Mexico - Second Technical Training (Second CONALEP) Project

DOCUment of The World Bank FOR OMCLAL USE ONLY ICR12FICt6E 6MOE'T Report T- h13/ TYpe E1 ReportNo. 10216 THIAS, / XZ1472 / -?'~0DD PROJECT COMPLETION REPORT MEXICO SECOND TECHNICAL TRAINING PROJECT (LOAN 2559-ME) DECEMBER 30, 1991 Human Resources Operations Division Country Department II Latin America and the Caribbean Regional Office This document has a restricted distribution and mav be used by recipients only in the performance of their offilcial duties. Its contents may not otherwise be disclosed wFithout World Bank authorization.  GLOSSARY CONALEP National Agency for Vocational and Technical Education (Colegio Nacional de Educaci6n Profesional T6cnica) ICB International Competitive Bidding IBRD International Bank for Reconstruction and Development LCB. Local CompetiLive Bidding NAFIN Nacional Financiera S.N.C. (National Finance Co., Inc.) PCR Project Completion Report SAR Staff Appraisal Report SEP Ministry of Education (Secretaria de Educaci6n Publica) SPP Ministry of Programming and Budgeting (Secretaria de Programaci6n y Presupuesto) STPS Ministry of Labor and Social Security (Secretaria de Trabajo y Previsi6n Social)  THE WORLD BANK FOR OFCIAL USE ONLY Washington. D.C. 20433 U.S.A. Office of Dwrectou-GenwaI Optatinns Iv^aItknn December 30, 1991 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Mexico Second Technical Training Proiect (Loan 2559-ME) Attached, for information, is a copy of a report entitled "Project Completion Report on Mexico Second Technical Training Project (Loan 2559-ME)" prepared by the Latin America and the Caribbean Regional Office with Part II of the report contributed by the Borrower. No audit of this project has been made by the Operations Evaluation Department at this time. Attachment I 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.  FOR OFFICIAL USE ONLY PROJECT COMPLETION REPORT MEXICO SECOND TECHNICAL TRAINING PROJECT (Loan 2559-ME) TABLE OF CONTENTS Page No. Preface........ ....................... ........... i Evaluation Summary .............................................. iii I. PROJECT REVIEW FROM BANK'S PERSPECTIVE .......... ........... 1 A. Project Identity ..................................................... 1 B. Project Background .......... ....................... ....* .....1..... C. Project Objectives and Description ................... .... 3 D. Project Design and Organization ..... ..................... 3 E. Project Implementaticn ....... ..... . ...................... 4 F. Major Results of the Project ...... .................... 5 G. Project Sustainability ....... ............................ 10 H.1 Bank Performance ........................................... 11 I. Borrower Performance ....... ................. ............. 12 J. Project Relationships ... .... .................... ........ 14 K. Technical Assistance . ......... so ........ ........ 14 L. Project Documentation and Data ..... ...................... 14 II. PROJECT REVIEW FROM BORROWER'S PERSPECTIVE ................. 15 A. Adequacy and Accuracy of Factual Information in Part III.. 15 B. Evaluation of Bank's Performance and Lessons Learned ..... 15 C. Evaluation of Borrower's Own performance and Lessons Learned .................. . .......................... 15 III. STATISTICAL INFORMATION ................................. 16 A. Related Bank Loans . ................................. 16 B. Project Timetable ............................ ......... 17 C. Loan Disbursements ................... .... ............. 18 D. Project Implementation ..................... 19 E. Project Costs and Financing ...................eo..o.ai..... 20 F. Project Results ................................ 00 ... 23 G. Status of Loan Covenants .................. ......... 27 H. Use of Bank Resources ..................... .0 .. ........ 29 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.  i PROJECT COMPLETION REPORT MEXICO SECOND TECHN,CAL TRAINING PROJECT (Loan 2559-ME) PREFACE This is the Project Completion Report (PCR) for the- Second Technical Training Project in Mexico, for which Loan 2559-ME in the amount of US$81.0 million was approved on May 28, 1985. The Loan was closed on June 30, 1991 and the funds fully disbursed by July 26, 1991. The PCR was jointly prepared by the Human Resources Operations Division, Country Department 2, of the Latin America and the Caribbean Regional Office (Preface, Evaluation Summary, Parts I and III), and the Borrower (Part II). In order to incorporate lessons for the preparation of a Third Technical Training Project, preparation of this PCR was started during the Bank's supervision mission of the project in June 1990, followed by PCR missions in November 1990 and March 1991; it is based, inter alia, on the Staff Appraisal Report, the Loan Agreements, supervision reports and internal memoranda.  iii PROJECT COMPLETION REPORT MEXICO SECOND TECHNICAL TRAINING PROJECT (Loan 2559-ME) EVALUATION SUMMARY Introduction 1. This was the second IBRD assisted technical training project in Mexico. It was appraised in November 1984 and approved on May 28, 1985. Total project cost was estimated at US$162.2 million, of which US$81.0 million was financed by an IBRD Loan. The Project was completed in December 1990. The Loan was closed on June 30, 1991. In scope, the project remained essentially as planned, except for a decision made by the Government of Mexico in 1988 to increase the number of centers targeted for construction from 97 to 130 (para. i2(b)). Because of higher than expected price increases for civil works, and because of the inclusion of 33 additional centers requiring additional furniture and equipment, the actual total cost of the project at t',e time of completion amounted to US$164.41 million, 1.3Z over appraisal estimate. Project Obiectives and Content 2. Consonant with the Government's efforts to increase the supply of skilled workers and technicians in Mexico, this project supported phase II of CONALEP's technical training program (para. 3). The project's objectives were to: improve the operational efficiency and effectiveness of central and local administrations; increase the supply of skilled workers and technicians; improve the quality of training; develop an advanced maintenance system for buildings and equipment and introduce cost reduction measures; and provide flexible support for the program as a whole, eliminating undesirable distinctions between project and non pro4ect centers, and facilitating the development of strategic training options and institution building. The project, at signing, included: (a) improvement of CONALEP'S operational efficiency and effectiveness through specialist assistance, fellowship and management training; (b) upgrading and expansion of instructor training and teaching materials; (c) development of a maintenance system for buildings; (d) increasing the supply of skilled workers and technicians through the construction, equipping and furnishing of about 97 new training centers; and (e) studies of other efficiency measures and development of strategic training options. Implementation. 3. For full implementation of the project, six years were needed from the date of Board approval until Loan closing. The implementation delay of 24 months resulted from: (a) an initial confusion as to the proper routing of communications between the major participants of the project--i.e., the Bank, NAFIN (the borrower), CONALEP (the executing agency), and the Government (the guarantor)--and consequent delays in the effectiveness of the Loan (para. 12 (a)); (b) the Government decision in 1988 to expand the number of training centers served from 97 to 130, and the consequent additional implementation time required for both civil works and equipment (para. 12(b)); and (c) two complete changes in the upper levels of CONALEP's administration, and consequent lack of familiarity by new administrations with Bank processes and procedures (para. 12(c)).  iv Project Reoults. 4. Project objectives were met and in some aspects exceeded. In particular, the attainment of some quantitative goals was significantly in excess of planned ones. 5. Improvements in CONALEP's operational efficiency, as a result of the inputs from specialist assistance, fellowships and management training, were: (a) an increase in the completion rate of the new student body from 401 on the average over the period 1979-86 to 522 at present; (b) more effective use of the advisory committees and industrial associations in setting training program priorities and in improving program effectiveness, as a result of establishing a more concise set of regulations for the activities of the local and national committees in about 902 of CONALEP's centers, which helped bring about a large flow of donations that CONALEP received from industrialists and provided guidance for graduate placement; (c) 654 staff-years of specialist assistance and 76 staff- months of short study tours abroad, for improved administrative efficiency; (d) the upgrading of the graduate placement program; and (e) extension of a graduate tracer system to all centers that have been operational sufficiently long to have produced graduates (para. 16). 6. The implementation of the component for increasina the supply of skilled workers and technicians through the construction, equipping, and furnishing of training centers greatly exceeded the planned quantitative goals. Specifically, as th'a result of additional local funding becoming available, CONALEP II was able to establish 130 training centers (para. 12(b)), for a total of 252 centers for CONALEP I and CONALEP II combined; thus, a substantial increase in the number of trainees as proposed in the SAR was realized. In fact 129,000 students enrolled in regular as well as in upgrading programs in phase II centers (including enrollments made possible by the expanding mobile training system (Annex 11)), surpassing the 90,000 expected at the time of appraisal, and resulting in a total enrollment in phase I and II centers combined, of 239,000 (as opposed to an appraisal estimate of 200,000). Outputs from the regular three-year program were somewhat lower than expected (about 14,000 from phase II centers vs. an appraisal estimate of 21,600; and 40,400 from phase I and II centers combined vs. the appraisal estimate of 48,000) due to a Government/CONALEP decision to allocate a large number of training places for the upgrading of trainees of the Manpower Training Program, under Loan 2876-ME; as a result of the same decision, however, the number of workers upgraded in CONALEP II centers was 31% over estimates (21,100 actual vs. 16,200 estimated at appraisal; 41,000 workers received upgrading training under both projects combined, as opposed to an appraisal estimate of only 36,000). The total output from phase II centers was 35,100 trainees vs. the appraisal target of 37,800 (para. 19). 7. Improvements in the guality of instruction were attained through: (a) enhancements in instructional capabilities; a total of 17,6951 instructors received pedagogical training during the implementation of the CONALEP II project to finally reach a total of 27,965 instructors in both projects combined (the appraisal target for total number of instructors receiving training under both l This figure includes double counting of instructors taking more than one course.  v projects combined was 10,000, but corresionding numbers actually attained are not available)i and (b) course syllabi improvements in about 40S of courses through approximately 367 M/Y of specialist services; during the project's life, 1,111 publications were produced by CONALEP, totaling 6.8 million copies that included textbooks, bulletins, syllabi, training materials, guidelines, handbooks, leaflets, extension bulletins, journals and manuals (para. 20). 8. In the context of improving quality of instruction, the project also supported the introduction of pilot production trainina programs in 70 centers (24 were targeted at appraisal), designed to enhance training (by making furniture and equipment and by providing practical hands-on training opportunities), to improve student motivation and to reduce training costs and capital investment costs financed from the regular budget. This program produced 62,000 items of furniture, hand tools and equipment, and had a net savings of about US$930,000 for CONALEP (para. 21). 9. The project also supported further develovment of a maintenance system for buildinRs. furniture and equi2ment, which, in addition to training enhancement, also resulted during 1990 alone in: (a) an estimated value of about US$1.05 million of maintenance activities being conducted by trainees and instructors; and (b) the development and utilization of operational manuals for the repair and preventive maintenance of 549 items of specialized equipment (para. 22). 10. As a result of its strengthened efficiency and institutional capacity, CONALEP's achievements in developing and implementing strategic training nrotrams surpassed appraisal targets. In fact, four innovative pilot programs, not anticipated under the Loan, were carried out during the implementation of the project, in support of the Government's 1989-94 development plan, without further support from the Bank (using Government and private funding). The major thrust of these programs was directed at assistance to marginal populations, micro- industry, self-employment and the in-bond assembly industries (maquiladoras) (para. 26). Pro ect Sustainabilitv 11. The sustainability of project benefits is closely linked to the question of the long-term technical relevance and financial sustainability of CONALEP as a predominantly federally financed and operated training system. Since its inception in the late 1970s, CONALEP has established itself as the backbone of the entire Mexican system of workforce training and upgrading, and has enjoyed strong support from politicians, entrepreneurs and the labor sector, which has essentially protected it from budget cuts even during recent severe austecIty programs. Nevertheless, CONALEP is actively seeking to diversify its funding, including updating its strategy for improving cost recovery/cost sharing of operational costs of training from the private sector (espacially under a proposed Third Technical Training Project); cost recovery in cash and in kind (not including land) in 1990 amounted to US$12.9 million, or almost 141 of CONALEP's total recurrent budget, up from US3.1 million in 1989 and US$2.3 million in 1988. CONALEP maintains close links and good standing with employers, providing the best guarantee that it will remain relevant to the training needs of enterprises. These links include: establishment and maintenance of industrial advisory boards for each center and region to advise CONALEP in determining training priorities and course content; contracting of courses with  vi employers; production of industrial prototypes under contract with erterprises and public agencies; development of learning aids (including simulator equipment and video programs); and production of finished goods such as school furniture (to the extent such production is consistent with efficient practical training). Close to US$1.0 million was earned in 1990 through production-for-revenue programs. CONALEP in also raising tuition fees for its regular cour-es (such fees have always been charged but amounts have been eroded by inflation) to cover about 101 of training costs. In addition, the project has enabled CONALEP to save on recurrent expenditure, for instance through the maintenance system which has produced annual savings of over US$1.0 million through systematic use of instructors and students to do qualified maintenance work. These and other efficiency measures introduced by CONALEP, some as part of the project and some on its own initiative, also serve to ensure the long term sustainability of project benefits. 12. Lessons Learned. The principal lessons learned with implication for future projects, as a result of the experiences during project implementation and the preparation of the PCR are summarized as follows. (a) In view of observed delays in project implementation, as a result of the lack of familiarity by new CONALEP Administrators with Bank process and procedures. a short seminar on project implementation should be conducted by Bank Supervision Missions when such changes occur; moreover, Bank missions should ensure that multiple copies of all project related documents are maintained in project implementation unit archives (para. 12(a)). (b) In view of the fact that installation difficulties experienced in a few institutions where large quantities and heavy or sophisticated equipment was involved, such installation should be contracted to the respective suppliers as part of the equipment supply contract (para. 13). (c) In view of the fact that advisory committees were instrumental in bringing about a large flow of donations that CONALEP received from industrialists during the 1984-90 period (Annex 4) and in providing guidance for graduate placement, and considering the potential for greater private sector involvement in improving the placement record of pre-service trainees through assistance in course design, such linkages with private sector industries should continue to receive high priority (paras. 16 and 24). (d) In view of the still acute problem of internal inefficiency (such as low completion rates and high unit costs in some training centers), CONALEP should investigate the causes of inefficiency and take proper remedial actions (paras. 17-18). (e) In view of the surplus training capacity in a few agricultural programs in some more remote areas of the country, where the demand for training is not well defined, qualified personnel from professional organizations must participate in the analysis of demand and of development of programs (para. 19).  vii (f) In view of relatively rapid developments in technology in Mexico and their implications on space planning criteria and requirements for shop., laboratories and other support spaces, as well as for equipment redistribution requirements, consideration must be given not only to the expected immediate use of these spaces but their possible m-. ium and longer term uses resulting from technology chAnges (para. 19). (g) In view of the shortcomings of the design of the graduate follow-up system (such as a short follow-up period and a lack of control groups for comparison of the effectiveness of CONALEP training programs) and of the method for evaluating effectiveness of CONALEP programs, CONALEP should take proper remedial actions to improve graduate tracer systems, and the Bank should at an early stage of project preparation focus more attention on the design of an economic evaluation of trainlng programs (para. 24). (h) In view of the sporadic slowdowns in project implementation, especially whan CONALEP's adm