diploma programs 13,100 books for diploma programs.

End of project

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Annex 2. Project Costs and Financing

Project Costs by Coponent(US$ million)

Appraisal estimate (US$M) Actual (US$M)Components Local Foreign Total Local Foreign Total

A. FACILITIES DEVELOPMENT1. Degree, Pulchowk 3.1 5.4 8.4 4.1 7.1 11.22. Certificate, Pulchowk 0.4 1.0 1.4 0.5 1.3 1.83. Certificate, Thapathali 0.7 1.3 2.0 0.9 1.7 2.64. Certificate, Pokhara 0.9 1.1 2.0 1.2 1.4 2.6

Sub-total 5.1 8.7 13.8 6.7 11.6 18.3

B. STAFF AND CURRICULUMDEVELOPMENT

1. Degree, Pulchowk 0.5 4.1 4.5 0.6 5.0 5.52. Certificate, Pulchowk 0.4 0.9 1.3 0.5 1.1 1.63. Certificate, Thapathali 0.1 0.2 0.4 0.1 0.3 0.44. Certificate, Pokhara 0.3 0.4 0.7 0.4 0.5 0.9

Sub-total 1.2 5.6 6.9 1.5 6.9 8.5

C. MANAGEMENT DEVELOPMENT1. Degree, Pulchowk 0.4 0.4 0.8 0.2 0.3 0.52 Certificate, Thapathali 0.0 0.0 0.1 0.0 0.0 0.03. Certificate, Pokhara 0.0 0.1 0.1 0.0 0.0 0.0

Sub-total 0.4 0.5 0.9 0.2 0.3 0.5

Baseline cost 6.7 14.8 21.5 8.5 18.8 27.3

Contingencies:Physical 0.6 1.2 1.8 - - -Price increase 0.9 1.7 2.7 - - -

Sub-total 1.5 3.0 4.5 0.0 0.0 0.0

TOTAL PROJECT COSTS 8.2 17.8 26.0 8,5 18.8 27.3

Source: Engineering Education Project, Staff Appraisal Report (May 26, 1989);Institute of Engineering (IOE).

Difference between actual and SAR estimate partly due to currency fluctuations.

Note: Differences between SAR estimates and actual due in large measure to currency fluctuations over time(SDR vis-a-vis the US dollar and the Nepali Rupee).

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Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent)

1. Works 4.21 2.80 0.00 0.00 7.01(0.00) (0.00) (0.00) (0.00) (0.00)

2. Goods 8.70 1.63 0.00 0.00 10.33(8.70) (1.35) (0.00) (0.00) (10.05)

3. Services 0.00 0.35 4.24 0.00 4.59(0.00) (0.00) (1.03) (0.00) (1.03)

4. Miscellaneous 0.00 0.00 3.31 0.00 3.31(Fellowship) (0.00) (0.00) (0.00) (20.00 (0.00)

5. Miscellaneous 0.00 0.00 0.00 0.74 0.74(0.00) (0.00) (0.00) (0.32) (0.32)

6. Miscellaneous 0.00 0.00 0.00 0.00 0.00_(0.00) (0.00) (0.00) (0.00) (0.00)

Total 12.91 4.78 7.55 0.74 25.98(8.70) (1.35) (1.03) (0.32) (11.40)

Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent)

1. Works 3.25 2.33 0.05 0.00 5.63(0.00) (0.00) (0.00) (0.00) (0.00)

2. Goods 10.88 2.01 0.00 0.00 12.89(9.94) (1.43) (0.00) 0.00 (11.37)

3. Services 0.00 0.00 1.81 0.00 1.81(0.00) (0.00) (0.1 1) (0.00) (0.1 1

4. Miscellaneous 0.00 0.00 5.76 0.00 5.76(Fellowship) (0.00) (0.00) (0.00) (0.00)

5. Miscellaneous 0.00 0.00 0.00 0.00 0.00(0.00) (0.00) (0.00) (0.00) (0.00)

6. Miscellaneous 0.00 0.00 0.00 1.22 1.22(0.00) (0.00) (0.00) (0.42) (0.42)

Total 14.13 4.34 7.62 1.22 27.31(9.94) (1.43) (0.11) (0.42) (11.90)

" Figures in parenthesis are the amounts to be financed by the IDA Credit. All costs include contingencies.21Includes civil works and goods to be procured through national shopping, consulting services, services of contracted

staff of the project management office, training, technical assistance services, and incremental operating costs related to(i) managing the project, and (ii) re-lending project funds to local govemment units.

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Project Financing (US$ million)

Appraisal estimate Actual /aLocal Foreign Local Foreign

Source Costs Costs Total Costs Costs Total

IDAFurniture 0.6 0.4 1.0 0.2 0.0 0.2Local Training 0.8 - 0.8 0.0 - 0.0Equipment 0.8 6.8 7.6 1.1 9.5 10.6Books 0.1 1.3 1.4 0.1 0.4 0.5Technical Assistance

Local Specialists 0.2 - 0.2 0.1 - 0.1

Sub-total 0.2 0.0 0.2 0.1 0.0 0.1

Consumable Materials 0.1 0.0 0.1 0.1 0.0 0.1Incremental Expenditure 0.3 - 0.3 0.4 - 0.4

Subtotal IDA 2.9 8.5 11.4 2.0 9.9 11.9

SDCCivil works 3.4 2.2 5.6 2.3 1.9 4.2Professional Fees 0.5 - 0.5 0.1 0.2 0.2International Fellowships - 0.2 0.2 - 0.0 0.0Regional Fellowships - 1.1 1.1 - 2.5 2.5Foreign Specialists - 1.1 1.1 0.3 0.3Equipment 0.0 0.0 0.0 0.1 0.9 1.1

Subtotal SDC 3.9 4.7 8.5 2.5 5.9 8.3

CIDA (excl. overhead and admin costs)International Fellowships - 2.0 2.0 - 3.2 3.2Foreign Specialists - 2.0 2.0 - 1.4 1.4

Subtotal CIDA 0.0 4.0 4.0 _ 0.0 4.6 4.6

HMG NepalCivil Works 0.8 0.5 1.3 1.2 0.0 1.2Furniture 0.0 0.0 0.1 0.1 0.0 0.1Equipment 0.0 0.2 0.2 0.3 0.0 0.3Consumable materials 0.1 0.0 0.1 0.0 0.0 0.0Incremental Expenditure 0.4 - 0.4 0.8 0.0 0.8

Subtotal HMGN 1.3 0.7 2.1 2.5 0.0 2.5

Total project financing 8.1 17.8 26.0 6.9 20.4 27.3

Source: Engineering Education Project, Staff Appraisal Report (May 26, 1989); IOE.Notes: (a) Average Exchange rate for each year is used to translate expenditures of each year.

(b) Provisional expenditure of FY1999/00.(c) CIDA financing is reported as per University of Calgary Grantees statement of Expenditure No 31.(d) Difference in total cost for SAR estimates and actual partly due to exchange rate fluctuations.

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Annex 3: Economic Costs and Benefits

Not applicable.

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Annex 4. Bank Inputs

(a) Missions:Stage of Project Cycle No.,of Persons and specialty Performane L

(e:. 2 Econfomist$s FMS, etc.) I: lmpliementatin DevelopmentMonth/Year Count Specialty Progress ^ bjective

Identification/Preparation05/1987 5 Educator, Economist, Architect,

Management Specialist

Appraisal/Negotiation9/1988 5 Educator, Economist,

Architect05/1989 3 Educator, Legal Counsel,

Disbursement Officer

Supervision06/1990 1 Tech. Edu. Specialist HS HS02/1991 1 Tech. Edu. Specialist S HS06/1991 1 Sr. Informatic Specialist S HS10/1991 1 Tech. Edu. Specialist S HS04/1992 1 Educator U S12/1992 2 Educator, Architect U S05/1993 2 Educator, Architect U S11/1993 2 Educator, Architect S S05/1994 2 Educator, Architect S S02/1995 3 Educators, Architect S S11/1995 2 Educator, Architect U U04/1996 2 Educator, Architect U U11/1996 2 Educator, Architect S S06/1997 4 Educator, Fin. Mgt. Analyst, S S

Procur. Specialist and Architect11/1997 3 Educators, Architect S S05/1998 5 Educators, Procur. Specialist, S S

Architect and Consultant012/1998 7 Educators, Architect, Procr. S S

Specialist, Disb. Officer andConsultant

07/1999 5 Educators, Procurement S SSpecialist, Fin. Mgt. Analyst andConsultant

ICR12/1999 4 Educators, Architect and S S

Consultant

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(b) Staff:

Stage of Project Cycle Actual/Latest EstimateNo. Staff weeks US$ (,000)

Identification/Preparation 36.0 99.0Appraisal/Negotiation 62.0 170.5Supervision 218.6 550.2ICR T-15.0 48.0Total 331.6 867.7

US$ amounts for earlier years (FY88-90) are estimates.

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Annex 5. Ratings for Achievement of Objectives/Outputs of Components

(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)

Rating

N Macro policies O H OSUOM O N * NAO Sector Policies OH *SUOM ON O NAN Physical O H *SUOM O N O NAN Financial * H OSUOM O N O NA• Institutional Development O H * SU O M O N 0 NA

N Environmental O H OSUOM O N * NA

SocialO Poverty Reduction O H OSUOM O N * NA

O Gender O H *SUOM O N O NA

E Other (Please specify)

O Private sector development 0 H O SU O M 0 N 0 NA

N Public sector management 0 H O SU O M 0 N 0 NA

O Other (Please specify)

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Annex 6. Ratings of Bank and Borrower Performance

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)

6.1 Bank performance Rating

[ Lending OHS *S OU OHUN Supervision OHS OS OU OHUZ Overall OHS OS O U O HU

6.2 Borrowerperformance Rating

X Preparation O HS * S O u O HU2 Government implementation performance 0 HS 0 S 0 U 0 HUZ Implementation agency performance O HS s O U O HUN Overall OHS OS O U O HU

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Annex 7. List of Supporting Documents

Engineering Education Project. Progress Reports prepared for various supervision missions: 1995 - 1999.

Institute of Engineering. Strategic Implementation Plan and Working Papers. March 2000

Institute of Engineering. Ten Year Development Plan for Institute of Engineering, 1983.

Kulshrestha, O.P. Sector Overview of Diploma Level Education at the Institute ofEngineering. May1994

Institute of Engineering. Diploma Program Transfer Plan. 1995.

Institute of Engingeering. Proceedings of Workshop on Achieving Excellence in Management andOperation of Institute of Engineering, 1996.

Institute of Engingeering. Academic and Financial Profile of Students. 1996.

Institute of Engingeering. Proceeding of Workshop on Sponsored Courses. 1996.

Joshi, Rajendra Dhoj. Technical Education and Vocational Training. Working Paper prepared for theWorld Bank Education Sector Work. March 2000.

Joshi, Rajendra Dhoj. Tertiary Education. Working Paper prepared for the World Bank Education SectorWork. March 2000.

Kulshrestha et. al. Technician Training Under the Institute of Engineering. 1993.

Mainali, Madhav P. Supplementary Mission Reports: 1998 - 1999.

McEvers, Norman. Manpower Implications of Education and Training Development in the Kingdom ofNepal. The International Development Association. 1983.

Ministry of Education. Report of the National Education Commission. 1992 and 1998.

National Planning Commission. The Ninth Plan. 1997 - 2002.

Berg, Gunnar J., Final Narrative Report for the Nepal Engineering Education Project, CanadianInternational

Development Project # 676/15050, The University of Calgary, June 1997.

Shrestha, Uttarn Narayan. Management Plan for Institute of Engineering. 1989.

World Bank. Reports of various Supervision Missions: 1989 - 1999.

World Bank. Staff Appraisal Report for the Engineering Education Project. 1989.

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Annex 8. Borrower's ICR

A. Project Objective

1. Project Background

The Engineering Education Project (EEP) is the third IDA supported project for thedevelopment and capacity expansion of engineering education in Nepal. Apart from IDA credit,the grant contribution from Swiss and Canadian governments and matching contribution from theHis Majesty's Government of Nepal were the major sources of financing the EEP.

The EEP was effective from August 1989 and with two years of extension, the projectclosing date was 31 December 1999.

2. Project Objectives

The primary objective of the EEP was to increase the supply of engineers and technicians in thecountry. This primary objective was to be achieved through:

- expansion of the enrollment capacity of the technician training ( diploma courses) from about1370 to 1700, and that of bachelor's courses from about 360 to 920 through construction,rehabilitation and maintenance of the facilities at three campuses of the IOE;

- enhancement of the quality of the education by providing training to the faculty and staff,improved curricula and educational materials: and

- strengthening the management capabilities of the IOE by creating positions of 3 associatedeans, training of staff, implementing MIS and establishing Manpower Development Unit.

B. Achievement of the Project Objectives

BI Capacity Expansion

3. The achievement with regards to the capacity expansions of technician training (diplomaprograms) exceeded the target set in the DCA by about 13 percent. The present enrollment figurestands at 1920 as against the DCA target of 1700. The steady state enrollment at the diplomaprograms will reach 2304 within next two years, thus exceeding the target by 3 5.5%.

4. The enrollment in the six degree programs (five programs as targeted in SAR and the sixthin computer engineering introduced during the project implementation period) at present is 1109against the target of 920. The achievement is over 20 percent of the target. The steady stateenrollment figure will be around 1632 within the next three years. The achievement in the steadystate will exceed the target by 77%.

5. With some initial support from Norwegian Government, the IOE introduced post -graduate programs in three areas: Urban Planning, Structural Engineering, and Environmental

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Engineering. The post-graduate program in Water Resources was introduced without any externalsupport. The total enrollment in post- graduate programs is 128. Doctoral programs leading toPh.D. have also been introduced with IOE's own effort.

B2 Female Enrollment

6. The SAR target of female enrollment to exceed 10 percent was grossly met by enrollingabout 12.5 percent of the female students at the IOE programs. However, the percentage offemale students admitted in the current intake at Purwanchal campus is only about six percent.One of the possible reasons for low percentage of female student enrollment in PurwanchalCampus could be lack of female dormitory in the campus.

B3 Infrastructure Development

7. Construction of new facilities and renovation/rehabilitation of existing infrastructure in allthe campuses are completed. An achievement of 97.5 percent was made in the new constructionfront. The achievements in renovation front are very impressive and exceed the 200 percent line.

B4 Equipment Procurement

8. Laboratory equipment for degree programs are installed in respective departments and areoperational to the extent required by the curricula. Procurement of diploma laboratory equipmentis completed and the installation of the equipment is almost completed. The IOE averageachievement in equipment procurement is about 141 % as compared to SAR target.

9. The Pulchowk campus is now linked to Internet via its own VSAT. IOE plans to provideInternet connectivity to all of its campuses in near future. The required technical facilities forInternet connectivity in the diploma campuses have been set-up.

B5 Class room and Laboratory Utilization

10. The class room utilization level in all campuses has been improved and in some casesexceeded the target set in SAR. The laboratory facility utilization level in Pulchowk campusremains marginally below the SAR target of 65%. However this level in other diploma campusesis well in line with the SAR target.

B6 Quality of Education

11. The achievements with regards to enhancement of quality of education are also in linewith the targets set in SAR. A total of 154.1 staff years of international and regional fellowshipprograms have been completed. The accomplished fellowship programs included 5 Ph.D., 38 M..Sc., 15 senior fellows, 67 staff-years of technician training, 15 administrative staff training and 90short-term training. The target for the fellowship was 173.5 study-years. A total of 334 teachingfaculty and support staff from the four campuses benefited from the fellowship programs. Out ofthese total beneficiaries of fellowship program, 325 are with IOE.

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12. The curricula for the degree programs were developed jointly by the expatriates fromConsortium of Canadian Universities and the IOE faculty. A total of 316 new courses weredeveloped by the joint team. Moreover, beyond the scope of the project, the IOE facultydeveloped over 100 new courses for Master level programs offered by the IOE.

13. The diploma level curricula were developed (except for Civil and Architecture) by theexperts from the ILO and were reviewed and finalized by the respective subject committees of theIOE. The IOE faculty, following inability of the ILO to recruit the concerned subject specialists atintemational level, developed the curricula for Civil and Architecture programs. All the curriculadeveloped so far have been effected.

14. Since the enrollment capacity at the various programs of the IOE has increasedconsiderably, new faculties have been recruited to cater to the increased class loads. Withadditional recruitment, the IOE average teacher/student ratio now stands at 1:7.6. Though thisratio, at present, is below the targeted value of 1:10 imnprovement can be expected once thestudent number increases as the prograrns approach the steady state.

15. The libraries of the campuses are now adequately equipped with new text and referencebooks. A total of 37,828 bound volumes of text/reference books costing about 22 million rupeeshas been procured for libraries of the campuses. Moreover, the Curriculum and InstructionalMaterial Development Unit (CIMDU) of the IOE, with financial support from the EEP hasproduced 104 and 101 course and laboratory manuals for degree and diploma programsrespectively.

B7 Research, Development and Consultancy Works

16. With the facilities developed under the EEP, various centers like Continuing EducationDivision (CED), Center for Energy Studies (CES), Center for Information Technology Studies(CITS), Manpower Development Unit (MDU) have been established and functional at IOE. TheInstitute of Engineering Consultancy Services (IECS), a separate entity of the IOE, which wasmade defunct due to its inability to win the design works package of the EEP, is now rejuvenatedand actively undertaking consultancy works. Similarly research and development activities havebeen started at departmental levels of the IOE.

B8 Reputation of the IOE Programs

17. Despite the fact that new universities and private engineering colleges are beingestablished in Nepal, the Institute of Engineering under the Tribhuvan University remains theleading and reputable institution in the country. This is supported by the fact that only about 18%of the aspirant are admitted in the degree programs of the IOE. The admitted percent of the totalapplicants in diploma programs is only about 17. The single admission test administered by theIOE has earned the reputation to be fair and objective. The quality of delivery in diplomaprograms is improving. This is indicated by the increasing number of diploma graduates passingthe tough entrance test and admitted to the degree level. Similarly, the degree graduates of the

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IOE are admitted in the post graduate programs of well-known universities abroad and have donewell. In fact the performance of the IOE graduates admitted at the Asian Institute of Technologywas instrumental to rank the Tribhuvan University in fifth position among the top ten universitiesof the region.

B9 Compliance to the DCA Covenants

18. All the DCA covenants including the two pertaining to single admission test and passingof prerequisite examinations before continuation into the follow-up courses have been complied.

B10 Improvement of Management Capabilities of the IOE

19. The objective to improve the management capabilities of the IOE have also been achievedto the extent targeted in the SAR. The office of the Dean have been strengthened by appointingtwo additional assistant Dean to look after the diploma programs (Assistant Dean- Diplomaprograms) and the general academic administration of the IOE (Assistant Dean- Academicadministration and Planning). With these additional appointrnents, the total number of assistantDeans now is four. The Manpower Development Unit (MDU) established within the Dean'soffice is now operational and headed by the senior faculty. The MDU has organized severaltraining programs for the administrative staff of the IOE in the field of general administrationpractices and computer education.

20. In accordance with the Tribhuvan University Decentralization Rules, 1998, the IOE nowexercises greater degree of autonomy, both in academic and administrative matters. The Instituteof Engineering Management and Development Council have been formed to formulate plans andpolicies of the IOE. A five member Implementation Committee, chaired by the Dean, has beenconstituted to implement the plans and policies of the IOE. The by-laws outlining theorganizational structure of the IOE and defining the roles and responsibilities of its members havebeen prepared and enacted.

21. The Management Information System (MIS) has been developed and is beingimplemented. The positive effect of MIS in improving management capabilities is yet to beassessed.

22. The Industrial Advisory Board and Industrial Linkage Units have been established andfunctional in each of the IOE campuses.

23. Maintenance of the facilities provided by the project was the major challenge for the IOEfor sustainability of the programs offered. To address the maintenance problems, MaintenanceUnits (MU) have been set-up and functional in each of the IOE campuses. Adequate budgetaryprovision has been made for the maintenance from the proceeds generated through internalresource mobilization efforts.

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Bll Unanticipated Project Achievements

24. The implementation of the project has produced some unanticipated positive results thatwere not foreseen at the project appraisal. These unanticipated results are:

* The enrollment capacity of the IOE has exceeded the SAR target significantly thusoffering more Nepalese a chance to get higher engineering education at affordable costwithin Nepal.

* To prepare the nation for the emerging information technology age, the IOE introducednew degree program in Computer Engineering.

* The IOE started offering degree program in civil engineering at Paschimanchal Campus.IOE plans to offer new degree program in Agriculture Engineering at Purwanchal Campusand Geomatics Engineering at Pulchowk Campus.

* Beyond the scope of the project, IOE has introduced post-graduate programs in four areasof specialization and is preparing to offer in other areas like Renewable EnergyEngineering, Electrical Engineering, Electronics Engineering, Soil Mechanics etc. Plansare underway to construct a Zero Energy House and Energy Park at the IOE.

* The IOE has initiated serious plans to generate revenue for sustainable development of theprograms initiated through the project. By introducing cost recovery fee scheme, campusdevelopment fund, campus maintenance fund, hostel maintenance fund and expandingresearch and consultancy activities at various levels, IOE was able to generate about 50%of the total operating budget granted by the university. Major bulk of the revenuegenerated internally would go to the maintenance of the existing facilities andprocurement of new equipment/books. A part of the proceeds is also being used toprovide additional incentives for the key position holders, faculty and staff.IOE has developed formal linkages with well known institutions in India, Bangladesh,USA, Canada, Japan, Norway, Thailand and Indonesia.T The 20-years strategic planning exercise to develop the vision for the future and toformulate strategic plan of action is in final stage.

C. Major Factors Affecting Project Implementation

25 The implementation of the project could not be completed within the originally agreedtime period of eight years and subsequently the implementation period was extended for twoyears.

26 The initial implementation schedule envisaged start of all new degree programs by mid of1992. By this time all the construction works, laboratory set-ups and curriculum developmentwere supposed to be completed. Unfortunately nothing significant (except placement of fewcandidates in higher studies in Canadian Universities and preliminary works on degree curriculum)could happen till the targeted date of start of all new degree programs. Almost all of these fouryears were spent on resolving the disagreement between the PIU and the IDA on selection ofdesign consultant. During this critical stage of project implementation, none of the parties, thePIU and the IDA, were serious to resolve the prolonged disagreement. Subsequently theimplementation suffered substantially. Finally in October 1992, the agreement with the designconsultant could be signed. Notwithstanding the unforeseen delays in implementation, the IOE

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with strong support and encouragement from the campus management and the departments,especially from the then Heads of Departments of Electronics and Electrical Engineering starteddegree programs in Electronics and Electrical Engineering in September 1994. The degreeprograms in Mechanical Engineering and Architecture were started in 1995.

27 Another delay encountered in implementing the project was the jeopardy created duringand after the popular democratic movement of 1990. For about a total of six months during andafter the movement, the activities of the PIU were slacked down due to organizationaluncertainties in the decision making level. If the design consultant were appointed as scheduled,the effect of this movement in project implementation would have been negligible.

28 The major delay in implementing the diploma component of the project was the result ofthe dilemma created by the uncertainties regarding the future umbrella of the diploma programsoffered by the IOE. In mid 1992, the National Education Commission recommended to phase-out,by 2000 AD, the 10+2(3) levels of education from Tribhuvan University. Following thisrecommendation, all the development activities related to the diploma programs were slackeddown until the policy decision was made regarding the future umbrella of the diploma programsoffered by IOE.

29 Among others, frequent change of personnel directly responsible for projectimplementation (project coordinator of the PIU and the IDA task manager) is also, to someextent, responsible for delays in implementation.

D. Project Sustainability

30 The Institute of Engineering has established itself as a premier institution of the nationwith credible admission and examination process; high quality physical facilities and well equippedlaboratories comparable to the reputed institution of the region or elsewhere. With these set-upthere is a high probability that the achievements of the project will be sustained. Furthermorebeing the only engineering institution developed from the state support, it is unlikely that thegovernment will let it go down.

31 Sustainability of any undertaking largely depends upon the resources available to maintainit. The IOE has taken serious measures to mobilize its internal resources to augment the grantfund available from the government. In the current FY, the amount generated by the IOE bymobilizing its internal resources amounts to about 50% of the recurrent expenses provided by thegovernment. Initiatives are being taken to increase this percentage to 70%.

32 Among the four campuses of the IOE, the Pulchowk campus, being the central campusoffering graduate and post-graduate level courses, is in better position in terms of internal revenuegeneration. This is because the major source of internal revenue in Pulchowk campus is the feesfrom the students enrolled under cost-recovery fee scheme.

33 Measures to increase revenue in diploma campuses are being taken. The Paschimanchalcampus now offer degree courses in civil engineering, and have introduced cost recovery fee

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structures in civil and electrical diploma programs. Similarly plan is underway to introduceAgriculture engineering degree program at Purwanchal campus where cost recovery fee structurehave already been introduced in civil and electrical engineering diploma courses.

34 Faculty commitment and motivation are another critical factors that have to be related tothe sustainability of the educational institution. One of the major weaknesses within the IOE islow level of motivation and commitment of the faculty and staff and continuing staff attrition. Thelow level of motivation and commitment is primarily a result of poor salary structure and lack ofprospects of research and professional works from within the institute. The IOB management hasto take this issue seriously and do needful to retain the qualified faculty and recruit capable ones.

E. Bank Performance

35 In early periods of project implementation, when the disagreement between IDA and PIUin the selection of design consultants was at the peak, the bank did not alert the concernedauthorities about the consequences of the delay. Though the overall delay in projectimplementation was primarily due to inability of the PIU to appoint the design consultant withinthe prescribed period, the bank decided to down rate the project as a problem project only in 1992when the major activities were underway. Were such measures taken in early days, the delayscould have been minimized.

36 At the periods of the implementation when the project was monitored directly through thebank's headquarters, obtaining no-objections and approvals was somewhat time-consumingprocess. Much slower became the process when the monitoring responsibility was transferred toits office in New Delhi. At a later stage when the Kathmandu office started taking responsibilities,the decision making process became quite fast.

37 With regards to the statements of accounts, the PIU had difficult times in gettingdisbursement statements from the bank, specially with regards to the Swiss contribution.

38 The guidance and support rendered by the bank staff during the final years of the projectimplementation was praiseworthy. During this period the PIU and the bank were in unison andhighly dedicated towards the successful completion of the project.

F. Borrower Performance

39. The PIU could not gain required momentum in the initial stage of the projectimplementation, basically due to inadequate staffing and unfavorable working environmentcreated by prolonged disagreement in selection of design consultant and uncertainties evolvedduring popular political movement.

40. During the second half of the project implementation, the PIU was adequately staffed andreceived ample support from the bank, Tribhuvan University management and the govermnent.With these supports from all entities, the PIU could gain momentum to achieve the projectobjectives.

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41. With respect to the CIDA assisted component of the project, the PIU was able toaccomplish most of the targeted objectives within the two years extended project period (theinitial completion year of 1995 was extended to 1997) without any major complications.

G. Lesson Learned

42. The nation greatly benefited from the project by establishing a premier institution in thefield of engineering education in the country. The achievement could not have been realizedwithout proper coordination among the co-financiers: IDA, SDC and CIDA. The Institute ofEngineering wishes to express its sincere gratitude to these agencies and the government of Nepalfor their support and guidance in implementing the project.

43. Successful completion of a project of this scale has raised the confidence and morale ofthe faculty and staff of the IOE. The IOE is now fully capable of undertaking future projects ofsimilar or larger scale.

44. Proper monitoring and evaluation arrangement is vital for the projects of this scale. TheEEP lacked adequate monitoring and evaluation mechanism as such. Although the projectdocument envisaged setting up of appropriate Project Monitoring and Evaluation (PME) scheme,neither the bank, nor the borrower took this issue seriously. As a result many planned activitiescould not be accomplished in time. However at later stage of project implementation PIU inconsultation with IDA developed a set of simple benchmarks / indicators by objective and timelineto monitor progress during each supervision mission.

45. Substantial portion of the project funds was invested on foreign expatriates for theassignments that could have been accomplished by the Nepalese professionals at the samestandard or even better. Examples are the curriculum for civil and architecture engineeringdiploma program developed by the Nepalese professionals at a rather small compensationpackage. Whereas the project paid relatively handsome amount for the similar assigments fordeveloping diploma curricula for other engineering disciplines. Similarly about half a milliondollars of precious project fund (the credit) was spent on the services of intemational procurementconsultant though the EEP staff could have done the procurement job independently as they havedone for some ICB package of diploma equipment and Internet, Audio-visual, telephoneexchange and MIS equipment. It is therefore advisable that in-house capabilities first be assessedthoroughly before finalizing the project documents.

46. The project implementation was delayed, time and again, due to delays in obtaining budgetallocations from the government, primarily because of multi-tier control over the budget release.For the development projects like this one, the budget release procedure should be made easierand less time consuming.

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Annex 9. SDC's Comments

SDC agrees with the performance rating of the project. In general, the results of the project arepromising, demonstrating that they can lead to a sustainable institution with the understandingthat:

§ there is stability in the leadership;§ the promised block grants are transferred to IOE;§ the financial management improves; and§ the motivation, the commitment and the accountability of the faculty members is raised.

Until there is full commitment by teachers, instructors and faculty members, it will be difficult tomake the IOE a sustainable institution.

Despite these promising results, it has to be underlined that the (high) satisfactory performance is

mainly due to the two-year extension of the project. Two issues regarding sustainability arealways critical, (i) maintenance that has been carried out with project funds, and (ii)establishment of functional linkages with industry.

Detailed questions and remarks:

p.5 (ii) Female Enrolment: The reduction in SDC funding was about US$ 1.38 million and notUS$ 1.5 million (See also p.10).

p.6 (v) Equipment: It would be worthwhile to re-mention the factors that led to the lateprocurement.

p.7 (iv) Admission Standards and Quality of lOE Education: Where is the link between thepercentage of admitted students and full-fee paying students? It seems the entryrequirements for full-fee paying students are not the same as for other applicants? If thisis the case, how can IOE maintain the quality level of its programmes in the long run?

p. 15/16 Partner Comments, SDC: To relate SDC's lessons learnt to the World Bank (WB)presentation, we suggest the following modifications in our text:

9.1 SDC has appreciated the good working relationship with the Task Manager of the WBand the members of the different review missions. SDC was always informed andincluded in the missions taking place. Informal discussions with the WB Task Managertook place when needed. Nevertheless, the influence of SDC in the steering of theproject was rather small, even though people with the required qualification wereavailable in SDC's Co-ordination Office.

9.2 The procedures regarding the Swiss funds flow were rather complicated (ProjectImplementation Unit PIU - World Bank Nepal - World Bank Washington - PII).Changes made in Washington were not always shared with the PIU, especially when theamount reimbursed was less then asked; clear indications and justifications were oftenmissing. The PIU then came to SDC asking for explanations. We would suggestimprovement and strengthening of the information flow from World Bank Headquarters

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to the project.

9.3 SDC's portion of the financing had to be scaled down when an extension of two yearswas agreed. The extension became necessary due to the unsatisfactory progress of theproject during the early years of implementation. SDC itsell was facing severe budgetconstraints due to the difficult situation of the Swiss federal budget and therefore had toadjust its financial planning. As no funds were planned for :1998199 for this project, itwas not possible for SDC to support the new request in a better way. Organisationsshould be more realistic regarding the time frame while planning such a huge project.There will always be factors either outside or subject to the control of the governmentand implementing agency that will affect the implementation and control of a project.

9.4 SDC played a role in the anticipated transfer of the diploma courses to CTEVT. At thattime, CTEVT was a very young institution that was not able to fulfil all the expectationsand tasks demanded of it. Knowing CTEVT and its organisational and manageralqualities, it was certainly the wrong moment to push the govermment for such a policydecision, without carrying out an independent analysis of the implications. We are stillconvinced that the university should not delivery technician level training. And if it islikely that degree programmes may squeeze the diploma programmes, the issues has tobe re-discussed. But once the objectives are set for a phase, the parties should stick tothem before entering into discussions regarding institutional changes. Avoid loosingvaluable time and delaying the implementation process.

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Annex 10. CIDA's Comments

The Canadian International Development Agency (CIDA) administered Canada's grant toNepal Engineering Education Project (NEEP). Implementation of the Canadian component wascontracted to the University of Calgary through the Division of Intemational Development. TheUniversity of Calgary in turn formed a Consortium with University of British Columbia,University of Saskatchewan and University of Manitoba engineering faculties.

Three categories of assistance were included within the CIDA contribution: (i) stafftraining, (ii) laboratory, curriculum and teaching assistance and (iii) IOE administration,management and accreditation.

1. Staff Training included:§ senior fellowships - 12 fellowship were provided;§ graduate fellowships; MSc: 21 fellowships and PhD: 4 fellowships were provided;§ technician fellowships: a total of 27 fellowships were provided;§ librarian fellowships: 2 fellowships were provided;§ administration fellowships: 5 fellowships were provided;§ new staff training initiatives: Non-degree: 27 training initiatives were completed;

Short courses - Nepal: 15 short courses were completed;Management: more than 25 visits to Canada

2. Develop Curricula and Lab Facilities and Assist in Teaching included:§ curriculum development and laboratory equipment provision.§ three Canadian instructors were provided to assist in teaching.

3. IOE Administration, Management and Accreditation:§ 5 Canadian instructors provided assistance in class scheduling§ Canadian support provided for IOE Management and Administration and Accreditation.

Delays in project implementation in Nepal, usually caused by political developments andby administrative problems internal to IOE and Tribhuvan University prevented certain assistanceto be completed as originally planned. Project implementation plans were reviewed and revised inconsultation with the parties concerned on a regular basis. New initiatives were introduced wereneeded. Thus three special training programs were implemented and two workshops wereconducted that were not included in the original Project Management Plan. All five degreeprograms are now in operation at IOEs Pulchowk Campus.

Cooperation and active support from IOE, the Consortium, World Bank and SNC haveenabled the CIDA funded NEEP to meet its principal objectives.

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