Mexico - Technical Training Project

Document of . The World Bank FOR OFFICIAL USE ONLY Report No. 7136 PROJECT PERFORMANCE AUDIT REPORT UNITED MEXICAN STATES TECHNICAL TRAINING PROJECT kCONALEP I) (LOAN 2042-ME) March 1, 1988 Operations Evaluation Department This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. GLOSSARY CAPFCE - Administrative Committee for Federal Programs for School Construction (Comite Administrador de Programas Federales para la Construci6n de Escuelas) CONALEP National Agency for Professional Technical Education :Colegio Nacional de Educacion Profesional Tecnica) ICB- International Competitive Bidding LCB - Local Competitive Bidding NAFINSA - Nacional Financiers, S.A. (The Government's financial institution) NDP - National Development Plan (Previous NDP 1977-82, current 1983-88) PROBECAT - Fellowship Program for Upgrading of Workers (Programa de Becas de Capacitaci6n para Trabajadores) SEP - Ministry of Education (Secretaria de Programacion y Presupuesto) SPP - Ministry of Programming and Budgeting (Secretaria de Programacion y Presupuesto) Fiscal Year of Borrower January 1 - December 31 FOR ORFCIAL USE ONLY THE WORLD BANK Washmngton. DC 20433 USA Oce a Dwmu Cewal Opertew valstom haxch 1, 1988 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Performance Ardit Report: United Mexican States Technical Training Project (CONALEP I) (Loan 2042-ME) Attached, for information, is a copy of a report entitled "Project Performance Audit Report: United Mexican States - Technical Training Project (CONALEP I) (Loan 2042-ME)" prepared by the Operations Evaluation Department. Attachment This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. WOR OFFICIAL USE ONLY PROJECT PERFORMANCE AUDIT REPORT UNITED MEXICAN STATES TECHNICAL TRAINING PROJECT (CONALEP 1) (LOAN 2042-ME) TABLE OF CONTENTS Pase No. Basic Data Sheet ................................. 1 Evaluation Suinary ...................... vi PROJECT PERFORMANCE AUDIT MEMORANDUM 1* PROJECT BACKGROUND .................................. 1 Project Formulation ....... ....... 1 Project Objectives and Content ...................... 1 II. PROJECT IMPLMENTATION ............................. 3 Design ........................ 3 management .......................................... 3 Bank Supervision .................................. 4 Cost and Financing .................................. 4 III. PROJECT OUTCOMES ................................... 5 Project Scope .... ........................... 5 Internal Efficiency ................................. 5 • External Productivity .............................. 6 Operational Costa ...................... 7 IV. FINDINGS ........................... 8 Project Content ..................................... 8 Project Implementation .............................. 8 Replicability ....................... 10 . ATTACMENT I: Coments from the Borrower .................... 11-16 This document bas a restricted distuibution and may be ued by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. TABLE OF CONTENTS (co.at'd) PROJECT COMPLETION REPORT Paie No. 1. Introductions Methodology and Focus of this Report .......................... II. Background and Composition of the Project ........... 20 III. Project Implementation .......................... 23 IV. Project Costs and Financing ......................... 30 V. Project Outcomes ................................ 32 VI. Conclusions, Recommendations, Lessons Learned ....... 41 Annexes: 1. CONALEP: Organization Chart ........................ 45 2. Regional Distribution of Training Centers and Enrollments ...................................... 46 3. Distribution of Total Enrollment by Main Area of Study - 1985-86 (Pie Chart) ..........0*........ 47 4. Student Places, Area and Costs of CONALEP Training Centers .................................. 48 5. Project Implementation and Disbursement Schedule .... 49 6. Project History, including Bank Missions and Reports ....................... 5 7. Costs of Project Components ......................... 51 8. Mexico: Index Series and Exchange Rates ............ 53 9. Allocation of Loan Proceeds ......................... 54 10. Compliance with Special Loan Covenants .............. 55 Map: No. IBRD 15811(PCR) PROJECT PERFORMANCE AUDIT REPORT UNITED MEXICAN STATES TECHNICAL TRAINING PROJECT (CONALEP I) (LOAN 2042-ME) PREFACE This is a performance audit of the Technical Training Project (CONALEP I) which was the Bank's first project in support of Mexico's education and training sector and for which a Loan (2042-ME) of US$90 million was approved on July 21, 1981. Following a one-year extension (but after a total implementation period of only 43 months) the loan account was closed without cancellations on June 30, 1985. The audit report consists of a Project Performance Audit Memorandum (PPAM) prepared by the Operations Evaluation Department (OED) and a Project Completion Report (PCR) prepared by Regional staff on the basis of a report by the beneficiary agency, CONALEP, and dated March 31, 1986. The PCR mission visited Mexico in March 1985, and December 1985/January 1986. The Project Performance Audit Memorandum draws on a review of materials in Bank files including the Staff Appraisal Report No. 3469b-ME of June 30, 1981, the President's Report No. P-3101-ME of June 30, 1981, the Loan Agreement dated July 31, 1981, correspondence with the Borrower, the PCR and background information provided by the beneficiary agency, CONALEP. An OED staff visited Mexico in February 1987 and discussed the project experience with staff of CONALEP and the financial intermediary agency NAFINSA (Nacional Financiers, S.A.). The information was complemented by discussions with Regional staff involved in project preparation and implementation. The audit memorandum confirms the positive evaluation given by the PCR and complements it with more recent information on the operation of the project institutions and operational outcomes which were not available to the authors of the PCR. As is customary in the preparation of audit reports, copies of the draft audit report were sent to the representatives of the Borrower for comments in September 1987. Comments received were taken into account and have been reproduced as Attachment I. - 11 - PROJECT PERFORMANCE AUDIT REPORT UNITED MEXICAN STATES TECHNICAL TRAINING PROJECT (CONALEP I) (LOAN 2042-ME) BASIC DATA SHEET KEY PROJECT DATA . Item Appraisal Estimate Actual Total Project Cost (US$ million) 214.84 188.70 Underrun (2) - 12.20 Loan Amount (US$ million) 90.00 90.00 Disbursed - 90.00 Cancelled . Repaid ) - 22.50 Outstanding) as of 12131187 - 67.50 Date Physical Components Completed 12131/83 06/30185 /a --in months since Loan Signature 29 41 Proportion completed by above date (1) 100 100 Proportion of time overrun (2) - 41 lb Institutional Performance Good CUMULATIVE ESTIMATED AND ACTUAL DISBURSEMENT (in US$ million) F! 82 83 84 85 86 Appraisal Estimate 13.3 77.8 100.0 100.0 100.0 Actual 5.0 47.9 75.6 95.8 100.0 Actual as % of Estimate 37.5 61.6 75.6 95.8 100.0 /a : The Project was essentially completed December 31, 1984, but limited equipment procurement continued through June 30, 1985. b : Related to an increase of the scope of the first phase of CONALEP's investment program (which was the phase assisted by this first Bank project). STAFF INPUT (Staff weeks) FY 76 76 79 8 8 81 62 68 04 65 8o Total Pre- appraisal 0.2 6.2 0.6 0.8 11.4 - -- -- - - 12.8 Appreleal - -- -- - 48.5 - - - - - 48.5 Negotiation - - - - 2.7 2.9 - - - - 6.6 Supervision - - - - - 21.7 26.5 18.1 6.9 9.6 78.7 Other - 0.1 - 0.1 Total 6.2 0.2 6.6 0.3 67.7 24.6 26.5 18.1 8.9 9.5 146.6 OTHER PROJECT DATA Original Actual or Item Plan Revision Est. Actual First Mention in Files 03122/79 Negotiations 06126/81 Board Approval 07121/81 Loan Agreement Date 07/31181 Effectiveness Date 11/25/81 Closing Date 06/30/84 06130/85 Borrower Nacional Financiera, S.A. (NAFINSA) Executing Agency Colegio Nacional de Educacion Profesional Tecnica (CONALEP) Follow-on Project Second Technical Training Project (CONALEP II) Loan Number 2559-ME Amount US$81.0 million Loan Agreement Date July 16, 1985 Currency Exchanze Rates Name of Currency (abbreviation) Mexican Pesos (M$) US$ = M$ Appraisal Year average 24.51 Implementation Period Average 120.17 Completion year 274.98 - iv - MISSION DATA Sent Month/ No. of No. of Staff Date of Mission ky Year Days Persons* Weeks** Report Reconnaissance/ Identification Bank 09180 10 4(AD,DC,EP,TE) 6.0 12/03180 Appraisal Bank 01/81 12 4(TEOAR,EP,FS) 8.0 -- Post-Appraisal Bank 03/81 4 1(TE) 0.8 06/30/81 Pre-Negotiations Bank 06/81 3 1(EP) 0.6 -- Total 15.4 Supervision 1 Bank 09/81 6 2(TE,AR) 2.4 10/02/81 * Supervision 2 Bank 02/82 7 1(EP) 1.0 04/14/82 Supervision 3 Bank 05/82 10 2(ED,AR) 3.2 05/26/82 Supervision 4 Bank 08/82 9 2(TE,AR) 2.8 09/17/82 Supervision 5 Bank 07/83 4 1(DDC) 0.8 07/26/83 Supervision 6 Bank 08/83 8 1(EP) 1.2 09/14/83 Supervision 7 Bank 12/83 10 1(EP) 1.6 01/16/84 Supervision 8 Bank 09/84 5 1(AR) 1.0 09/20/84 Supervision 9 Bank 01/85 5 1(FS) 1.0 04/28/84 Total 14.0 Completion Bank 03/85 4 2(TE,AR) 1.6 Completion Follow-up Bank 12/85 5 1(AR) 1.0 Total 2.6 * AD: Assistant Director DC: Division Chief TE: Technical Educator DDC: Deputy Division Chief AR: Architect EP: Education Planner/Economist FS: Financial Specialist ** Estimated number of staff-weeks attributable to this project (including travel time). ALLOCATION OF CREDIT PROCEEDS (In US Dollars) Original Amendment Amendment Actual Category Allocation (06125/82) (08122/84) (12131/85) 1. Varks under Part A 6,200,000 6,200,000 7,250,000 6,576,866 of Project 2. Equipment, including 74,300,000 71,0,000 79,500,000 83,368,660 its installation, procured in accordance with Parts A and C.1 of the Schedule to the Project Agreement 3. Equipment procured in 2,500,000 2,500,000 150,000 - accordance with Part C.2 of the Schedule to the Project Agreement 4. Consultants and - 600,000 600,000 44,109 professional services, studies, training and fellowships 5. Initial Deposit in - 2,500,000 2,500,000 10,365 Special Account 6. Unallocated 7,000,000 6,400,000 - - Total 90,000,000 90,000,000 90,000,000 90,000,000 WW s W W s R ng a W W W W S WW s W W a a s - vi - PROJECT PERFORMANCE AUDIT REPORT UNITED MEXICAN STATES TECHNICAL TRAINING PROJECT (CONALEP I) (LOAN 2042-ME) EVALUAT:ON SUMMARY Introduction A loan of US$90 million in support of this project was approved in * July 1981 and became effective in November of that year. The appraisal estimate of total project cost was about US$215 million and actual cost, because of rate-of-exchange shifts in favor of the US dollar, US$190 million. The fully disbursed Bank loan thus financed almost 48% instead of the anticipated 421. Prolect Obiectives and Content The project's principal objective was to expand and improve voca- tional training at lower technicians' and skilled workers' levels, a sub- sector with large and urgent investment needs. To this end, the project was to assist a recently established specialized agency, CONALEP, in expanding and improving its network of training centers and facilitate its administrative, staff training and program development work through the provision of a central support complex to replace the scattered facilities being used by CONALEP in Mexico City. A total of 99 training centers were to be assisted (construction and equipping of 37 new centers, facilities remodelinglexpansion and equipping of 52 existing centers, and equipment only for another ten.) Implementation Experience Project implementation proceeded without major problems, except for a short period in 1982183 when an acute economic crisis lead to the adoption of drastic import restrictions and consequently to the temporary blockage of imported equipment in customs warehouses. This problem was solved through the mediation of regional management, and the establishment of a Special Account helped expedite payments. Implementation profited from CONALEP's strong management and good quality of its staff and fr--m staff stability both on the part of CONALEP and of regional staff working on the project. The abolition of CONALEP's regional layer of administration and the creation of a Procurement Directorate iia CONALEP also contributed to more efficient implementation. -vii - Project implementation had been scheduled to last until June 30, 1984, or 31 months following effectiveness. This was clearly an overopti- mistic estimate in view of the size and geographic dispersion of the proj- ect, of its being the first Bank activity in Mexico's education sector, and of the fact that a change in administration, with the attendant transition uncertainties and delays, was to take place in 1982. The situation was furthermore complicated by the before-mentioned economic crisis. It is to the credit of the borrower that the loan only needed one extension of 12 months and was completely disbursed within 43 months, a time frame well below regional or Bank-wide averages for education projects. At the same time, because of additional government financing for locally produced equipment, the project was expanded to include equipment purchases for an additional 23 training centers, thus enlarging substantially the impact of the investment. Results to Date In most areas project performance so far has surpassed appraisal expectations. This applies to number of beneficiary centers (122 vs. 99), number of trainees (93,000 vs. 70,000), instructors trained (almost 15,000, not counting 8,900 undergoing upgrading courses, vs. 4,100) and unit cost (US$5001/ per trainee per year vs. 1,000). Only the annual output figures are still lagging behind expectations, pointing to a lower than expected internal efficiency. CONALEP is vigorously addressing this problem with good initial results, although part of the difficulties are of an exogenous nature (e.g., difficult economic conditions) and thus outside CONALEP's influence. Sustainability Although budget allocations for the operation of the training centers are still adequate, they will need to be increased to take into account higher maintenance and repair requirements in the future. Recent enrollment decreases in a number of centers will also have to be examined closely to determine their causes and to devise proper remedial action. On balance, however, these two potential flaws do not seem to have sufficient weight to affect the general optimistic assessment of the project's sustainability, given continuous strong leadership and support from the productive sector. Findings The project provides an example of the advantages of a simple and robust project design and underscores the importance of good project management and competent staff. Bank supervision was appropriately selec- tive and of a facilitating rather than monitoring nature. While it may not 1/ US$875 if donations by enterprises are taken into account. - viii - be easy to replicate the project experience in other countries because of the general economic, educational and manpower conditions it presupposes, the following specific features would be worth considering for introduction elsewhere: (i) budgetary and administrative autonomy of the training system; (ii) part-time employment of instructors from the productive sector; (iii) strong institutional links with enterprises both locally and * nationwide; and (iv) an explicit terminal (employment-oriented) character of the training. - 1 - PROJECT PERFORMANCE AUDIT MEMORANDUM UNITED MEXICAN STATES TECHNICAL TRAINING PROJECT (CONALEP I) (LOAN 2042-ME) I. PROJECT BACKGROUND Proiect Formulation * 1. The Technical Training Project (CONALEP I), the Bank's first project in support of Mexico's education and training sector had its origin in a growing concern of the Mexican Government about imbalances in the country's education and training system: while the sector was generally well developed, as evidenced, e.g., by virtually universal primary educa- tion, there was a marked quantitative and qualitative gap between general and technical schooling. The shortcomings affected above all the training of middle-level manpower (technicians and skilled workers) and were made all the more noticeable by the rapid and sustained economic development Mexico had gone through in the three decades between 1940 and 1970. 2. This preoccupation led to the establishment of a semi-autonomous agency (under the guidance of the Ministry of Education), CONALEP, at the end of 1978 and shortly thereafter, to the preparation by Government of a subsector study on vocational training which provided a basis for the identification and preparation of a Technical Training Project. An identi- fication mission by the Bank visited Mexico in September 1980 and, follow- ing project preparation by CONALEP, appraisal took place in January 1981. The proposed loan of US$90 million was approved by the Board on July 21, 1981 and became effective on November 25, 1981. Project Objectives and Content 3. The project's principal objective was to expand and strengthen middle-level vocational training in Mexico. To this end, the newly created agency in charge of vocational training, CONALEP, was to be assisted in several key areas, and a network of vocational training centers to be established. 4. The CONALEP system has a number of special features which distin- guish it from the rest of the education and training system. They have a semi-autonomous status (under the general guidance of the Ministry of Education) with budgetary autonomy. Its instructors are not civil servants but part-time staff employed in the productive sector who are selected for their proficiency in a given occupation. This means that specific training courses could be quickly establishedlexpanded with a minimum of administra- tive procedures. -2- 5. The second distinguishing feature is the explicitly terminal nature of the training coursess at the end of the three-year program the trainees cannot continue their education at a higher level but only at the level where they left the general school system (i.e., upon completion of grade 9). This effectively prevents trainees from using CONALEP training as a backdoor for entrance into post-secondary education. 6. The third characteristic of the CONALEP system is the existence of advisory committees composed of representatives of the productive sector which exist at national, regional and local levels. These committees ensure a strong permanent linkage with future employers and play a key role in the identification of new and modification of existing training programs; the secondment of their employees as oart-time instructors; and the placement of CONALEP graduates, to name only a few examples of their support work. 7. The project was to comprise the following components: (i) the construction and equipping of a support complex for development of instructional materials, instructor training, information and documentation, and administration of the system; (ii) civil works and/or furniture and equipment for a total of 99 vocational training centers; and (iii) preparatory work for follow-up investments. 8. Ten of the vocational training centers to be assisted were to receive equipment only, 52 were to be given furniture and equipment, com- bined with facilities expansion or remodeling and 37 were new establish- ments. The centers in the last group and their specific training programs were not yet determined at the time of board presentation, but Government and the Bank had agreed on a set of criteria to be followed in the selec- tion of locations. 9. The first group of criteria concerned demand for specific training programs, which had to be satisfactory both nationwide (i.e., taking into account existing training programs) and in the area where a center was to be established. 10. The second related to socio-economic factors: the envisaged catchment area for a new (or expanded) center was to contain a sufficient number of grade 9 school leavers (the entrance level for the vocational training center) which would nct be absorbed by alternative schooling avenues. It also needed an industrial base of adequate size and appropri- ate composition to make available sufficient numbers of part-time instruc- tors with the requisite occupational backgrounds and sufficient interest on the part of the local authorities and enterprises to support the estab- lishment and operation of a training center (e.g., through the donation of a site for the center or other contributions). -3- 11. The third group of criteria concerned economic efficiency: to avoid unacceptably high unit cost for the subsequent operation of the centerq, centers were to have an enrollment of not less than 600 trainees, minimum class sizes in given training programs were to be established by CONALEP and the possibility of using the facilities for additional training activities was to be considered. A group of centers with an initial enrollment of only 400 each were, where feasible, to be expanded or con- solidated with larger units in the medium term. 12. Overall, the project was to expand enrollments by about 50,000 and improve training, through provision of appropriate equipment, for another 20,000 trainees. With the assumption of a satisfactory level of internal efficiency (cumulative losses of 20% over the three-year program), the incremental output of skilled workers/lower level technicians was to be around 21,000 per year. II. PROJECT IMPLEMENTATION Desian 13. The compact design of the project helped ensure a smooth imple- mentation. Despite the wide geographic dispersion of the training centers to be established or assisted, the project was completed in only 43 months, a good performance by comparison with the average education project for the Latin America and Caribbean Region (or for that matter, any other Region). The achievement is all the more remarkable as this project was the Bank's first involvement in Mexico's education and training sector and the imple- menting agency was a very recent creation. Management 14. The loan required one extension by 12 months (from June 30, 1984 to June 30, 1985) which suggests an overly optimistic implementation sche- dule rather than any shortcomings of CONALEP. Most of the delays were exogenous and outside the influence of CONALEP, namely (i) the 1982 change in administration which resulted in a transition period with certain adjustments (as the PCR points out--para. 3.02--this event was entirely foreseeable); (ii) the effects of the 1982/83 acute economic crisis which forced the Government to adopt import control measures which in turn delayed the delivery of Bank-financed imported equipment, and (iii) the expansion of the project's coverage (the inclusion of another 23 centers in the equipping program which was made possible by increased government funding for locally produced equipment.) In addition, some construction delays were experienced. 15. The new centers profited from the application of standard designs and from the supervision of civil works by CAPFE, an experienced government entity in the area of school construction. Similarly, equipment procure- ment was organized in large batches, and equipment selection was facili- tated thanks to considerable upstream work undertaken by Regional staff. 16. Covenants were limited to a few essentials and promptly complied with; the first dealt with the adherence to criteria for the location of new training centers (paras. 8-10 above), the second to the preparation of annual work plans for the Ipstructor Training Center and the Instructional Materials Production Center and of a development plan for CONALEP for the period 1984-88 which formed the basis for a follow-up project (Second Technical Training Project--CONALEP II, assisted through Loan 2559-ME of July 16, 1985). 17. Two internal organizational changes by CONALEP also had a positive influence on project implementation: one was the removal of the intermedi- ate regional layer in CONALEP's administrative structure (para. 6 above) which permitted project management to deal directly and expeditiously with the individual training centers and their investments; the other was the creation of a Procurement Directorate in CONALEP. The move from a number of dispersed offices to the new CONALEP complex at Metepec (which had been financed from loan proceeds) also contributed to easier and speedier inter- nal communications. 18. A minor but useful addition to the project during implementation was a technical assistance component (specialist services and training abroad of CONALEP personnel). The arrangement chosen--partnerships with similar foreign organizations and universities--proved effective. Bank Supervision 19. Only once during the implementation period did the project encoun- ter major difficulties. This was in the wake of the economic crisis which affected the country in 1982/83 and which caused the Government to insti- tute drastic measures to limit imports. This resulted in the blockage of large quantities of Bank-financed equipment in customs warehouses. The involvement of Regional managc.ent at this juncture doubtlessly played a major role in getting the project back on course, as did the establishment of a Special Account in the amount of US$2.5 million. 20. The above episode was characteristic for the Bank's supervision of this project, which was of a facilitating nature, working jointly with the Government agencies involved. The nine supervision missions spent a total of only 14 staff-weeks in the field; these economies in project supervision were made possible by the quality of project management and by good staff continuity on the Bank's side as well as in CONALEP. Cost and Financing 21. Total project costs expressed in US dollars were about US$190 million, 12% below the appraisal estimate of US$215 million, of which the Bank loan covered almost 48% instead of the anticipated 42%. The reason lies in the continuous shift of the rate of exchange in favor of the US dollar over the implementation period. Expressed in constant 1970 Mexican dollar, total project cost were about 142 above appraisal estimates, due in large part to increased construction areas. - 5 - III. PROJECT OUTCOMES Project Scope 22. In quantitative terms, actual project outcomes exceeded appraisal expectations in almost every respect. The project created or improved training capacities for more than 93,000 instead of just under 70,000 trainees. Instructor training, estimated at appraisal to comprise 4,100 persons, had been given to 9,200 by mid-1985, and to about 12,400 by the end of 1986.11 At present the CONALEP system is providing training in more than 100 different programs, and the catalogue of occupational options is continuously expanded. As the PCR observes (paras. 3.14-3.15), the Instructional Materials Production Center, despite its versatility and technical competence, faces a daunting workload. However, a greater reli- ance on the adaption of existing materials should make it possible to bridge the present period of rapid expansion and diversification. Internal Efficiency 23. This is the one major area in which the project fell short of expectations. Instead of the anticipated loss of 20% of the trainees over the three-year program, cumulative dropouts during the period 1979-1986 have averaged 60%. This is clearly an unsatisfactory situation, and CONALEP has given this problem their full attention. Losses are partic- ularly heavy during the first semester, drop during the remainder of the first and the second year, and peak again in the third year. 24. The available information suggests that shortcomings in the general education received prior to starting CONALEP, dissatisfaction with the training program chosen, and general difficulties of adapting to a very different kind of learning experience account for much of the initial losses. Economic straits play a large role in forcing trainees to drop out throughout the cycle.2/ 11 The numbers for 1985 and 1986 include some instructor training in support of the CONALEP II project; it is not possible to separate the two subgroups. . 2/ The modest fees of M$750 per month (scheduled to be raised to M$850 in early 1987) for a ten-month training year, of which one half is not due until the ex-trainee finds employment, are probably only a minor factor. Among the direct costs, expenses for transport and food are probably much more constraining, and for trainees from low-income families earnings foregone particularly during an economic crisis, weigh heavily. -6- 25. These observations and the wide regional variations in dropouts (ranging from a low of 6.7% in the state of Tlaxcala to a high of 23.02 in Guanajato during the semester September 1985/February 1986) suggest that this problem will only partly yield to corrective measures that are within the reach of CONALEP. 26. Among the changes already instituted are a more thorough screening and aptitude testing of applicants to avoid mismatches, and compensatory training during school holidays for trainees who lag behind their group. For training centers which perform poorly overall, a temporary system of close monitoring and guidance is activated--usually with good results. Equally Important, in realization of the fact that the dropout problem is likely to persist, albeit at a reduced level, CONALEP has put a series of practical skill modules at the beginning of the course, to equip their trainees at least with a minimum of useful and marketable skills, should they be forced (or choose) to leave the program prematurely. 27. The concerted efforts of CONALEP's management appear to start showing some results: for the semester September 1986/February 1987, losses from the cohort of new entrants were down to 14%; extrapolation of this improvement .over the three years' training period would result in graduatelentrant ratio of 53% (instead of the average of 402 achieved so far--para. 21), an encouraging development. External Productivity 28. As was pointed out in the PCR (para. 5.13), it is difficult to assess this aspect of the project: the graduate tracer system is just starting to yield results, and there is a possibility that the link between initial employment and the deferred payment of half the tuition fees (para. 24, footnote) may cause a downward bias in these estimates which are based on questionnaire returns by ex-trainees. Furthermore, all employment data have to be seen against the background of the crisis which with varying degrees of severity has affected the Mexican economy since 1982. 29. The first round of the tracer study, encompassing more than 5,200 graduates who had gone to 18 training centers in three federal states and in the metropolitan area during the period 1980-85, recorded 63% of the sample as employed (including 5% of ;elf-employed graduates). The second round, comprising almost 6,800 ex-traitees from 38 training centers in 19 different states and having graduated between 1982 and 1986, showed 59% employed (with 4.22 in self-employment). A simultaneous survey of more than 600 enterprises yielded the following evaluation of CONALEP graduates: - 7 - Rating (in % of firms) Area Excellent Good Averaxe Deficient No Opinion Job Performance 22.0 69.0 6.0 3.0 -- Theoretical Knowledge 16.7 62.7 14.1 -- 6.5 Practical Skills 11.6 54.3 23.1 -- 11.0 General Education 12.8 54.2 19.3 -- 13.7 The enterprises were unanimous in their opinion that CONALEP graduates displayed a high sense of responsibility and ease of adaptation to the workplace. 30. The close linkages between the training centers and the enter- prises located in their catchment areas must be given much of the credit for this very satisfactory picture. These links are working in many ways: in the consulting role of enterprises during identification and development of new programs, secondment of part-time instructors, donations in cash or kind, orientation visits of trainees to the enterprises and active collabo- ration with the centers in the placement of graduates, to name the most important ones. Operational Costs 31. Cost per trainee in 1985/86 amounted to slightly under US$500 equivalent; this is a reasonable level in view of the good quality of training and the technical sophistication of a number of programs.3/ The use of part-time instructors (with no overhead costs attached to them) is a major explanatory factor. Part-time instructors are hired at four levels of qualification. Their monthly honoraria per hour of instruction per week ranged from about M$4,182 for the least qualified instructor in the metro- politan area to about M$7,900 in high-cost areas.4/ 3/ The PCR estimates that with contributions from the productive sector, unit costs may run as high as US$875 per trainee per year--still well below the appraisal estimate of US$1,000 (para. 5.22). 4/ At the rate of exchange prevailing in late February 1987 (US$1=M$1,000), this represented a range of about US$4-8 per month for each weekly hour taught. - 8 - 32. Thanks to this part-time arrangement, costs for teaching staff in the centers amounted to only 252 of operations costs vs. 582 for adminis- tration (including the entire central administration) and 172 for materials, supplies and utilities. 33. In an effort to use facilities and equipment efficiently, CONALEP, apart from operating in a double-shift system, has also made available its centers to trainee groups sponsored by other government agencies. Between 1984 and 1986, more than 41,500 unemployed youth have received short-term skill courses under the PROBECAT scheme, since 1983, more than 81,500 workers have undergone upgrading courses. Both programs are sponsored by the Ministry of Labor. The conditions under which CONALEP centers can be used are, (i) full coverage of additional operating cost by the sponsoring agency; (il) non-interference with CONALEP's regular training programs; and (iii) a proven demand for this type of training in a particular location. IV. FINDINGS Proiect Content 34. The experience of this project points to the advantages of a com- pact project design (even if the project is of a considerable size and widely dispersed). Standardization of facilities and equipment packages contributed further to the streamlining of implementation. Project Implementatio. 35. By the same token, implementation arrangements were kept simple: covenants were limited to a few essentials, and a condensation of CONALEP's administrative structure during implementation (removal of the intermediate regional layer) shortened lines of command and permitted rapid direct intervention by headquarters in case of special problems. Temporary dif- ficulties brought on by an acute economic crisis in 1982/83 were addressed successfully by the appropriate management levels in the Bank. Sustainability 36. At present the longer-term sustainability of the project institu- tions appears assured. While federal funding for operating costs, in particular materials and supplies, is somewhat tight, this does not interfere with the proper functioning of the centers, particularly since they are assisted by contributions from the enterprises. However, an increase in allocatias would appear justified, the more so since mainte- nance and repair requirements will grow once the facilities and equipment cease to be new. An advance planning for equipment replacement would also be indicated, particularly for items with a rapid rate of obsolescence (e.g., office equipment). - 9 - 37. One recent development deserves close monitoring: this is the enrollment drop observed in a number of project institutions between 1985 and 1986. The most recent development is summarized belows Distribution of Project Schools La by Extent of Enrollment Changes 1985 - 1986 Extent of Chanee () Total Enrollments First-year Enrollments +25.0 and more 29 46 15.0 to 24.9 14 10 5.0 to 14.9 14 14 -4.9 to +4.9 26 17 -5.0 to -14.9 15 11 -15.0 to -24.9 9 8 -25.0 and more 9 10 Totals 116 116 /a 116 of 122 schools for which data could be matched. 38. While on the whole the above table conveys the picture of a system in expansion, the existence of project schools with shrinking enrollments merits attention. True, the number of centers with stagnating or decreas- ing enrollment is rather small and, more significantly, this drop is less marked for first-year enrollments (which are a better indicator for the demand for this training). Overall, it seems that first-year entry appli- cations still exceed the number of available places by at least 50% (125,000 vs. 80,000). However, enrollment shortfalls anywhere in the * system, while not giving cause for immediate alarm, should be looked into closely. The available data so far do not suggest any pattern; the changes may be explained by strictly local developments, e.g., the closure of specific enterprises or the failure of an anticipated industrial develop- ment to materialize. Other reasons could be the lack of popularity among trainees of specific occupations (say because they are physically demand- ing or carry with them negative characteristics such as excessive heat, noise, etc.) Finally, economic considerations could play a major role, either because trainees can no longer afford the direct and indirect (earnings foregone) costs of training or, conversely, a slight improvement in a particular labor market is leading trainees to the conclusion that vocational training is not any longer necessary to ensure them employment. 39. In view of the wide array of possible explanations, the problem will probably have to be analyzed and addressed on a center-by-center basis. Given its good record for prompt and successful response to emerg- ing problems and its close links ith the productive sector, there is ample reason to be optimistic about CONALEP's future. - 10 - 40. CONALEP I was followed in 1985 by n project of similar size and composition comprising about 97 training cez.ters and being assisted by a loan of US$81 million. The CONALEP II project is proceeding on schedule without significant problems; its completion is expected for 1990. 41. The latest addition to the sectoral project portfolio is a Manpower Training Project which became effective in October 1987 and which would, (a) strengthen the State Employment Services and retrain about 160,000 displaced or unemployed workers; (b) support inservice training through a Demonstration Inservice Training and Productivity Programs (c) assist institutional development in the Ministry of Labor in the fields of inservice training and retraining; and (d) help existing training institutions increase and diversify their programs through upgrading investments. Total project cost would be US$159 million of which roughly one half would be covered by a US$80 million Bank loan, US$44 million by the Government and US$35 million by contributions from enterprises. Replicability 42. The successful experience of the CONALEP project naturally raises the question of its replicability in other countries. Here a note of caution seems necessary: in order to establish a system similar to CONALEP, a country needs a sizeable industrial base, a sufficient pool of professional and technical manpower over a broad occupational spectrum to staff the training centers, sufficient managerial capabilities and an ade- quate system of transport and communications to permit continuous monitor- ing and guidance. There are not many borrower countries which at present meet these conditions and those that do in all likelihood already have some form of vocational training network. 43. Nevertheless, specific features of this project are worth being considered for introduction in countries that do not yet dispose of the type of infrastructure outlined above. These are: (i) the concept of budgetary and administrative autonomy for the training system; (ii) the principle of part-time instructors with regular employ- ment in the productive sector which would free the training programs from constraints imposed by civil service regula- tions and give it greater flexibility in responding to chang- ing economic and labor market conditions; (iii) close continuous links with the productive sector to increase program relevance, broaden the system's financial base and assist in the absorption into employment of former trainees; and (iv) the explicit terminal nature of training which would prevent vocational training from being misused as an avenue of second choice for access to post-secondary education. - 11 - CONENTS FROM THE BORROWER ATTACHMENT I (Page 1 of 5) NACIONAL FINANCIERA Gerencia de Financiamientos Banco Mundial (Bureau of World Bank Financing) December 14, 1987 Mr. Graham Donaldson Division Chief, Agriculture, Infrastructure and Human Resources Operations Evaluation Department World Bank Washington, D.C. Ref.: CEC/3124/XII/87 Dear Sir: I am writing with reference to the Technical Training Project (Loan 2042-ME), executed by CONALEP, and to your communication of September 23, 1987. Herewith, I enclose the comments on the Project Performance Audit Report provided by the Ministry of Finance and Public Credit, the Executing Agency and National Financiera so that they can be incorporated into the final . version of the Report, which we would oe most grateful to receive. Yours, etc. Is/Hector Flores Santana Bureau Chief Enclosure: As above. cc: Dr. Josi Gerst1, Director General, CONALEP, Metepec, State of Mexico. Mr. Jose Luis Flores HernAndez, Director for International Financial Organizations, Ministry of Finance and Public Credit, National Palace, Building 4-4o Mr. Benjamin Hedding Galeana, Director of Management and Finance, CONALEP, Metepec, State of Mexico. Mr. Jorge Delgado Benitez, Subdirector for International Organizations, National Financiera. - 13 - ATTACHMENT I (Page 2 of 5) PROJECT PERFORMANCE AUDIT REPORT TECHNICAL TRAINING PROJECT I (LOAN 2042-ME) The general comments on this Report by the Executing Agency, the Ministry of Finance and Public Credit and Nacional Financiera, SNC, agree with the views expressed in the document itself to the effect that execution was satisfactory, due in part to the compact project design. As regards project management, although a one-year extension was necessary, this delay was not caused by the Executing Agency, as the Report rightly says, but resulted from the economic crisis affecting the country in 1982/83 and the change of government, which led to the adoption of import restrictions. It should be emphasized that another factor contributing to this * sound execution was the internal change in CONALEP's structure and the close involvement of the various official agencies, in cooperation with the World Bank's Education Department. While in general the project objectives were surpassed, one of the purposes of this process is to draw lessons from the project that can be used in others. We wish, therefore, to make the following comments: - In light of the large number of contracts dealt with by CONALEP, resulting in 1,552 applications and all the relevant support documentation for the Bank, it is suggested that, in the execution of projects for equipping training centers and similar activities, SOEs (Statements of Expenditure) be used as much as possible. - Similarly, and for the same reasons, it is recommended that the Bank authorize payments to contractors with the minimum number possible of partial payments. Verification of payments was also delayed because of the excessive number of applications and the arrangement made by the Bank to provide direct payments to non-Mexican suppliers. - On page vii of the Evaluation Summary (TN: page viii of the Spanish version], it should be noted that, in addition to the mediation of Regional management and the establishment of a Special Account, the various government agencies concerned made a valuable contribution by actively participating in solving problems. - The following changes are suggested in Chapter I (Project Background), Section 4: * "Semiautonomous" should be used instead of "independent," because CONALEP enjoys a certain budgetary and administrative autonomy. The phrase "(or conversely curtailed/abolished)" should be removed. * On page 6 (II, 14, 1), the phrase "with some uncertainties and delayed decisions" could be replaced by "with certain adjustments." - 14 - ATTACHMENT I (Page 3 of 5) On page 8, Section 20 (TN: page 9 in the Spanish version], after the phrase "monitoring nature" should be added '..., participating jointly with the government agencies involved." - As regards the loss of trainees, the anticipated 20% apparently set by CONALEP when the project began seems highly optimistic, and therefore unrealistic. Studies have shown that it is practically impossible to keep losses below 30-35%, and even that level would be a much better rate than for any other education system in Mexico. Consequently, it should be emphasized that, in addition to the provision of diplomas and certificates for "lateral exits," the programs were modified to ensure that, particularly in the first and second semesters, skills and abilities are taught that will enable trainees leaving the course early to obtain paid employment, so that the cost of training will be to some extent recovered. The document also refers to development planning. In this regard, it should be mentioned that, in general, the strategic planning for the period 1935-88 proposed the establishment of 70 new centers, the launching of new courses in demanding economic activities using leading-edge technology, and the preparation and development of an extensive work training program, together with encouragement and promotion of small-scale enterprises (microempresas). As indicated, moreover, it is evident that--in addition to the lack of information at national level and the political and economic constraints facing the education system--long-term strategic planning is mainly concerned with improving the quality of education and with establishing, promoting and disseminating the technological expertise necessary for Mexico's growth. CONALEP's training centers are widely dispersed so that it can serve medium-sized urban centers ic. particular, as a means of accelerating their incorporation into the national development process and reducing the impact of migration to the major population centers. As regards the links between CONALEP programs and training needs, the current consolidation of the CONALEP system makes it necessary to strengthen and modernize the linking activities fostered by the type of development that has been characteristic of this organization under its dynamic structure of management. The following activities will therefore be promoted as a means of maintaining and strengthening the linkages being established by the institution: (a) services to the community; (b) productive activities; (c) integration into small-scale enterprises. Services to the Community: The CONALEP education model will be used to prepare a catalog of each of the courses in productive activities that students can take during the first two semesters of training. - 15 - ATTACHMENT I (Page 4 of 5) As an example, a student of Applied Techniques I and II is trained in basic methods of metal working, carpentry, basic electrical installations, etc. These activities take place in the training centers' workshops, and efforts will be make to link them to the local communities' needs by means of agreements with local donors under which the latter wouid provide materials and the trainees manufacture products in the workshops. Productive Activities: In the following semesters (i.e. third, fourth and fifth), the * trainees will prepare--in the workshops and laboratories--inputs to be used in production in certain local plants. This production will consist of unfinished products. The enterprises accepting this service will provide the materials and specifications, and will p:: a certain sum in cash to the training center, to be used to establish a f'.nd f-o- maintaining workshop and laboratory equipment. Integration into Smati-Scale Enterprises: The trainees taking the final semester of the course will be provided with an opportunity to be integrated into small-scale enterprises. Through the Liaison Committee (Comiti de Vinculaci6n), representatives of the productive sector will participate in establishing a "project bank" of small-scale enterprises that would be viable in the area and could undertake subcontracting from established industry. As regards "lateral exits," the CONALEP system provides ongoing training throughout the educational process, emphasizing the development of * expertise and techniques relevant to jobs in the productive sector, combined with general scientific and cultural knowledge, so that trainees build up credits enabling them to fill positions at the various stages of their studies until they reach the level of "Professional Technician." Guidance is also provided with respect to self-employment and smal.-scale enterprise activities, and the trainees' ability to adapt to technological innovation and change is also developed. World Bank recommendations regarding the preparation of the following programs and systems have been noted: 1. advance planning for repayment for office, workshop and laboratory equipment; 2. a program of resource allocation for the maintenance and repair of buildings and equipment; 3. implementation of maintenance system. - 16 - ATTACHMENT I (Page 5 of 5) In this regard, the following measures have been adopted: 1. The resource allocation program for the maintenance and repair of buildings and equipment has been included in the 1988 investment program. 2. In January, 1988, a start will be made on designing a maintenance system based on a project for a maintenance and repair center serving all training centers and located in the metropolitan area. 3. Once the maintenance system has been completed, a plan will be launched for replacing office, workshop and laboratory equipment. - 17 - UNITED MEXICAN STATES TECHNICAL TRAINING PROJECT (CONALEP 1) (Loan 2042-ME) PROJECT COMPLETION REPORT March 31, 1986 Education Projects Division Latin America and the Caribbean Regional Office - 19 - PROJECT COMPLETION REPORT UNITED MEXICAN STATES TECHNICAL TRAINING PROJECT (CONALEP I) (LOAN 2042-ME) I. INTRODUCTION: METHODOLOGY AND FOCUS OF THIS REPORT 1.01 In accordance with recent Bank practice, the Borrower was required to prepare a draft completion report on this project. The draft was completed by CONALEP, the executing agency, in November 1984. A supervision/completion mission consisting of a technical education specialist and an architect (consultant) took place March 4-8, 1985. However, the architect's participation was interrupted by illness at an early stage of the mission and he therefore again visited Mexico in December 1985-January 1986 to obtain additional information. The present report makes full use of the information provided in the Borrower's draft but substantial information and analysis have been added, particularly concerning the educational outcomes of the project. In addition, in January 1985, LCPED's financial management specialist had separately reviewed the accounting and auditing organization and activities of the project; his conclusions have been incorporated into. this report. 1.02 This large and innovative project was implemented successfully and, relatively speaking, very quickly. It is being followed by a second project (CONALEP II) of similar size and design. In addition to the standard description and analysis, this report attempts to explore in particular the following aspects of the project: (a) particular design features and implementation actions which contributed to the project's success (ref. para. 6.02); and (b) features of the CONALEP training system which warrant special attention as either (i) promising innovations worth exploring for training systems and projects in other countries (ref. para. 6.03), or (ii) remaining or potential problems with the sysues which require particular attention during implementation of the follow-up project (ref. para. 6.04). - 20 - II. BACKGROUND AND COMPOSITION OF THE PROJECT Project Origin and Formulation 2.01 Organization of CONALEP. Growing concern over technical/vocational training in Mexico in the 1970s led to the law on vocational training issued April 28, 1978, and the creation, in December 1978, of the Colegio Nacional de Educacion Profesional Tecnica, CONALEP, as a semi-autonomous central vocational training agency. Annex I shows CONALEP's organization chart. CONALEP's central Board of Governors consists of seven business and industrial leaders appointed by the Ministry of Education (SEP); a central industrial advisory committee advises the Board on general technical matters. The Director General of CONALEP is appointed by the President of the Republic. At the local level, the director of each training center is the chief administrative officer. He is assisted by a local governing board made up of representatives of local enterprises and authorities, and specifically on training matters, by a local industrial advisory committee (Comite de Vinculacion). This organization makes for a wide-ranging decentralization of operational decisions and therefore flexibility and responsiveness to local conditions. 2.02 Subsector Study and Project Processing. In late 1978, the Government and the Bank began discussing a proposed subsector study of vocational training designed to obtain data on manpower needs, particularly concerning middle-level industrial technicians, and to provide guidance for CONALEP's expansion program. The subsector study was subsequently carried out entirely by the Government, and was of high quality. After completion of the study, Bank missions visited Mexico to assist the Government, and CONALEP in particular, in preparing a project request. The results were reviewed by a Bank reconnaissance/identification mission in September 1980; after further preparation by CONALEP, the project was appraised in January 1981. The loan was approved on July 21, 1981 and was signed on July 31, 1981 (see Annex 6 for detailed project history). 2.03 This project was the first Bank-assisted project in the education and training sector in Mexico. In the past, Mexican authorities had been reluctant to borrow for education projects, partly with reference to a stipulation in the Mexican Constitution that foreign borrowing be limited to "productive investments". The question of whether Bank funds could be used to finance training for work was raised, and favorably resolved, early in the project's development. (Later, other types of education and training have also been included in Bank projects, for instance, the proposed Earthquake Rehabilitation and Reconstruction Project). 2.04 Bank staff made three major contributions to the project at the design stage: - 21 - (a) it helped convince CONALEP's top management of the crucial importance of preparing a detailed development plan. This later proved of great value in assisting the new Administration (1983-88) in formulating sector investment proposals; (b) it assisted in defining economic standard sizes of training centers which made possible considerable savings in capital costs; (c) it helped CONALEP substantially in selecting appropriate equipment for the intended level and specializations of training, many of which were essentially new to Mexico. The project was processed rapidly; once the subsector study was completed, preparation and appraisal were carried out comparatively quickly. This helped to avoid disrupting changes of Individual staff during the process. Project Justification 2.05 The principal justification for the project was that Mexico's existing secondary-level training system (which was functioning mainly as a feeder into higher education) was entirely inadequate to supply even the economy's existing needs of skilled workers and middle-level technicians. It was obvious that this training system would be a serious Impediment to further economic development if not substantially expanded and improved. In particular, more emphasis needed to be given to terminal training programs. CONALEP's main program which was assisted by the project, was therefore designed as a three-year pre-service course at the upper secondary level (equivalent to grades 10-12). The program is expressly terminal; graduates do not have access to higher education without repeating grades 10-12 in secondary school. In quantitative terms, the project was designed to help CONALEP produce about 20,000 additional skilled workers and technicians annually. This would meet only about 11% of estimated total annual needs. Nevertheless, the infusion of these 20,000 0NALEP graduates would almost triple the number of skilled workers and technicians entering the labor market, and could be expected to have an important impact because of the improvement of the relevance and quality of training, compared to existing training systems. 2.06 This project was conceived as a major effort to help the recently created agency, CONALEP, to become an important development force in Mexico in a very short time. Much hinged on CONALEP's leadership in a complex institutional environment. CONALEP's first Director General was a visionary and very capable leader who had quickly assembled a competent administration. This was a major reassurance for the Bank in entering into a project of such innovative character, complexity and magnitude. Fortunately, despite subsequent changes in some posts, including the Director General, CONALEP has continued to be excellently managed. The Bank's efforts during project implementation have continued to focus on supporting this good local leadership and through it, the further strengthening of 0ONALEP as a major de,velopment institution. - 22 - Project Objectives 2.07 The project's overall objective was to help CONALEP implement the first phase of its development program (1979-83). The specific project objectives were: (a) to strengthen the efficiency and effectiveness of the central administration by providing facilities for (1) instructor and staff training, (ii) developmen . of instructional materials, (iii) supervision of operations, (iv) information and documentation, and (v) central administrative support services; (b) to increase the output of skilled workers and technicians by expanding existing enrollments by an additional 50,000 students and by providing appropriate equipment for a total of aboat 70,000 students; (c) to improve the quality of instruction by upgrading and expanding instructor training, emphasizing practical approaches, evaluation, follow-up and feedback, and (d) to improve the quality of the second phase of CONALEP's development plan (1984-88) by including reliable manpower estimates, cost-reduction measures, and alternative approaches to training. Project Components and Description 2.08 In supporting the entire first phase of CONALEP's development program, the project was to consist of the following components: (a) construction, furniture and equipment for: (i) an Instructive and Administrative Support Complex and (ii) 37 training centers; (b) partial construction and/or remodelling, furniture and equipment for 52 training centers; (c) equipment only for 10 training centers; and (d) planning of CONALEP's development, including preparation of a follow-up (Phase 11) project. 2.09 CONALEP had developed criteria for the creation of new centers to be developed under the project. According to these criteria, centers would be established on the basis of economic need, feasibility and economic efficiency, as well as regional/local support from enterprises and authorities. Together with the Bank, CONALEP also developed guidelines for allocating equipment funds. The Bank and CONALEP agreed that these criteria and guidelines would be applied to all centers assisted by the project. A tentative plan was made at appraisal for where the 99 centers would be located (Map, attached). It was recognized that the final distribution might be different, after the detailed criteria were applied (for details on the criteria, see SAR, Annex 4). - 23 - Project Amendments 2.10 The project was amended during implementation as follows: (see list of amendments in Annex 6): (a) the number of training centers to be equipped only was increased from 10 to 33. The need for this amendment arose because CONALEP was able to expand training center construction beyond what had initially been planned for the first phase of its investment program. The amendment increased the total number of training centers assisted by the project from 99 to 122, and the estimated enrollment capacity from about 70,000 to 93,300. This was possible because the Borrower allocated additional funds for the purchase of locally available equipment; (b) a Special Account of US$ 2.5 million was created. The allocation of proceeds was changed accordingly. A new category of expenditure was also created for technical assistance and training for CONALEP staff. This amendment was made to facilitate 0NALEP's financial administration and to assist in clearing imported equipment by enabling CONALEP to pay storage costs, container rentals, etc. in foreign exchange. The new technical assistance category was to enable CONALEP to extend its professional contacts, staff exchanges and training arrangements with sister organizations abroad; (c) the Closing Date was postponed from June 30, 1984 to June 30, 1985, and a further adjustment was made to the allocation of proceeds. The justification for this amendment is explained below under "Implementation Schedule". Initial, amended, and final allocations of proceeds are shown in Annex 9. III. PROJECT IMPLEMENTATION Implementation Schedule 3.01 The implementation schedule (Annex 5) shows that the project required 3.4 years to be essentially completed counted from the date of loan approval, or one year more than estimated as appraisal. There were three main causes of delay: (a) the change of government administration in 1982 caused a period of uncertainty and lack of decisions; this factor alone would have delayed implementation by six to nine months; - 24 - (b) the change of administration coincided with the 1982/83 economic crisis in Mexico which occasioned drastic measures to limit imports, causing long delays in the liberation by customs of Bank-financed equipment; and (c) project scope was expanded to include 122 training centers instead of 99, thus including in Phase I of CONALEP's expansion plan some of the centers originally anticipated for Phase II. Largely independent of the above, there were some delays in the construction of training centers. This factor by itself would probably have created a need for a one-year postponement of the Closing Date. 3.02 In retrospect, the delay caused by (a) could have been anticipated as the Mexican adminstration changes regularly every six years. Delay (b) could not have been anticipated. Some delay could reasonably have been expected in the large and dispersed construction program (although only about a third of total volume was to be built during 1983, the last year of implementation). In sum, the appraisal estimate of required implementation time was overoptimistic in that it did not include any safety margin. This led to an overrun of two years (80%) in the disbursement period. On the other hand, if the standard disbursement profile had been used, as is now the rule, in the absence of more specific past experience, this would have resulted in an underrun of four years (47%). Project Management 3.03 In accordance with arrangements agreed upon at appraisal, project implementation was managed by the regular CONALEP administration, with the Director General of CONALEP serving as Project Director. Two changes, both well justified, were made in the management structure during implementation: a separate Directorate of Procurement was created to make procurement more efficient, and the Regional Coordinating Offices were abolished to facilitate a more direct flow of information between CONALEP Headquarters and individual training centers. As anticipated at appraisal, no substantial additional staffing has been required for the project pr se except for the Procurement Department, which was staffed without major problems. 3.04 The decision to abolish Regional Coordinating Offices particularly demonstrated CONALEP management's ability to act flexibly in response to administrative difficulties. This decision was appropriate under the circumstances; however, the optimum degree of centralization vs. decentralization will need to be continually reviewed as the system grows further. (As a consequence of this decision, 0ONALEP's Headquarters staff increased from 400 to 700 in order to take on the responsibilities previously carried out by the Regional Coordinating Offices. This in turn necessitated changes in the new Headquarters complex financed under the project, as described in para. 3.08). - 25 - 3.05 Project management arrangements have worked very well thanks to the competence of the management team and the strong commitment to CONALEP's and the project's objectives at all levels of the organization. The question of creating a separate project implementation unit (PIU) apparently never arose; a PIU would have been redundant in this project because of CONALEP's clear organizational responsibility and the dominating financial importance of the project for CONALEP's entire investment program. Physical Aspects 3.06 Location of Training Centers. The criteria for creating new training centers proved to be well chosen and were strictly adhered to, with a few exceptions dictated by very special local conditions. Most sites were well selected, but in some cases, the criteria could not have to protected against an unsuitable location. For instance, some training centers were built in areas designated for industrial expansion which subsequently did not take place. (In these cases, buses are being provided for students to reach the training center in spite of its remote location). All sites were ceded to CONALEP without compensation; 50% were given by municipalities, 14% by State authorities, 22% by e1ido communities and 14% by others. Whenever possible a site of at least 2 ha was obtained. With the increase to 122 training centers, centers were located in all but one of the 32 states (including the Federal District). 3.07 Location of New CONALEP Headquarters. Four different locations nationwide were studied; the location finally selected is at Metepec near Toluca,, capital of the State of Mexico (25 km from Mexico City), where a suitable 7 ha site was secured. 3.08 Designs. CONALEP's basic standard designs were used for almost all training centers and proved to be functional and suitable; most (66%) construction drawings and specifications were prepared by CAPFCE based on . CONALEP's educational specifications, and were of high quality. Most training centers were designed to be built in two distinct phases to allow for a gradual build-up of enrollment. The overall area constructed increased considerably compared to appraisal estimates due to the increase from 99 to 122 training centers, increased per student area, and a net increase in the area of the headquarters complex. The original specifications for the headquarters complex, which was well designed by Mexican consultants, were changed to provide more space for administrative personnel (para. 3.04); on the other hand, the instructor training facility included in the complex was reduced following a decision to decentralize instructor training. The net result was an increase of the complex from the estimated 10,900 m2 to 13,688 m2. 3.09 Construction. Construction of training centers was carried out by private contractors. Counted in value, 66% of construction contracts were managed by CAPFCE (essentially all new construction of training centers), 20% by CONALEP (mainly the new Headquarters complex, installation contracts, and some refurbishing of training centers), and 14% by State authorities and others (in cases where states or private entities had donated the - 26 - buildings). It is worth noting that the construction program was implemented well, despite the absence of Bank supervision or a direct contractual relation with CAPFCE, an arrangement accepted by the Bank considering CAPFCE's particularly good track record from a large regular program of school construction. The quality of construction was adequate and the timing satisfactory, except for a few cases of delay of up to nine months due to shortages of certain construction materials during the 82-83 economic crisis. The headquarters complex was built by private contractors under the supervision of two consultant firms. Construction took 24 months instead of the estimated 15 months, mainly due to shortages of materials and the change of administration. The complex was opened in March 1984. The performance of the consultant firms, as well as CONALEP and CAPFCE staff, was satisfactory. Average unit construction cost for training centers was US$215 per i2, 29% lower than the appraisal estimate in dollars, and 12% lower in constant 1970 pesos (para. 4.05). Annex 4 indicates the cost for each group of training centers and the headquarters complex. 3.10 Furniture and Equipment. Furniture and Equipment (total value US$79.25 million, excluding installation costs) were procured through ICB (US$68.85 million; 87%), LCB (US$9.00 million; 11%) and special local procedures acceptable to the Bank (US$1.4 million; 2%). Procurement was carried out efficiently, particularly after the creation of a special Directorate for the purpose. Major problems were encountered with deliveries, resulting from the import controls instituted by the Government during the 82-83 crisis; at one time Bank-financed project equipment worth US$40 million was being held up in customs. This problem was resolved through (a) strong Bank representations, with participation of Regional Projects Management and Programs Staff, to the Ministry of Finance, (b) creation of a Special Account (para. 2.10) which enabled CONALEP to pay charges in foreign exchange related to the equipment and thereby speed up its release, and (c) creation of a central storage location specifically for CONALEP with permanent staff and customs service. The equtpment delivered and installed at the training centers is generally adequate. 3.11 Maintenance. Maintenance manuals and guidelines for buildings and equipment are being prepared by CONALEP for distribution to training centers; however, the comprehensive system for maintenance and spare parts supply which was envisaged at appraisal has not yet been put in place. A pilot maintenance program began functioning in December 1985 as part of the follow-up project; this program is scheduled for evaluation in late 1986, and is expected to be followed by a comprehensive system during 1987. Education/Training Aspects 3.12 Instructor Recruitment and Training. CONALEP's principle of using only part-time instructors drawn from enterprises, combined with the rapid expansion of training capacity and the flexibility in coeirse offerings, creates a need for large-scale recruitment and training of instructors. At appraisal, it was estimated that 4,100 additional instructors would need to be trained between 1981 and 1985 in order to bring the total number of - 27 - instructors (for 99 training centers) to 5,550. With the increase of Phase I of CONALEP's expansion plan to include 122 training centers, instructor needs grew further. By mid-1985, the actual number of instructors under contract was about 9,200 (for a number of centers already exceeding 122, because Phase II expansion had already started). Even when CONALEP's zapacity expansion levels off in the future, the relatively high turnover inherent in the part-time systeml/, as well as technological changes in Mexican industry, will necessitate-maintaining a substantial, permanent instructor training capacity within CONALEP. 3.13 Since instructors are recruited among active professionals who master the technical content and professional practice of their respective . trades, CONALEP's instructor training programs are limited to the pedagogical/methodological and administrative aspects of the training process. This training is carried out through a short introductory course at a training center well equipped for methodology training for the respective trade, or at the central training facility in the Headquarters Complex. This introductory training is followed by a distance upgrading program operated from Headquarters, combined with practice sessions at the training centers. For trades and specialties new to Mexico, further training is provided through collaborative arrangements with sister organizations abroad (including staff exchanges with Los Angeles Community College, USA, and the Engineering Training Board of Great Britain). Numbers trained are shown in the following table: Table 3.1: Instructor Training by CONALEP Number of Instructors trained up to Introductory Training and including 1984 Introductory course at Headquarters facility 1,665 Introductory course at training centers 13,155 . TOTAL 14,820 Instructor Upgrading Participants in distance upgrading program - 1983: 3,666 Participants in distance upgrading program - 1984: 5,195 TOTAL 8,861 The large number of instructors having completed the introductory course, relative to the number employed (about 9,200) reflects the high turnover. The above numbers also indicate that the majority of instructors now under contract have completed the introductory course and participated to some extent in the distance upgrading program. In overall quantitative terms, the 1/ Available sample data indicate an annual turnover of instructors of 15 to 36 percent, with an average of 28%. - 28 - instructor training program has thus met its objectives, and vastly surpassed appraisal estimates (which were based on lower assumptions as tocapacity expansion). Other aspects of the program, including quality consideratiors, are discussed below under "Project Outcomes" (para. 5.09). 3.14 Curriculum Development and Preparation of Instructional Materials. CONALEP's Commission for Curricula, Profiles and Programs is responsible for determining the otjectives and main characteristics of all training programs. The detailed curriculum is then prepared by specialists and adapted to local needs, through established procedures, at the training centers. From 1980 to 1985, the Commission defined 101 different profiles for technicians (three-year course), and began to define curricula for shorter courses including technical supervisor (two years), assistant technician (one year) and in-service and upgrading courses of shorter duration. The preparation of the necessary instructional materials to support these curricula is the responsibility of the Instructional Materials Center which is an integral part of the new Headquarters Complex. This center is well equipped and staffed and is producing a variety of materials of excellent quality, including workshop manuals, problem collections, color slides, and video cassette programs. 3.15 The curriculum component has been well implemented and the Instructional Materials Center is meeting its objectives in a qualitative sense. However, due to the rapid expansion in training specializations, it would obviously be unreasonable to expect the Center to have prepared all the corresponding materials in the short time that has elapsed since the center became operational. A wider use of ready-made materials including manuals, video programs, and other training aids developed and supplied by equipment manufacturers and specialist firms might have helped to alleviate the capacity constraint. Budget constraints have probably also played a role in limiting the output of the Instructional Materials Center. Specialist Services and Fellowships. 3.16 This component has been limited, but successful; it has mainly financed exchanges between CONALEP and sister organizations abroad. Compliance with Loan Covenants 3.17 Compliance has been excellent. Annex 10 describes the only two special covenants in the Loan Agreement. Recurrent Cost Financing 3.18 CONALEP finances its recurrent costs essentially from three sources: a budgetary allocation from the Federal Government, funds received from enterprises (in-kind contributions and payment for special training contracts), and tuition fees. No reliable estimates exist for the aggregate value of enterprises' contributions towards recurrent costs; special training contracts are mainly for in-service training which is not covered by this report. Tuition fees were originally calculated to cover 10% of recurrent costs but have been eroded by inflation and currently correspond to only about 3%. Therefore, the Federal budget allocation is the dominating source - 29 - for financing of recurrent costs for pre-service training programs. It has been maintained above the 50 million mark in dollar terms and has been slowly rising, except in the economic crisis year of 1983 (when CONALEP still fared far better than most government agencies), as shown in the following table: Table 3.2: Federal Budget Allocations for CONALEP Per-Student- Tear Budget Year Budget in Current Budget in Constant Budget in in Constant Pesos 1970 Pesos US Dollars 1970 Pesos (uIllions) (aillions) (millions) (approx.) 1981 1,252 193.7 51.1 1982 2,824 271.0 53.3 - 1983 4,899 242.2 40.8 3,800 1984 9,431 281.6 54.9 3,100 1985 15,712 284.4 57.1 2,500 In constant pesos, the Federal budget amount increased by 47% from 1981 to 1985. This is obviously less than would have been desirable in view of the rapid increase in training volume, as indicated by the per-student-year budget in constant 1970 pesos, which has decreased from about 3,800 in 1983 to about 2,500 in 1985. As discussed in para. 5.22 on unit recurrent costs, although there are additional sources of financing, the government subsidy is becoming inadequate to support the growing CONALEP system, and substantial increases are needed in coming years. Budget limitations have probably already been a constraining factor in the preparation and distribution of training materials; they have probably contributed in other ways also to limiting the pace of quality improvement. In general, however, shortages of operational funds have not caused serious setbacks for the project. 3.19 Tuition Fee/Student Loan Program. CONALEP has instituted a cost recovery system involving tuition fees, part of which are paid during training, part during the first years of post-training employment. This deferred payments scheme is equivalent to a student loan program. Total payments were initially determined to cover about 10t of per-student unit recurrent costs and are seen as a means to strengthen the student's commitment to his own training, as well as to provide some revenue. The overall effects of the system are yet to be evaluated. One notable aspect is that fees have not generally deterred prospective students from enrolling, in a country where public education has traditionally been free of charge. On the other hand, the fees are cited as contributing to CONALEP's high desertion rate. Once this system of cost recovery has been evaluated, further studies should be made of its applicability in other countries and projects, as well as its potential for contributing more to covering CONALEP's recurrent costs. Possible alternative approaches to cost recovery should also be studied. Accounting and Audit 3.20 Accounting arrangements have been satisfactory and audit reports have been sent to the Bank as required. Negative comments in audit reports - 30 - have been essentially limited to matters beyond CONALEP's control, such as delays in formal transfer to CONALEP of title to land donated by municipalities, and transfer of title to project-financed equipment from NAFINSA to CONALEP. In December, 1985, CONALEP furnished a satisfactory overall report by external auditors covering the project from inception to completion. Bank Role 3.21 The Bank's role in project implementation was dynamic and well adapted to the circumstances. Bank staff saw its role during implementation as one of facilitating, interfering as little as possible when things went well, but being ready to take action at the highest level when major problems arose (such as with the clearance of imported equipment). Supervision was carried out as a team effort involving essentially the same individual staff who had identified and appraised the project, and using small field missions including different specialists in an alternating mode. This made for efficient supervision at relatively low cost to the Bank. IV. PROJECT COSTS AND FINANCING Project Cost 4.01 The total final project cost expressed in US Dollars amounted to $188.7 million, which is 12.2% below the appraisal estimate. Calculated in constant Mexican pesos, however, the total cost turned out to be 14.1 % higher than the appraisal estimate, as shown in the table below (details in Annexes 4 and 7): Table 4.1: Estimated and Actual Project Costs (in US$ millions) Category of Appraisal a/ Actual Difference as Expenditure Amount Z of Total Amount % of Total % of Appraisal Construction 122.32 56.9 109.4 58.0 -10.6% Furniture and Equipment 92.52 43.1 79.3 42.0 -14.3% TOTAL 214.84 100.0 188.7 100.0 -12.2% Equivalent in millions of constant 1970 Pesos: Construction 463.59 56.9 517.2 55.7 +11.5% Furniture and Equipment 350.65 43.1 412.0 44.3 +17.5% TOTAL 814.24 100.0 929.2 100.0 +14.1% a/ Including contingencies - 31 - 4.02 The differences between estimated and actual cost and between dollar and peso cost are mainly due to the sharp rise in the value of the dollar relative to other currencies, including those of major equipment suppliers, in the period between appraisal and project implementation. Index and exchange rates series illustrating the relative movements of costs and currency values are in Annex 8. Overall costs were obviously also influenced by the increase in area constructed (para. 3.08), which increased both construction costs (in local currency) and local costs for equipment. In dollar terms, however, the change in the exchange rate for the dollar was more than adequate to compensate for these increases in local costs. Financing and Disbursement 4.03 At appraisal, the Bank loan of US$ 90 million was expected to finance 42% of total project costs (US$ 214.84 million). For the reasons explained in para. 4.02, the Bank's actual share increased to 47.7% of the reduced (in dollar terms) project cost of $188.7 million, as shown in the following table: Table 4.2: Financing and Disbursement (in US$ Million) Appraisal Actual Amount % of Total Amount Z of Total Government 124.84 58.0 98.7 52.3 Bank 90.00 42.0 90.0 47.7 TOTAL 214.84 100.0 188.7 100.0 4.04 Disbursements were slower than anticipated, mainly due to (a) an unexpected delay of nearly four months between signing and effectiveness and (b) delayed procurement decisions during the change of administration in 1982. Reason (b) caused the more important delays in disbursements, as has been discussed under "Implementation Schedule" (para 3.01). It can be safely concluded from the records that disbursement problems would likely have been very much worse, had disbursements not been concentrated to a few categories, each with a high disbursement percentage. Estimated and actual disbursements are shown graphically in Annex 5 and in tabular form in "Basic Data". Unit Capital Costs and Space Allocations 4.05 The areas built and unit capital costs of the 122 training centers are compared with appraisal estimates in the following table (details in Annex 4): - 32 - Table 4.3: Comparative Analysis of Planned and Actual Areas and Costs Per Student Place Per m2 Unit Cost per Student Place JArea per Construction Civil Furniture and Student Cost Works Equipment Total Place 1970 1970 1970 1970 1_m2 1US$ Pesos US$ Pesos I US$ Pesosl US$ Pesosi Appraisal 1 8.9 1303 1,15012,700 10,2301 2,050 7,7701 4,750 18,0001 Acua 10.008,028235 Actual 10.4 215 1,00812,236 10,464 1,607 8,358 3,839 18,8221 Difference % +16.8% 129.1Z -12.4%[-17.2% +2.321-21.6% +7.6%-19.2% +4.6%1 4.06 Actual unit costs in dollars are lower than those estimated at appraisal (in spite of a 16.8% increase in the area per student place) for the reasons explained in para. 4.02. In terms of constant 1970 pesos, actual unit construction cost per m2 was 12.4% lower than appraisal estimate. Due to the increase in area per student place construction cost per student place increased slightly in constant pesos (2.3%); overall cost per student place increased 4.6% in constant pesos but dropped by 19.2% in dollar terms. V. PROJECT OUTCOMES Physical Facilities: Quality and Functionality 5.01 The physical facilities provided under the project are satisfactory. CONALEP's standard layouts and designs used for almost all the training centers have proved suitable and adequate; centers and individual facilities are functioning well, most of them near or slightly above design capacity. The equipment supplied, local as well as imported, is suitable for training purposes at the relevant level. The central adminstrative and support complex (CONALEP Headquarters) was well planned, and built and equipped to high standards of efficiency; it is functioning very well. Educational Outcomes 5.02 More Efficient and Effective Central Administration (first specific project objective, para 2.07 (a)). This objective was fully achieved with the construction of the new CONALEP Headquarters at Metepec. The substantial relocation of existing offices (from a number of sites in the city) seems to have taken place with less pain and staff losses than expected, and resulted in a much calmer and more efficient work environment for CONALEP staff. The availability of reasonably priced housing close to the new Headquarters Complex, on sites provided by the State government, was a factor in the choice of location and no doubt has contributed to the success of this essential improvement. 5.03 Overall Enrollments and Use of School Facilities. The second specific project objective (para. 2.01 (b)) was to increase overall enrollments in CONALEP's pre-employment courses by about 50,000 to 69,500 -33- students. This goal was surpassed, as shown in Annex 2 which compares estimated and actual numbers of training centers and students enrolled for each main region. In September 1984, the number of student places available (in two shifts) was 93,300 and total enrollment had reached 89,160, implying an average use factor of 95.6% for the 122 centers included in the project. In September 1985, enrollments in the three-year pre-employment courses had increased further to 105,921, reflecting the start-up of new centers belonging to Phase II of CONALEP's expansion plan. Enrollments in September * 1985 were distributed among main areas and year of study as follows: Table 5.1: Total Enrollment by Main Area and Year of Study Year of study Total Percentage of 1st 2nd 3rd Enrollment Enrollment Main Area of Study Agriculture 1,984 1,251 1,100 4,335 4.1% Fisheries 475 255 276 1,006 0.9% Administrative 23,607 11,189 7,259 42,055 39.9% Industrial 31,010 12,924 9,666 53,650 50.6% Health 2,930 1,043 902 4,875 4.6% TOTAL 60,006 26,712 19,203 105,921 100% Percentage of Enrollment 56.4% 25.5% 18.0% 100% Annex 3 shows the distribution of enrollment by main area of study as a pie chart. The uneven distribution by year of study, with over half of total enrollment in the first year, reflects (a) the (transient) effect of rapid system expansion and (b) the (more permanent) effect of dropout and "lateral exits" (intermediate-level graduations after the first and second year of study; see paras. 3.14 and 5.16). The question of which portion of the uneven distribution depends on each of the two effects cannot be meaningfully answered at this stage but requires follow-up and possibly future modification of facilities, if the permanent uneveness turns out to be high. (The above data do not include enrollment in short upgrading courses ("capacitacion"); these are discussed separately below). 5.04 Overall Output of Graduates. At appraisal, the overall annual output of graduates (from 99 training centers) was expected to reach about 20,900 in 1985-86. Actual output from the 122 centers included in the expanded project reached 14,433 in 1985, as shown in the following table: - 34 - Table 5.2: Total Number of Graduates from CONALEP Training Centers Area of Study Number of Graduates from 122 Project Centers 1983 1984 1985 Total 1983-85 Agriculture 109 839 768 1,716 Fisheries 0 149 161 310 Administration 1,608 3,944 5,157 10,709 Industrial 3,687 7,387 7,410 18,484 Health 183 893 937 2,013 TOTAL 5,587 13,212 14,433 33,232 Additional Graduates from Phase II Centers (estimated) 0 1,849 6,577 8,426 TOTAL, all CONALEP Centers (estimated) 5,587 15,061 21,010 41,658 . Thus, by coincidence, total output in 1985 from all CONALEP centers (including the 23 additional Phase I centers and some already operational Phase II centers) came very close to the appraisal estimate for 99 centers; actual output from the original 99 centers can be estimated to have reached only abouc 55% of the appraisal estimate. The main reason for this shortcoming is the much higher than expected student desertion rates, particularly during the earlier years of the project. 5.05 Regional Distribution of Training Capacity. The agreed criteria for determining the location of new centers and areas of training to be offered (paras. 2.09 and 3.06) were designed to ensure economy, feasibility, and efficiency in expanding CONALEP's training capacity. Local commitment and support as expressed in donations of land, etc., was an important consideration. The criteria, as used, have ensured equity and yet flexibility in system development, increased Borrower involvement and commitment, provided incentives for local enterprises and authorities to share in the cost of training, and eliminated the need for cumbersome, detailed specifications and covenants. The resulting regional distribution of training centers is generally close to that expected at appraisal and is demonstrated in Annex 2 and in the attached Map. The main deviation from appraisal estimates is a higher concentration of training centers to Regions I (North-West) and V (West-Center). The net effect of is that virtually all the 23 new centers added to the project are located in those two Regions. Particularly strong support for CONALEP from local authorities as well as from industry in these two regions appears to have been the main determining factor for this relative shift. Overall, the objective of providing more equal training opportunities countrywide has been achieved by the project, and is being pursued further by the follow-up project (CONALEP II). 5.06 Occupational Distribution of Enrollments and Graduates. CONALEP has standardized its description of the occupational distribution in five main fields of study as shown in Tables 5.1 (para 5.03) and 5.2 (para. 5.04). The following table compares the actual distribution to that estimated at appraisal. - 35 - Table 5.3: Enrollment and Graduate Output by Main Area of Study: Actual vs. Appraisal Estimate Enrollment Graduate Output I Actual I I I Sept. I AppraisalI Appraisal 1 1985 tActual lEstimate Actual lActual in Estimate I (All lin % of (99 (122 j % of Main Area of (99 Centers, OperatingjAppraisall Centers,J CenterslAppraisal Study 1985-86) Centers) Estimate 1985-86) 1985) Estimate Agriculture 3,600 a/ 1 4,335 1 148 a/I 1,050 a/1 768 88 a! Fisheries - 1,006 1 - - 1 161 - Administrative 15,200 42,055 276 4,450 5,137 116 Industrial 43,900 ( 53,650 122 113,420 1 7,410 1 55 Health 6,800 4,875 72 1980 937 47 I II I 69,500 1105,921 1 152 120,900 114,433 69 a7 Including Fisheries The main deviations are found in the "Industrial" and "Health" areas, where actual output 1985 from 122 project centers was only 55 and 47 percent of the respective appraisal estimate. The most recent trends are illustrated by the enrollment in September 1985 for all operating centers (122 centers plus some Phase Il centers). According to these data, overall enrollment in the "Industrial" area now exceeds appraisal estimate (for 99 centers) by 22%, but accounts for only 51% of total enrollment against 63% estimated at appraisal. In the "Administrative" area, by contrast, enrollment has expanded to almost three times the number estimated at appraisal and from 22 to 40 percent of overall enrollment. "Health" still lags behind at 72% of appraisal estimate. 5.07 A separate study would be needed to find the reasons for these deviations from appraisal estimates. At the time of the appraisal mission, it was obviously very difficult to predict the relative demand for training for administration and services vs. industry, and to assess the practical feasibility of expanding a new type of industrial training very rapidly on a broad front. The criteria for determining training areas ensure that the occupational distribution reflects effective demand, so that on average and in the longer term, the actual distribution ought to approximate the optimum. Nevertheless, CONALEP will need to monitor carefully the further evolution of enrollment and graduation data for the different areas to avoid possible distortions that may be caused by unforseen or underestimated factors. For the "Health" area in particular, a review of the effects of using the currently agreed criteria should be made to determine eventually desirable modifications to ensure adequate development of training in this area. - 36 - Improvement of qulality (third specific project objective, .07 (c)). This outcome was to be achieved through: 1) instructor training, .1) practical approach to training, and 1) evaluation, follow-up and feedback. Instructor Training. CONALEP's instructor training program and its ntation are described in paras. 3.12 - 3.13. The results have ated that large-scale recruitment and training of part-time :ors are generally feasible, and the program has met its objectives in . numbers trained. However, due to the steep expansion of enrollments ,tical limitations in instructor training capacity, the qualitative of this training is not yet satisfactory. CONALEP's own evaluations, ated by Bank missions' observations, indicate that considerable of existing instructors need additional training, particularly in at methodologies for workshop/laboratory instruction. Further efforts ye training of instructors and other 0ONALEP staff will be made under inical assistance component of the follow-up project. Feasibility of Part-Time Instructor System. CONALEP's system of tly part-time instructors has important advantages. It ensures that ors are up-to-date in their profession, and allows flexibility and a in course offerings by reducing resistance to change, such as the ion of courses which have turned out to be in little demand. The iso allows CONALEP to offer attractive remuneration, while avoiding ,ems that would be inherent in CONALEP being the instructors' main . The system also has inherent disadvantages such as high average or turnover (part of which is an effect of the highly desirable ty in course offerings), problems with recruiting instructors in ies which are new to the geographic area served by a training and difficulties of collaborating enterprises to release staff as instructors during peak hours of industrial activity. CODNALEP is ig these problems through its massive training program for new >rs, by special arrangements for new technologies (essentially a ie involving temporary hiring of full-time technicians as rs), and by more flexible scheduling of parts of training activities ie morning shift. Other possible improvements to the system will be uring the follow-up project. On balance it appears that, in the tontext, the advantages of the part-time instructor system far the disadvantages, and that this innovative approach could be one countries to consider (particularly countries at a similar or vel of industrial development). Practical Approach to Training. On average, 0ONALEP devotes 20% of me to general theory, 20% to technical, trade-specific theory, and :hnical practice. This emphasis on hand-on training has been very successful; indeed, CONALEP's practical, workshop-based ias revolutionized vocational training in Mexico. Where subject - 37 - matter used to be taughc using chalk and blackboard, it is now taught doing the job; some of the training center workshops resemble production factories more than school facilities. There still persists, though, a certain shortage of necessary instructional materials (para. 3.15). The main factors behind this relative success are the use of instructors who are active and up-to-date in their profession, a generally very good selection of training equipment, and suitable buildings and other installations. 5.12 Evaluation, Follow-up, and Feedback. These aspects were emphasized from the beginning of the CONALEP system. A separate Department of Evaluation has been created and CONALEP has agreed to establish a system of tracer studies. Due to the rapid expansion of training capacity, until now, the Department of Evaluation has focused mainly on problems related to student selection. It is establishing systems for collection and processing data for evaluation purposes, however, while some pilot studies have been carried out, there are as yet no conclusive evaluations available for the countrywide training program. Such evaluations will be fully implemented during the follow-up project. At the local level, effective evaluation and feedback is secured through the industrial advisory committees at each training center. With the assistance of these committees, each training center regularly reviews the demand for and effect of its courses, and makes proposals to Headquarters to terminate programs that are ineffective or in low demand, and to start new courses needed by enterprises. ODNALEP has established a standard format and process for such proposals which ensures that decisions on program modifications are based on adequate and objective information, taking local requirements fully into account, and at the same time, does not inhibit change; this process appears to be working very well at centers visited by the completion mission. 5.13 Employment of Graduates. To date, only preliminary studies have been made concerning the employment of graduates. The graduate tracer system is currently under development in the context of the follow-up project, and has not yet produced reliable data. One problem detected during testing of tracer forms is that CONALEP's system of deferred payment of tuition fees provides a strong incentive for graduates to declare themselves unemployed, to avoid beginning to pay deferred fees. Impressionistic evidence, as well as the continued high student demand for CONALEP training, indicate a very favorable rate of employment of graduates. Some training centers report having had to appeal to employers to allow students to complete their courses before hiring them away. 5.14 Industrial Advisory Committees. Such committees have been set up at each training center (in addition to each center's Governing Board, which also includes indc.trial representatives; para. 2.01). The committees appear to be functioning ary well in their role of providing feedback on curriculum and training center performance (para. 5.12). CONALEP is studying measures to expand the role of the committees in facilitating the placement of graduates and provision of instructors. 5.15 Internal efficiency. The main problem in this area has been a high rate of desertion of students, particularly in the first year of the three - 38 - year course. In 1980-81, about 30% of registered students left the program during the first year of study; for 1984-85, CONALEP's preliminary data indicate that this rate has been reduced to an average of about 15%, with higher rates generally limited to less developed regions of the country. Part of the explanation for these high desertion rates lies in CONALEP's unusually strict definition of desertion (every student registered in September is counted, although some of them never actually appear when courses start). Nevertheless, desertion remains a major pr,alem. According to studies by CONALEP, the main reasons for desertions as stated by students are (a) inability to pay fees and other costs (including the opportunity cost of students' time), (b) poor local transport, and (c) inadequate preparation for CONALEP's courses (shortcomings of general education, particularly in mathematics and basic science). Initially, there was also a lack of information to prospective students concerning the terminal, practical, and relatively demanding nature of CONALEP's training programs; this has been resolved through an efficient publicity campaign. 5.16 Alternative Courses ("Lateral Exits"). In most cases of student defection, the reasons given above are probably relevant and largely intractable in the short and medium term. To minimize wastage, CONALEP is now offering alternatives to those considering leaving the program by allowing "lateral exits" after the first and second years, and providing modified courses in the latter part of the first and second years for these students. These "lateral exits" lead to lower qualifications of "Technical Supervisor" and "Assistant Technician" after 1 or 2 years of study, respectively (see also para. 3.14). The adecuacy of these programs and the problem of internal efficiency will be particularly monitored under the follow-up project. 5.17 Student Recruitment and Public Information. As in many other countries, vocational training in Mexico has faced an image problem when compared to academic education. CONALEP has addressed this problem directly, forcefully, and successfully in a way that could be a model for other training agencies. Through an effective and sustained publicity campaign e:.plaining to the general public the value of professional technical work and using brochures, the press, radio, and television, CONALEP has built a strong and positive public image for itself and managed to attract as many as three to five applicants per entrant place in a very rapidly growing national network of training centers. 5.18 In-Service and Upgrading Training. Initially, CONALEP's mandate was essentially pre-service vocational training of young school-leavers, while a different agency was responsible for in-service training. That other agency has since been abolished. As a consequence, and in response to direct requests from enterprises, CONALEP has felt compelled also to arrange shorter - 39 - courses during vacations, etc. to upgrade already employed workers. This activity has been growing rapidly and in 1984, over 25,000 workers were upgraded; for 1985, this number was expected to reach 40,000.2/ This activity, while highly beneficial for the Mexican economy, is straining CONALEP's training and management capacity. CONALEP's leadership is currently considering a model for organizing and carrying out these courses in a way commensurate with capacity constraints. Institutional Outcomes and Development Planning 5.19 Institutional Development. The institutional outcomes of the project are excellent. The project has further developed and strengthened CONALEP's central organization, particularly through the creation of the Procurement Department and the construction of a well-functioning Headquarters Complex. The project has also been instrumental in development at the local level through the strengthening of the advisory committee system and the abolition of Regional Coordinating Offices. 5.20 Development Planning. The fourth specific project objective (para. 2.07(d)) was to improve the quality of CONALEP's long-term plan for 1984-1988. This was achieved to the extent that a draft plan was produced, discussed, and used as the basis for the follow-up project. Some important issues remain concerning CONALEP's development planning. One problem is the scarcity until now of relevant data, including comprehensive statistics and evaluations of CONALEP's own operations and costs; another is the organization cf CONALEP's long-term strategic planning, as different from short-term operational planning. CONALEP's leadership is currently addressing both issues within the framework of the follow-up project. Recurrent Costs 5.21 As discussed in para. 3.18, the recurrent costs for the regular pre-service training programs are financed essentially from the Federal budget allocation and by enterprises in the form of replacement equipment and consumable materials. CONALEP has provided the following analysis of the use of the Federal budgetary allocation of US$57 million equivalent for 1985 (in thousands of US dollars): 2/ To avoid confusion, these enrollments in upgrading courses (which were not anticipated at appraisal) are not included elsewhere in this PCR. Discrepancies on this point between this PCR and for instance, the SAR for CONALEP II, are due to this fact (that SAR correctly includes upgrading enrollments) and to the fact that CONALEP has in the meantimefurther expanded training center construction. - 40 - Supplies and Misc. Salaries Materials Exenses Total % Headquarters Complex 3,099 719 727 4,545 8.0 Training Centers (Administrative Costs) 32,693 1,416 806 34,915 61.1 Training Centers (Training Costs) 15,856 1,018 806 17,680 30.9 Total 51,648 3,153 2,339 57,140 100 % 90.4 5.5 4.1 100 The costs for training center administration are shown as amounting to twice the training costs. This is probably misleading to some extent, since at least some of the staff budgeted as administrative, including Directors of centers, usually also teach part-time. Nevertheless, the proportion of administrative costs does appear high. The cost of supplies and materials is unusually low for reasons explained in the next paragraph. 5.22 Unit recurrent costs. CONALEP has estimated the breakdown of the allocation of the 1985 Federal budget by main area of study as follows: Per Student Year Main Area of Study Total Cost Unit Cost (US$ million) (US$) Agriculture and Fisheries 4.8 809 Administrative 20.8 441 Industrial 20.2 349 Health 11.3 2,182 Total/Average 57.1 492 An unknown quantity should be added to these costs to account for contributions from enterprises. These are reported to be particularly significant in the industrial area (consumable materials, etc.), which helps to explain why this area receives the least per unit contribution from Federal funds. Total unit costs per student-year have been estimated at about US$875 in 1985, well below the appraisal estimate of US$1,000 (except for "Health", where costs are similar to those in industrialized countries, probably largely due to uneconomically small classes). Regardless of the size of contributions from enterprises (which contributions also vary among geographical areas) recurrent expenses on the whole are now most probably somewhat under-funded, as reflected by the gradually decreasing budget per student year, expressed in constant 1970 pesos (para.3.18). A very low average internal allocation for supplies and materials (US$27 per student year, only one third of which directly for training), also points to possible - 41 - underfunding of costs for consumable training materials which are of great importance for maintaining the quality and efficiency of practical training, and to a need to increase substantially the Federal budget allocation in coming years. VI. CONCLUSIONS, RECOMMENDATIONS, LESSONS LEARNED 6.01 In accordance with paras. 1.01-1.02, this report's conclusions and recommendations are summarized under the following headings: - particular design features and implementation actions which contributed to the project's success; - innovative features worth exploring for training systems and projects in other countries; and - remaining or potential problems with the system which require particular attention during implementation of the follow-up project . 6.02 Particular Design Features and Implementation Actions Which Contributed to Success. The following were among the most important such features and actions: (a) project design was based on a thorough subsector study carried out by local experts with the assistance of specialist Bank staff (Educational Planner, Technical/Vocational Educator; para. 2.02); (b) the project was processed rapidly; once the subsector study was completed, preparation and appraisal were carried out comparatively quickly. This helped to avoid, disrupting changes of individual staff during the process (paras. 2.02-2.03); (c) in addition to thoroughly establishing the project's technical feasibility, the careful preparation process ensured that a competent and well-managed implementing agency was selected, and provided support and endorsement for good leadership of that agency (paras. 2.02-2.06); (d) the concentration to only one Borrower agency, the clear consistency of the project's objectives with the goals of that agency, and the financing of a major part of the agency's investment program ensured full counterpart commitment (paras. 2.07-2.08); (e) efficient, low cost Bank supervision was ensured through staffing continuity, coordination, teamwork, and flexibility; unnecessary interference was avoided, but the Bank's influence was used at the necessary level when problems arose which were beyond the implementing agency's control (para. 3.21); and - 42 - (f) disbursements were concentrated on a few categories, each with a high percentage of disbursement (para. 4.04). 6.03 Innovative Features Worth Exploring for Training Systems and Projects in Other Countries. The main features of this kind were: (a) the expressly terminal nature of CONALEP's training programs (CONALEP graduates who wish to go on to higher education, by law must repeat grades 10-12 in an ordinary secondary school) (para. 2.05); (b) the highly practical orientation of the curriculum, with an average of 20% of course time devoted to general theory, 20% to technical/trade-specific theory, and 60% to practical training (para. 5.11); (c) the system of using exclusively part-time instructors active in local enterprises to ensure a strong practical orientation, as well as relevance and flexibility in the training program, and the massive and sustained effort undertaken to ensure adequate pedagogical/methodological training of such instructors (paras. 5.09-5.10); (d) the intensive and sustained multi-media promotion campaign which has helped improve public perceptions of vocational training and built a strong and positive public image for CONALEP (para. 5.17); (e) the consistent establishment, at each training center, of industrial advisory committees to provide guidance and feedback on training programs and performance (para. 5.14); (M) CONALEP's standard format and process for initiating changes in training programs such as introducing new specialties and deleting courses (para. 5.12); (g) the use of agreed general criteria and guidelines for location and specializations of new training centers and for equipment allocations. As used, the criteria have ensured equity and yet flexibility in system development, increased Borrower involvement and commitment, provided incentives for local enterprises and authorities to share in the cost of training, and eliminated the need for cumbersome, detailed specifications and covenants (para. 5.05); (h) the use of collaborative arrangements with sister organizations abroad (para. 3.13) rather than technical assistance contracts, for training of instructors in trades and specialities new to Mexico; and; - 43 - (1) CONALEP's semi-autonomous status and decentralized organization, which is unusual for institutions mainly engaged in pre-service, essentially formal training and has been very beneficial for this project in terms of operational flexibility and responsiveness to the needs of the economy (paras. 2.01, 3.04). In addition, CONALEP's cost recovery system has innovative features which could, if favorably evaluated, be adopted in other training projects (para. 3.19). Another interesting aspect of the project was the delegation of the preparation, procurement, and supervision of the main part of the construction program to CAPFCE, without a direct contractual relation between it and the Bank (para. 3.09). This worked well for this project and could be * replicated in future projects in Mexico; in general, however, such arrangements would requ:re a careful assessment of the respective organization's track record and verification that it is adequately funded and . staffed, and that its management and procedures for procurement and supervision are satisfactory. 6.04 Remaining or Potential Problems which require Special Attention During Implementation of the Follow-up Project. The main issues, all of which are being actively addressed by the follow-up project (CONALEP II), are: (a) the continued high desertion rate, particularly of first-year students, the reasons for which need to be analyzed in more detail, and the question of the adequacy of the "lateral exit"programs as preparation for the labor market (paras. 5.15-5.16); (b) the organization and implementation of both pre-service and in-service/upgrading courses wittin CONALEP's overall training capacity and management constrairts, including the issue of centralization vs. decentralizati3n, considering the administrative difficulties arising from the growing diversity and dispersion of a large system of over 200 training centers (paras. 5.03 and 5.18); (c) the financial sustainability of the system under the current mechanisms for recurrent cost financing, particularly the heavy reliance on government subsidies and the imminent need to increase allocations from the Federal Government budget, the need to assess current and potential contributions from enterprises, and the questions related to the operation and long-term feasibility of the tuition fee/deferred payment system, including possible alternative approaches to cost recovery (paras. 3.18 and 5.22); (d) the need to expand the recruitment and training of instructors and to improve instructor training, particularly in practical workshop methodology (paras. 5.09-5.10); (e) the continuing shortage, in spite of impressive efforts, of instructional materials (workshop manuals, etc., para. 3.15); - 44 - (f) the need to establish of a system for maintenance of buildings and equipment (para 3.11); (g) the need to accelerate work on comprehensive monitoring and evaluation of CONALEP's training, including monitoring of enrollments in different areas and evaluation of the location criteria (para. 5.07) and graduate tracer studies (paras. 5.12-5.13); and (h) the organization of CONALEP's long-term strategic planning (para. 5.20). -45 - ANNEX 1 PROJECT COMPLETION REPORT UNITED MEXICAN STATES TECHNICAL TRAINING PROJECT (CONALEP I) (LOAN 2042-ME) CONALEP: Organization Chart (+++e Changes during Project Implementation) A. NATIONAL AMA AC0AO rMVL I ZI OINICTONATI! COUNCIL DIRSCTORATS OF PROMOTION AND TWO VUNIC ALAIOR of grocugeaTa $ICRKTARY 0SeCTOCATL Of OF STUO1SS INSTRUCTIO AD PWANCga"uT $OftDUrectorate con TING of Procurement . 6. LOCAL LIVIL O CANTSAS OMMITT61 TATINGs ADm-STMATION *arid sou - 22873 MEXICO - Loan 2042-NE COMPLETION REPORT Annex 2: Regional Distribution of Training Centers and Enrollments (1) (2) (3) (4) (5) (6) Student Number Enrollment Actual of Centers Capacity II Overall Use Estimated Actual Estimated Actual Enrollment Factor Region at Appraisal Available at Appraisal Available (Sept. 84) ((5):(4)) 1. North-West: Baja California Norte, Baja California Sur, Nayarit, Sinaloa, Sonora 13 23 6,000 14,000 12,166 86.92 41 11. North: Coahuila, Chihuahua Durango, Nuevo Leon 14 13 11,000 8,900 7,771* 87.32 III. Gulf of Mexico: Tamaulipas, Veracruz 9 7 4,800 4,500 4,938 109.82 IV. North Cente: Aguascalientes, San Luis Potost, Zacatecas 6 7 3,200 4,900 4,827 98.5% V. West-Center: Colima, Cuanajuato, Jalisco, Michoacan 11 21 5,400 15,500 15,062 97.22 VI. Center: Hidalgo, Morelos, Puebla, Queretaro, Tlaxacla 7 8 3,200 5,200 5,385 103.62 VII. Valle de Mexico: Distrito Federal, Mexico State 21 22 28,100 27,000 26,470 98.02 VIII. South and South-East: Campeche, Z Chiapasa, Cuerrero, Oaxaca, Quintana Roo, Tabasco, Yucatan 18 21 7,600 13,300 12,541 94.32 t Totals 99 122 69,500 93.300 89,160 95.62 I/ Total enrollment capacity for two shifts (in accordance with CONALEP terminology) MEXICO - Loan 2042-ME COMPLETION REPORT Annex 3: Distribution of Total Enrollment by Main Area of Study (1985-86) INDUSTRIAL I 50.6 I ADMINISTRATIVA 39.9 Administrative PESCA 0.9 SALUD AGROfECUARIA Fisheries 4.6 4.1 Health Agricultural MEXICO - Loan 2042-ME COMPLE1ION REPORT Student Places, Area and Coats in US$ of CONALEP Training Centers (Total Costs in US$ Millions; Unit Costs in US$) Construction Cost Equipment/Furniture Cost. Total Centers Area Total Cost Cost (Grouped No of Per Cons- Per Cost Per GRAND per by Use of Student Area (2) Student truction Student Pei Total Student TOTAL Student Funds) Places Total Place Cost Place a_ Cost Place COST Place Group 1 (Equipment Only) 10 Centers 6,900 45,519 6.6 13.5 1,957 296.6 13.8 2,000 27.3 3.957 Group II (Expansion/remodeling, furniture and equipment) 52 Centers 23,400 240,374 10.3 55.7 2,383 232.0 35.4 1,513 91.2 3,894 A Group Ill (construction, furniture and equipment) 37 Centers 10,500 129.257 12.3 24.3 2,318 188.3 17.9 1,704 42.2 4,022 Group IV (Construction and equipment) 23 Centers (added to the project in 1983) 5,850 69,180 11.8 10.5 1,797 152.0 7.9 1,350 18.4 3,147 TOTAL GROUPS I - IV (122 Training Witters) 46,650 1/ 484,330 10.4 104.1 2,232 215.0 75.0 1.607 179.1 3.839 Group V (CONALEP Headquarters, including support centers) 1. Conjunto Metepec. . Estado de Mexico - 13,688 - 5.3 - 385.6 4.3 - 9.6 - GRAND TOTAL: 46,650 1/ 498,018 - 109.4 2/ - 219.7 79.3 2/ * 188.7 - 1/ Possible enrollment in two shifts 2 X 46,650 - 93,300 (Appraisal Estimate: 69,500 enrolled in 99 Centers asauming two shifts) 2/ In this table, equipment installation costs are included in construction costs. This explains the apparent discrepancy with total disbursements in the equipment category (US$83 million, category (2) in Annex 8) which Include installatioas costs. a - 49 - ANNEX 5 MEXICO - Loan 2042-ME COMPLETION REPORT Project Implementation and Disbursement Schedule: Actual vs. Programmed CT 1980 1961 1982 1983 1984 1985 Actiiti. gaI I i 111 1 IT 111II I Il III IV I it tII IV T 1z u11 19 Activities ~U UU l l! ZlUlI1 1y Zn Programed at Appraisal: a All institutions Iastitutions Requiring ftut- ture and Equipment only Iastitutions in Phase A see Instigutions in Phase m Institutions in Phase C M Support Centers Accual: TPhase Z 23 Additional Centers Civil Wosks: Site Acquisition . . Preparation of F2eas and * ---------Disbursemnents Bidding Dcuments (US$ Milions) - Estimated Adverting and Tendering s = A gat Appraisa. i-MCwx Actual Construction ' * -90 00 -- 0 Sauipment and Furniture: 80 70 Cowpletion of Lists an" M specifications A as0 Completion of Bidding a GO Documents 50 Advertising of Tenders 000, and Issuing of Bidding (140 Docu ents" Analysis of ids and Contract A * Avards 20 Manufacturing and DeliveryA InstallatIan m -jA Loan Signature Loan tMfective Original Pinul 7/31/81 11/25/81 Closing Date Closing Date 6/30/84 6/30/85 - 50 - MEXICO - Loan 2042-ME ANNEX 6 COMPLETION REPORT Project History, Including Bank Missions and Reports No. and Month/ No.of Spec. of Staff- Date of Item Sent by Year Days Staff a/ weeks Report Reconnaissance/ - 4 (AD,DC, Identification Bank 9/80 10 EP,TE) 6.0 PB 12/3/80 Appraisal Bank 1/81 12 4 (TE,AR, EP,FS) 8.0 Post-Appraisal Bank 3/81 4 1 (TE) 0.8 SAR 6/30/81 Pre-Negotiations Bank 6/81 3 1 (EP) 0.6 Total 15.4 Board Presentation 7/81 Loan Signature 7/81 Effectiveness 11/81 Supervision 1 Bank 9/81 6 2 (TE,AR) 2.4 10/2/81 Supervision 2 Bank 2/82 7 1 (EP) 1.0 4/14/82 Supervision 3 Bank 5/82 10 2 (ED.AR) 3.2 5/26/82 Supervision 4 Bank 8/82 9 2 (TE,AR) 2.8 9/17/82 Supervision 5 Bank 7/83 4 1 (DDC) 0.8 7/26/83 Supervision 6 Bank 8/83 8 1 (EP) 1.2 9/14/83 Supervision 7 Bank 12/83 10 1 (EP) 1.6 1/16/84 Supervision 8 Bank 9/84 5 1 (AR) 1.0 9/20/84 Supervision 9 Bank 1/85 5 1 (FS) 1.0 A/28/85 Total 14.0 Completion Bank 3/85 4 2 (TE,AR) 1.6 Completion follow up Bank 12/85 5 1 (AR) 1.0 Total 2.6 Amendments to the Loan Agreement Amendment August 3, 1983: Addition of 23 training centers (furniture and equipment) Amendment October 12, 1983: Establishment of a Special Account Amendment August 22, 1984: Postponement of Closing Date and reallocation of proceeds Follow-Up Project Project Name Second Technical Training Project (CNALEP 11) Loan Number Loan 2559-HE Total Project Cost US$162.2 million Loan Amount US$81.0 million Board Approval Date May 28, 1985 Loan Agreement Date July 16, 1985 Effectiveness Date December 18, 1985 a/ AD - Assistant Director; DC - Division Chief; DDC - Deputy Division Chief TE - Technical Educator; AR - Architect; EP - Education Planner/Economist F! .....t.eAt -51 - MEXICO - Loan 2042-ME ANNEX 7 Page 1 of 2 COMPLETION REPORT Costs of Project Components Annual and Total Expenditure on Civil Works and Furniture /Equipment (in millions of dollars resp. pesos) Furniture Calendar and Year Civil Works Equipment Total * Constant Constant Constant 1970 1970 1970 US$ Pesos US$ Pesos US$ Pesos 79 4.0 23.3 0 0 4.0 23.3 80 19.6 88.4 0 0 19.6 88.4 81 31.5 119.4 2.5 9.5 34.0 128.9 82 25.9 131.1 45.3 229.7 71.2 360.8 83 11.9. 70.4 14.8 87.9 26.7 158.3 84 16.5 84.6 12.0 61.7 28.5 146.3 85 - - 4.7 23.2 4.6 23.2 Grand TOTAL 109.4 517.2 79.3 412.0 188.7 929.2 Comparison of Actual Costs and Appraisal Estimate Appraisal Actual Difference (%) In US$ millions 214.8 188.7 - 12.2 In millions of Constant 1970 Pesos 814.2 929.2 + 14.1 - 52 - ANNEX 7 MEXICO - Loan 2042-ME Page 2 of 2 COMPLETION REPORT Costsof Project Components Total Costs for Civil Works and Furniture/Equipment per Center Group and Year Group of TOTAL Centers 1/ 1979 1980 1981 1982 1983 1984 1985 (1979-1985) 1 4.0 5.6 2.5 12.0 1.7 1.5 - 27.3 (14%) II - 13.4 28.0 32.0 9.0 7.2 1.6 91.2 (48%) * III - 0.6 3.3 19.6 8.0 8.3 2.4 42.2 (22%) IV - - 0.2 7.1 5.7 4.7 0.7 18.4 (10%) V 2/ - - - 0.5 2.3 6.8 - 9.6 ( 5%) TOTAL 4.0 19.6 34.0 71.2 26.7 28.5 4.7 188.7 (100%) (2%) (10%) (18%) (38%) (14%) (15%) (2%) (100%) 1/ Grouping as per Annex 3 2/ New CONALEP Headquarters at Metepec. - 53 - ANNEX 8 MEXICO - Loan 2042-ME COMPLETION REPORT MEXICO: Index Series and Exchange Rates Exchange Rate Annual Mexico: Composite Ratio Other Pesos per US Average Consumer Price Index Constant Exchange Calendar Year Dollar used Price Used in 1970 Pesos Rates uset and Quarter Period Averagel/ in PCR Indexl/ PCR2/ to US $ in PCR d 1970 12.50 5.2 1979 22.81 22.81 79.1 3.947 5.78 S 1980 22.95 22.95 100.0 5.080 4.52 1981 I 23.49 117.2 II 24.09 124.3 24.51 6.464 3.79 III 24.79 130.9 IV .25.68 139.3 1982 I 34.34 155.6 II 46.77 179.4 46.92 53.00 10.421 5.07 B.F./US$ III 71.18 216.8 IV 73.32 261.4 1983 I 102.02 330.4 II 114.20 385.2 2.18 120.17 20.225 5.94 S.F./US$ III 126.12 435.4 IV 138.04 489.9 2.72 D.M./USS 1984 I 149.96 573.0 II 161.87 646.5 2.94 171.94 33.426 5.14 D.M./USS III 173.73 711.0 IV 185.74 785.7 1985 I 200.57 913.1 II 218.57 1,001.9 274.98 47.456 4.98 III 274.75 1,107.8 1 Source: International Financial Statistics (IMF) 2/ Base Year 1970; Source: Secretaria de Programacion y Presupuesto - 54 - MEXICO - Loan 2042-ME ANNEX 9 COMPLETION REPORT Allocation of Loan Proceeds Original Loan Amendment Amendment Actual Category Agreement 10/12/83 8/22/84 12/31/85 (1) Works under Part A of 6,200,000 6,200,000 7,250,000 6,576,866 Project (2) Equipment, including 74,300,000 71,800,000 79,500,000 83,368,660 its installation, procured in accordance vith Parts A and C.1 of the Schedule to the Project Agreement (3) Equipment procured in 2,500,000 2,500,000 150,000 0 accordance with Part C.2 of the Schedule to the Project Agreement (4) Consultants' and 600,000 600,000 44,109 professional services, studies, training and fellowships (5) Initial Deposit in 2,500,000 2,500,000 10,365 Special Account (6) Unallocated 7,000,000 6,400,000 - - TOTAL 90,000,000 90,000,000 90,000,000 90,000,000 - 55 - ANNEX 10 MEXICO - Loan 2042-ME Compliance with Special Loan Covenants Section/Covenants in Project Agreement A B C Remarks 2.03 Location of training centers to be X * selected in accordance with agreed criteria 2.05 (a) Annual work programs for the x (a) Included in * Instructor Training Center and Instructional annual budget Materials Production Center; and (b) plans and reviewed CONALEP's Draft Development Plan for by supervision 1984-88 to be submitted to Bank. missions; (b) draft Development plan was used as a basis for follow- up project (CONALEP II) A - Covenants not complied with. B - Conditions on which action is pending. C - Covenants complied with. －一 !BRD 15811(PCJ ：祝