Argentina - Vocational Training and Technical Education Project

Document of The World Bank FOR OFFICIAL USE ONLY MICROFICHE COPY Report No. 10407-AR Type: (PCR) ReportNo. 10407 DONALDSON,/ X31757 / T9 017/ OEDDl PROJECT COMPLETION REPORT ARGENTINA VOCATIONAL TRAINING AND TECHNICAL EDUCATION PROJECT (LOAN 1905-AR) MARCH 9, 1992 Human Resources Division Country Department IV Latin America and the Caribbean Regional Office 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.  CURRENCY EQUIVALENTS Name of Currency: Peso Argentino ($P) at Appraisal and Austral (A), at Cancellation Rate at Appraisal: US$1.00 - $P 1,620 Rate at Cancellation: US$1.00 - A 1.38 WEIGHTS AND MEASURES Metric System ABBRE'VIATIONS AND ACRONYMS CONET : National Technical Education Council VTC : Vocational Training Center  FOR OFICIAL USE ONLY THE WORLD BAN,A Washington, D.C. 20433 U.S.A. Office of Directow-Geneual Opetations Evaluation March 9, 1992 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on ARGENTINA Vocational Training and Technical Education Project (Loan 1905-AR) Attached, for information, is a copy of a report entitled "Project Completion Report on ARGENTINA - Vocational Training and Technical Education Project (Loan 1905-AR) prepared by the Latin America and the Caribbean Region. No audit of this project has been made by the Operations Evaluation Department at this time. Attachment This document has a restricted distribution and may be used by recipients only in the perforrnance of their of ficial duties. Its contents may not otherwise be disc osed without World Bank authorization.  FOR OFmFCIAL USE ONLY PROJECT COMPLETION REPORT ARGENTINA VOCATIONAL TRAINING AND TECHNICAL EDUCATION PROJECT (LOAN 19O5:AR) TABLE OF CONTENTS Page No., Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . i Evaluation Swmary .... . . ....... . . . ... iii PART I REVIEW FROM BANK'S PERSPECTIVE 1 Background and Context . . . . .. . . . . 1 Project Objectives. . . . . 2 Project Design and Organization ..2 Project Results . . . . . . . . . . . . 3 PART II REVIEW FROM BORRO'W1ER'S PERSPECTIVE: THERE IS NO PART 11 5 PART III STATISTICAL INFORMATION 7 Table 1: Related Bank Loans . . . . . . . . . . . . . . . 7 Table 2: Project Timetable ... . . . . . . . . . . . . 7 Comments oa Project Timetable . . . . . . . . . . 7 Table 3: Loan Disbursements . ... o , ........... . 8 Table 4: Project Costs and Financing . . . . . . . . . . . . . 9 Table 5: Project Activities: Missions. . . . . . . . . . . . . 11 Comments on Missions . . . . . . . . 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.  PROJECT COMPLETION REPORT ARGEt4TINA VOCATIONAL TRAINING AND TECHNICAL EDUCATION PROJECT (LOAN 1905-AR) PREFACE 1. This is a Project Completion Report for the Argentina Vocational Training and Technical Education Project for which Loan 1905-AR in the amount of US$58 million was approved on October 7, 1980. The loan became effective on February 22, 1982. After almost six years of very limited disbursement, the Government of Argentina requested and in July 1986 the Board approved the cancellation of US$37.8 million of the original loan and the reprograming of the remainder. After total disbursements of approximately US$ 0.9 million, the remaining US $19.3 million was canceled on February 18, 1987. No projact completion report was prepared in the months following closure because the project had never really become operational. As a number of important lessons can be learned from the failure to implement a project, this PCR has been prepared four years after closure. 2. The loan was extended to the Government of Argentina, to be carried out by the National Technical Education Council (Consejo Nacional de Educaci6n T6cnica, CONET), a semi-autonomous entity under Argentina's Ministry of Education. 3. The PCR was prepared by the Human Resources Division of Country Department IV, Latin America and Caribbean Region on the basis of project documentation in the LAC Information Center and discussions with present and former Bank staff, including the leader of the Appraisal Mission and task managers at various stages in the project's history. Discussions were also held with the current President of CONET in Buenos Aires on two occasions, once to explain the PCR process and request his assistance in evaluating the project from the Argentine Government's point of view, and a second follow-up meeting. However, no records of the project were found in CONET's files. In view of the turnover in CONET staff and the lack of files, the Borrower did not complete a PCR. No formal Project Completion Mission was carried out by Bank staff.  - iii - PROJECT COMPLETION REPORT ARGENTINA VOCATIONAL TRAINING AND TECHNICAL EDUCATION PROJECT (LOAN 1905-AR) EVALUATION SUMMARY 1. This project was the first social sector project in Argentina. Initiated during a period when structural reform was being attempted, it was expected that the upgrading of technical capacity would reinforce the Government's effort to open up the economy. In design, the project was fairly typical of other vocational projects the Bank had supported in Latin America. While large and involving a number of innovative components, analysis supported the size of investment proposed; during the late stages of project negotiations a reduction was made in project size in response to the Ministry of Economy's concern about available country counterpart funds. 2. What would distinguish this project was the total inability of the Government and Bank to proceed int *-- implementation phase. In spite of considerable effort on the part of .e Jovernment, its implementing agency, and Bank staff, less than 2% of t., .an would disburse over the entire seven year period of implementation. Underlying this performance was a set of interacting factors; chan3es in project administration, project complexity, deteriorating economic ccnditions, and political turmoil. Individually, none of these was unique end each would typically be addressed effectively through supervision and follow up. That such efforts, which were considerable and marked by increasing intensity over time, did not succeed in getting the project on track, supports a view that their combined presence at project start up be.came an overwhelming block to successful implementation. Clearly, they presented a situation that undermined the typical commitment to project goals which would facilitate progress over time. Perhaps the fact that this was the initial project in the sector added to the difficulties --counterparts were not familiar with Bank procedures and differences with the Bank, in particular misunderstandings about procurement, contributed to the failure to get the project going. 3. A number of clear lessons emerged from the project's record. The importance of developing a broad commitment to the project concept is clearly underlined. The record also reinforces the important role that macroeconomic constraints play and demonstrates the difficulty of getting a large, complex project implemented in a sector new to the Bank. Yet perhaps the most important lesson is on the need for more a disciplined review of how/whether to proceed when project implementation has been unsuccessful over an extended period of time. For over seven years considerable efforts were made by Government and Bank staff to get the project going. If there had been a more systematic and formal requirement to assess the prospects for progress, the considerable frustration that emerged over this project on all sides (particularly during its later years) could have been avoided and resources could have been redeployed either toward redesign or developing another, potentially more successful, approach to the social sectors.  PROJECT COMPLETION REPORT ARGENTINA VOCATIONAL TRAINING AND TECHNICAL EDUCATION PROJECT (LOAN 1905-AR) PART I. REVIEW FROM BANK'S PERSPECTIVE Pro1ect Identity Project Name: Vocational Training and Technical Education Frr 'c Loan No.: 1905-AR RVP Unit: Latin American and the Caribbean Country Department IV Country: Argentina Sector: Education Subsector: Vocational Training and Technical Education Background and Context 1. The Economy. Argentina's decline from one of the richest countries in the world to one beset by seemingly intractable economic problems can be attributed to a fundamental reorientation of the economy following the economic crisis provoked by the Great Depression of the 1930s. For the next four decades the country's development strategy turned inward, promoting rapid industrialization financed largely by transfers from agriculture, the sector upon which early prosperity had been built. However, the exhaustion of import-substitution options led to increasingly frequent balance of payments crises and erratic economic growth. 2. Major efforts were undertaken in 1976 and again in 1978 to reverse the trend, but persistent inflation and failure to contain public expenditures undermined these programs, leading to extreme instability which, in turn, concentrated the efforts of decision-makers on short-term, speculative operations which were unsustainable and perceived as such. At the time of the development of this project the Government was, therefore, in the process of making an effort at structural reform. 3. Sector and Prolect Environment. As part of its effort to stabilize its economy in the late 70s, the Government opened up its financial system and reduced protection "nvels. These measures exposed the industrial sector to increasing international competition. As this economic strategy emphasized growth and strengthening of the modern industrial sector, vocational and technical education were perceived as key contributors to this strategy. Project design, which required a long period from identification to appraisal and high levels of staff time input, was carried out in this environment. The period leading to loan effectiveness and that of the first years of the project's life were extremely tumultuous. Economic difficulties continued, with high rates of inflation and large fiscal constraints. In the political  -2- .rea, the country was experiencing the last years of military government and elthin months of effectiveness, Atgontina embarked on the Malvinas war, which complicated efforts to get the project started. 4. The executing agency, the Consejo Nacional de Education Tecnica (CONET), had been formed to incorporate two major training activities, one that had provided secondary level vocational education through a large network of National Technical Schools and another a largely postsecondary technical education program. The project was expected to double enrollment in the vocational education program, and was designed to introduce innovative approaches to vonational training through mobile training units, and to finance studies and technical assistance intended to lay the groundwork for a new "dual system" of vocational education in which the private sector was to play an important role. There was resistance to some of these policy reforms within CONET. Proiect Obiectives 5. The project aimed to increase thL capacity and improve the quality of Argentina's vocational training system in order to support the Government's economic policies and facilitate expected growth of production in sectors repuiring technically trained workers. It focussed on skill formation for m. Lfacturing, utilities, construction, and mechanized agriculture and on moCernizing training facilities to meet the needs of more technically advanced I. ..s in Argentina. The mobile units included in the project were intended to make training available on a cost-effective basis in smaller communities around the country. Proiect Design and Organization 6. There were three main components of the project. (i) A vocational component was to provide curriculum development, teacher training, construction and equipment of 12 new vocational training centers and rehabilitation or replacement of 18 existing centers, as well as purchase and ecuipment of 50 mobile units to provide short term training to workers in response to recognized demands. (ii) A technical education component provided for planning and development of a "dual system" of technical education and improving the organization and quality o' the technical subsector. (iii) A techrical assistance component serving both the vocational and technical education components of the project, providing studies of the labor market and evaluation of CONET's existing operations. The project fnllowed fairly traditional patterns for Bank vocational education activities witn the exception of the mobile units and studies and plans leading to the proposed "dual system" of technical education. CONET was to be responsible for implementation through a special project unit that was to supervise construction and procurement activities and coordinate the technical assistance and quality improvement components that were to be carried out by CONET's Directorates of Vocational Education, Technical Education and Planning. The head of the Project Unit was to report to the President of CONET. Architectural designs for ten vocational training centers were prepared by CONET's staff and consultants, who were to complete the remaining architectural designs after implementation began. The private sector was to  3 participate through Advisory Committees linked with all of CONET's training centers. Proiect Results 7. For a number of reasons the project never became truly operational and, therefore,did not achieve any of its objectives. The civil works program progressed as far as designing the new vocational centers. Otherwise the only significant expenditures were on project administration during the long effort to begin operations. A major effort and project restructuring was made in 1986 when over 652 of the loan was canceled and a renewed effort at project start-up was made. This effort was not successful Lnd at project closing less than 2% of the original loan was disbursed during the seven years period of implementation. On the basis of the documents available and the opinion of Bank staff associated with the project at various stages in its frustrating history, the reasons for non-implementation included the following. (i) Changes in CONET administ;-ation and lack of sustained commitment to the obiectives of the prolect. After the project was appraised and negotiated, CONET's management changed and a permanent replacement was not named for an extended period. Complicating this situation, some of the reforms to be financed under the project were controversial within CONET. Finally, there were reservations in some parts of the Government about borrowing for social sector investments. The lack of strong leadership combined with policy conflicts at the technical level greatly complicated the start up of the project. (ii) Project Complexity. Although the design of the project conformed to norms for vocational education projects throughout the Bank, its size and complexity were too great for an initial operation in the sector. In addition, many Bank requirements were new to CONET and presented a set of issues which was not easily addressed. Procurement problems were noteworthy --in particular many officials in CONET did not support the use of ICB. (iii) Deteriorating Economic Conditions. Concurrent with the final agreement on the project, Argentina entered a period of extreme economic crisis that both undermined the ability of the Government to meet counterpart financing requirements and distracted the attention of key government officials from project implementation. While the Ministry of Economy expressed its reservations on funding at the final steps of project preparation and the project size was reduced to address this, as the overall environment deteriorated, financial problems were not effectively addressed. (iv) Rapid and Continuous Political Change. The period during which the project was to be initiated was marred by dramatic political change. These changes, affecting CONET projict management and the ministries involved, made the process of reaching a sustained consensus on project design and priority elusive.  -4- 8. Leaons Learned a) Dearse of Comitment to Proiect Concept. The breadth of government commitment to a project is particularly critical in a time of rapid economic and political changes. Surviving a change in government or project leadership and/or financial constraints will depend directly on how broad and deep the level of support for the project is, both within the project entity/ministry and with the core ministries. In this case, problems were presented from both sides and in spite of considerable goodwill and effort over the life of the project, the initial concerns on pi:oject size (in the Ministry of the Economy) and on project concept (within CONET) could not be overcome. b) Impact of Macroeconomic Constraints. Government inability to deliver counterpart funding marked this project from its inceptiot. Financing difficulties overshadowed all other problems through the period of implementation. c) New Borrower Constraints. As an initial operation in the education sector, this project presented a number of special problems. Its large size and complexity presented a considerable constraint. In addition, unfamiliarity with Bank procedures (particularly ICB) emerged as a large issue. This argues for a careful review of project size and complexity in new sectors and underlines the importance of full understanding of Bank procedures with new borrowing entities. d) Project Reviews. The most interesting aspect of this project was the period over which it remained open in spite of a virtual standstill in implementation. At the initial stage inactivity was seen as a start-up problem. Then, the war in the Malvinas and the change in government intervened. Finally, there was the restructuring effort and a complex set of financial problems. Taken alone, each cf these situations is easily explained. In total, they present a situation where the project languished for a period of alaost seven years. Clearly, this experience argues for a more decisive process of review when issues of commitment or macroeconomic circumstances remain for an extended period. The recent trend toward incorporating a formal mid-project review may represent an appropriate response. It is interesting to note that it was the Bank's determination not to extend the original closing date that contributed to agreement on the cancellation of a pc,-tion of the loan and the major project restructuring in 1986. Having a definite date at which the project is reviewed (as in a mid-term review) could have presented an opportunity to cancel or redesign the project much earlier than was eventually done.  -5- PROJECT COMPLETI)N REBrURT ARGENTINA VOCATIONAL TRAINING AID TECHNICAL EDUCATION PROJECT (LOAN 1905-ARI PART II. REVIEW FROM THE tORROWER'S PERSPECTIVE No comments were received f-. the Borrower.  -7- PROJ"ECT COMPLETION REPORT ARGzi.TINA VOCATIONAL TRAINING AND TECHNICAL EDUCATION PROJECT _ .(LOAN 1905-AR) PART III. STATISTICAL-INFORMATION Table 1: Related Bank_Loans Loan Title Pur2ose Years of ADproval Status Comment This was the first Bank loan in the Education Sector or in any of the Social Sectors in argentina. Table 2: Proiect Timetable Item Original Loan Dates Actual Dates Adentification May, 1978 Preparation March, 1979 Appraisal January, 1980 Loan Negotiations July, 1980 Loan Approval October, 1980 Loan Signature October, 1980 Loan Effectiveness April, 1981 February, 1982 Loan Completion December 31, 1985 N.A. Partial Cancellation July, 1986 1/ Final Cancellation February, 1987 1/ 1/ US$37.8 million was canceled on July 30, 1986 and the balance was canceled on February 18, 1987. Comments on Project Timetable: Project formulation took twenty-two menths, including a significant amount of field time (44 m/w)  - 8 - ARGENTINA VOCATIONAL TRAINING AND TECENICAL EDUCATION PROJECT (Loan 1905-AR) Table 3: Loan Disbursements A: Cummulative Estimated and-Actual Digsbursements (USSMillion)I Y81 FY82 FY83 7Y84 7lE FY86 (a) Planned 0.7 4.2 14.8 41.4 58.0 (b) Actual 0.0 0.0 0.0 0.32 0.8 0.934 1/ (c) As Z of (a) 0.0 0.0 0.0 0.01 0.01 Corments: Project implementation was slow due to inadequate budgetary allocations, legal problems affecting procurement and management changes in CONET. The delay was so protracted that cancellation was necessary. 1/ The final cancellation of funds to bring total cancellation to US$57.066 was made on February 18, 1987. The Loan was closed on July 30, 1988.  -9- ARGENTINA VOCATIONAL TRAINING AND TECHNICAL EDUCATION PROJECT (Loan 1905-AR) Table 4: Prolect Cost and Financing A: Proiect Costs (US$Million) Appraisal Estimate a/ Actual Project Component Amount % of Total Amount Z of Total Facilities 134.11 89.7 N.A.1/ Mobile Units 10.26 6.9 Technical Assistance 1.81 1.2 Studies 0.43 0.3 Project Administration 2.89 1.9 149.5 100% a/ Includes contingenzies 1/ Tenders were received on 14 VTC's and construction was initiated but none of the VTCs was ever completed. As a result, there are no actual costs for construction, for mobile units, equipment or any other component.  - 10 - PRGENTINA VOCATIONAL TRAINING AND TECHNICAL EDUCA.ION PROJECT (Loan 1905-AR) B: Project Financing (US$) Original Actual Allocation Disbursements 1. Civil Works 10,600,000 552,291 2. Furniture 3,200,000 7,422 3. Equipment 34,000.000 14,784 4. Consultants, Fellowships, 2,200,000 359,465 Studies, Prof. Admin. 5. Unallocated 8,000,000 Total 58,000,000 933,962  - 11 - ARGENTINA VOCATIONAL TRAINING AND TECHNICAL EDUCATIONPROJECT (Loan 1905-AR) Table 5: Missions No. Performance Type of S.W. rating of Stage of Date per- in Status Trend prob- project cycle (mo/yr) sons Specialty a/ field b/ c/ lem d/ Identification 05/78 2 E,EP 2 Reconnaissance 12/78 4 2E,EP,VT* 6 Pre-Preparation 03/79 1 E 1 Preparation 03/79 4 VT,E,TE,A* 9.5 Preparation Review 05/79 1 EP 1.5 Preparation Review 10/79 4 EP,VT,E,TE* 8 Appraisal 01/80 4 E,VT,A,TE* 12 Post Appraisal 05/80 2 E,A 4 Subtotal 44 Supervision 1 12/80 3 E,TE,A* 3 3 2 F,L Supervision 2 12/81 3 TE,E,A* 5 2 1 F,L Supervision 3 12/82 2 TE,A 3 2 1 F,L Supervision 4 02/83 1 LO 0.5 Supervision 5 01/84 2 TE,A* 3 2 2 F,L Supervision 6 07/84 3 E,TE,A* 5 2 2 F,L Supervision 7 12/84 1 E 2 3 1 F,L Supervision 8 04/85 1 E 0.5 3 2 F,L Supervision 9 03/86 2 TE,1,EP 2.5 3 F,M Supervision 10 12/86 3 TE,EP,A* 1 3 Subtotal 25.5 Comments: The frequency of supervision missionswas not satisfactory. There is barely one per year for a project which had problems getting started. In addition three of these missions consisted of only one person, which proved inadequate for a project of this complexity. a/ A: Architect; E: Economist; EP: Educational Planner; LO: Loan Officer, TE: Technical Educator; *Mission included consultants. b/ 1: Problem free or minor problem; 2: Moderate problem; 3/4: major problem c/ 1: Improving; 2: Stationary; 3/4: Deteriorating. d/ F: Financial; L: Legal; N: Management