Starting-up the Project April 2012. We would like to acknowledge the contribution of the Programme Management Department in the preparation of this presentation.

Starting-up the ProjectStarting-up the Project

April 2012

We would like to acknowledge the contribution of the Programme Management Department in the

preparation of this presentation that will introduce some concepts and guiding principles for the

starting-up of a new project

For more information on the topic please refer to the supervision training material of February 2012

Starting-up the ProjectStarting-up the ProjectStarting-up the ProjectStarting-up the Project

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Starting-up the ProjectStarting-up the ProjectLearning ObjectivesLearning Objectives

Starting-up the ProjectStarting-up the ProjectLearning ObjectivesLearning Objectives

What happens after the Board approves the loan and before actual

project implementation begins?

What are the legal prerequisites for effectiveness?

What is the Letter to the Borrower?

What should be included in the first year’s Annual Work Plan and Budget

(AWPB)?

What is the Project Start – up Workshop?

Starting-up the ProjectStarting-up the ProjectStarting-upStarting-up

Starting-up the ProjectStarting-up the ProjectStarting-upStarting-up

The third and fourth crucial stage in Implementation (Letter to the Borrower and Start-up)

Here you:

1.Translate all design, negotiation and legal documents into ACTION

2.This phase sets up the “software” of how your project will be run – difficult to change later

3.Clearly establish project’s responsibilities in implementation

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Starting-up the ProjectStarting-up the ProjectSupport for Start-up: Pre-Entry into forceSupport for Start-up: Pre-Entry into force

Starting-up the ProjectStarting-up the ProjectSupport for Start-up: Pre-Entry into forceSupport for Start-up: Pre-Entry into force

Ensure rapid signature of financing agreement

Ensure necessary steps are taken for ratification, if required and

stipulated in the Financing Agreement

Initiate actions with the Authorised Representative of the Borrower to

include in the National Budget the Annual Counterpart funding

requirements

Selection and Limited contracting of essential start-up staff

Open Designated and Project Accounts as required

To facilitate rapid Start-up, several actions can be taken before effectiveness:

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• The financing agreement enters into force upon signature, or, if ratification is required, when the instrument of ratification is received by IFAD

• An official notification is sent to Borrower by IFAD when conditions are met to IFAD’s satisfaction, and financing agreement enters into force

Starting-up the ProjectStarting-up the ProjectSupport for Start-up: Entry into ForceSupport for Start-up: Entry into Force

Starting-up the ProjectStarting-up the ProjectSupport for Start-up: Entry into ForceSupport for Start-up: Entry into Force

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Starting-up the Project Letter to the BorrowerStarting-up the Project Letter to the BorrowerStarting-up the Project Letter to the BorrowerStarting-up the Project Letter to the Borrower

Is the operational guideline for withdrawal of loan funds for project expenditures (procurement) on goods, works and consulting services, details of financial and audit reporting requirements

Sent to the Borrower after the loan/grant has entered into force

Is explained to the PMU/Implementing Agency during Start-up mission

LTB goes hand in hand with the Loan Disbursement Handbook (LDH), which includes prescribed forms to be used by the Borrower in withdrawing funds from loan

The Letter to the Borrower . . .

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Starting-up the Project Starting-up the Project LTB and the LDHLTB and the LDH

Starting-up the Project Starting-up the Project LTB and the LDHLTB and the LDH

• Eligible expenditures

• Evidence of authority to sign Withdrawal Application (WA)

• Disbursement procedures

• Designated Account

• Statement of Expenditure

• Conditions for disbursement

• Allocation of loan proceeds

Explains the following topics:

• Withdrawal applications

• Project Completion and Loan Closing Dates

• Procurement

• Review of documents by IFAD

• Project reviews, periodic assessments and reporting

• Financial reporting and auditing

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Starting-up the ProjectStarting-up the ProjectLTB and the LDHLTB and the LDH

Starting-up the ProjectStarting-up the ProjectLTB and the LDHLTB and the LDH

1. Sample letter of evidence of authority to sign WA

2. Operation of Designated Account

3. Direct payment procedure

4. Special commitment procedure

5. Reimbursement procedure

6. SOE provision and eligibility

7. Schedule 2 and guidelines for withdrawal of loan proceeds

8. Project Checklist – Form and Instructions in completing form

9. List of IFAD Member States

10. Flow Charts for the disbursement procedures

11. Register of Contracts

12. Status of Financial Statement and Audit Report

Loan Disbursement Handbook includes several attachments:

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Starting-up the ProjectStarting-up the ProjectLetter to the BorrowerLetter to the BorrowerStarting-up the ProjectStarting-up the ProjectLetter to the BorrowerLetter to the Borrower

Drafted by Controller and Financial Services Division

Reviewed by Country Programme Manager

Cleared by Country Programme Manager, Controller and Financial Services Division, Office of the Secretary, Office of the General Counsel

Signed by the President

Amendments to Letter to the Borrower, including SOE thresholds, are delegated by the President to Letter to the Borrower’s signatories

The LTB is:

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Starting-up the ProjectStarting-up the ProjectDesignated Account - Initial DepositDesignated Account - Initial Deposit (1) (1)

Starting-up the ProjectStarting-up the ProjectDesignated Account - Initial DepositDesignated Account - Initial Deposit (1) (1)

•Imprest account - Based on authorized allocation with determined ceiling e.g. USD 2 million. Replenishment made against justification of expenditures (i.e. amount justified = amount replenished)

•Revolving Fund - Based on AWPB. Advances made to cover a specific reporting period (e.g. 6 months). Replenishment made against justification of previous advances (e.g. 100% of penultimate advance)

The DA has two modalities. . .

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Starting-up the ProjectStarting-up the ProjectDesignated Account - Initial DepositDesignated Account - Initial Deposit (2) (2)

Starting-up the ProjectStarting-up the ProjectDesignated Account - Initial DepositDesignated Account - Initial Deposit (2) (2)

• In most cases, it is the first withdrawal request

• The advance or authorized allocation (AA) is usually limited to an amount sufficient to cover expenditures for a period of four to six months

• Amount of AA is provided in the LTB

• AA could be paid in one tranche or in 2 or more tranches (Check out provision in LTB)

• Payment of second tranche of authorized allocation could be subject to meeting condition/s provided

The initial deposit is subject to a number of conditions . . .

Starting-up the ProjectStarting-up the ProjectDesignated Account - Initial DepositDesignated Account - Initial Deposit (3) (3)

Starting-up the ProjectStarting-up the ProjectDesignated Account - Initial DepositDesignated Account - Initial Deposit (3) (3)

• Increase in authorized allocation is subject to amendment of the LTB

• Expenditures funded from the Designated Account are replenished by submission of WA

• During typical project life, 70 – 80% of WAs are replenishment to the Designated Account

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• Usually have 2 sessions: a) General-with all participants; b) Technical-with project staff and key operational stakeholders

• Reach clear and common understanding of Project objectives and goals, and roles and responsibilities of each stakeholder

• Establish working relationship between IFAD, project staff, stakeholders

Starting-up the ProjectStarting-up the ProjectStart-up Workshop: Objectives (1)Start-up Workshop: Objectives (1)

Starting-up the ProjectStarting-up the ProjectStart-up Workshop: Objectives (1)Start-up Workshop: Objectives (1)

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• Ensure Borrower understands project financing plan in AWPB, and in the Procurement Plan and relationship between procurement and disbursement

• Confirm with government the budgeting and allocation procedures for financing its contribution to project cost (counterpart funding), as well as any co-financiers

• Establish appropriate financial management (using national systems consistent with IFAD guidelines) and M&E systems and agreed reporting requirements useful to IFAD and Government

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Starting-up the ProjectStarting-up the ProjectStart-up Workshop: Objectives (2)Start-up Workshop: Objectives (2)

Starting-up the ProjectStarting-up the ProjectStart-up Workshop: Objectives (2)Start-up Workshop: Objectives (2)

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• The Borrower organizes start-up workshop with stakeholders (same as members of the CPMT), e.g., Government, beneficiaries, project staff, NGOs, co-financiers. CPM actively supports process

• Discuss all aspects of Project: e.g., project components, logframe, risks, reporting formats, IFAD safeguards, AWPB, procurement plan, M&E, auditing, coordination of components

• Explain procedures and guidelines for disbursement of IFAD loan, and common reasons for delays

• Agreement on Supervision/Implementation support set up – e.g., responsibilities of PMU including what should be prepared in advance of Supervision/implementation support mission

• How to work as a team-common interest in satisfactory outcomes

Starting-up the ProjectStarting-up the ProjectStart-up WorkshopStart-up Workshop

Starting-up the ProjectStarting-up the ProjectStart-up WorkshopStart-up Workshop

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Starting Up the Project: Project Planning and Budgeting Starting Up the Project: Project Planning and Budgeting Annual Work Plan and Budget – PurposeAnnual Work Plan and Budget – Purpose

Starting Up the Project: Project Planning and Budgeting Starting Up the Project: Project Planning and Budgeting Annual Work Plan and Budget – PurposeAnnual Work Plan and Budget – Purpose

AWPB is part of the Financing covenants. It is an essential managerial tool.

It consists of specific time and activity schedules and detailed budgets for the impending year.

It is a key moment to organize beforehand for Implementation.

Why do we need it?

• serves as the instrument for emphasising and integrating management priorities for implementation, forecasting procurement requirements and facilitating the mobilisation of staff and resources when they are needed

• required for the release of funds by the financiers

• as a tool for Project Management, Government and IFAD to control costs, review and assess the performance and achievement of targets at the end of each year

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Starting-Up the Project: Project Planning and BudgetingStarting-Up the Project: Project Planning and BudgetingAnnual Work Plan and Budget (AWPB)Annual Work Plan and Budget (AWPB)

Starting-Up the Project: Project Planning and BudgetingStarting-Up the Project: Project Planning and BudgetingAnnual Work Plan and Budget (AWPB)Annual Work Plan and Budget (AWPB)

• Timely submission of draft AWPB to IFAD (as stipulated in the financing agreement general provisions agreement)

• IFAD (CPM) – “No Objection” to draft AWPB and communication sent usually within 30 days as stipulated in the loan agreement

• Finalization of AWPB by PMU (within the timeline stipulated in the loan agreement but prior to the start of the implementation year)

Procedures

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Starting-Up the Project: Project Planning and Budgeting Starting-Up the Project: Project Planning and Budgeting Annual Work Plan and Budget – General FormatAnnual Work Plan and Budget – General Format

Starting-Up the Project: Project Planning and Budgeting Starting-Up the Project: Project Planning and Budgeting Annual Work Plan and Budget – General FormatAnnual Work Plan and Budget – General Format

Summary of progress and performance since effectiveness

Description of Work Plan of current year including: objectives (why?); activities (how?); deliverables & outputs (what?); required inputs; implementation arrangements (when?); institutional responsibilities (who?); key M&E indicators; etc.

M&E activities (bench-marking, operation of M&E system); impact-oriented data related to participating villages and households, expected outputs, etc.

Quantitative data of planned inputs in table format including: detailed physical and financial targets, sources of funds, and budget summary tables

Monthly activity schedules and timelines (Implementation Schedule)

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Starting Up the Project: Project Planning and Budgeting Starting Up the Project: Project Planning and Budgeting

Annual Work Plan and BudgetAnnual Work Plan and Budget

Starting Up the Project: Project Planning and Budgeting Starting Up the Project: Project Planning and Budgeting

Annual Work Plan and BudgetAnnual Work Plan and Budget

1. Introduction2. Activities and Resources Schedule 3. Procurement Plan4. Summary Training & Technical Assistance

Schedule5. Budget & Financing Plan

Guidelines for AWPB preparation

AWP&B Part I - Narrative template

AWP&B Part II - Excel Templates-revised

Procurement Plan-Consultancies

Sample contents AWPB

The consolidated AWPB is expected to contain several key elements…

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Starting-up the Project: Project Planning and Budgeting Starting-up the Project: Project Planning and Budgeting Annual Work Plan and Budget Review Annual Work Plan and Budget Review

Starting-up the Project: Project Planning and Budgeting Starting-up the Project: Project Planning and Budgeting Annual Work Plan and Budget Review Annual Work Plan and Budget Review

Procedural aspects – is it submitted by the authorised official(s) within the time-lines and methodology set in the Loan Agreement?

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Starting-up the Project: Project Planning and Budgeting Starting-up the Project: Project Planning and Budgeting AWPB Review – Setting Your Checklist AWPB Review – Setting Your Checklist

Starting-up the Project: Project Planning and Budgeting Starting-up the Project: Project Planning and Budgeting AWPB Review – Setting Your Checklist AWPB Review – Setting Your Checklist

Tips:• Is the AWPB complete? Does it include summary progress,

activities & resource schedule, budgets, procurement plan, training & TA schedule?

• Is the work plan linked to project log-frame (activities, inputs, outputs)?

• Is the strategic direction adequately reflected in the work plan (and component sub-plans)?

• Are inputs & outputs adequately quantified and is there coherence between inputs & outputs?

• Do implementation schedules appear realistic, appropriate milestones/ targets?

• Is there evidence of adequate M&E system in place & operating? • Are measures and activities for impact monitoring & reporting

adequate?• Is the budget generally consistent and coherent with the planned

activities, inputs & outputs?

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Starting-up the Project: Project Planning and Budgeting Starting-up the Project: Project Planning and Budgeting First Year Annual Work Plan and Budget (AWPB)First Year Annual Work Plan and Budget (AWPB)

Starting-up the Project: Project Planning and Budgeting Starting-up the Project: Project Planning and Budgeting First Year Annual Work Plan and Budget (AWPB)First Year Annual Work Plan and Budget (AWPB)

Plan actions for coming year

Responsibilities

Determine what needs to contract/purchase, and how to purchase it

Is main tool to measure progress towards development effectiveness and impact

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1. PMU: Vehicles and Office Equipment 4WD vehicles desktop and notebook computers

printers software fax machine photocopier telephones office furniture air conditioners stationery etc.

Start-up : Project Planning and BudgetingStart-up : Project Planning and BudgetingAWPB – Typical First Year InputsAWPB – Typical First Year Inputs

Start-up : Project Planning and BudgetingStart-up : Project Planning and BudgetingAWPB – Typical First Year InputsAWPB – Typical First Year Inputs

3. Sub-Contracts accounting software English language training computer training

4. Recurrent Costs salaries & allowances for

PMU personnel vehicle operation and

maintenance office operation and

maintenance office utilities and supplies

2. Technical Assistance Inputs contracting specialist monitoring and evaluation

specialist other technical assistance as

required

Start-up : Project Planning and BudgetingStart-up : Project Planning and BudgetingAdditional elements to AWPBAdditional elements to AWPB

Start-up : Project Planning and BudgetingStart-up : Project Planning and BudgetingAdditional elements to AWPBAdditional elements to AWPB

From Project Year 2, the consolidated AWPB will contain the following additional key elements:

Physical progress made in prior year, including quantitative data

Financial progress in prior year, including cost overruns & savings, analysis of flow of funds from financiers

Procurement performance

Constraints & problems from prior year, & recommendations to resolve them; good practices to be scaled up

Lessons learned & rationale for the activities proposed

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Starting-up the Project: Project Planning and BudgetingStarting-up the Project: Project Planning and BudgetingProcurement at Start-UpProcurement at Start-Up

Starting-up the Project: Project Planning and BudgetingStarting-up the Project: Project Planning and BudgetingProcurement at Start-UpProcurement at Start-Up

Desired Features of a Procurement Plan

1. Ideal Structure

2. Coherence with project objectives and annual work plan

3. Financial estimates in line with annual budget and overall funds allocation

4. Procurement methods in line with regulatory framework

5. Realistic timing and scheduling of procurement activities

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• Ideal Structure

The plan covers 18 months and shows for each procurement action: the loan category, financing rate, procurement method, estimated cost, quantities, IFAD review requirement, and anticipated timeline for the entire process

Procurement actions are presented by project component and properly identified and referenced

Procurement actions are grouped according to categories (goods/works/services) for each component

Within each category, procurement actions are grouped into coded lots or packages for increased competition, efficiency and better prices

Starting-up the Project: Procurement Starting-up the Project: Procurement Review of Procurement Plan (1) (refer to checklist)Review of Procurement Plan (1) (refer to checklist)

Starting-up the Project: Procurement Starting-up the Project: Procurement Review of Procurement Plan (1) (refer to checklist)Review of Procurement Plan (1) (refer to checklist)

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• Coherence with project objectives and annual work plan

Procurement actions are relevant to project objectives

Nature and quantity of goods/works/services are consistent with appraisal report (detailed cost tables)

Nature and quantity of goods/works/services are consistent with activities in the annual work plan

• Financial estimates in line with annual budget and overall funds allocation

Estimated costs for each procurement action are reasonable Cost estimates are properly reflected in the annual budget Cost estimates are within overall project funds allocation (by

expense category)

Starting-up the Project: Procurement Starting-up the Project: Procurement Review of Procurement Plan (2)Review of Procurement Plan (2)

Starting-up the Project: Procurement Starting-up the Project: Procurement Review of Procurement Plan (2)Review of Procurement Plan (2)

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• Procurement methods in line with regulatory framework Compliance with the loan agreement Compliance with the procurement guidelines and national

regulations

• Realistic timing and scheduling of procurement activities Anticipated timeline for each procurement action (from

preparation of bidding documents to signature of contract) is realistic

Anticipated delivery dates of goods/works/services are consistent with physical targets as per the AWPB

Starting-up the Project: ProcurementStarting-up the Project: ProcurementReview of Procurement Plan (3)Review of Procurement Plan (3)

Starting-up the Project: ProcurementStarting-up the Project: ProcurementReview of Procurement Plan (3)Review of Procurement Plan (3)