Strategic linkages between SFYP and ADP

The projects in the Annual Development Programme (ADP) are expected to serve as the main tool to implement strategies and achieve targets of the Perspective Plan and the SFYP (Sixth Five Year Plan). However, many of the ongoing projects in the ADP have no clear linkages with the SFYP. Any new project in the ADP should have clear strategic linkages with the SFYP.
WEAK LINKAGES BETWEEN ADP AND SFYP: Few projects in the ADP have clear indications as to which strategies in the SFYP they are aligned with, what objectives the projects aim to achieve, and how the objectives contribute to the achievement of SFYP set targets. All new projects prepared and appraised in the period of the SFYP should be prioritised and selected, based on the extent to which they contribute to implementing the strategies and achieving the targets of the SFYP. This would require framing DPP/TPP and the ADP and for this, concerned officials should be quite conversant with the national medium term and long term plan documents. Many of the officials, who are involved in project preparation, do not know exactly what are there in the SFYP. So they do not look for the objectives/targets of the 6th FYP, rather they prepare the project documents without prioritising and laten on try to match with any of the objectives/targets of Five Year Plan (FYP). As a result, most often the link between the project and FYP is superficial.
M&E OF DEVELOPMENT PLANS AND PROJECTS: A fair number of indicators for M&E of development plans and projects are already in place: (i) the Perspective Plan sets the targets by FY2021; (ii) the SFYP and MDGs set the targets by FY2015; (iii) MTBF includes Key Performance Indicators (KPIs) over FY2011-FY2015; (iv) financial and physical monitoring of projects in ADP; and (v) monthly fiscal reports of the Annual Budget. The SFYP also includes results based indicators for M&E (Monitoring and Evaluation) at the sector/macro level.
TRANSITION TOWARD RESULT-BASED M&E: Bangladesh started moving toward a result-based M&E system with the SFYP. Currently, the M&E focuses primarily on financial inputs. The SFYP sets up a Results Framework for the first time in Bangladesh's history of five-year plans, and will conduct periodic monitoring of SFYP implementation. The Key Performance Indicators (KPIs) in the MTBF have not been regularly monitored. Indicators listed in the SFYP needs to be revised and the effort is on. First Implementation Review of the SFYP on result-based indicators has already been published by the GED with two year implementation experience of SFYP.
LIMITED CAPACITY OF M&E: In the M&E of the SFYP, it is imperative to strengthen the General Economics Division (GED) through training staff, setting up a data compilation system, and establishing sound coordination mechanisms to collect information from ministries, divisions, and implementing agencies. In the M&E of the ADP, it is clearly necessary to strengthen the monitoring of outputs and outcomes to make a transition toward result-based M&E at the project level by the IMED (Implementation Monitoring and Evaluation Division).
 Limited authority of IMED: IMED does not have any direct legal instrument to enforce its observations as the outcome of its monitoring and evaluation activities. In most of the cases sponsoring ministries and their implementing agencies do not give sufficient attention to the observations of IMED which makes the monitoring functions ineffective. Moreover, limited logistic support and manpower shortage are the impediments in monitoring increased number of projects in the ADP.
 STRATEGIC RESOURCE ALLOCATION: The Perspective Plan and the SFYP are expected to guide the decision making on resource allocations among the sectors in the MTBF and the Annual Budget. The allocation of resources (funds) among projects and programs within the ADP should be also guided by the SFYP. This would improve allocative efficiency of public expenditures towards achieving Vision 2021.
DIFFERENCES OF SECTOR CLASSIFICATION BETWEEN ADP AND MTBF/ANNUAL BUDGET: In the ADP, a traditional sector classification (17 sectors) continues to be used since the start of the ADP in the 1970s. By contrast, the MTBF and the Annual Budget use 13 sectors. The difference in sector classification causes ambiguity and confusion among concerned institutions in negotiating and making decisions on resource allocation among sectors.
WEAK STRATEGIC LINKAGES BETWEEN FYP AND MTBF: The FYP (Five Year Plan) and the MTBF are formulated by the Planning Commission and the Finance Division (FD), respectively. Coordination between them has not been satisfactory in the processes to prepare the FYP and the MTBF, and that there is scope for strengthening the linkages between the FYP (GED) and the MTBF (FD). Both these Divisions should work jointly in development of the Macroeconomic Framework to be used in preparing medium term plan and corresponding budgets.
CROSS-CUTTING ISSUES: The following key issues cut across, and therefore influence, all aspects of PIM:
n Frequent revision of the projects: As the DPP/TPPs are not prepared with due diligence and sometimes prepared hastily, revision becomes inevitable very soon. Programmes/projects are included in the ADP without proper cost rationalisation leading subsequently to time and cost over-run. Many agencies try to include new projects in the ADP with intentionally low estimated cost at the beginning to get into the project appraisal process. They also seek very little allocation for the first year so that approving authority does not feel burdened with the demand. However, from following year, those projects become burdens and even require quick revision due to change in construction rate schedule and price escalation. Delay in procurement is another critical issue in project implementation. Land acquisition is another complex issue which creates serious backlog in completing project activities. Project management staffs including project directors are mostly not trained well and frequent transfers of project officials also hamper the implementation.
* Coordination between the ADP process and PPP initiatives: A new policy and procedures on PPP were formulated only recently, and a newly created PPP Office under the Prime Minister's Office started its operation. The PPP Unit under the Finance Division was also set up and is now operational. It is premature to make any assessment on PPP initiatives, but some key issues related to the ADP were identified: (i) capacity building on management of PPP projects; (ii) wide dissemination on PPP among the private sector; (iii) further clarification of relationships between the ADP and PPP; and (iv) review the existing legal framework to facilitate PPP and establishing linkages between PPP/ADP/FYP.
* Donor harmonisation and implementation rules: Among donor agencies, differences in the implementation rules cause occasional delays in donor-supported projects. This is particularly the case in the procurement rules of donor agencies that are generally stricter than the rules of the government, and there are some variations among donor agencies. As the first step, harmonisation of procurement rules among donor agencies would help speed up the implementation and disbursement of donor-funded projects. Development partners often procrastinate on different pleas to get the TA projects started (e.g., in election years they tend to wait until the election is held).
* Frequent rotation of personnel across ministries and divisions: The current civil service system in Bangladesh requires frequent personnel rotation across ministries and divisions, which is every 3 years on average for an officer. This makes it difficult for officials to accumulate knowledge and experience in specific sectors and perform their assigned tasks efficiently. The limited knowledge and experience in certain sectors among officials at least partly explains the delays in the ADP process.
* Weak financial management and accountability: There are serious deficiencies in financial data and budget reporting of projects. Accounting and auditing systems are antiquated and less effective to ensure accountability of project managers. Compliance with internationally accepted accounting practices are not established. To improve economic governance and attract FDIs, introduction of international standard of accounting and transparency is a must.
SPECIFIC RECOMMENDATIONS FOR IMPROVEMENT OF PIM: The recommendations consist of three components that aim at improving public investment management in the immediate and medium terms:
1) Streamlining the formulation and approval process of public investment projects: This component aims to achieve improvement of PIM in the immediate term. This can be achieved by streamlining the process for the formulation of public investment projects through DPP/TPP, while maintaining the quality of each function. The following activities are recommended to be undertaken:
a) Assigning task oriented responsibilities among concerned organisations and officials  in the formulation process of the DPP/TPP.
b) Clearly delineated assessment criteria in the process of approving the DPP/TPP at three critical steps, i.e., Ministry/Division Screening Committee, PEC and ECNEC.
c) Developing assessment formats that match the assessment criteria for each step in (b).
d) Revisiung DPP/TPP formats that match the assessment formats in  (c).
e) Developing the capacity of officials related to the project formulation and approval process.The Economic Cadre Service needs to be strengthened and trained emphasising more on economic and management issues (in line with Indian Economic Cadre Service).
2) Linkage between ADP and FYP: This aims to improve the ADP so that it would incorporate strategic indicators that link individual projects to the SFYP. These indicators also serve as selection criteria for new projects that are applied through the DPP/TPP process. The following activities are recommended to be taken under this:
a) Developing a strategic ADP outline that incorporates strategic linkages with the FYP: The strategies and targets in the FYP should be divided into 17 sectors of the ADP, and compared with approved and unapproved projects for their relevance to FYP targets. Furthermore, the strategic ADP would include projection of indicative budgets for future ADP using indicative budgets over the project duration of approved DPP/TPP. Medium term plans should be organized and have plans on 17 sectors of ADP.
b) Incorporating project selection criteria in ADP: A strategic ADP will become a viable tool to select public investment projects within the budget ceilings indicated in the MTBF. In the process of approving public investment projects, the ADP will function as a guideline to align them into development targets. The strategic ADP will also become the guideline when selecting projects within limited resources available.
c) Developing the capacity of officials involved in formulating a strategic ADP: The capacity of relevant officials for formulating a strategic ADP needs to be developed. The target officials would include those in the Programming Division and Sector Divisions of the Planning Commission, and planning wings of ministries and divisions.
Linkage between adp and MTBF: Resource allocations in the MTBF, Annual Budget, and ADP should be aligned with the strategies and priorities as in the FYP at the macro-level. A key issue in this regard is that the sector classification of the ADP (17 sectors) are currently different from that of MTBF/Annual Budget (13 sectors). Because of this difference, the prioritisation and selection of projects in the ADP process may not match precisely with the strategic resource allocations among sectors in the MTBF/Annual Budget. This ambiguity causes confusion at the time of the decision making in the MTBF/Annual Budget and the ADP.
Two options can be conceived to address this issue: (i) create a simple programme in which the sector classification of the ADP can be matched to that of the MTBF/Annual Budget; and (ii) update the sector classification of the ADP to match that of the MTBF/Annual Budget.
3)  Result-Based M&E of projects in ADP: To achieve improvement of PIM in the medium term, promoting a transition toward result-based M&E (RBM&E) at the project level would be needed. This will enhance linkages with the M&E approaches developed for the SFYP at the macro-level. The following activities may also be undertaken:
a) Developing a project-level RBM&E framework for ADP by IMED: This will be better aligned with the monitoring of the strategies and targets of the 17 sectors in the ADP. The RBM&E approach fits into the direction of improvement of the M&E system of the Implementation Monitoring and Evaluation Division (IMED).
b) Strengtheing linkage of RBM&E between SFYP and ADP: Since the monitoring scale and subjects at the SFYP and ADP levels are different, the ways to match the two levels need to be articulated.
c) Developing the capacity of officials involved in RBM&E: Development of the capacity to conduct RBM&E is not limited to officials at the IMED. Capacity development would be needed for the officials in the Programming Division of PC, ministries/divisions and implementing agencies.
d) Strengthening legal authority of IMED: An act can be enacted for M & E system to strengthen IMED to enforce some of its decisions. Public Procurement Act, 2006 is an example of such type of legal enforcement.
e) Further strengthening linkages of RBM&E with KPI in MTBF: Special attention should be paid to the linkages of RBM&E of the ADP with the monitoring of KPI in the MTBF. The linkages with KPI will help the government monitor development performance in a holistic way. Thus, it is recommended to review the RBM&E (both the SFYP and the ADP) and KPI monitoring process.
Professor Shamsul Alam is Member, General Economics Division, Planning Commission, Ministry of Planning, Government of Bangladesh. Md Taibur Rahman, Senior Assistant Chief, General Economics Division, Planning Commission, assisted in the                preparation of this policy brief. [email protected]