Sri Lanka - Construction Industry Training and Second Vocational Training Projects

Document of The World Bank FOR OFFICIAL USE ONLY Report No: 17352 PERFORMANCE AUDIT REPORT SRI LANKA CONSTRUCTION INDUSTRY TRAINING PROJECT (Credit 1130-CE) SECOND VOCATIONAL TRAINING PROJECT (CREDIT 1698-CE) February 4, 1997 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. Abbreviations and Acronyms ACCSL/NCCASL (National) Association of Construction Contractors of Sri Lanka IDA International Development Association ICTAD Institute for Construction Training and Development IFC International Finance Corporation MLGHC Ministry of Local Government, Housing and Construction NAB National Apprenticeship Board NAITA National Apprenticeship and Industrial Training Authority OED Operations Evaluation Department UDA Urban Development Authority UNDP United Nations Development Programme VET Vocational and Technical Training VTA Vocational Training Authority Fiscal Year Government: January 1-December 31 Director-General, Operations Evaluation Mr. Robert Picciotto Director, Operations Evaluation Dept. Ms. Elizabeth McAllister Manager, Sector and Thematic Evaluations Group Mr. Roger Slade Task Manager a Ms. Linda A. Dove FOR OFFICIAL USE ONLY The World Bank Washington, D.C. 20433 U.S.A. Office of the Director-General Operations Evaluation February 4, 1998 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Performance Audit Report on Sri Lanka Construction Industry Training Project (Credit 1130-CE) Second Vocational Training Project (Credit 1698-CE) The Sri Lanka Construction Industry Training project and the Second Vocational Training project formed a self-contained series of operations supporting the development of the construction industry. The first project, estimated to cost US$25 million, was financed by Credit 1130-CE for US$13.5 million equivalent. The credit was approved in FY81 and closed, with cancellation of US$0.97 million, after a 30-month delay in FY87. The second project, estimated to cost US$24.48 million, was supported by Credit 1698-CE) for US$15 million equivalent. The credit was approved in FY86 and closed after a 12-month delay in June 1996, with cancellation of US$3.46 million. Prior to 1992, the United National Development Program disbursed US$1.32 million in cofinancing for technical assistance for which the International Labor Organization was the executing agency. The projects were intended to overcome critical constraints in Sri Lanka's infrastructure program arising from the weaknesses and inefficiency of the domestic construction industry. The projects aimed to increase the supply of skilled workers and strengthen the industry operating environment in public and private construction. The projects also anticipated benefits to the country for human resource development and poverty alleviation by providing wages-earning opportunities in the industry for the poor and unemployed. The projects were exemplary in many aspects of performance and in their focus on meeting targets and achieving results. OED finds that the positive account of the projects' implementation in the completion reports is accurate and objective, highlighting the constructive role played throughout by the project management and IDA staff. The main implementation weakness, with implications for the long- term, was the second project's failure to build on evaluation studies begun under the first, that could have been used by project management to demonstrate development impact and ensure support for continuation of the work begun. In particular, the effects of the projects on industry efficiency and profitability have yet to be evaluated. The projects succeeded well in meeting their objectives, as described in the completion reports. They produced benefits in terms of skills-acquisition and employment, improved industry training and trade-testing, and innovations in construction management education, technology development and standards and procedures for construction projects. They also contributed in small part to the country's development goals through employment of the poor. The audit focuses on the factors that have led to successful development of an entirely new institution despite an extremely difficult environment. The Institute for Construction Training and Development (ICTAD) developed out of the first project's implementation unit. It is highly effective operationally and has assumed the lead role in industry development. It has created public value by improving construction management in both government and amongst private firms, though much still 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. 2 remains to be done. The main factors contributing to this result have been excellent client and stakeholder responsiveness, forward-looking strategic and institutional development with calculated risk- taking, and organizational changes aligned with needs for business innovation. ICTAD is now at a cross-road and cannot stand still if it is to survive and continue to produce benefits. Under the government's privatization program, ICTAD is required to become fully self- financing from its products and services-a big challenge given the industry's fragile profitability and ability to pay. In part to meet this challenge, the agency has proposed legislation that would make it a public regulatory authority and expand its role into technical auditing, first in the public and later in the private sector. The plan is bold and controversial. It involves a shift in ICTAD's role from technical assistance and education of the construction industry to ensuring its compliance as a way to achieve high quality in construction work. And it involves a change in ICTAD's sources of finance. Conflict-of- interest issues would need to be handled carefully if the agency were to continue in an advisory role, charge fees and impose fines. Legislation is proposed that is now under consideration by government. But until ICTAD's status is settled, the agency faces an uncertain future. OED rates outcome for the Construction Industry Training project as satisfactory and institutional development as substantial.I For the Second Vocational Training project, OED agrees with the ICR rating for outcome as satisfactory and rates institutional development as high (ICR substantial). For both projects, OED rates IDA performance as satisfactory in supporting a very good project management and staff. At completion of the second project the ICR correctly rated sustainability as likely. At the time of audit, however, OED rates sustainability as uncertain for both projects. Changes in the external environment-public-private sector policy, and in the internal environment-core business, management and staffing and budgets-render ICTAD's sustainability uncertain and thus put at risk a continued flow of benefits for the construction industry and the country's infrastructure development. The project experiences provide valuable insights for institution-building on actions that are critical for project managers in ensuring that new institutions become effective and sustainable. * Building alliances with political stakeholders, business partners and potential competitors; * Establishing good strategic, operational and technical capacity in order to be able to develop products and services that will create value for clients; * Creating communication links with beneficiary groups in order to ensure that the products and services offered meet their needs and build a market for the future; * Establishing an institutional self-evaluation capacity in order to have ready for decisionmakers convincing evidence about effectiveness, efficiency and value created; and * Managing expectations for short-term outputs while creating conditions for achieving long- term developmental impact. Attachment 1. The completion report did not assign performance ratings. 1 Contents Ratings and Responsibilities.....................3........ ..........3 Preface.......................................................5 1. Project Background and Objectives ............. .....................7 The Industry Context ...............7............ ...............7 The Projects ........................................ ..........9 Benefits Anticipated.............................................10 Project Preparation and Design.......... ......................10 2. Project Implementation...........................................12 Success Factors................................................ 12 Challenges .......................................... ......... 14 Building Industry Relations........................................ 15 3. Project Outcomes ....................................... .......16 Industry Training ................................... ....... 16 Industry Development .................................... ........ 17 Benefits Realized.........................9...... ...............19 4. Findings, Issues and Lessons ..........................................21 Institutional Survival and the Sustainability of Project Benefits ...... ........23 Lessons for Institutional Development ................................23 Annex Basic Data ..........................................................25  3 Principal Ratings Credit 1130-CE Credit 1698-CE Outcome Satisfactory Satisfactory Sustainability Uncertain Uncertain Institutional Development Substantial High Borrower Performance Satisfactory Satisfactory IDA Performance Satisfactory Satisfactory Key Staff Responsible Construction Industry Training Project (Credit 1130-CE) Task Manager Division Chief Country Director Appraisal H. Thriscutt B. Shields A. Shibusawa (Acting) Midterm R. Cambridge W. Rees E. Lerdau Completion S.R. Santos M. Karcher E. Lerdau Second Vocational Training Project (Credit 1698-CE) Task Manager Division Chief Country Director Appraisal Richard Cambridge William Rees E. Lerdau Midterm Grant Sinclair Martin Karcher Ann Hamilton Completion Mohamed Allak Barbara Herz Mieko Nishimuzu  5 Preface This is a Performance Audit Report (PAR) on a self-contained series of two consecutive IDA-financed projects in Sri Lanka that supported development of the construction industry over the 16 years, 1981-1996. The Construction Industry Training Project and the Second Vocational Training Project emerged from the country's long-standing policies favoring human capital formation, its need for infrastructure rehabilitation and development in the 1980s and its increased emphasis on the private sector in the 1990s. The first project, estimated to cost US$25 million, was supported by Credit 1130-CE for US$13.5 million equivalent. The credit was approved on April 1, 1981 and closed after a 30- month delay in December 1986. The second project, estimated to cost US$24.48 million, was supported by Credit 1698-CE for US$15 million equivalent. The credit was approved on May 5, 1986, became effective in April 1987 and closed after a 12-month delay on June 30, 1996. Prior to 1992, the United Nations Development Programme (UNDP) disbursed US$1.32 million out of a US$3.2 million cofinancing facility for technical assistance for which the International Labor Organization (ILO) was the executing agency. The audit report derives from an Operations Evaluation Department (OED) mission to Sri Lanka in July 1997. It relies on findings from site-visits and focus groups with project beneficiaries and interviews with industry representatives, senior government officials and managers and staff of the project implementing agency. Documentary sources include the completion reports (no. 7560, December 30 1988 and no. 16180, December 1996); the staff appraisal reports; and project files. The author wishes to express her deep appreciation to all who helped to provide the material for the review, in particular, the Sri Lankan officials and industry personnel who were unflagging in supporting the mission and generous in sharing their experience and views. Following standard OED procedures, copies of the draft audit report were sent to the relevant government officials and agencies for their review and comment but none were received.  7 1. Project Background and Objectives 1.1 The performance of the two related projects under review was exemplary in many, though not all, aspects of preparation, implementation and in the focus on meeting targets and achieving results. This review probes beyond the findings reported at the projects' completion' to understand how, starting from zero, a new institution could establish itself, become very effective operationally and produce developmental results in an unfavorable environment. It also analyses some issues that face the institution for the future. This chapter describes the projects' objectives in context. Chapter 2 explores implementation experience and Chapter 3 reviews the projects' outcomes. Chapter 4 examines some concerns for the projects' sustainability and identifies lessons for institutional development. The Industry Context 1.2 Importance of the construction industry. The first of the construction industry projects was designed to overcome critical constraints in Sri Lanka's infrastructure program-constraints caused by the ill health of the industry. In the 1970s, private sector construction output had declined drastically while the real value of public sector construction had improved only modestly. The first project was identified in the late 1970s when IDA and the International Finance Corporation (IFC) worked with the incoming government to liberalize economic, trade and industrial policies, reduce the dominance of the public sector and provide investment resources to the private sector. The construction industry was crucial to the government's medium-term development plan, 1979-83. Underway were several large infrastructure programs in power, water supply and transportation. The programs for the Mahaweli power project, urban renewal and housing alone, including the prime minister's Million Houses program, were estimated to account for 32 percent of public and 19 percent of total investments under the plan. The industry's value-added was expected to increase from 12 to 28 percent a year to help meet macroeconomic targets. 1.3 Industry structure. Foreign construction firms dominated large infrastructure projects but could not cope without domestic subcontractors. However, they could not rely on the quality, timeliness or price-efficiency of subcontractors' work. The domestic industry dealt with industrial building, hotels, offices and housing. But there were only 2 large, 5 medium-to-large and 20 medium-sized firms, alongside thousands of very small enterprises, labor contractors, house-builders and self-employed craftsmen. Because the domestic industry was unbalanced, unprofessionalized and unorganized, it had poor access to government departments such as Public Works, Labor, many sectoral ministries managing or contracting construction projects and workers, and the State Corporation. Moreover, neither foreign nor domestic firms were happy with the efficiency of the government bureaucracy in contract processing, procurement or payment. 1.4 Industry problems. The dominance of a few large firms and the overall fragility of the domestic industry alarmed IDA staff as they considered whether to support new projects in power and roads. They foresaw problems arising from high costs and low productivity, such as 1. The audit mission found that both project completion reports were accurate and comprehensive in describing the achievements and weaknesses of the projects. This review does not repeat the details to be found in the reports. 8 had already affected the fifth power project. The problems included an inefficient contract system, shortages of imported materials and skilled manpower,2 weak financial and quality controls, late payment by clients, including government departments, and lack of banking credit for cash-strapped firms. The main labor needs were for entry-level workers in crafts such as carpentry, masonry, electricity and plumbing, experienced equipment operators, mechanics and engineers, and site supervisors and managers. There was little specialized training available. On-the-job learning was practical and cheap but narrow and limiting. Labor contractors were unconvinced of the benefits of training and unwilling to pay. Also, the IFC was having trouble convincing the industry to go ahead with a heavy-equipment-leasing facility because, in a cyclical industry and an uncertain economy, firms were unwilling to take the risks involved. Then, in 1980, when the economy began to revive, labor shortages became a serious problem, exacerbated by skilled worker emigration to the oil-rich countries under the government's program to increase foreign exchange earnings. All these factors persuaded IDA staff that its support for the domestic construction industry was essential to improve the business and operating environment. 1.5 Labor supply issues. Concurrently during this period, IDA education sector staff were engaged in dialogue with the government about the issues facing vocational and technical training (VET) as part of sector work on the entire education system. The government well- recognized the chronic problems of unresponsiveness, inefficiency and high cost to the budget and IDA advocated more cost-sharing with the industry. But the existing system was tough to reform. There were seven powerful stakeholder agencies involved-the Ministries of Higher Education, Labor and Youth Affairs and Small Industries, the National Apprenticeship Board (NAB), the Electricity Board and the Women's' Bureau. There were vested interests also among training providers, including universities, colleges and institutes under the Ministry of Higher Education, as well as many formal training and apprenticeship programs under the other agencies. 1.6 IDA's study of general education also pointed to problems for the supply of new entrants to the construction industry. Unskilled labor was plentiful but skilled workers and construction managers and supervisors were in short supply. Youths from the poorest households dropped out of school early with few income-earning opportunities outside agriculture, petty trade and construction work. Each year, the primary and secondary schools produced 200,000 more qualified school-leavers than the wage-jobs available. Those who could not enter the universities opted for VET as a second-best option. Yet employers complained that formal training did not give workers practical skills. The government planned to continue to provide unrestricted access to education and training, in part to mitigate the threats to social order inherent in youth unemployment. In parallel, it planned to improve educational quality and the relevance of training to the workplace. In 1981, therefore, the government outlined proposals for reform, later including them in the 1984-88 public investment program. With this background, IDA's education staff and country counterparts were well able to apply their insights into the problems and opportunities for training, labor supply and human resource development to the specific case of the construction industry. However, the urgent need for the industry to improve its efficiency and productivity led IDA staff to the conclusion that an immediate solution to the labor shortage problem could not await reform of the country's VET system and that human resource investments must be made immediately by other means. 2. "Manpower" was the terminology used in the 1980s and was appropriate. Only three percent of workers in the industry were female. 9 The Projects 1.7 The Construction Industry Training project. The first of the two projects sought to increase the supply of trained manpower and improve the level of technical and management expertise in the construction industry so that it could better meet the demands of the country's investment program. The project was to establish an innovative, modular training system for construction crafts and trades and to supply the industry as quickly as possible with 137,000 trained workers. The project was also to improve training materials and improve industry methods and procedures. The project was to be implemented in four years. The project implementation unit was to be under the Ministry of Local Government, Housing and Construction (MLGHC).3 1.8 The Second Vocational Training project. The second project was a follow-up operation redesigned to respond to a deteriorating economic and employment situation. In the mid- 1 980s, migrants began to return to the country, threatening to add to unemployment problems but ensuring workers available for construction projects in the public investment program for 1985- 89 were plentiful. The second project placed increased emphasis on improving the industry's efficiency and on institutional development in the related VET training system, while cutting down on the targets for entry-level training directly by the project because of a threatened glut of workers. Instead, the training objectives emphasized improving the delivery of the new training programs and upgrading existing workers through on-site instruction and trade-testing. In terms of quantitative targets, the project was to train less than half the numbers under the first project-50,000 new entrants, 26,000 experienced workers and 5,200 managers and supervisors in both the government and private sector. In addition, the project was to introduce more user- fees. 1.9 The Institute for Construction Training and Development. The project unit was to be upgraded into a semi-autonomous Institute for Construction Training and Development (ICTAD)4 under the Urban Development Authority (UDA).5 To resolve problems experienced in its rented accommodation, ICTAD was to move into purpose-built facilities financed under the project. To resolve problems in recruiting qualified technical and professional staff when the project was under a sectoral ministry, the project was to provide funds for ICTAD to broaden its recruitment and pay additional salaries. The project argued that ICTAD should be established as a permanent government institution because of the industry's enormous needs and its importance in development programs. It argued that ICTAD should be placed under an appropriate (cross- sectoral) authority of the government because the government was a major client across ministerial boundaries and responsible for creating a favorable operational environment for private construction firms. To ensure that ICTAD remained responsive to its clients, it was to involve private sector representatives on its consultative committee, including the fledgling Association of Construction Contractors of Sri Lanka (ACCSL). The project was to be implemented over nine years in the light of lessons learned about the time-consuming efforts 3. Initial proposals for worker training to be developed as an industry, rather than a government, responsibility did not materialize because of the industry's undercapitalization and disorganization. 4. For brevity, the acronym, ICTAD, is used throughout to refer to actions by the project unit under the first project. 5. In fact, this had been more or less agreed in 1983 and had been authorized by the Cabinet in early 1986. 6. Now the National Association (NCCASL). 10 required to establish a new institutional framework for the industry. Eventually, ICTAD remained under the MLGHC, whose influential secretary had also become chairman of the UDA. Benefits Anticipated 1.10 The projects anticipated three main sets of benefits for the country. Both projects were expected to contribute to employment and poverty alleviation. In the first project alone, an estimated 85 percent of the trainees were expected to be from lower-income households and were expected to find wage-earning construction jobs as a result of their newly acquired skills.7 Both projects anticipated increased returns for the industry on invested capital through better management and use of equipment, and improved quality of finished work. Because of the continuing industry weaknesses, the second project anticipated benefits from better cost efficiency, conformity to industry standards and timeliness in meeting investment program targets in both the public and private sectors. Both projects expected to improve the effectiveness and productivity of construction training. The second project, however, was no longer to provide much direct training but to focus on helping other training providers deliver good programs for the industry. 1.11 In what appears almost as an afterthought in the first project but was really a hotly argued concern, IDA acknowledged that project-trained workers might emigrate, with a resulting loss of skills to the domestic industry. But, it argued, the wages the workers sent home would support the government's policy of building up foreign exchange from remittances from abroad. Moreover, it averred, the loss of trained manpower would probably be temporary because the overseas-experienced workers would return to work in the construction industry. During preparation of the second project, migrants began to return home as an economic recession began. Project Preparation and Design 1.12 The projects benefited from the early cooperation of IDA specialists in both the infrastructure and education sectors. This meant a better focus on the industry demand-side than was typical of VET projects of the era and a better focus on labor and training programs than was typical of infrastructure projects. The first project was initially identified with the support of IDA power and transport specialists. A transport engineer eventually became responsible and began to prepare a broadly-focused operation that included financing for heavy equipment. When this component faltered, the training component became the centerpiece. IDA's internal peer and management reviews demanded from the project preparation team a great deal of work in ensuring that the operation was justified and that the estimates of manpower projections were reasonable. The education economist responsible for the sector work on the VET system offered some criticisms of the project proposal and was invited to join the IDA team to strengthen the 7. Somewhat inconsistently, the first project also emphasized the benefit of reduced wage bills through its efforts to alleviate shortages of skilled workers. 8. For example, the second project involved eight public sector organizations and 23 quasi-public institutions providing construction-related goods and services. The key ministries were the MLGHC, Lands and Land Development, Transport, Industries and Scientific Affairs, Mahaweli Development, Power and Energy, and Defense, Trade and Shipping. On the education side also, new stakeholders included the National Technical Teacher Training College, the Tertiary Education Commission, the National Apprenticeship and Industrial Training Authority (NAITA (formerly NAB)) and the Vocational and Technical Education Council, now the Vocational Training Authority (VTA). 11 labor and training components. Two of the initiatives added during preparation came to nothing, however. Because of IDA's general concern to include more women in development, it included a proposal to set targets for the training of women. However, the legal covenant proposed did not survive negotiations because the government argued, quite reasonably, that it would be impossible to comply given that Sri Lankan society did not yet favor women working in construction. An effort to provide convincing justification for the project on the basis of a rate of return analysis for the training component also came to nothing when a very senior Bank manager instructed that the analysis should be omitted from the documents for Board presentation. He considered that it did not serve its purpose and that the project justification would have to do without it. 1.13 The overall objectives and design of both projects proved robust enough to accommodate an industry environment that greatly changed over the years. The heavy involvement of both senior officials and project managers in preparing the projects and the good facilitation by IDA staff allowed for management creativity and flexibility in developing strategy and operations and resolving issues. 12 2. Project Implementation Success Factors 2.1 The second project's completion report identified several factors that contributed to successful project implementation. These are consistent with the audit findings as well as OED's analysis of factors essential to good project performance. * Thorough project preparation. Good use of lessons arising from experience; responsiveness to the sector policies; good definition of project management and of implementing agency responsibilities. * Strong government ownership leading to timely action in support of the projects. * Competent project management, results-oriented, innovative, efficient and collaborative with IDA. * Management use ofstudies and tracer surveys to monitor performance, guide operations and develop strategy. * Competent IDA supervision. "A very significant contribution" by IDA through collegial and supportive working relationships; timely and constructive missions; effective professional advice; support to senior staff in learning from international experience, in targeting fellowships to project needs and encouraging project staff to be creative and flexible; in encouraging ICTAD to build capacity and quality in partner training institutions and establish links with similar agencies in the Asia region. 2.2 Project beneficiaries interviewed for this review identified several related factors they consider highly relevant to the good implementation record. 2.3 Strong political support. Constant interest in the projects at the highest levels of government had advantages. Indeed, interviewees said that the senior official responsible for the projects deserves enormous credit for nurturing them until he left office. But such support also had disadvantages because the official moved the projects with him from one agency to another-the MLGHC, the UDA and the Ministry of Policy, Planning and Implementation. In the three-year period at the latter Ministry, the umbrella of an apex ministry was very helpful in enabling ICTAD to extend its influence across construction-related government agencies. In 1994, with the advent of a new government, key supporters left office, the project director was reassigned and the board of directors was dismissed. It took ICTAD some months to recover but the appointment of a new, well-connected project director in 1995 helped sustain the agency in the final project phase. 9. Picciotto, Robert, 1997, "Why do projects succeed or fail?" OECF/World Bank Aid Effectiveness Symposium, September 17-18, Tokyo, Japan. 13 2.4 Continuity and competence ofproject staff Interviewees said that management and staff quality were outstanding asset for the projects. The original project director (later ICTAD's director-general and chairman) was well-qualified and experienced as a civil engineer and had served agencies responsible for housing, urban development and water supply. He remained in position from 1981 for twelve years. In 1994, he became additional secretary in the Ministry of Housing, Construction and Public Utilities. Once the second project provided salaries for professional staff and ICTAD had more scope in recruitment, he introduced principles of staff appointment based on competence and merit and created a creditable team of unit managers and technical staff who remained on board until the second credit closed. He did not hesitate to restructure the operating divisions to serve new priorities and he managed to build a commitment to teamwork that is still evident across the institution. The continuous service of a competent financial officer with strategic vision was a significant bonus. The accounts division overcame difficulties in reconciling accounting formats for the two projects and was creative in adapting the institution as a self-financing entity. In the final year or so, many experienced staff left the agency when the senior management changed and employment contracts tied to the project came to an end. However, though budgetary pressures promise persistent difficulties for staffing, the new management has turned the problem into an opportunity to recruit some new blood and align staff skills with new institutional priorities. 2.5 Project governance. The heavy stakeholder involvement encouraged during the first project's design stage paid dividends throughout implementation. Project management ensured throughout that governing and advisory bodies remained broadly representative, involved and active. They helped the projects stay on track and respond to developments in the construction industry and the economy. The governing architecture evolved over time. The first project was advised by a national training committee. Later, ICTAD instituted a management committee responsible for determining policy and providing oversight. This was strengthened further in the cabinet memorandum establishing ICTAD. The Secretaries' Committee, as it became known, was chaired by the secretary of the MLGHC and included the secretaries of Finance, Planning and five other key agencies. Two consultative committees also emerged; one to advise on training, standardization of trade-testing and curriculum development; and the other on industry specifications, technology and small-scale contracting. In 1990, the creation of a Board of Management gave ICTAD even more autonomy and flexibility than previously. In 1992, the agency experienced a major change in status when it became a public corporation responsible for raising revenues to cover its non-salary operating costs and programs, with the eventual target of becoming entirely self-financing. 2.6 IDA's contribution. The record on the IDA side was impressive. Project staff interviewed especially appreciated the continuity of IDA missions and their collegiality. The transport sector engineer who identified the first project remained with it well into implementation and ensured a gradual and careful handover in 1982. The same education economist who had joined the appraisal team became responsible for supervision until 1986 and also appraised the second project. In 1987, after a short transitional arrangement, a successor qualified in architecture and familiar with construction industry issues took over until 1992. Supervision missions invariably included members who were technically well-qualified, flexible and supportive of the project-factors much valued by the project staff. Only after 1994, did this good record management's efforts at experimentation and innovation of IDA support deteriorate, due mainly to an internal reorganization, budget cuts and new IDA management that was sceptical of vocational and technical training projects and withdrew resources for supervision. This abruptly disrupted staff responsibilities and reduced missions. Even then, 14 project officials said, the IDA staff member who took over final responsibility was very helpful in facilitating the disbursement of unspent credit proceeds. 2.7 Evaluation. The other shortfall in IDA's supervision was the failure to ensure that the second project completed evaluation studies planned. Both projects had scope and funds for this work. The first project performed well in launching a series of useful training needs assessments and tracer studies. During the second project, IDA staff reminded ICTAD of evaluation responsibilities but did not provide much advice on establishing evaluation capacity. On the ICTAD side, staff say that the project was distracted by the pressing responsibilities of its operational programs and the unavailability of local experts. Challenges 2.8 Without all of the good management identified above, the external challenges might well have overwhelmed projects. These came from ups and downs in the economy and public and the private sector constraints. With the deepening recession in the mid-1980s and the continued slow economic growth in the early 1990s, the construction industry predictably became averse to taking risks and investing in skilled manpower and new technologies, instead concentrating on survival. 2.9 The public sector. The challenges came first from public training and trade-testing institutions, sectoral agencies responsible for construction policies and regulations, and professional agencies responsible for standards and accreditation. In training, for example, the Ministry of Higher Education had initially agreed to suspend two-year craft courses at technical institutes and had directed the institutes to provide construction-related courses. But when existing training institutions could not quickly adapt, the first project itself became the main training provider. It invested heavily in its own center for training heavy equipment operators, and developed innovative, on-site training, using new content and materials. But this competition caused difficulties with other training providers. After discussions with IDA, the project director changed tactics and the second project turned the situation around. ICTAD withdrew from most direct training. Instead, it began to make practical sense of its mandate to coordinate, enable and facilitate other training institutions in building their own capacity to serve the construction industry. The project actively involved other training institutions in ICTAD's developments and innovations, trained their instructors and provided technical assistance, equipment and materials. In the early days, NAB similarly resisted project incursions into its traditional area of responsibility for training standards, trainee selection, testing and certification and the registration of workers. But when the projects began to engage NAB staff as consultants in developing new standards for on-site training, a partnership developed. 2.10 Private sector. The challenges in the private sector were even more problematic than those in the public sector. During the early years, the projects' intended first-line clients were the small construction enterprises and labor contractors dispersed around the country. But the first project had tremendous problems in working with them because they had no widely recognized representative organization. Moreover, most firms had little vision of what industry development could mean, did not understand that training in construction management could help improve their efficiency and profits and saw little value in special training for workers, especially if this put pressure on them to pay higher wages. is Building Industry Relations 2.11 The first project eventually decided to take a bold, but risky, initiative. In 1983, it adopted the struggling ACCSL as its main industry interlocutor. The projects provided financing to establish its governing body and provide office space in the ICTAD building and a national consultant (now the executive director). This arrangement succeeded in putting the projects more closely in touch with the domestic industry. However, it also created tensions because the organizations needed to maintain separate and independent identities. Both organizations had to contend with criticism that could be damaging if proven correct. ICTAD had to avoid the appearance of directly profiting private interests. And the association had to avoid the appearance of inviting government interference in the industry. ACCSL adopted a public posture of assertive autonomy. For instance, its public support for trade-testing remained lukewarm and it appropriately resisted taking over the difficult responsibility of registering firms as the projects originally mandated on grounds of conflict of interest. It found that it could not easily represent both its larger, more professional, member firms and those of the small and marginal firms on whose membership fees it relied. In 1988, the association considered openly competing with ICTAD to provide revenue-earning training and advisory services-a principle desirable enough if it encouraged industry self-investment. However, it lacked the capacity and contacts in the public sector to perform this role effectively and continued to develop a collaborative relationship with ICTAD. In the event, though there were some problems, the high standards of professional conduct established by the respective governing bodies helped maintain a reasonably balanced relationship that proved mutually beneficial. Both parties agree that ICTAD could not have been responsive to industry needs without the grassroots links that ACCSL provided and ACCSL could not have gained access to government and legitimacy in the industry without ICTAD's support. 2.12 ICTAD's Evolution. In recent years, ICTAD's financial basis has changed. The government awarded two hefty pay increases for all government employees, at the same time as IDA's financing of project staff salaries declined (as planned), the government reduced ICTAD's subsidy and, finally, the IDA credit closed. In response, ICTAD began a vigorous expansion of its revenue-earning activities such as property-renting, machinery and plant-leasing, fee-hikes for some services and the sale of new products. It dropped an initiative to provide technical consulting services to construction enterprises when this provoked conflict with ACCSL and other professional bodies. At project completion, ICTAD's revenues had risen from 6 to 30 percent of total operating expenses including staff costs and they remain currently at the same level. However, this good progress has not been sufficient to preserve core programs, staffing and outreach to the industry at previous levels and ICTAD finds its financial future uncertain because of the fragile financial health of the industry. 16 3. Project Outcomes 3.1 Together, the two projects are said by a wide range of industry stakeholders to have made a substantial and positive impact on the construction industry. This chapter reviews the basis for these claims and finds that they are reasonably well-founded despite the lack of quantitative information on improvements in industry performance and products. The chapter also reviews the social and economic benefits realized from the projects. Industry Training 3.2 Management development. ICTAD's pioneering management training has begun to meet an important need and has huge potential for both private and public sector efficiency. Currently, the majority of project beneficiaries are public sector agencies, non-governmental organizations and the few large domestic contractors trying to compete or partner with foreign firms. The project innovations have made these industry leaders aware of how better management can improve productivity, quality of work and profitability. ICTAD says that it still has a challenge to convince small firms that investment in management training is worthwhile, largely because of their focus on short-term profit and survival. Nevertheless, as an industry representative put it, "ICTAD is a respected household name" among construction managers across the country. Plans are now under way for the agency to hand over its direct management training to the Center for Housing, Planning and Building, the new building for which was financed with undisbursed funds from the second project. 3.3 Worker training. The projects introduced industry-specific training where none existed and achieved impressive results in terms of quantitative targets and improvements in training quality. With 160,000 beneficiaries trained-craftsmen, machine operators, mechanics and instructors-in an industry workforce of some 262,000, the projects far exceeded their output targets. The first project emphasized quantity at the expense of quality and contributed modestly to a surplus of trained entry-level youths available for jobs. Guided by the training needs- assessments, the second project tried to redress the balance, improving qualitative inputs and somewhat reducing the emphasis on entry-level training in favor of existing workers. 3.4 Trade-testing. ICTAD and partner agencies have made much progress in establishing an objective system of trade-testing that meets international standards and in providing preparatory training for the test. The projects developed the scheme's capacity for testing in 20 trades and ICTAD has recently helped NAITA formulate national skill standards in seven additional trades. Efforts under the first project rapidly doubled the numbers of candidates for trade tests and pass- rates improved. But, since then, progress has been patchy. In 1997, only 60 percent of test candidates turned up, though pass rates for those who did ran to 73 percent. The main reasons for slow acceptance are the fear of failure, the fees levied, and the lack of recognition from employers. Employers continue to show little enthusiasm despite a regulation that requires firms to have at least 15 percent of the workforce certified in order to qualify to bid on government contracts. Contractors and workers at district level say, that the enforcement is weak and compliance low. While ICTAD has now reduced its subsidy to NAITA, it continues to persevere 10. A first project study indicated that the productivity of the construction industry rose by three percent. 17 by collaborating in developing standards, training standards formulators and running motivational programs. ICTAD, NAITA, and NCCASL all agree that an uphill struggle is ahead to establish trade-testing for workers as an industry norm. 3.5 Industry specific training. Industry training is now tailored much more to client needs than before the project interventions. Construction workers now benefit from hands-on, focused training, much of it at construction sites, that combines cognitive and practical skills. Training content is driven by local context, new technologies and guidelines on safety and environment. Workers say that the training has enhanced their motivation, problem-solving abilities and sense of pride as craftsmen and mechanics. Site supervisors observe that trained workers are different from untrained because of their better work habits, initiative, timeliness and cleanliness. Instructors say they themselves have learned new techniques and practices. ICTAD training specialists emphasize that inputs of new training material, demonstration of good practice, and supervision and coaching of instructors, must all continue in order to sustain the improvements. 3.6 Training policy and institutional development. ICTAD's withdrawal as a direct training provider and its policy of subsidizing and building institutional capacity among existing providers has proven sensible and feasible.II The policy has led to the use of spare VET training capacity and has fostered better coordinated and more responsive training delivery among many training institutions-a major achievement given that they all have their own broader priorities and agendas. ICTAD and senior VET managers say that the projects provided a training model and benchmark for other training providers some of which have adopted new training practices institution-wide. However, they admit, the lack of incentives in many public institutions still inhibits innovation and ICTAD's impact is small relative to the huge size of the VET network. Meanwhile, ICTAD continues to work with the vocational training authority (VTA) and others to ensure coordination and efficiency amongst industry providers.12 Industry Development 3.7 Operational policy and institutional weaknesses still prevail in the public sector and business practice is still weak among small, private enterprises. Therefore, ICTAD's management has moved strategically into more industry development during and since completion of the second project. It has continued successful initiatives such as developing contract standards for the industry and developed new ones such as environmental and safety standards. These promise useful outcomes if they can be sustained and ICTAD successfully fends off opposition in both public and private sectors. 3.8 Grading and registration. Among ongoing efforts, a contractor grading scheme is now well established, offering detailed information by which prospective clients can assess the quality of firms. The scheme grades firms, according to size, on financial and technical criteria-human resources, plant and equipment, work experience and organization. It now covers seven sectors, including buildings, highways and water. These objectives standards have I1. ICTAD still runs the Operator Training Center financed by the projects, as well as a new Construction Equipment Training Center now financed for three years through a US$I million Japanese grant. 12. ICTAD and NCCASL recently submitted a joint proposal to deliver industrial enterprise training programs under a skills development fund with the Ministry of Industrial Development. ICTAD would be the training provider and NCCASL the industry sponsor. The fund, however, has been slow to develop and may not take off. 18 helped reduce NCCASL's long-standing resistance to the contractor registration program. ICTAD has recently revamped the program to sort out the more professional firms from the rest. From September 1996, previously registered firms are required to pay a fee for reregistration. By June 1997, 2,300 graded firms had been awarded registration 48 percent of firms identified in the ICTAD database. Most of the registered firms are in the western province, with fewer in the central, southern and north-central provinces, and very few in the more northerly and eastern provinces hit by civil conflict. In a complementary initiative that it intends to expand, ICTAD has developed a database of registered consultants and has made this available in a directory for sale to foreign and local firms. 3.9 Construction excellence awards. Since the early 1990s, ICTAD has developed an awards program to help raise professional standards in the industry. It held the latest awards ceremony in July 1997. The honor is now highly regarded among firms as a fair and prestigious scheme. It has so far attracted the larger and more prosperous firms confident enough to welcome the exposure and competition. ICTAD says it is searching for ways to attract smaller firms, especially those in the outlying districts. 3.10 Pre-arbitration mediation. Mediation of disputes for firms, subcontractors and their clients is a fee-based service which the institution is uniquely positioned to provide. It is much in demand. Industry representatives say they use it because ICTAD is independent, fair and objective. 3.11 Technology development. ICTAD brings technology and equipment specialists from overseas to disseminate awareness of innovations through workshops and seminars.13 It develops new construction materials such as stabilized soil-blocks, micro-concrete roofing tiles, improved lime-kilns and new testing techniques for imported cement. It has almost completed the manufacture of the machines and moulds needed for the roofing technology. It plans more studies and training on building materials and environmental issues. The agency has recently begun to donates laboratory equipment to help provincial councils and universities in establishing construction material testing facilities. Three provincial councils and three universities have so far signed memoranda of understanding and received the equipment. 3.12 Industry education. ICTAD plays a lead role in disseminating global innovation to all sections of the domestic industry. It publishes in Sinhala, Tamil and English. Its development and dissemination of industry guidelines and standards has been a significant achievement. The model bidding documents developed have been adopted with beneficial impact across the public sector for IDA-financed projects. Current work includes technical notes and other publications on quarry operations, rock-drilling and blasting, the maintenance of drills and other equipment and specifications for site investigations and foundation designs. 3.13 Contractors'guarantee fund. Of great significance for the industry from the NCCASL perspective would be ICTAD's support for the expansion of a modest, government guarantee fund that helps contractors limited in access to banking credit and insurance. NCCASL says that the fund has helped many firms through cash-tight periods and encouraged them to make more capital improvements than they would have done in the uncertain and increasingly competitive 13. In 1997, it sponsored an exhibition at Badulla on modem tools and materials for finishing trades that participants said exposed them to new ideas, as well as several training programs on the manufacture or new soil-blocks and new roofing tiles. 19 business environment. ICTAD'S support for an expanded scheme is obviously important to the industry given the large subsidy it would probably entail. The main issue, however, is whether the undue protection such schemes afford to inefficient firms outweighs the benefits to viable firms when cash is tight.14 Clearly given the unique vulnerabilities of the construction industry, alternative mechanisms for helping viable firms through difficult times need to put in place since the current arrangements are insufficient and may, under analysis, prove inappropriate. 3.14 A sector think-tank. For the future, ICTAD's new management places high priority on developing the agency's capabilities in knowledge creation. It plans to synthesize the fragmented information on the industry now available, develop databases and generate new ideas on industry issues. ICTAD does not intend to compete with other, related agencies such as the Bureau of Census, the Central Bank and the universities, but to further develop these partnerships. The agency has recently contracted with the University of Moratuwa to develop its labor market information database which it hopes to update and publish annually. Its first annual report in 1996 was well received by foreign firms, and donor agencies but its second report has been delayed by budgetary and operating constraints. In July 1997, the institution's new think- tank capability was put to good use in a well-received seminar for training providers. ICTAD's efforts to collect robust data and develop powerful analyses and models, though under way, are constrained by several factors. The main one is the agency's current location under a sectoral ministry which limits its access to information under the jurisdiction of other entities. Two other constraints are the absence of detailed, industry-specific data in official sources-for instance, on migrant labor-and the difficulty of recruiting top-notch researchers and analysts. 3.15 Lead sector authority. ICTAD's management considers the expansion of the agency's analytical capabilities essential for its future success as a knowledge repository and adviser on industry policy to government and industry clients in Sri Lanka and neighboring countries. Over the years, the agency has achieved legitimacy and credibility with key stakeholders and the VTA seeks its advice regularly. It continues to have good access to senior officials, in part because the former project director is now an additional secretary in the umbrella ministry and, in part, because the current chairman, a professor of civil engineering at the University of Moratuwa, is the former chairman of the VTA. Benefits Realized 3.16 The benefits originally anticipated from the projects covered the construction industry and the wider society. Many of the benefits were realized, though in the absence of empirical studies, evaluation of their scope and extent must rely on informed judgment. 3.17 Industry health. The projects were to contribute to the efficiency, productivity and product quality in construction industry, which in turn, would improve the development of the country's infrastructure. There is no doubt among industry representatives that the projects made a positive difference that neither the industry association, nor the many public sector entities on their own, could have achieved. With ICTAD's leadership, some of the building blocks for industry development are in place. But much work still remains because the industry is still under-capitalized, at a relatively low level of technology compared with others in the Asia 14. A recent OED study suggests that, for many purposes, government guarantee schemes have outlived their usefulness and it provides several recommendations on alternatives. Operations Evaluation Department. 1997. World Bank Support for Small and Medium Industries in Sri Lanka: An Impact Evaluation. Report 16790. 20 region, and concerned with short-term profits at the expense of the quality of finished work. The reports on six, recently completed IDA-assisted infrastructure operations in power, roads, irrigation and water supply show that there are continuing issues of delay, poor quality and cost- escalation. Industry representatives affirm that ICTAD's efforts are indispensable in solving these problems, particularly to enhance communication between public entities and the private sector, achieve better compliance with industry standards and trade-testing procedures, encourage widespread adoption of ICTAD contract guidelines across the public sector and advise government on the appropriate balance of competition and protection for the domestic industry in the new open economy. 3.18 Human resource development. The projects were to contribute to human resource development. Furthermore, they made assumptions that the acquisition of skills would lead to jobs for the unemployed and additional incomes for those already with jobs. These assumptions were probably only partly substantiated. The project studies showed plenty of evidence that many workers benefited from learning new skills, found work on construction sites and stayed with the industry for many years. On several issues, however, much more information could have been captured, such as how far the training actually made it easier for individuals to find jobs in periods of labor surplus. Beneficiaries say that the training helps them get jobs, especially with larger, more professional firms and on public works projects. But it is less of an asset in finding jobs with small firms. They say that, as a result, even skilled workers can remain at the lowly "helper" level for many years, without opportunities for advancement. 3.19 Poverty alleviation. Construction industry jobs still affect only an estimated five percent of households and the projects' impact on poverty has probably been modest. The projects clearly increased the incomes of workers who would otherwise have remained unemployed but is not known how far this benefited their families and communities. First project tracer studies show that, in the early 1990s, project-trained workers received slightly higher wages than non- project workers. But the wage-related incentives for existing workers to seek training remain weak. In the late- 1 990s, according to former trainees, most labor contractors have little need to pay higher wages for additional skills because cheap, unskilled labor is plentiful. In addition, trained workers who complete secondary education are typically from families above the poverty-line because the poorest students cannot afford to stay in school. Furthermore, many questions remain about the returned migrant workers. There is some evidence that those with savings invested them in land or houses or went into trade and it is reasonable to assume that their savings have helped raise incomes and standards of living for their families and communities. They did not typically return to construction work in Sri Lanka as the first project anticipated they would. Overall, industry representatives point out that the prospects for construction workers are unlikely to change until the industry becomes more prosperous and more concerned with productivity and quality. 15. There is some puzzling evidence that income inequality among affected households has actually increased. 16. The studies failed, however, to control for non-project effects on wages and did not trace the income-effects on households. 21 4. Findings, Issues and Lessons 4.1 The projects were exceptionally satisfactory in many aspects of preparation, implementation and outcomes and the partnership between IDA, the government and the project staff was excellent in most respects. The only significant failure was the lack of follow-through on the evaluation of industry outcomes which had the unfortunate effect of obscuring the developmental impact of the projects. Currently, however, ICTAD faces new challenges that threaten its survival and the sustainability of the programs, products and services that it has launched. This chapter identifies important factors contributing to the projects' successes, describes the opportunities and risks ahead for ICTAD and offers five insights stemming from this review that may be useful to others engaged in building new institutions. 4.2 Against the odds and through sustained efforts, the projects achieved remarkable success, jump-starting industry development and increasing demand for the products and services that ICTAD developed where little initially existed. The competencies that produced this result out of inauspicious circumstances have mostly to do with how the projects' senior management aligned ICTAD's role, programs and operational capacity with the demands of the external environment. 4.3 The projects ensured continuous sponsorship at the highest levels of government, kept the stakeholders involved and forged alliances with related professional groups and training providers. In terms of the private sector, the risks the projects took in supporting ACCSL paid off and proved mutually productive. On the internal front, the projects built and strengthened their operational capacity to meet emerging business needs and ensure that they created value for prospective clients. Learning from the first project's experience, the institutional development that ICTAD achieved was a vital factor contributing to both projects' successes. The most important aspects of this included the establishment of the project unit as a permanent, semi- autonomous institution, the continuity and commitment of the management team over many years, and a human resource policy that built up a qualified and experienced staff who stayed with the projects. 4.4 Risks and opportunities. ICTAD survived and developed because it learned to manage risks and seize business opportunities. At the end of the first project, while withdrawing as a direct training provider, the agency identified a market for quality-related products and services such as instructor training and technical guidelines. When self-financing became essential for survival, it aggressively sought new avenues of revenue-generation. More recently, in anticipation that construction activity in the north of the country will eventually grow, the agency has entered a formal inter-agency cooperation agreement on behalf of the Rehabilitation and Reconstruction Authority that poises it to serve new clients. For the future, ICTAD is developing a new instrument, fee-based service in technical auditing. Based on its preparatory research, ICTAD would initially market the service to government agencies and larger firms that want to learn how to upgrade the quality of their construction work to international standards, and, later, to a wider range of private firms as they become more client-responsive and quality- driven. The service would have the added advantage of providing a new source of income to help the agency cover its costs. ICTAD says that it is confident that the market will expand in the future but does not know how much business it can foster in the short run. Meanwhile, it is concentrating on assembling the information and resources required to provide a quality service. 22 4.5 Impact evaluation. The projects' failure to persevere with evaluating their impact on human resource development, employment and income-generation is, with hindsight, unfortunate, because it means that ICTAD, as a publicly-funded agency, lacks the hard evidence of the public value all observers claim it has undoubtedly created. Moreover, the absence of impact data on the industry's efficiency and productivity does nothing to convince a generally reluctant industry that private value is created through investment in the services ICTAD has to offer. At a time when funds are very tight and future sources of revenue uncertain, impact studies would have provided decision-makers with the evidence they needed to make objective judgments on ICTAD's future. These judgments would have been based on estimation of the sunk costs and the social and economic benefits that would be foregone if the agency did not survive. 4.6 Managing the future. In terms of strategic objectives, the attention the projects' senior management paid to developing and communicating the agency's role and purpose in the spirit of the original design of the projects has served well in moving ICTAD forward from its initial activities as a training provider to broader programs designed to improve the industry environment. In its recent Business Plan, 1996-2000, ICTAD has again poised itself for innovation and a continuing, central role in industry development. The agency is staking its future development on the successful passage of a bill now making its way through parliament. The legislation would give the agency the authority, as a public sector body, to regulate the construction industry and impose fines. ICTAD emphasizes the value of the proposed, new role in bringing coherence and consistency to the multiplicity of rules and procedures affecting the industry, educating and advising the industry and its clients and an ensuring compliance with new industry standards. Internally, the agency sees the legislation as a way of redefining its core business, preventing drift towards piecemeal products and services in a relentless search for income, and providing a new source of regular income. 4.7 This bold bid is risky for the institution because it runs counter to current government deregulation and threatens to undermine support from public and private sector agencies to whom regulation means interference. On a practical level, there is an issue of who would pay. If taxpayers were to shoulder the cost, they would in effect be paying for improvements in industry performance. If the industry were to pay as the beneficiary, a subsidy of small by large firm would probably be essential and the levy would be unpopular and difficult to collect. As a supplementary measure, ICTAD plans that new educational programs would stimulate demand for technical auditing and pave the way for eventual industry self-regulation. However, the agency struggles with how to draw the line between its regulatory and its fee-based advisory services to avoid conflict of interest. As a public authority, it would be clearly inappropriate for the agency to collect consulting fees from entities on which it could impose fines. 4.8 Alternatives. If ICTAD's plan for its future is not realized and the construction bill is not passed into law, one thing is certain-the agency cannot stand still if it is to survive. Industry observers envisage several alternative ways forward. First, the agency can probably make a sound case with government to argue for an exception to the rule of full self-financing on the grounds that it is producing public value for industry development in a situation of market failure. Until the private industry becomes more profitable and is able to pay for its own development, it is unreasonable to expect that ICTAD can survive on income generated from the private sector. And if it turns solely to public sector clients, the income generated would be merely a transfer of subsidy within government. If the agency has squeezed all the additional resources it can from internal efficiencies and fees and still cannot sustain and develop its 23 programs, it is unlikely to retain current clients and unlikely to expand its client-base in more remote districts. A second alternative is for the agency to fully privatize and become a mainstream consulting firm providing a full range of services to the industry. This would force it to identify a market niche and provide only those services that would generate business. In this regard, the agency would need to identify other consulting entities with which it could form local partnerships and search aggressively for regional and international clients seeking joint venture opportunities. But this alternative has a downside. It would force the agency to drop services of public value for which the industry is unwilling to pay and it would challenge the agency's capacity to maintain the insider-knowledge of government policy that has proven so valuable. 4.9 A third, even more radical, alternative for ICTAD-a merger with NCCASL-would be a natural evolution of their partnership and mutual dependence. If management and staff could work well together, their combined capacity to serve the industry would be enhanced and the prospects of industry self-governance would be closer. The main disadvantage would be, again, some loss of access to government. None of these alternatives would be easy for ICTAD's management and staff whose terms of employment and status would change and some of them may surface insurmountable problems that outsiders cannot begin to comprehend. However, all of them-and others that may develop-deserve consideration as fall-back strategies in the interests of institutional sustainability and a continued flow of benefits to industry development. Institutional Survival and the Sustainability of Project Benefits 4.10 At completion of the second project the Implementation Completion Report (ICR) correctly rated sustainability as likely. At the time of audit, however, OED rates sustainability as uncertain for both projects. Changes in the external environment-public-private sector policy, and in the internal environment-management and staffing, budgets, core business-render ICTAD's sustainability uncertain and thus put at risk a continued flow of benefits for the construction industry. Lessons for Institutional Development 4.11 The projects provide valuable insights for institution-building on actions that are critical for project managers in ensuring that new institutions become effective and sustainable. * Building strategic alliances with political stakeholders, business partners and potential competitors. * Establishing good strategic, operational and technical capacity in order to be able to develop products and services that will create value for clients. * Creating communication links with beneficiary groups in order to ensure that the products and services offered meet their needs and build a market for the future. * Establishing self-evaluation capacity in order to have ready for decisionmakers convincing evidence about effectiveness, efficiency and value created. * Managing expectations for short-term outputs while creating conditions for achieving long-term developmental impact.  25 Annex Basic Data CONSTRUCTION INDUSTRY TRAINING PROJECT (CREDIT 1130-CE) Project Data Appraisal Actual or Actual as % of estimate current estimate appraisal estimate Project cost (US$ million) 25.0 18.8 25% underrun Credit (US million) 13.50 11.18 17.2% underrun Cumulative Disbursements (SDR) FY 82 83 84 85 86 87 Appraisal estimate 2.44 6.09 7.48 10.0 - - Actual 2.11 3.29 5.44 7.2 8.16 10.1 Actual as % of estimate 85 54 73 66 75 93 Final disbursement FY88 (July 21, 1987) Dates Original plan Revisions Actual First mention in files - March 21, 1979 Appraisal - - July 1980 Negotiations - - Feb. 23, 1981 Board approval - - April 7, 1981 Signing - - June 1, 1981 Effectiveness June 30, 1981 - August 19, 1981 Completion June 1984 Dec. 1986 Credit closing Dec. 31, 1984 Dec. 31, 1986 Dec. 31, 1986 Staff Inputs (staff weeks) FY 80 81 82 83 84 85 86 87 88 Identification/Preparation 8 Appraisal 60 Negotiations 2 Supervision 9.1 10.6 10.4 1.7 3.2 10.1 Project Completion 2 Subtotal 8 62 9.1 10.6 10.4 1.7 3.2 10.1 2 26 Annex IDA Missions Performance Date No. of staff Specializations rating Identification June 1980 2 2 n.a. Appraisal July 1980 6 4 n.a. Post-appraisal April 1981 1 1 n.a. Supervision I June 1981 1 1 1 Supervision II October 1981 2 2 1 Supervision III July 1982 3 3 2 Supervision IV April 1983 3 3 2 Supervision V July 1983 2 2 2 Supervision VI Sept. 1983 2 2 2 Supervision VII Sept. 1984 1 1 2 Supervision VIII Dec. 1985 1 1 2 Supervision IX August 1986 3 3 1 Supervision X March 1987 1 1 1 Completion January 1988 2 2 - SECOND VOCATIONAL TRAINING PROJECT (CREDIT 1698-CE) Project Data (US$ million) Appraisal Actual or Actual as % of estimate current estimate appraisal estimate Project cost 24.48 28.50 116.42 Credit amount 15.0 13.88 92.5 UTNDP 1.02 1.32 Cumulative Disbursements FY 87 88 89 90 91 92 93 94 95 96 97 Appraisal estimate (US$m) 0.3 4.5 7.8 9.5 10.7 11.8 12.8 13.9 15.0 15.0 15.0 Actual (US$m) 0.9 3.0 4.1 4.9 6.1 6.7 7.9 8.9 10.8 11.8 13.9 Actual as% of estimate 298 68 53 52 57 57 61 64 72 79 93 Final disbursement: November 1996 27 Annex Dates Original Actual Executive Project Summary March 1983 June 23, 1983 Appraisal August 1985 August 6, 1985 Negotiations March 1986 March 18, 1986 Board approved June 1986 May 13, 1986 Signing --- Nov. 7, 1986 Effectiveness July 1986 April 15, 1987 Midterm review January 1991 April 1, 1992 Completion Dec. 31, 1994 June 30, 1996 Credit closing June 30, 1995 June 30, 1996 IDA Staff Inputs (staff weeks) Stage ofproject cycle Planned Revised Actual Weeks US$000 Weeks US$000 Weeks US$000 Through appraisal 61.0 103.6 61.0 103.6 61.0 103.6 Appraisal-Board 2.2 3.9 3.9 36.4 3.9 35.4 Board-effectiveness 8.8 16.1 8.8 16.1 8.8 16.1 Supervision 92.7 215.2 88.1 207.0 88.6 209.7 Completion 9.0 15.2 9.0 15.2 8.4 23.8 Total 173.7 354.0 170.8 378.3 170.7 388.6 Missions Performance Date No. of staff Specializations rating Identification June 83 1 E Preparation Sept. 84 1 E Appraisal August 85 6 E, E, TE, MS, A, CS Supervision I July 86 4 E, AS, A, MS 1 Supervision II March 87 2 AS, A I Supervision III Nov 87 1 AS 1 Supervision IV May 88 2 AS, A I Supervision V Nov 88 2 PA, A 1 Supervision VI Nov 89 2 A, CIS 2 Supervision VII May 90 2 A, VTS 2 Supervision VIII Nov 90 2 A, CIS 2 Supervision IX May 91 3 A, IS, VTS 2 Supervision X April 92 3 A, VTS, IS 2 Supervision XI June 93 2 IS, VTS 2 Supervision XII March 94 2 IS, VTS, EMS S Supervision XIII January 95 1 EP S Supervision XIV April 95 2 EP S Supervision XV March 96 2 EP, E S a. A = Architect; AS = Agricultural Specialist; CIS = Construction Ind. Specialist; CS = Construction Specialist; E= Economist; EMS = Educational Monitoring Specialist; MS = Management Specialist; PA = Project Advisor; A = Architect; EP = Education Planner; IS = Implementation Specialist; TE = Technical Educator; VTS = Vocational Training Specialist.