## cr17269 ## Source details **Canonical URL:** [cr17269](https://www.imf.org/-/media/files/publications/cr/2017/cr17269.pdf) ## Other formats - [Markdown version](/-/media/files/publications/cr/2017/cr17269.pdf.md) - [Structured JSON version](/-/media/files/publications/cr/2017/cr17269.pdf.json) --- ### PREFACE — mission context and outputs - Mission dates: March 1–14, 2017. - Team lead: Christiane Roehler. Team members: Jacques Charaoui, Kubai Khasiani, Martin Darcy, Arturo Navarro. - Purpose: advise authorities on an action plan for strengthening Uganda’s Public Investment Management System (PIMS). - Outputs referenced: Status review of MoFPED’s 2016 Action Plan (Annex I); Supplementary Action Plan with specific near-term actions (Annex II). - Workshop date: March 9, 2017 (attended by 45 officials). ### Key findings on public investment performance and gaps - Efficiency gaps: - Efficiency gap of about 50 percent to the best performing countries. - Efficiency gap of about 25 percent to the average performance of emerging market economies. - Implementation deficiencies: - Significant time and cost overruns and impacts below expectations per audit and evaluation studies (AGO, MoFPED BMAU) and project case evidence. - Diagnostic studies (2016 Diagnostic Study by MoFPED supported by World Bank and DFID; 2014 AFE study) identify key weaknesses at all stages of the project cycle. - Institutional actions: - MoFPED adopted a “PIMS Action Plan” (the “2016 Action Plan”). - Project Appraisal and Public-Private Partnership Department (PAP) in the Budget Directorate established in 2015 leads PIMS strengthening. - Implemented measures: PIMS Framework with four project phases; Development Committee Guidelines (“DC Guidelines”); Uganda-specific project preparation and appraisal manual at advanced stage. - Gaps undermining link with budgeting: - PIP contains many projects not ready when entering the PIP and blocks funding for other projects. - PIP overextended relative to the projected medium-term envelope; arrears accumulating; new projects continuously pushed into the PIP. - Weak project monitoring; project status information unreliable; government lacks clear picture of PIP commitments. ### Supplementary Action Plan focus and report structure - Supplementary Action Plan organized by same action areas as 2016 Action Plan; focuses on MoFPED mandate to contain spending requests within annual and medium-term envelopes and issue guidance. - Chapter mapping of recommendations: - Chapter II: baseline and stock-take of portfolio. - Chapter III: appraisal purpose and pre-PIP quality and fiscal discipline. - Chapter IV: effective budgeting, realistic bottom-up costing, PIP cleanup, PBB benefits. - Chapter V: adjustments to make the DC an effective PIP gatekeeper. - Chapter VI: monitoring and ex-post evaluations. - Chapter VII: developing an IPD. - Chapter VIII: capacity building and future TA. ### Baseline statistics on public investment (Central Government Expenditure and components) - Central Government Expenditure (In billion of Uganda Shillings): - 2011/12 = 9,281; 2012/13 = 10,523; 2013/14 = 11,684; 2014/15 = 14,379; 2015/16 = 16,727. - o/w Public Investment (In billion of Uganda Shillings): - 2011/12 = 3,458; 2012/13 = 4,237; 2013/14 = 4,957; 2014/15 = 6,215; 2015/16 = 7,239. - Concessional loans & grant financed (In billion of Uganda Shillings): - 2011/12 = 1,612; 2012/13 = 2,163; 2013/14 = 1,871; 2014/15 = 1,933; 2015/16 = 2,182. - Non-concessional external loans (In billion of Uganda Shillings): - 2011/12 = 19; 2012/13 = 20; 2013/14 = 0; 2014/15 = 0; 2015/16 = 1,276. - Domestic financing (In billion of Uganda Shillings): - 2011/12 = 1,654; 2012/13 = 2,074; 2013/14 = 3,066; 2014/15 = 4,282; 2015/16 = 3,781. - (As a percent of GDP) Central Government Expenditure: - 2011/12 = 15.6; 2012/13 = 16.2; 2013/14 = 16.6; 2014/15 = 18.5; 2015/16 = 19.8. - (As a percent of GDP) o/w Public Investment: - 2011/12 = 5.8; 2012/13 = 6.5; 2013/14 = 7.0; 2014/15 = 8.0; 2015/16 = 8.6. - (As a percent of GDP) Concessional loans & grant financed: - 2011/12 = 2.7; 2012/13 = 3.3; 2013/14 = 2.7; 2014/15 = 2.5; 2015/16 = 2.6. - (As a percent of GDP) Non-concessional external loans: - 2011/12 = 0.3; 2012/13 = 0.0; 2013/14 = 0.0; 2014/15 = 0.0; 2015/16 = 1.5. - (As a percent of GDP) Domestic financing: - 2011/12 = 2.8; 2012/13 = 3.2; 2013/14 = 4.4; 2014/15 = 5.5; 2015/16 = 4.5. - Memorandum items: - Nominal GDP: 2011/12 = 59,420; 2012/13 = 64,758; 2013/14 = 70,458; 2014/15 = 77,835; 2015/16 = 84,434. - Real GDP growth: 2011/12 = 4.4; 2012/13 = 2.7; 2013/14 = 5.2; 2014/15 = 5.1; 2015/16 = 4.8. - PIP portfolio size and composition: - About 450 projects included in the government’s PIP database and eligible for funding. - Remaining project values in PIP: approximately UGX 58 trn or US$ 16 ½ bn. - PAP multi-year commitment worksheet: remaining project values approximately UGX 60 trn or US$ 17 bn. - Known large new projects not fully reflected (example: Standard Gauge Railway US$ 2 bn shows up with much smaller values). ### Data quality and fiscal context - Data weaknesses: - Approximately 10 percent of projects in the PIP do not show any project value. - Project values often outdated; coverage and values differ between datasets. - MoFPED considers only the immediate budget year medium-term cash flow forecasts reliable; multi-year cash flow forecasts are unreliable. - Donor-funded projects constitute more than 25 percent of project expenditures; some donors implement off-budget and reporting is often delayed. - MDAs can only accept grant funding upon Minister of Finance authorization, usually granted for projects below US$ 1 million. - Arrears and fiscal outlook: - Arrears in “development expenditures,” and “court cases and compensations” related to projects amount to about 1 percent of GDP (Draft AFE Technical Assistance report of January 2017). - Deficits projected to fall in the medium term from the peak by around 3 ½ percent of GDP, partly due to a reduction in concessional projects and projected increase in revenue; higher tax revenue depends on project completion and growth dividend materializing. ### Stock-take and PIP baseline recommendations (timelines preserved) - Recommendation 2.1: Undertake stock-take of the PIP and overhaul the PIP database, updating all multi-year commitment and cash flow estimates based on a close review of project financials, and physical and contractual milestones (Sept. 2017). - Recommendation 2.2: Identify options for electronically recording and maintaining the information obtained in the stock-take so that it can be updated and remains reliable before the IPD is activated (Aug. 2017). - Recommendation 2.3: Use the stock-take of the PIP to enter all signed contracts into the IFMIS, and record all certificates for completion of work. Enforce timely recording going forward (Sept. 2017). - Operational guidance and timeline: - Team set-up: Budget Directorate, possibly with NPA, to visit all MDAs and review projects. - Anticipated timeline: 2–3 months preparation; perhaps 3 months for the review. - Minimum information to collect: project financials and costing, signed contracts, pending certificates of completion, physical and contractual milestones. ### Appraisal process: objectives, DC role, and tensions - Appraisal objectives: - Surface new problems and project ideas; explore alternatives. - Make selection decisions to advance, abandon, or choose options; ensure projects align with NDP strategic priorities and the medium-term fiscal envelope. - Produce documentation during appraisal that meets implementation requirements so projects are ready when declared Pre-PIP. - Development Committee (DC): - DC is PS-level, chaired by PS/ST with representatives of NPA, OPM, Office of the President, several MoFPED officials; PAP is DC secretariat. - Current reach is not comprehensive; DC faces difficulties standing up to political directives and inclusion of donor-funded or new projects outside appraisal cycle. - DC Guidelines (August 2016) features: - Appraisal stages: Concept note, project profile, pre-feasibility study, feasibility study, and project proposal. - Building blocks for studies: Demand; technical/engineering; environmental; human resources and administrative support; institutional and legal. - Analytical modules: Financial evaluation; economic or social evaluation (Cost Benefit Analysis); stakeholders and risk analysis. - All projects with approved feasibility study included in pool of Pre-PIP projects. - Limit PIP to investment in physical assets and remove projects with more than 50 percent of recurrent expenditures. - Completion reports required for projects exiting PIP. ### Appraisal weaknesses and recommendations - Weaknesses: - DC appraises projects on their own merits rather than relative to other projects or resource envelopes. - PPP projects follow a different approval process under the 2015 PPP Act (PPPC), undermining DC oversight. - Sector strategies not always up-to-date; donor-funded projects may proceed outside agreed country strategy. - Key recommendations: - Introduce rolling update on project priorities coordinated by NPA and aligned with an annual strategic PIP review (Chapter IV). - Keep all projects under DC jurisdiction until after completion and approval of the pre-feasibility study; DC should have option to intervene after PPP feasibility if deviations occur. - PAP to develop step-by-step operational guidance enabling refusal of ill-prepared projects and clarifying technical criteria (timelines appear in Recommendation 3.x list below). ### Appraisal documentation improvements and thresholds - Economic and social appraisal: - Move to full Cost Benefit Analysis (CBA) for major projects; Uganda to develop national parameters shortly. - Consider indicative value thresholds below which full CBA not required; specify appraisal requirements in relation to project design and value. - Threshold examples referenced for guidance development (examples only): - Cyprus Euro 5 million; Romania Euro 30 million; South Korea US$50 million; Chile US$150,000; Norway Euro 100 million; Ireland Euro 20 million; EU funded Euro 50 million. - Financial appraisal shortcomings: - Approximately 10 percent of projects in the current PIP do not have capital estimates attached and none of them have recurrent costs identified. ### Financial appraisal, costing and implementation planning - Financial appraisal guidance needs: - PAP should develop comprehensive guidance for financial appraisal including baseline information for budgeting and MTEF. - Development of a unitary price database foreseen in 2016 Action Plan; interim access to MDA price databases (e.g., MoWT) recommended. - Price information ideally published on MoFPED website; maintenance requires dedicated staff. - Recurrent costs: - Templates must explicitly require estimating recurrent cost impact post-delivery (maintenance, staff, supplies). - Implementation Plan Checklist (minimum items to appraise deliverability): - Land acquisition legal issues and costs; permits, licenses, regulatory requirements; site access; associated investments; utility connections; procurement plan including timing on long-lead items; cash flow connected with all of the above; project management plan; availability of human, technical, and financial resources for implementation and sustainable operations and maintenance. - Implementation planning timing: - Implementation planning needs prominence and should start no later than the feasibility study stage; re-assess immediately prior to selection for funding. ### Appraising PPPs and fiscal risks - PPP characteristics and fiscal implications: - PPPs convert capital expenditure today into recurrent spending commitments in future years and include long-term maintenance costs. - Private partner financing costs are higher than government’s and included in overall project costs. - Accounting changes (IPSAS 32 conditions) mean many PPPs are recognized on government books and score against national debt at full investment value. - Institutional arrangements and recommendations: - PPPs should be managed within an integrated PIM framework; DC should oversee whole government project portfolio including PPPs. PPPC can continue as specialized body but DC oversight is needed. - PPPU should develop a brief manual on fiscal risks to guide evaluations. - Staged appraisal considerations for PPPs (high-level): - Concept Note/Project Profile: do not identify as PPP prior to pre-feasibility. - Pre-Feasibility: consider PPP as part of options appraisal; examine investor conditions and likely guarantees. - Feasibility: soft market test, should-cost benchmark, establish risks to MDA and government. - Prior to commitment: final assessment of financial obligations and whether fiscal consequences have shifted. ### Paying for feasibility studies - Funding concerns: - High appraisal costs; development partners paying feasibility studies can bias project progression. - Proposed funding mechanism: - MoFPED/DC should make funding for feasibility studies available through the budget (not a special fund). - Option: special budget allocation in MoFPED budget with estimated amount vireable to responsible MDA; DC approves funding when advancing from pre-feasibility to feasibility. ### Key appraisal recommendations (exact texts and timing) - Recommendation 3.1: Reshape the appraisal process to ensure that the DC is an effective gatekeeper, assessment against the MTEF takes place early, and financing decisions are taken only after the pre-feasibility study (see also Chapter V) (Dec. 2018). - Recommendation 3.2: Reshape the appraisal process to ensure that the PPP process remains integrated with the process for traditional and donor-funded projects, in particular that DC retains control over the assessment of the options appraisal until after the pre-feasibility study stage (see also Chapter V) (Dec. 2018). - Recommendation 3.3: Develop a brief manual on fiscal risks of projects and in particular of PPPs (Dec. 2017). - Recommendation 3.4: Develop as a priority specific guidance on how to undertake financial appraisal (capital and recurrent) and how to prepare implementation plans (Dec. 2017). - Recommendation 3.5: Develop prototype projects to simplify and standardize appraisals and reduce costs (Jul. 2018). ### Budgeting, MTEF challenges and reforms - Key budgeting weaknesses: - MTEF does not effectively constrain commitments in public investment; top-down MTEF not linked to project planning. - Bottom-up forecasts of commitments and cash flow requirements are weak; insufficient information on contracts, variations, milestones, and physical progress. - MoFPED lacks information to undertake independent bottom-up checks; MDAs’ information dispersed and filtered by medium-term guidance. - Insufficient attention to post-delivery recurrent costs and maintenance funding. - Optimism bias and lack of skilled staff skew bottom-up estimates; acquisition of land rights typically underestimated. - Over-optimistic revenue and arrears lead to within-year cuts while commitments exist; projects often first area where payments delayed. - Actions to strengthen PIP budgeting: - Improve multi-year cash flow forecasts after stock-take and possibly with IPD. - Enforce submission and use of multi-year projections per section 53 of the 2015 PFM Act. - Enforce recording of signed contracts and pending certificates on IFMIS. - Design and implement an arrears clearance strategy and enforce commitment controls thereafter. - Consider use of asset registers under AGO’s accrual accounting reform to improve maintenance budgeting. ### Strengthening PIP budgeting and PIM outcomes (operational actions) - Prepare reliable bottom-up estimates and decide projects to accelerate, slow or stop. - Enforce multi-year projection baseline rule: multi-year projection submitted in year t for year t+2 becomes baseline during MTEF and budget preparation in year t+1. - Recommended outputs of PIP clean-up: - Data bank showing projected cost, contractual cost, date of commencement, projected date of completion, status of completion, percentage paid, current budget allocation, medium-term budget projection. - Categorization by size (mega, large, medium, minor), share of recurrent/capital content, consistency with NDP, donor-funding type. - Categorize projects for allocation, pool for re-assessment/redesign, or cancellation after cost comparison. - Recommendation 4.1: Introduce comprehensive PIP review by sector in September/October each year (Pilot Oct. 2017, Full Oct. 2018). - Recommendation 4.2: Put short annual decision paper on the PIP to Cabinet (Oct. 2017). - Recommendation 4.3: Estimate realistic bottom-up requirements and integrate into MTEF (Dec. 2017). - Recommendation 4.4: Develop summary information on the PIP and the MTEF for monitoring and decision making (Dec. 2018). - Recommendation 4.5: Proceed with clean-up of the PIP database on the basis of a clear definition of a project (Sept. 2017). ### Gatekeeping: reshaping the DC and appraisal cycle - Proposed adjustments overview: - Use concept notes to issue project ID numbers; NPA to appraise consistency with NDP; DC technical subcommittee screens concept notes. - Approve pre-feasibility only after review in context of overall and sectoral portfolio and MTEF; document conditions to limit scope creep. - Link third-party funding and options appraisal: allow project-specific external funding only after pre-feasibility and explicit options appraisal. - Require DC and Parliament approval if project requires external funding; funding negotiations to begin only after DC authorization. - For PPPs, DC should have role in final approval to proceed as PPP; administrative regulations or PPP Act amendments may be needed. - Feasibility study approval by DC classifies project as Pre-PIP; Pre-PIP not guaranteed budget funding. - Projects receive budget funding only when implementation readiness is demonstrated and scheduled in PIP–MTEF. - Cabinet endorsement of PIP and portfolio development plan at least annually to back DC gatekeeping. - DC should monitor existing portfolio and trigger re-appraisal for poorly performing projects. - Recommendation 5.1: Reshape the project planning cycle to ensure DC is effective gatekeeper, assessment against the MTEF takes place, and financing decisions are only taken after the pre-feasibility study (Annex V, Dec. 2018). ### Monitoring and Evaluation (M&E): current state and reforms - M&E framework and current practice: - OPM is M&E coordinator with framework requiring periodic reviews and planning/evaluations. - Reviews: quarterly by ministries/local governments; bi-annually and annually by SWG; annually by Cabinet. - MDAs must prepare five-year rolling evaluation plans, and for each project: baseline study, mid-term review, final evaluation or value-for-money audit. - OPM reports semi-annually to Cabinet via GHAPR and annually via GAPR. - Weaknesses in ongoing monitoring: - Focus on standardized criteria rather than project-specific baselines and implementation plans. - Monitoring of whole portfolio and cross-sector linkages absent. - Baseline plans largely absent; previous forecasts overwritten; financial and physical progress not linked. - MoFPED requires additional information from MDAs; stock-take proposed to generate reliable information. - Completion reports and ex-post evaluation: - Completion reports often not prepared or not shared; should report against original and revised plans and resource use. - Ex post evaluations should be selective and can follow examples like Chile: two-stage approach (implementation compliance sample 8–10% followed by in-depth evaluations after five years). - M&E recommendations: - Recommendation 6.1: Develop capacity to monitor the whole project portfolio and prepare an operational manual on ongoing monitoring including physical, financial, contract(s) implementation progress and summary templates (Dec. 2018). - Recommendation 6.2: In conjunction with PIP clean-up, demand submission of completion reports (Dec. 2017). - Recommendation 6.2 (duplicate numbering in source): PAP to identify ex-post evaluation topics and work with NPA and sectors to ensure studies undertaken (Jul. 2018). ### Information landscape and need for an Integrated Project Database (IPD) - Current information systems: - Annual PIP document/database; PBS and IFMIS for financial execution; aid management system for donor disbursements; various MoFPED databases and MDA M&E reporting. - Expenditure information period increased from three to five years for fiscal year 2016/2017. - Data quality issues and consequences: - Expenditure projections vary greatly between fiscal years for same project; inconsistencies in totals; non-standardized presentation; weak links to development strategy; non-measurable expected outcomes. - Donor-funded project information weak: donor funds represent approximately 30% of total resources in investment budget in fiscal year 2016/2017. - Only current year budget allocation in PIP is "fairly reliable." - Rationale and benefits of an IPD: - Single point of entry to improve management, reduce repetition and errors, standardize data, support selection/sequencing/monitoring/evaluation. - Preferred term: "Integrated Project Database" covering potential, pre-approved, ongoing and completed projects with updated monitoring information. - Three broad data sets for IPD: 1. Descriptive identification and relationships (unique project ID, link to development plan, location, accountable party). 2. Intrinsic project context (objectives, problem, options, technical description, feasibility outputs). 3. Regularly updated implementation data (project costs, physical execution, outputs, breakdown by components, execution periods, funding sources). - Design principles: - Start with clear conceptual design to define scope and functionalities. - Phased development, extensible over time. - Keep system streamlined to avoid deterring users. - Link IPD to existing systems (PBS, IFMIS) for automatic sharing and to make IPD the primary search point. - System features can improve data quality, but culture and processes must support quality. ### IPD phased implementation and immediate priorities - Phase 1 (initial): strengthen existing systems focused on budget aspects, planning, allocation, execution. - Phase 2: focus on pre-investment phase where appraisal guidelines exist. - Phase 3: capture monitoring and evaluation information; feed lessons back to pre-investment. - Immediate MoFPED priorities for IPD: - Improve reliability of information requested for project approval. - Integrate current project data (Access) with PBS and IFMIS. - Avoid demanding additional information beyond MoFPED business needs. - Recommendation 7.1: Set up a project management team comprising inter alia a project manager, business users and experts in system design and IT (June 2017). - Recommendation 7.2: Develop carefully the conceptual design of the IPD, including information and functional requirements and the governance structure (Dec. 2017). - Recommendation 7.3: Design work processes to keep information in the PIP/IPD up-to-date and reliable (Dec. 2017). ### IPD technical features and lifecycle fields (selected key fields) - Fixed identification and descriptive fields: - Project ID; Project name; Date of inclusion; Project owner/accountable party; Implementing entity; Supporting entities; Project description; Project objective; Problem to be solved; Alternative solutions; Deliverables; Duration; Type of Project; Economic activity area; Geographic location; Link to development strategy. - Dynamic, updateable fields: - Total cost (division by budget cycles; include maintenance and operating costs); Budget additions/reductions; Cash flow forecast; Sources of Funding; Impact on future current expenditures; Physical execution plan; Relationship with other projects; Latest revision; Approval date; Project start and project end (actual dates). ### Capacity building and training approach - Capacity needs: - Initial focus: project design, appraisal and selection; training in project management and on the IBP/IPD. - PAP received some training; structured training across public service needed. - Train-the-trainer approach to create nucleus of PIM instructors; seek external partners. - Collaboration with Makerere University planned; possible involvement of international schools (initiated with Canada’s Queens University, Toronto). - Training priorities (initial): - Costing, project financials, practices for ongoing monitoring. - Introduction to appraisal process and methodologies including economic and social appraisals. - Module on project management and implementation planning for MDA staff. - Recommendation 8.1: Continue to identify partners for capacity building of large groups of officials in PIM and related areas like medium-term budgeting; find support for curriculum development (ongoing from 2017). ### Supplementary Action Plan — high-level proposals and timelines (selected items) - Institutional setting and PIMS role (PAP, 2016–17): monitor selected projects (Now); develop capacity to monitor whole portfolio (2017); oversee IPD development (June 2017); enforce end-of-project date and completion reports (Now). - Re-engineering PIM processes (PAP, 2017–18): process mapping and roles (2017); PIMS organogram (2017); fine-tune identification and pre-investment cycle and DC strengthening (2017–18); introduce annual PIP review (2017). - Improving project cycle (PAP, 2017–18): issue operational guide on appraisal emphasizing financial appraisal and implementation planning (2017); prepare operational manual on ongoing monitoring (initiate 2017); develop project definition and entry/exit criteria (2017); develop standardized project summary (2017); develop detailed costing forms (2017–18); develop brief manual on fiscal risks of projects/PPPs (2017–18); develop prototype projects (2018). - IPD/IBP development (High Priority): develop software components (PAP 2018–23); develop data collection module (2018–23); build capacity on IBP operations (2018–23). - Legal and budgetary framework enhancements (PAP 2018–23): develop PIM policy (2018); input to Treasury Instructions (2017); identify legal updates (2019). - Monitoring, evaluation and indicators (PAP 2018–23): standardized key performance indicators (PAP 2018–23); standard guidelines for ex-post evaluation (PAP 2018–23). *Source: cr17269* ### PREFACE _________________________________________________________________________________________ 6 ### PREFACE ### Mission context and participation - A technical assistance (TA) mission from the IMF’s Fiscal Affairs Department (FAD) visited Kampala during March 1–14, 2017, at the request of Permanent Secretary/Secretary to the Treasury, Mr. Keith Muhakanizi. - Team lead: Christiane Roehler. Team members: Jacques Charaoui, Kubai Khasiani, Martin Darcy, Arturo Navarro. - The mission met senior officials from MoFPED, NPA, PBO, OPM, Ministries of Health, Agriculture, Education, Works and Transport, Energy and Minerals Development, ICT and National Guidance, Uganda National Roads Authority, Kampala City Council Authority, Makerere University (MAK), and representatives from the World Bank and DFID. - An interactive workshop on March 9, 2017 covered project appraisal and feasibility studies, the link with the budget, monitoring and evaluation, and setting up an integrated project database. The workshop was attended by 45 officials. ### Purpose and outputs - Purpose: advise authorities on an action plan for strengthening Uganda’s Public Investment Management System (PIMS). - Outputs referenced in the report: - Status review of MoFPED’s 2016 Action Plan (Annex I). - A Supplementary Action Plan with specific near-term actions to support effective implementation of PIM practices (Annex II). ### Acknowledgments - The mission expresses appreciation to MoFPED staff (named in text) and IMF office staff for support and cooperation during the mission. ### Key administrative dates and names retained verbatim - Mission dates: March 1–14, 2017. - Workshop date: March 9, 2017. - Named officials and units as listed in PREFACE. ### Source *cr17269 - PREFACE* ### 2. Projects need to be delivered on time, on budget and with the planned impact to ### 2. Projects need to be delivered on time, on budget and with the planned impact to ### Key findings on public investment performance and gaps - Estimates indicate Uganda’s public investment has an efficiency gap of about 50 percent to the best performing countries, and about a 25 percent gap to the average performance of emerging market economies. - The efficiency gap implies the impact of public investment on publicly available physical infrastructure and infrastructure quality could be significantly improved for the same level of expenditure. - Audit and evaluation studies (e.g., AGO, MoFPED BMAU) and project case evidence point to significant time and cost overruns and impacts below expectations. - Several diagnostic studies (2016 Diagnostic Study by MoFPED supported by World Bank and DFID; 2014 AFE study) identify key weaknesses at all stages of the project cycle that impede delivering projects on time, on budget and with impact. ### Institutional reforms, PIMS Action Plan, and recent measures - MoFPED adopted a “PIMS Action Plan” (the “2016 Action Plan”) focusing on institutional arrangements and the appraisal process. - A Project Appraisal and Public-Private Partnership Department (PAP) in the Budget Directorate (established 2015) is leading PIMS strengthening. - PAP near-term priorities: - Clarify and assign roles and responsibilities across PIMS to ensure timely and effective project cycle actions. - Strengthen the appraisal process (project identification and pre-investment phases) so projects are fully ready when financing becomes available. - Implemented measures include: - An overview PIMS Framework identifying four project phases with key steps/outputs and tasks/actors. - New Development Committee Guidelines (“DC Guidelines”) setting the appraisal structure, providing templates/required information for each appraisal stage, and a template for performance review/completion report. - A new project preparation and appraisal manual (Uganda-specific case study) at an advanced stage. - Related government reforms that support PIM: - OPM strengthening monitoring and evaluation, annual performance targets, Annual Performance Report, and performance agreements between PS/ST and accounting officers. - Shift from output-oriented budgeting (OOB) to program-based budgeting (PBB). - AGO-led accrual-basis accounting initiatives, introduction/strengthening of asset registers, activation of IFMIS automated asset registration module. ### Gaps identified by the mission - Critical gaps exist in linking PIM processes with budgeting and the medium-term expenditure envelope: - The PIP is supposed to contain only projects that can receive budget funding, but many projects are not ready when entering the PIP and block funding for other projects. - The PIP is overextended relative to the projected medium-term envelope; arrears are accumulating; new projects are continually pushed into the PIP. - Lack of sufficient and timely funding during execution drives up costs, delays completion and reduces project impact. - Project monitoring is weak; project status information is unreliable; government lacks a clear picture of PIP commitments. ### Supplementary Action Plan focus and report structure - The mission proposes a Supplementary Action Plan (Annex II) organized by the same action areas as the 2016 Action Plan, focusing on MoFPED’s central agency mandate to contain spending requests within annual and medium-term envelopes and issue necessary guidance. - Analyses and recommendations in the Supplementary Action Plan are reflected in subsequent chapters: - Chapter II: need to establish baseline information and a stock-take of the project portfolio. - Chapter III: appraisal process purpose and elements; recommendations for pre-PIP project quality and fiscal discipline. - Chapter IV: effective budgeting for projects; need for realistic bottom-up costing; cleaning up PIP database; benefits of PBB for PIM. - Chapter V: adjustments to appraisal process to make the DC a more effective PIP gatekeeper. - Chapter VI: need for ongoing monitoring and ex-post evaluations. - Chapter VII: advice on developing an IPD to enhance information reliability and extent. - Chapter VIII: capacity building requirements and potential future technical assistance. ### Establishing baseline information on the PIP — current situation and statistics - Public investment scaling and financing mix (Table 2: Public Investment Expenditure 2011/12–2015/16): - Central Government Expenditure (In billion of Uganda Shillings): 2011/12 = 9,281; 2012/13 = 10,523; 2013/14 = 11,684; 2014/15 = 14,379; 2015/16 = 16,727. - o/w Public Investment (In billion of Uganda Shillings): 2011/12 = 3,458; 2012/13 = 4,237; 2013/14 = 4,957; 2014/15 = 6,215; 2015/16 = 7,239. - Concessional loans & grant financed (In billion of Uganda Shillings): 2011/12 = 1,612; 2012/13 = 2,163; 2013/14 = 1,871; 2014/15 = 1,933; 2015/16 = 2,182. - Non-concessional external loans (In billion of Uganda Shillings): 2011/12 = 19; 2012/13 = 20; 2013/14 = 0; 2014/15 = 0; 2015/16 = 1,276. - Domestic financing (In billion of Uganda Shillings): 2011/12 = 1,654; 2012/13 = 2,074; 2013/14 = 3,066; 2014/15 = 4,282; 2015/16 = 3,781. - (As a percent of GDP) Central Government Expenditure: 2011/12 = 15.6; 2012/13 = 16.2; 2013/14 = 16.6; 2014/15 = 18.5; 2015/16 = 19.8. - (As a percent of GDP) o/w Public Investment: 2011/12 = 5.8; 2012/13 = 6.5; 2013/14 = 7.0; 2014/15 = 8.0; 2015/16 = 8.6. - (As a percent of GDP) Concessional loans & grant financed: 2011/12 = 2.7; 2012/13 = 3.3; 2013/14 = 2.7; 2014/15 = 2.5; 2015/16 = 2.6. - (As a percent of GDP) Non-concessional external loans: 2011/12 = 0.3; 2012/13 = 0.0; 2013/14 = 0.0; 2014/15 = 0.0; 2015/16 = 1.5. - (As a percent of GDP) Domestic financing: 2011/12 = 2.8; 2012/13 = 3.2; 2013/14 = 4.4; 2014/15 = 5.5; 2015/16 = 4.5. - Memorandum items: Nominal GDP: 2011/12 = 59,420; 2012/13 = 64,758; 2013/14 = 70,458; 2014/15 = 77,835; 2015/16 = 84,434. - Memorandum items: Real GDP growth: 2011/12 = 4.4; 2012/13 = 2.7; 2013/14 = 5.2; 2014/15 = 5.1; 2015/16 = 4.8. - Size and composition of PIP portfolio: - About 450 projects are included in the government’s PIP database and thus are eligible for funding. - Remaining project values as available in the PIP: approximately UGX 58 trn or US$ 16 ½ bn (Figure 2). - In the PAP multi-year commitment worksheet, remaining project values are approximately UGX 60 trn or US$ 17 bn. - Known large new projects are not fully reflected (example: Standard Gauge Railway US$ 2 bn shows up with much smaller values; no estimate yet for new oil road projects). - Data quality and tracking weaknesses: - Approximately 10 percent of projects in the PIP do not show any project value. - Project values summed in estimates are often outdated; coverage and values differ between datasets. - MoFPED considers only the immediate budget year medium-term cash flow forecasts reliable; multi-year cash flow forecasts are unreliable. - Donor-funded projects constitute more than 25 percent of project expenditures; some donors implement off-budget and reporting is often delayed. - MDAs can only accept grant funding upon Minister of Finance authorization, usually granted for projects below US$ 1 million. - Arrears and fiscal context: - Arrears in “development expenditures,” and “court cases and compensations” related to projects amount to about 1 percent of GDP (Draft AFE Technical Assistance report of January 2017). - Deficits are projected to fall in the medium term from the peak by around 3 ½ percent of GDP, partly due to a reduction in concessional projects and projected increase in revenue; but higher tax revenue depends on project completion and growth dividend materializing. ### Stock-take and PIP baseline recommendations (timelines preserved) - Recommendation 2.1: Undertake stock-take of the PIP and overhaul the PIP database, updating all multi-year commitment and cash flow estimates based on a close review of project financials, and physical and contractual milestones (Sept. 2017). - Recommendation 2.2: Identify options for electronically recording and maintaining the information obtained in the stock-take so that it can be updated and remains reliable before the IPD is activated (Aug. 2017). - Recommendation 2.3: Use the stock-take of the PIP to enter all signed contracts into the IFMIS, and record all certificates for completion of work. Enforce timely recording going forward (Sept. 2017). - Operational guidance for the stock-take: - Set up a team (Budget Directorate, possibly with NPA) to visit all MDAs and review projects using MDA documents and records. - Anticipated timeline: 2–3 months preparation; perhaps 3 months for the review. - MDAs should prepare internally and support the review; data collection templates should be developed to standardize information. - Minimum information to collect: project financials and costing, signed contracts, pending certificates of completion, physical and contractual milestones. - A project management consultant could advise on templates and questioning; short-term IMF TA may assist with template development and initial training. - Use stock-take outputs to update PIP database and IFMIS contract recording module; record all signed contracts and any certificates of completion even if no immediate budget allocation exists. - Over time, MoFPED could require MDAs to update project documentation (e.g., “review appraisals”) so appraisal-level information supports decisions on project continuation or closure. ### Appraisal process: purpose, tensions, and role of the Development Committee - Appraisal process objectives and tensions: - Allow brainstorming and exploration in early stages to surface new problems and project ideas; explore alternatives as concepts mature. - Facilitate selection decisions as projects move through appraisal stages — which projects to advance, abandon, or which options to choose — with decisions intended to be final. - Ensure prioritization aligned with NDP strategic priorities and mindful of the medium-term fiscal and sectoral envelope; avoid developing projects far outside realistic budget allocations. - Produce documentation and analyses during appraisal that meet implementation phase requirements so projects are mostly ready for implementation when declared Pre-PIP. - The Development Committee (DC) is recognized as the decision-making body and gatekeeper in the appraisal process; MoFPED has overall PIMS responsibility and effects this through the DC. *Source: cr17269 - 2. Projects need to be delivered on time, on budget and with the planned impact to* ### 23. However, the current reach of the DC is not comprehensive. The 2015 PPP Act ### cr17269 - 23. However, the current reach of the DC is not comprehensive. The 2015 PPP Act ### Institutional arrangements and governance - The Development Committee (DC) is a PS-level body chaired by the PS/ST with representatives of the NPA, OPM, Office of the President, and several officials from the MoFPED. MDAs are represented on a case-by-case basis. PAP is the secretariat of the DC. - A technical subcommittee at Commissioner-level examines projects in detail and prepares the decisions of the DC; it calls on sector representatives or technical experts as needed. - The 2015 PPP Act established a separate Public-Private Partnership Committee (PPPC), also chaired by the PS/ST. PPPC members include the Attorney General, OPM, NPA, Ministry of Lands, the Ministry for local governments, and four members that are not public officers. - The Public-Private Partnership Unit (PPPU), a stand-alone directorate-level unit in the MoFPED, acts as the secretariat to the PPPC. - Challenge: the DC’s current reach is not comprehensive and it faces difficulties standing up to political directives and inclusion of donor-funded or other new projects outside the appraisal cycle. ### DC Guidelines (August 2016) — appraisal structure and institutional strengthening - The DC Guidelines set out a structured appraisal process, requirements and templates for each stage. - Enhanced project review process: - 4 stages: Concept note, project profile, pre-feasibility study, feasibility study, and project proposal. - 5 building blocks for pre-feasibility and feasibility studies: Demand; technical or engineering; environmental; human resources and administrative support, and institutional and legal. - 4 analytical modules for pre-feasibility and feasibility studies: Financial evaluation module; economic or social evaluation (Cost Benefit Analysis); stakeholders and risk analysis. - All projects with approved feasibility study will be included in a pool of Pre-PIP projects, from which the PIP will be populated. A project proposal document demonstrates implementation readiness. - Stronger institutions: - Create the Project Preparation Committees (PPC) at Vote and Sector Working Group (SWG) levels to facilitate the project preparation phase. - Better focus and monitoring: - Limit PIP to investment in physical assets and remove projects with more than 50 percent of recurrent expenditures. - Enhance the monitoring of on-going projects by conducting annual reviews. - An implementing agency must formally request (in writing) the DC’s authorization to change the scope of a project or an extension of its implementation period. - All projects exiting the PIP must present a completion report for which a template was developed. - Implementation caveat: Implementing the DC Guidelines fully will take time; PAP’s immediate focus is on surfacing projects early, improving project documentation quality, and identifying selection criteria for appraisal stages. ### Purpose and mechanics of appraisal - Appraisal is framed as a rationing and prioritization tool to match inadequate supply of resources with over-demand for new projects, guiding selection toward proposals consistent with development objectives, balancing costs, risks, and benefits, and ensuring implementability. - Appraisal is a graduated, continuous investigation that proceeds from concept through pre-feasibility to full feasibility (the “funnel”), intended to slow entry into the PIP and concentrate effort on promising proposals. - The nine building blocks and modules in the DC Guidelines, plus an Option Appraisal and a good Implementation Plan, together constitute a “Feasibility Study.” - Cultural change required: currently the DC appraises projects on their own merits rather than relative to other projects or resource envelopes; projects are often treated as acceptable if a source of financing exists; PPP projects follow a different approval process. ### Ensuring strategic fit - The NDP is recognized as the guiding document and all projects presented to the DC must be certified by the NPA as aligning with the NDP; sector strategies coordinated by SWGs underpin the NDP. - Practical weaknesses: - It is reportedly quite easy for a project idea to demonstrate compatibility with the NDP. - Not all sector strategies and master plans are up-to-date, including in important sectors like roads. - Donor-funded projects occasionally proceed outside the agreed country strategy. - Political priorities shift (e.g., the ruling party’s “Manifesto”), while the NDP is static for its 5-year horizon. - Recommendation: introduce a rolling update on project priorities, coordinated by the NPA and aligned with an annual strategic PIP review proposed in Chapter IV, including assessment of physical project progress to coordinate interdependent projects. ### Observing fiscal constraints and portfolio management - The current appraisal process does not effectively limit PIP projects to available fiscal resources, causing resource dilution and project delays that undermine original appraisals; delays increase direct costs and push benefits further into the future. - Pressure to include new projects is high: "156 new investment projects are being proposed just for PPP funding," and the party “Manifesto” includes projects outside of the NDP. - Recommendation: conduct a broad assessment of the overall project portfolio—both existing and new—and groups of projects against the resource envelope; implement a regular, at least annual, systematic review of all project proposals at various preparation stages to ensure preparation pace does not exceed financing possibilities. - The critical constraint is the MTEF financial envelope, which must include all grant-financed, debt financed, and PPP projects because most projects have direct financial obligations for the government and other fiscal impact. - Chapter IV proposes an annual PIP review to be endorsed by Cabinet to manage new project pressures and the strategic development of the project portfolio. ### Options appraisal and PPP alignment - An Options Appraisal considers alternatives (PPP, donor funding, commercial debt) and should treat options equally based on likely efficiency and effectiveness; it should be developed with all stakeholders to ensure buy-in. - Under the DC Guidelines an Options Appraisal is required during pre-feasibility. However, under the 2015 PPP Act potential PPP projects are often pre-identified prior to pre-feasibility and the PPPC, not the DC, makes the PPP suitability decision. - Past practice has also seen donor-funded projects de facto approved before pre-feasibility. - Recommendation: - Keep all projects under DC jurisdiction until after completion and approval of the pre-feasibility study; only then should project development account for likely financing sources. - The DC should have the option to intervene after the PPP feasibility study if significant deviations from pre-feasibility arise. - Best practice would delay the options decision until after a full feasibility study, but in Uganda this may be unrealistic. - PAP’s planned PIM policy could help communicate that all project types should be managed in an integrated manner under DC oversight. ### Developing operational guidance and capacity - PAP and MoFPED are clarifying PIM processes and procedures; MoFPED will focus on financial management and PIM while OPM regulates government-wide M&E and accountability. - Gap identified: new appraisal manuals are conceptually useful but not operational; DC Guidelines are quasi-legal and instructive but not sufficiently informative. A vacant space remains for practical, step-by-step operational guidance. - Recommendation: - PAP should develop step-by-step operational guidance in a phased approach tailored to PAP’s needs. - Guidance should enable PAP to refuse ill-prepared projects by clearly communicating technical criteria and templates for feasibility studies, appraisal steps, and required quality standards. - Operational guidance will help officials know how to improve submissions and reduce DC time fighting poor proposals. - Capacity note: A survey among 40 government officials indicated many do not have the skills or information to undertake good quality appraisals including financial appraisal and estimating multi-annual commitments. ### Strengthening appraisal documentation: economic, social, financial, and implementation planning - Current appraisal documentation is heavily technical and provides insufficient information on other essential feasibility elements. - PAP’s priorities include strengthening economic and social appraisal (moving to full Cost Benefit Analysis) and urgent improvements in costing and financial appraisals; implementation planning and procurement planning are weak. - Options to improve efficiency: - Develop prototype appraisals for repeat projects to standardize and reduce appraisal costs and to serve as teaching tools. - Prioritize guidance on financial appraisals and implementation plans; templates and materials can be developed during the planned stock-take of the PIP (Chapter II). - Economic and social appraisal: - The most comprehensive technique is a full social Cost Benefit Analysis (CBA), requiring calculation of shadow costs and national parameters; Uganda will begin steps to develop these parameters shortly. - CBAs require subjective judgments (e.g., “the economic value of a human life”) and may risk politicization. - Less complex techniques are appropriate for small and mid-sized projects; MoFPED should consider indicative value thresholds below which CBA would normally not be required, though authorities may object due to risk of circumvention by splitting projects and because CBA requirements incentivize training. - Specifying appraisal requirements in relation to project design and value is preferable. - Threshold examples from other countries (for context in guidance development): - Cyprus Euro 5 million - Romania Euro 30 million - South Korea US$50 million - Chile US$150,000 - Norway Euro 100 million - Ireland Euro 20 million - EU funded Euro 50 million - Financial appraisal: - Financial appraisal is critical to determine project value and sustainability. - Approximately 10 percent of projects in the current PIP do not have capital estimates attached and none of them have recurrent costs identified, implying full financial appraisals are unlikely to be routinely undertaken currently. - The capital and recurrent costs to be considered are listed in the MoFPED’s simplified appraisal manual. *Source: cr17269 (excerpt supplied).* ### 53. The financial appraisal is critical for budgeting, and PAP should develop ### cr17269 - 53. The financial appraisal is critical for budgeting, and PAP should develop ### Financial appraisal and costing - The financial appraisal is critical for budgeting; PAP should develop comprehensive guidance including how to ensure sound baseline information for budgeting and MTEF purposes. - The needs of budgeting should be taken into account when developing templates and guidelines for the PIP stock-take exercise (Chapter II). - Costing needs to be based on reference information and data; lack of access to such information constrains the accuracy of appraisals. - Development of a unitary price database is foreseen in the 2016 Action Plan. In the meantime: - PAP could arrange for access to databases kept by MDAs (reportedly the Ministry of Works and Transport (MoWT) maintains a price database). - PAP efforts should start with basic information on cross-cutting items such as construction costs and encourage sectors to research and monitor sector-specific costs. - Price information ideally would be published on the MoFPED website; updating and maintaining it will require dedicated staff and resources. - Little attention is paid to estimating the recurrent cost impact post-delivery; an explicit requirement should be added to the templates in the DC Guidelines at the next revision. - Assessing recurrent cost implications is necessary for project appraisal and essential for understanding implications on the medium-term expenditure framework. - This should cover both maintenance of the physical asset(s), and the impact on recurrent costs of operating the new facility or physical asset(s) including costs for staff and supplies. ### Implementation plan appraisal - Appraisal of implementation or “deliverability” should be an essential part of the feasibility study. - Many projects are insufficiently prepared when they start to receive PIP allocations, causing long delays in start-up. - Procurement is frequently where inadequate implementation planning is exposed. - Implementation planning needs more prominence and should start no later than the feasibility study stage. Currently the project proposal stage considers implementation plans only briefly (four lines in DC Guidelines, Section 4 in Annex VI). - Implementation Plan Checklist (minimum items): - Land acquisition legal issues and costs - The requirement for and timing of permits, licenses, and other regulatory requirements - Site access - Need for associated investments to allow functionality - Access to or need to connect with utility services - Procurement plan including timing on long-lead items - Cash flow connected with all of the above - A project management plan - Availability of human, technical, and financial resources to ensure that the project can be implemented to planned cost and time - Availability of human, technical, and financial resources to ensure sustainable operations and maintenance of the project - Implementation planning needs to be re-assessed and updated immediately prior to selection for funding in case critical assumptions have changed so the plan is a reliable guide for monitoring and evaluation. ### Appraising Public-Private Partnerships (PPPs) - PPPs are an alternative implementation model but remain government projects including in their fiscal impact; the separate approval process under the PPP Act can create the illusion PPPs differ from conventional projects. - PPPs should be managed within an integrated PIM framework and be based on the same appraisal and selection principles as other public investment projects. - Key characteristics and fiscal implications: - The majority of PPP transactions convert capital expenditure requirements today into recurrent spending commitments in future years. - PPPs include costs of long term maintenance over the contractual period, ensuring sustainability of underlying assets. - PPP contracts do not constitute “free money”; the private partner’s financing costs are higher than the government’s and are included in overall project costs. - Changes to accounting standards mean many PPPs are recognized on government books and score against national debt at their full investment value (see IPSAS 32 conditions). - Institutional arrangements: - PPPs should be overseen by MoFPED like conventional projects. The 2015 PPP Act created a parallel PIM system; the main challenge is that the DC has no formal role in overseeing PPP development, selection, and approval (this role is given to the PPPC). - The DC should be recognized as overseeing the whole government project portfolio, including PPPs; the PPPC can continue to oversee appraisals but the whole PPP process should be overseen by the DC. - The DC (based on Cabinet endorsement) should provide directions on the overall development of the government’s project portfolio, including PPPs, and be able to intervene at key stages. - Fiscal risk and appraisal guidance: - PPPs pose potentially high fiscal risks due to complexity, long-term nature and contractual risk-shifting; a careful fiscal risk analysis is essential. - The PPPU should develop a brief manual on fiscal risks to guide evaluations; this manual would also be useful for traditional projects but meet special needs of PPP appraisal. - Essential considerations in appraising the PPP option (stages and questions summarized): - Concept Note and Project Profile: Projects should not be identified as PPP prior to pre-feasibility stage. - Pre-Feasibility Study: Consider PPP as part of strategic option appraisal; ask about precedents, investor conditions, likely guarantees, and fiscal acceptability to MoFPED. - Feasibility Study: Consider a “soft market test,” establish a “should-cost” benchmark, establish qualitative reasons for PPP, and establish risks to MDA and government. - Feasibility Study Assessment: Assess investor appetite, likely lending conditions, necessary payment mechanism, and fiscal consequences. - Procurement: Assess competition and bidder credibility. - Clarifications/Negotiations: Be alert to “negotiation creep” and fiscal consequences of negotiation points. - Immediately prior to commitment: Final assessment of financial obligations in final contract and whether fiscal consequences have shifted since last appraisal. ### Paying for feasibility studies - High costs of appraisals and feasibility studies are a main concern; MDAs and MoFPED officials report difficulty justifying significant expenditures while ongoing projects are underfunded. - Development partners funding feasibility studies can lead to projects progressing once funded, making it hard to stop projects. - Funding mechanism proposed: - MoFPED through the DC should make funding for feasibility studies available, but through the budget not a special fund. - One option: create a special budget allocation in the MoFPED budget, with the estimated amount for a feasibility study vired to the responsible MDA. - The DC would approve funding as part of its decision to advance a project from pre-feasibility to feasibility study. - Creation of a separate fund is unnecessary and would require significant management effort. - The DC should identify the type of appraisal required in a feasibility study and allocate requisite funding so complexity and special circumstances can be taken into account and guidance is provided for approval conditions and scarce appraisal funding. ### Key recommendations (exact texts and timing) - Recommendation 3.1: Reshape the appraisal process to ensure that the DC is an effective gatekeeper, assessment against the MTEF takes place early, and financing decisions are taken only after the pre-feasibility study (see also Chapter V) (Dec. 2018). - Recommendation 3.2: Reshape the appraisal process to ensure that the PPP process remains integrated with the process for traditional and donor-funded projects, in particular that DC retains control over the assessment of the options appraisal until after the pre-feasibility study stage (see also Chapter V) (Dec. 2018). - Recommendation 3.3: Develop a brief manual on fiscal risks of projects and in particular of PPPs (Dec. 2017). - Recommendation 3.4: Develop as a priority specific guidance on how to undertake financial appraisal (capital and recurrent) and how to prepare implementation plans (Dec. 2017). - Recommendation 3.5: Develop prototype projects to simplify and standardize appraisals and reduce costs (Jul. 2018). ### Budgeting and medium-term expenditure issues linked to PIM - Good PIM is closely intertwined with good budgeting; MDAs’ planning and project management staff and MoFPED staff need to work closely to ensure sufficient and timely availability of funds. - Several budgeting challenges result in low budget credibility and constrain timely availability of funds for projects, contributing to delays and cost increases: - The Medium-Term Expenditure Framework does not provide an effective constraint on commitments in public investment; the top-down MTEF is not linked to project planning and does not tightly constrain approval of new projects. - Bottom-up forecasts of total commitments and cash flow requirements for existing and intended projects are weak; insufficient information about full commitments and upcoming cash flow requirements associated with projects approved for budget funding (projects in the PIP). - Information available at MoFPED is not up to date and reliable; information at MDAs may be dispersed between central units and project teams and often filtered by medium-term guidance. - MoFPED has insufficient information to undertake rough bottom-up estimates to cross-check MDA submissions; information on contracts, contract variations, contractual milestones and physical project progress is patchy and not available in structured format. - Insufficient attention to post-delivery recurrent cost implications; generally insufficient funds allocated to maintenance despite high returns from good maintenance. - Lack of skilled project staff, lack of standardized costing information, and optimism in estimations skew bottom-up estimates (e.g., costs for acquisition of land rights typically seriously underestimated). - Over-optimistic revenue estimates and existing arrears lead to within-year cuts in budget allocations while commitments may already exist; projects are often first areas where payments are delayed. Accumulation and rolling forward of arrears undermines budget control procedures. *Source: cr17269 - 53. The financial appraisal is critical for budgeting, and PAP should develop (PDF chapter/section).* ### 69. Improving the credibility of the budget and the effectiveness of the MTEF would ### 69. Improving the credibility of the budget and the effectiveness of the MTEF would ### Strengthening PIP budgeting and PIM outcomes - Prepare reliable bottom-up estimates for project needs and make explicit decisions on which projects to accelerate, slow down or stop to ensure credible PIP budgeting. - Actions to take: - Following the stock-take of the projects in the existing PIP (see Chapter II) and possibly in conjunction with building the IPD, improve multi-year cash flow forecasts. Develop a MoFPED process and methodology for creating independent bottom-up estimates for multi-year project cash flows as a cross-check and challenge tool for MDAs’ submissions. - Enforce commitment to policy and expenditure prioritization by demanding complete information on multi-year commitments and cash flow forecasts as provided by section 53 of the 2015 PFM Act. Establish the practice that the multi-year projection submitted in year t (when budgeting for t+1) for year t+2 becomes the baseline during MTEF and budget preparation in year t+1. - Enforce the recording of signed contracts and pending certificates of completion on the IFMIS. - Design and implement an arrears clearance strategy and enforce commitment controls and budget discipline thereafter. Unauthorized commitments should be punished as provided by the 2015 PFM Act. - As asset registers are being activated under the AGO’s accrual accounting reform, consider how this information can be used to improve budgeting for maintenance requirements. ### Box 6 — Key elements that underpin an effective Medium-Term Expenditure Framework - Credible top-down expenditure ceilings: Medium-term expenditure ceilings that are designed to ensure commitment to expenditure levels for years beyond the annual budget year. Design choices include nominal or real estimates, binding or indicative, and level of detail—aggregates, programs, or economic classification. - Strong institutional arrangements that support policy and expenditure prioritization over the medium-term: Institutional mechanisms to prioritize competing policies and programs taking into account budgetary impact and affordability over the medium term. - Expenditure control to enforce multi-year expenditure commitments: A range of control measures to ensure that the expenditure limits and indicative spending allocations that have been set are delivered over a multi-year period. - Accountability to enhance credibility: Accountability mechanisms that ensure monitoring of progress and demonstrate that the government is delivering on prior commitments. ### Annual strategic PIP review within the MTEF constraint - Purpose and three-step process: - Reassess existing projects and reliably determine resource needs for the upcoming budget, the medium-term horizon, and the outlook beyond. - Compare the medium-term expenditure ceiling with existing commitments to determine fiscal space for new projects or projects to accelerate. - Distribute the identified fiscal space toward new projects. - Governance and timing: - The annual strategic PIP review would be guided by the MTEF and require project cash flow forecasts to respect MTEF ceilings. - The review should be collaborative between MoFPED, NPA and the sectors, with results considered by the DC and summary information created. Possible timing: September/October ahead of the budget cycle. - Cabinet-level endorsement is needed on MTEF ceilings and key PIP decisions, including sector-specific ceilings and project development plans. - Portfolio management and sequencing: - For the upcoming 1–2 years identify Pre-PIP projects for implementation/budget funding or existing PIP projects for possible acceleration. - For the 2–5-year horizon identify a short list of sectors/outcome/program areas for project development: call for proposals, move projects from profile to pre-feasibility, and from pre-feasibility to feasibility. - Move projects in “packages” and impose an over-commitment constraint (examples: 200 percent or 300 percent or even 500 percent of the MTEF envelope) during early development stages to focus prioritization. - Packages facilitate sector-targeted capacity building and create merit-based competition among projects. - Institutional roles and accountability: - The SWGs have key responsibilities in prioritizing projects; the annual review would elevate attention and enhance accountability. - The annual review should guide donor engagement and alignment of donor-funded projects with updated priorities. - The Minister of Finance can demand explicit offsets for “political” projects to remain within MTEF ceilings; options for removal/suspension must be technically prepared in the PIP review. ### Operational requirements and features for an effective annual strategic PIP review - Estimates of the medium-term resource requirements must be as realistic as possible; the PIP stock-take and strengthened financial appraisals and costing will help. - The 2015 PFM Act requirement for MDAs to submit a statement of multi-year commitment with their annual budget will pressure MDAs for realism. - Timely updates on donor-funded and PPP projects are needed. - Recommended timing: ideally ahead of the budget preparation cycle, perhaps in September/October. ### Example: UNRA - UNRA has placed a moratorium on new projects to mitigate accumulation of commitments beyond the projected medium fiscal space. - UNRA has an estimated UGX 167 billion backlog of commitments in ongoing and maintenance costs that have not been provided for within the medium-term budget. With the moratorium, the agency intends to liquidate the pending commitments by 2019 based on current budgetary allocation. ### Cleaning the Public Investment Plan Database (PIP) - Current portfolio issues: - Projects include add-ons to completed projects created to obtain additional resources, projects that circumvent restrictions on recurrent spending, projects that may have outlived their objectives, and projects without any current funding. - MoFPED clean-up focus: - Focus the PIP on capital investment projects with at least 70 percent investment content and remove all recurrent projects; recurrent projects should be restructured or shifted to recurrent spending. - Clean-up outputs to determine: - A data bank of all government projects showing projected cost, contractual cost, date of commencement, projected date of completion, status of completion, percentage paid, current budget allocation, and medium-term budget projection. - A categorization of projects by criteria including size (mega, large, medium, minor), share of recurrent/capital content, consistency with the NDP and sector strategies, and donor-funding (none, loan, grant...). - Categorization for future action: - Projects for which adequate funds for efficient implementation should be allocated. - Projects to be put into a pool for re-assessment and possible continuation, perhaps with redesign. - Projects to be assessed for cancelation due to non-performance or strategic irrelevance; cancelation costs need comparison with continuation costs. - Challenges and guidance: - Enforcement of restricting PIP to high investment content projects may be difficult (e.g., grant-financed vaccination projects). - PAP should avoid ad hoc exceptions, revise guidance, and adhere to internationally accepted accounting/statistical definitions of capital expenditures (recognize physical assets only). - PAP must develop a working definition of what a project is and criteria for PIP/IPD eligibility. Considerations for defining a project could include: - Is the project activity specific and time-bound with a clear end date? - Does success depend on staff with scarce and specialized skills who would not be willing to work for standard civil service compensation but may do so under a project? - Is the activity of an investment nature and is a PIP project structure needed, or could it be implemented under standard GoU procedures? - Does a donor or agreement/contract demand a project structure for safeguarding resources or accountability, and is the intervention sufficiently high priority under the NDP? - Does the project integrate well with the program to which it belongs (see PBB reform)? ### Public Investment Plan and Program-Based Budgeting (PBB) - PBB introduction: - Government is introducing program based budgeting with the 2017/18 budget to link budgets with performance and entrench performance practice. - Over the last six years Uganda implemented an Output-Oriented Budgeting (OOB) system. - Implications for PIM and PIP: - Once programs are operational, planning, budgeting and appropriation of both recurrent and development resources should be consolidated under each program. - Projects are being placed under PBB programs; for the time being recurrent and project resources are appropriated separately under the recurrent budget and the PIP, respectively. - PBB facilitates appropriating funds by program rather than line item and can help break down the separation of recurrent and development/project budgets. - PBB can facilitate removing recurrent “projects” from the PIP and allow DC and PAP to focus on managing investment projects, though the transition will be long and gradual. - Performance and accountability: - PBB adds outcome focus, but planning of outputs and activities remains key. Outcome indicators may move slowly and be influenced by external factors. - Performance will be measured against project-specific milestones that contribute to outputs toward the overall program objective. - The proposed Integrated Project Database (IPD) (Section VII) will ensure individual project performance continues to inform decision-making at MDA and macro levels. ### Recommendations (with timing) - Recommendation 4.1: Introduce a comprehensive review of the PIP by sector in September/October of each year between MoFPED, NPA, and the sector, ascertaining the status and phasing of existing projects, and agreeing a sector strategy for developing new projects, taking into account the likely MTEF envelope for the sector (Pilot Oct. 2017, Full Oct. 2018). - Recommendation 4.2: Put a short annual decision paper on the PIP to Cabinet and obtain endorsement of (i) medium-term expenditure envelope and allocations for each sector, (ii) any projects to add to the PIP and offsetting ones to remove/ suspend to stay within the sector envelope, and (iii) a short list of well-defined priority areas for development of new projects (Oct. 2017). - Recommendation 4.3: Estimate realistic bottom-up requirements for projects, both multi-year commitments and cash flows, and integrate them into the MTEF (Dec. 2017). - Recommendation 4.4: Develop summary information on the PIP and the MTEF for monitoring and decision making (Dec. 2018). - Recommendation 4.5: Proceed with the clean-up of the PIP database on the basis of a clear definition of a project and other criteria; consider the implications of program-based budgeting (Sept. 2017). *IMF staff report: Improving the credibility of the budget and the effectiveness of the MTEF would (cr17269)* ### 93. The DC is the gatekeeping institution for the PIP. As explained in Chapters III and IV, ### The DC is the gatekeeping institution for the PIP ### Gatekeeping role and current weaknesses - The DC is charged with making assessments and judgements in the appraisal process, which must accommodate brainstorming and exploration of project options, project prioritization and selection, and hard choices to stay within the MTEF ceilings. - Key weaknesses of the current process: - Insufficient linkages of the appraisal process with the budget and MTEF processes. - Lack of procedures to create political-level buy-in to cross-sector prioritization and for rolling updates to cross-sector prioritization. - Pre-approval of projects at the political level, allowing some donor-funded or politically sponsored projects to enter the PIP with little effective scrutiny and only weak preparation. - Fragmentation of approvals for PPPs because under the 2015 PPP Act PPP projects are appraised by a separate committee––the PPPC––rather than the DC. - The DC does not have a well-defined role in monitoring the existing project portfolio, and requesting re-appraisals of projects that are poorly performing. ### Proposed adjustments to the appraisal process (overview) - Several desirable improvements were introduced with the new DC Guidelines; the mission proposes additional adjustments detailed in Annex V (which presents current and proposed appraisal process flow charts). - Objectives of adjustments: - Support design of projects independent of (or less dependent on) potential financing options. - Enable the DC to take a holistic view of the project portfolio before approvals. - Imply that projects are advanced in “packages” through the process. - Use the proposed annual strategic PIP review (Chapter IV) as a starting point for holistic assessment. ### Proposed adjustments: stages and controls - Concept notes and project identification: - Sectors develop concept ideas independently; approval of a concept note triggers issuance of a project identification number. - Concept notes should be reviewed by the DC technical subcommittee to screen out unrealistic ideas and excessively large projects, and to check consistency with strategic priorities. - All concept notes should be appraised by the NPA for consistency with the NDP and to identify potential cross-project and cross-sector linkages. - Issuing a project identification number does not imply approval for project implementation but enables MoFPED to keep track of serious project ideas, including donor-funded and PPP projects; this may require the IPD (see Chapter VII). - Pre-feasibility approval: - Approve a project for the pre-feasibility study stage only after review in the context of the overall and sectoral project portfolio (existing projects and projects under development) and the MTEF. - The review should screen out very large projects or projects in over-committed sectors and provide guidance on a potential financing envelope. - Conditions on project design for proceeding to pre-feasibility (e.g., denial of expensive add-on options) should be documented to limit scope creep. - Linking third-party funding and options appraisal: - Projects may be linked to third party project-specific funding only once they have completed at minimum the pre-feasibility study stage and only following an explicit options appraisal. - Projects can continue into one of three options: traditional project funded from GoU resources (revenues or commercial loans), donor-funded projects (loans or grants), or PPP project. - Financing negotiations and DC authorization: - Projects must secure DC and Parliament approval if the project requires some type of external funding. - Funding negotiations should only begin after explicit authorization by the DC. - Ideally, options appraisal and identification of funding sources should be finalized after the feasibility study; shifting financing approval to the pre-feasibility stage is a change compared to current practices. - MoFPED should fully explain the new process to donors and work closely with them to avoid delays. - PPPs and DC oversight: - For PPPs, an explicit options appraisal should be conducted at the pre-feasibility study stage, and the DC should have a role in the final approval for a project to proceed as a PPP. - The option appraisal is foreseen at the pre-feasibility studies stage in the 2015 PPP Act, but approval currently rests with the PPPC; administrative regulations or amendments to the PPP Act may be needed for DC oversight. - Feasibility studies and Pre-PIP status: - The DC should specify the scope of the feasibility study (including whether a full CBA is required) and financing for the feasibility study when approving progression to feasibility. - The DC should approve the feasibility study for all projects, including externally funded projects and PPPs if the financial analysis differs significantly from pre-feasibility study. - Passing the feasibility study stage classifies a project as a Pre-PIP project. - Budget funding and implementation readiness: - Before receiving budget funding a project must demonstrate implementation readiness and be explicitly approved for inclusion in the PIP. - Passing to Pre-PIP does not guarantee budget funding (though probability should be high). - To receive funding, a project needs to be scheduled in the PIP––MTEF (i.e., other projects must have been completed and exited the PIP) and demonstrate full implementation readiness (implementation plan, resolution of land rights, update to financial plans). - Projects are moved into the PIP once a year at a suitable date in the budget calendar; that date determines the deadline for demonstrating readiness. - Political endorsement and oversight: - Cabinet endorsement of the PIP and portfolio development plan at least annually is needed to support the DC’s gatekeeping function. - The annual strategic PIP review would provide political direction and help control politically sponsored projects; the Minister of Finance should demand explicit decisions on removal or suspension of existing projects if large new projects are included in the PIP by Cabinet. - Portfolio monitoring and re-appraisal: - The DC should exercise broad oversight over the existing project portfolio; currently the DC has no formal monitoring role after PIP approval unless scope change or extension is required. - Time or budget overruns currently do not trigger a DC review. - The DC should demand updates and actions on poorly performing projects and may request a full re-appraisal to decide whether a project should continue or be closed down. ### Recommendation (appraisal cycle) - Recommendation 5.1: Reshape the project planning cycle to ensure that the DC is an effective gatekeeper, assessment against the MTEF takes place, and financing decisions are only taken after the pre-feasibility study (Annex V, Dec. 2018). --- ### Monitoring and Evaluation: current situation - M&E is critical for performance management to ensure projects are delivered on time, on budget and with impact; ongoing monitoring detects deviations early, ex post evaluation provides lessons. - OPM, as M&E coordinator, has established a framework requiring: - periodic reviews, and - planning and project evaluations. - M&E framework requirements: - Reviews: quarterly by ministries and local governments, bi-annually and annually by SWG, and annually by cabinet. - MDAs must prepare and implement a five-year rolling evaluation plan, and for each project a baseline study, a mid-term review, and a final evaluation or value-for-money audit at project end. - MoFPED has regulations (DC Guidelines) including brief guidelines on review of existing projects and ex-post monitoring; DC guidelines do not distinguish between monitoring of ongoing projects and evaluation of completed ones. - OPM reports semi-annually to Cabinet via the Government Half Annual Performance Report (GHAPR) and the Government Annual Performance Report (GAPR); performance frameworks of OPM and the budget appear well-aligned. - A 2014 OPM study identified generally weak M&E capacity and a need to change the culture; a M&E implementation plan was developed but appears to have fallen behind schedule. - Legal/regulatory reference: The National Policy on Public Sector M&E – OPM – Passed by Cabinet in March 2013. ### Ongoing monitoring: weaknesses and supporting reforms - Existing ongoing monitoring is weak: - Focuses on individual projects assessed against standardized criteria rather than project-specific baseline and implementation plan. - Monitoring of the whole project portfolio, cross-sector linkages, and implications of delays in one large project for the portfolio are absent. - Basic monitoring practices lacking: - Baseline plans are largely absent. - Previous forecasts in the PIP database get overwritten and are not available for comparison. - Financial information and progress assessment are not linked to physical and contractual progress; project progress communication is often positively shaded. - MoFPED requires additional information from MDAs to establish rough baseline projections as a cross-check and challenge tool; such information can be generated by a proposed stock-take of all projects and must be recorded, tracked, and updated. - AGO reforms that can support monitoring: - An “Aid Management Platform (AMP)” exists for donor-funded projects conducted off-budget; MoFPED has struggled to enforce regular and timely donor reporting. - A current project introducing accrual accounting includes establishment of asset registers, which will be important information sources once linked to accounting and will facilitate monitoring (e.g., increases in asset values or changes in inventories). - Main weakness: lack of summary information on the whole project portfolio and its evolution targeted at senior decision makers. ### Completion reporting and ex-post evaluations - Completion reports should be prepared for all projects but many projects do not prepare one or do not share it. - Completion reports should take stock at delivery, report against original and revised plans, identify main outputs, and comment on resource use. - Ex post evaluations: - Investigate whether project outputs and outcomes were successfully and efficiently achieved. - May be selective and focused on special questions for individual projects or groups of projects; aim to draw lessons for future PIM developments. - Example procedures from Chile: - Two-stage ex-post evaluation: first evaluate implementation for a representative sample (8–10% of projects completed during past two years) covering compliance with ex-ante specifications (total cost, outputs, procedures, schedules); second stage conducts in-depth ex-post evaluations after at least five years of operation to determine whether anticipated benefits were realized. - Ministry of Finance develops the evaluation framework; MDS (successor to Ministry of Planning) conducts evaluations using external experts and staff; reports are published on the MDS website. - Footnotes and references: - The Development Committee Guidelines for the approval and review of PIP Projects – MoFPED August 2016. - Operationalizing the National Policy on M&E – OPM / Department of M&E – November 2014 brief description. ### Recommendations (M&E and transparency) - Recommendation 6.1: Develop the capacity to monitor the whole project portfolio. Prepare an operational manual on ongoing project monitoring, including physical, financial, contract(s) implementation progress, and develop summary templates (Dec. 2018). - Recommendation 6.2: In conjunction with the clean-up of the PIP, demand submission of completion reports (Dec. 2017). - Recommendation 6.2 (duplicate numbering in source): PAP to identify ex-post evaluation topics of interest to PAP. Work with NPA and sectors to ensure that relevant studies are undertaken, or these issues be included in ongoing ex post evaluation studies (Jul. 2018). *IMF staff report (cr17269), chapter excerpts as provided in the source content.* ### 120. Uganda’s public sector produces large quantities of information on an investment ### Uganda’s public sector produces large quantities of information on an investment project throughout its life ### Information landscape and current systems - The annual PIP document and associated database provides a profile on each project receiving resources in that financial year, which includes background information, original total project costs, planned activities and outputs, and expenditure projections for a five-year period. - The PBS and its IFMIS allow MoFPED to keep track of financial execution for each year, especially for resources coming from the Government of Uganda. - An aid management system supports reporting and recording of donor disbursements. - MoFPED maintains several other databases or files to meet particular information requirements; MDAs create and maintain their own monitoring and evaluation information and report quarterly on project progress to MoFPED and OPM. - Footnote: The period for which expenditure information is presented was increased from three to five years for the fiscal year 2016/2017. ### Key findings on data quality and use - Reliability constraints: - Expenditure projections for future years vary greatly between fiscal years for the same project. - Cases exist in the PIP database where total project cost is not equal to the sum of previous, current, and future expenditure. - Information presentation is not standardized across the investment portfolio. - Links between projects and the development strategy are inconsistently reported (sometimes at objective level, other times as broad references). - Expected outcomes may be non-measurable or lack a specific time frame, reducing usefulness. - Consequences: - Analysis of the public investment portfolio is very limited under current data quality. - Only the current year budget allocation in the PIP is "fairly reliable" because it captures Parliament’s attention during budget approval. - Medium-term projections are published "for information" but do not influence budget envelope decisions or future allocations. - Line ministries are not held accountable for inaccurate or missing information; no process checks year-to-year financial consistency. - Donor-funded project information is particularly weak: - Donor funds represent approximately 30% of the total resources in the investment budget in fiscal year 2016/2017. - Only partial information is available on expenditures and physical progress of donor-funded projects because many funds are not managed through MoFPED accounts. - MoFPED fully tracks disbursements of loans but often only learns about grant-funded project financials, progress, and funding needs when GoU counterpart funding is required. - Budget execution reports therefore do not necessarily reflect the full effort by government and development partners or show the full impact on economic growth and development. ### Monitoring and evaluation shortcomings - Monitoring and evaluation activities are in early stages with little information feeding back into the PIP project profile. - Central agencies (MoFPED, OPM, NPA) have not produced guidelines for monitoring and evaluation; activity is left to line ministries and varies considerably. - Monitoring from a financial perspective is limited to the annual difference between budget and actual disbursement; limited attention is given to cost escalation over time and prevention. ### Integrated Project Database (IPD): rationale and expected benefits - An IPD can address many weaknesses by providing a comprehensive set of information at a single point of entry. - Expected benefits: - Improves project management capacity through better information and increased efficiency in information management. - Eliminates repetitive reporting and reduces errors and inconsistencies by making the IPD the single go-to point for retrieving and updating project information. - Facilitates analysis via standardization and comprehensiveness (e.g., linking geographic location to administrative subdivisions). - Supports all project stages: selection, sequencing (mutual dependencies), implementation monitoring (key milestones), and evaluation (baseline scenarios to determine real impact and extract lessons). - Note on terminology: MoFPED is considering an "Integrated Bank of Projects (IBP)"; the mission prefers the term "Integrated Project Database" because it should cover potential, pre-approved, ongoing and completed projects and hold regularly updated monitoring information, not only static background data. ### Information content for the IPD - Three broad sets of data recommended: 1. Descriptive identification and relationships: - Unique project identification number (as per paragraph 95). - Relationship with development plan, location, accountable party. - Standardizable fields to support cross-sector and aggregate analysis. 2. Intrinsic project context: - Objectives, problem addressed, options analyzed (including option of doing nothing), technical description, feasibility study outputs. - Detail to verify that proposed solution addresses the problem and that appraisal choices are transparent. 3. Regularly updated implementation data: - Project costs, physical execution, specific outputs. - Progressive firming up of estimates as projects move through appraisal and feasibility stages; breakdown by components, execution periods, and funding sources. - Change management: - The IPD should keep track of all project changes and maintain a baseline scenario as a reference. - If a project undergoes considerable change, a new baseline scenario should be developed and enforced. ### Design principles for the IPD - No single IT approach is uniformly superior: options include modular designs, off-the-shelf systems, or additional modules to existing platforms (e.g., IFMIS). - Start with a clear conceptual design to define scope, coverage, and functionalities and to align stakeholders before implementation. - The IPD is a continuous development process; functionalities should be extensible over time rather than exhaustive at launch. - Keep the system streamlined: - Avoid excessive initial complexity that deters users or causes incorrect data entry. - Ensure users have access to the relevant financial and descriptive information required to fulfill their mission. - Control development costs by clearly defining core requirements. ### Implementation approach and sequencing - Adopt a phased development approach: - Phase 1 (initial): Strengthen existing systems focused on budget aspects, planning, allocation, and execution—leveraging available information and defined procedures for quick wins. - Phase 2: Focus on the pre-investment phase where appraisal guidelines exist but are early in implementation. - Final phase: Capture monitoring and evaluation information where roles, accountability, and procedures are least defined. - Immediate priorities identified by MoFPED staff for initial IPD development: - Improve reliability of information requested for project approval. - Integrate current project data (currently managed in Access) with PBS and IFMIS systems. - Avoid demanding additional information from line ministries beyond what MoFPED business needs require. - Key feature: Link the IPD to existing systems (automatic sharing between IPD, PBS, IFMIS) to eliminate repetition and reduce errors, making the IPD the primary search point while allowing IFMIS and PBS to focus on original tasks. - Data quality is not solved solely by technology: - System features can improve quality (e.g., restricting certain variables to pre-defined inputs). - Streamline information requested to what MoFPED actually uses to ensure regular review and consistency checks. - Integrate monitoring procedures into system design and stakeholder practices to identify and correct flaws. *Source: IMF country report content unit cr17269* ### 143. In a second phase, the system should focus on capturing the information that is ### cr17269 - 143. In a second phase, the system should focus on capturing the information that is ### Phased development of the information system for PIM - Phase 2: Capture information required for project approval and selection. - The DC guidelines and future step-by-step guidance on the appraisal process will determine business requirements for the system. - The system must be accessible to users outside the MoFPED who will be responsible for uploading information. - Project appraisal and approval processes should be closely linked with information upload to guarantee information is shared correctly and on time. - Phase 3: Capture information related to monitoring and evaluation phases of a project’s lifecycle. - Monitoring and evaluation information should feed back into the system to identify when projects face problems requiring corrective measures or changes in project design. - Deviations from feasibility study plans or updated implementation plans should trigger corrective measures or design changes to achieve targets. - Lessons from implementation and evaluation should inform identification and pre-investment phases. ### Main recommendations (Section E: Main Recommendations) - Recommendation 7.1: Set up a project management team comprising inter alia a project manager, business users and experts in system design and IT (June 2017). - Recommendation 7.2: Develop carefully the conceptual design of the IPD, including information and functional requirements and the governance structure to ensure that it meets current and anticipated future business needs of the government (Dec. 2017). - Recommendation 7.3: Design work processes to keep information in the PIP/IPD up-to-date and reliable (Dec. 2017). ### Additional recommendations (Section E: Additional Recommendations) - Streamline information requirements to the current needs of the MoFPED in order to limit the amount of information that is wasted. - Standardize some of the descriptive information on projects so that more comprehensive analysis can be done. - Link the new database to existing information systems to obtain information relevant for project implementation and execution. - Development the IPD in a phased approach. Additional modules or functionality can be added as the government develops its PIM capacity and information to populate the database. This will likely help save costs in the initial stages of the system’s development. ### Capacity building and technical assistance (Section VIII.A) - All stakeholders emphasized the need for capacity building; the 2016 Action Plan includes several capacity building activities. - Initial focus: project design, appraisal and selection; training in project management and on the IBP is included. - PAP has received some training and provided sensitization, but coverage is limited; structured training across the public service is needed. - PAP envisions a train-the-trainer approach to create a nucleus of competent civil servants and PIM instructors to deliver basic, intermediate and advanced training. - PAP is seeking external partners to expand delivery capacity and relieve its own staff from training obligations. - Deepening knowledge for PAP officials and central steering officials (e.g., in NPA and OPM) is required; much will be learning on the job. - Core PAP staff have received trainings via collaborations with the World Bank and IMF East Afritac; such training should continue. - Technical assistance or outside consultants can help PAP develop step-by-step guidance on PIM processes and provide specialized training. - Training design and delivery: - Effective training should be targeted and practical rather than academic. - Collaboration with Makerere University is planned; training will include case studies and workshops covering theory and practical aspects of appraisals. - Immediate urgency: tailored instruction on PIM delivered to MDA practitioners within the government legal framework, regulations and guidance. Options include short or block courses delivered in a phased manner. - Assistance with curriculum development, possibly from an internationally recognized school of public management, should be pursued (initiated with Canada’s Queens University, Toronto). - Initial training priorities: - Costing, project financials and practices for ongoing monitoring. - Introduction to the appraisal process and appraisal methodologies, including economic and social appraisals. - A module on project management including implementation planning for MDA staff who must submit implementation plans as part of a feasibility study. - Medium- to long-term training: - Training at certificate, diploma, or advanced levels could be set up in collaboration with the planned Center of Excellence in PIM at Makerere University or other partners. - Related capacity building needs: - Strengthening medium-term budgeting is critical to public investment success. - Authorities have requested technical assistance to support restoration of the MTEF and institutionalizing program based budgeting. - The IMF through FAD and AFE will continue to provide technical assistance to support PIM reforms and related areas critical to PIM implementation (including advice on a medium-term budget framework, costing, enhancing commitment controls, and addressing weaknesses promoting proliferation of arrears). ### Capacity building recommendation (Section VIII.B) - Recommendation 8.1: Continue to identify partners for capacity building of large groups of officials in PIM and related areas like medium-term budgeting; find support for curriculum development (ongoing from 2017). ### Supplementary Action Plan — key proposals and timelines (Annex II summary) - The mission prepared a supplementary action plan with proposals for next actions by PAP reflecting the report’s recommendations; it should be merged with the existing 2016 Action Plan once PAP prioritizes actions. - Institutional setting and PIMS role (PAP, 2016–17): - S-I.1.1 (= I.1.3) Monitor project implementation reports for selected key projects. Status: Initiated. Timeline: Now. - S-I.1.2 Develop capacity to monitor the whole project portfolio. Summary tables on status of the Pre-PIP & PIP developed. Timeline: 2017. - S-I.1.3 Oversee the development of the IPD. Responsibilities assigned. Timeline: June 2017. - S-I.1.4 (= I.1.4) Enforce end-of-project date, demand completion reports. Filing system in PAP agreed. Timeline: now. - Re-engineering PIM processes (PAP, 2016–17): - S-I.2.1 (= I.2.1) Undertake process mapping and document roles and responsibilities in detail. Timeline: 2017. - S-I.2.2 (= I.2.2) Develop a PIMS organogram describing roles and responsibilities. Timeline: 2017. - S-I.2.3 Fine-tune project identification and pre-investment cycle to strengthen the DC as gatekeeper and introduce checks against the MTEF. Timeline: 2017–18. - S-I.2.4 Introduce annual PIP review in Sept./Oct. between MoFPED, NPA, and MDA/sector in relation to sector-specific MTEF constraint. Timeline: 2017. - S-I.2.5 Review role of NPA in PIMS and develop proposals for strengthening cross-sector coordination. Timeline: 2017. - S-I.2.6 Develop a glossary of PIM-related terms and cross-check with legal documents; standardize. Timeline: 2017. - Improving the entire project cycle (PAP, 2016–17): - S-II.1.1 Issue step-by-step operational guide on project appraisal with emphasis on financial appraisal and costing (investment and post-delivery OM) and implementation planning. Timeline: 2017. - S-II.1.2 Prepare operational manual on ongoing project monitoring including physical, financial, contract(s) implementation progress; develop phased plan and implement. Initiate in 2017. - S-II.1.3 Develop definition of a project and set criteria for entry into and exit from the PIP. Timeline: 2017. - S-II.2.1 Develop a standardized project summary (1–2 pages) for senior decision makers; identify key information required and procedures to ensure quality. Timeline: 2017. - S-II.3.1 Develop detailed costing forms for appraisal and project monitoring (investment phase and post-delivery maintenance & operating costs). Timeline: 2017–18. - S-II.3.2 Develop a brief manual on fiscal risks of projects and PPPs. Timeline: 2017–18. - S-II.3.3 Develop prototype projects to standardize appraisals where suitable (e.g., schools, local roads, health clinics). Timeline: 2018. - Develop capacity in whole project cycle (PAP, 2016–17): - S-III.1.1 Develop short training courses in key PIM skills. Continue in 2017. - S-III.1.2 Continue to identify partners for capacity building and support for curriculum development. Initiate in 2017. - S-III.1.3 Identify options for providing training on project management. Timeline: 2017–18. - Integrated Bank of Projects (High Priority): - V.1 Develop software components of IBP. Timeline: PAP 2018–23; V.1.1 Develop two new modules. V.1.2 Make new and existing modules interoperable. - V.2 Develop a Data Collection Module in the IBP for project formulation at sector level. Timeline: PAP 2018–23; V.2.1 Put operational data collection module in place (for unstructured information relevant for PIM work). - V.3 Build capacity on IBP operations. Timeline: PAP 2018–23; V.3.1 Conduct training on IBP once IBP available. - Legal, budgeting, implementation, monitoring and ex-post evaluation: - VI.1.1 Medium-term review of PIMS implementation in view of existing legal and regulatory framework. Preparation of Treasury Instructions for new PFM Act underway. Timeline: PAP 2018–23. - VII.1.1 Develop standardized set of key performance indicators. Timeline: PAP 2018–23. - VII.2.1 Conduct training on project management. Timeline: PAP 2018–23. - VIII.1.1 Develop standard guidelines for project ex-post evaluation. Timeline: PAP 2018–23. - VIII.1.1 Conduct training on ex-post evaluation. Timeline: PAP 2018–23. *Source: cr17269 - 143. In a second phase, the system should focus on capturing the information that is (PDF chapter).* ### 2. Develop on the Job Training Approaches ### 2. Develop on the Job Training Approaches ### Structured training within project cycle - S-III.2.1: In the context of a structured cycle of developing new projects, provide training on procedures and documents to be submitted. - Lead: PAP, MAK, MDA - Initiate in 2018 ### Integrated Project Database (IPD) — objectives and priorities - V. Establish an Integrated Project Database — High Priority - Lead: PAP - Proposed Timeline: 2018–23 - V.1. Create Reliable Baseline on Existing Projects through a Stock-take and Overhaul of the PIP Database — High Priority - S-V.1.1: Review all existing projects, obtain financial, costing, contractual and physical information to establish a new baseline. - Lead: PAP with MDAs - Status/Comment: High priority. Possibly with support of a project management consultant. - Proposed Timeline: Sept. 2017 - S-V.1.2: Update all cost estimates to realistic current estimates (multi-year commitment, cash flow projections). - Lead: PAP with MDAs - Status/Comment: High priority. Possibly with support of a project management consultant. - Proposed Timeline: Sept. 2017 - S-V.1.3: Remove projects from PIP based on established criteria. - Lead: PAP - Links with S-II.1.3. - Proposed Timeline: Sept. 2017 - S-V.1.4: Put all project-related signed contracts into the IFMIS, and all pending certificates. - a. Update in conjunction with S-V.1.1 - b. Issue Treasury Instruction for timely inclusion of info into IFMIS - Lead: MDAs with AGO - Status/Comment: High priority. - Proposed Timeline: Sept. 2017 - S-V.1.5: Open IFMIS to all interested stakeholders with role in monitoring (read/ download access). - Note: May have cost implications. - Proposed Timeline: 2017–18 ### IPD management, technical design, and capacity building - V.2. Develop the Management Structure and Business Requirements for the IPD - S-V.2.1: Set up a project management team for the IPD. - Lead: PAP, PS/ST - Proposed Timeline: June 2017 - S-V.2.2: Develop the conceptual design, including information requirements, desired functionality, users and stakeholders, governance structure. - Lead: PAP, Consult - Proposed Timeline: 2017 - S-V.2.3: Determine procedures for ensuring reliability of information in the IPD. - Lead: PAP, Consult - Proposed Timeline: 2017–18 - V.3. Develop Technical Specifications of the IPD - S-V.3.1: Develop technical specifications, including interlinkages with existing systems. - Lead: PAP, Consult - Proposed Timeline: 2018–19 - S-V.3.2: Decide on IT platform. - Lead: PAP, Consult - Proposed Timeline: 2018–19 - S-V.3.3: Decide on IT support. - Lead: PAP, Consult - Proposed Timeline: 2018–19 - V.4. Build Capacity on IBP Operations - Lead: PAP - Proposed Timeline: 2018–23 - S-V.4.1: Conduct training on IDP (existing action V.3.1). Start with training on PIP IBP team. ### Enhance the Legal and Budgetary Framework - VI. Enhance the Legal and Budgetary Framework — PAP 2018–23 1) Improving the Legal Framework - S-VI.1.1: Develop a PIM policy, including relation between traditional projects and PPP. - Lead: PAP - Comment: Will inform need for legal revisions. - Proposed Timeline: 2018 - S-VI.1.2: Provide input on asset management section of Treasury Instructions. - Status: Underway - Lead: PAP - Comment: FAD/AFE could review. - Proposed Timeline: 2017 - S-VI.1.3: Develop PIM section in the Treasury Instructions. - Status: Underway - Lead: PAP - Comment: FAD/AFE could review. - Proposed Timeline: 2017 - S-VI.1.4: Identify updates to the legal framework, e.g., PFM Act, PPP Act, possibly new PIM Act. - Comment: Avoid fragmentation of legislation. - Proposed Timeline: 2019 2) Improving the Budgetary Framework - S-VI.1.1: Make the top-down budget strategy phase more effective. - a. Prepare an annual assessment on PIP commitments for Cabinet. - b. Introduce or formalize a process of Cabinet approval for key parameters of the MTEF, including sector shares. - Lead: BPD, PS/ST; BPD, PS/ST - Comment: Possibly FAD/AFE TA. - Proposed Timeline: 2018 - S-VI.1.2: Make the MTEF more effective; make t-1 forward estimates the baseline for budgeting in t, esp. for upcoming budget t+1. - Lead: BEPD - Comment: Possibly FAD/AFE TA. - Proposed Timeline: 2018 ### Improve Implementation (Investment Phase) - VII. Improve Implementation (Investment Phase) — PAP 2018–23 - S-VII.1: Develop set of standardized indicators to determine if project is ready to receive budget funding, i.e., can absorb financing. - Lead: PAP - Comment: Possibly in conjunction with developing the IPD. - S-VII.2: Develop set of standardized project performance/progress indicators suitable to inform senior decision makers (existing VII.1.1). - Lead: PAP with OPM - Comment: Possibly in conjunction with developing the IPD. ### Improve Monitoring and Ex-Post Evaluation - VIII. Improving Monitoring and Ex-Post Evaluation — PAP 2018–23 - S-VIII.1.1: Demand delivery of completion reports, and set-up procedures for circulation to all interested stakeholders. Assign responsibility for follow-up. - Lead: PAP - Also S-I.1.4. - Proposed Timeline: 2017 - S-VIII.1.2: Demand preparation of evaluation reports on key questions/issues relevant for strengthening PIMS. Identify key issues where ex-post evaluation could help; coordinate with sector. - Lead: PAP/ BMAU/ NPA - Proposed Timeline: 2018 ### Appraisal techniques (accepted standards) - 1. Cost-Effectiveness Appraisal - Use: smallest projects; cost-minimization; compares relative costs of options; accounts for capital and recurrent costs. - 2. Multi-Criteria Analysis - Use: medium and large projects; measures non-monetary factors linked to project objectives; scoring and weighting; also used as first step in CBAs. - 3. (Social) Cost Benefit Analysis - Use: largest projects; estimates all costs and benefits over operational life; adjusts via a ‘Discount Rate’ (usually set by Ministry of Finance). - Guidance on selection: - Depends on perceived project risk, availability of skilled staff and cost. - Most PIM systems exclude only the smallest projects from any appraisal entirely (e.g., GBP10,000 in the UK). - Qualitative intelligence on need and nature of project is a prerequisite; formulaic application can be misleading. ### Elements of the Integrated Project Database — key fields and lifecycle tracking - Fixed identification and descriptive fields (provide unique identification and stable scope): - Project ID (unique identification number assigned after approval of concept note by the technical subcommittee of the DC) - Project name (limit in number of characters; provided by project sponsor) - Date of inclusion into database (saved automatically) - Project owner/accountable party (Ministry/Agency, specific unit, officer accountable) - Implementing entity (when different from owner) - Supporting entities (comprehensive list of involved entities) - Project description (current situation, activities, expected outcomes) - Project objective - Problem to be solved - Alternative solutions - Deliverables (specific and measurable) - Duration (including prefeasibility or engineering studies; feeds into MTEF) - Type of Project (investment/activity type; impact on recurrent expenditure) - Economic activity area (sector linkage) - Geographic location (location and area of influence) - Link to development strategy (objectives, indicators, contribution to targets) - Dynamic, updateable fields (tracked throughout project life; initial estimates provided at prefeasibility/feasibility and updated during implementation): - Total cost (divided between budget cycles; include maintenance and operating costs; changes approved by DC and integrated into MTEF) - Budget additions/reductions (explain cause; approval by DC; consistent with monitoring) - Cash flow forecast (detailed by completion of feasibility study; monitored and updated) - Sources of Funding (government funding, donor loan or grant, PPP; identified at pre-feasibility; secured after full approval and inclusion in PIP) - Impact on future current expenditures (identified in feasibility report; MoFPED must formally guarantee future resources for operation stage) - Physical execution plan (detailed implementation schedule, milestones, bottlenecks, responsible parties) - Relationship with other projects (inputs/outputs dependencies; monitored) - Latest revision (time of last review by project champion) - Approval (date when project is allocated budget resources) - Project start and project end (actual dates to determine deviations) ### Documentation and reference lists (selected items indicated in source) - Annex VII lists key Government of Uganda and diagnostic documents, Uganda databases with public investment information, previous IMF and AFRITAC East TA Reports, and references relevant to PIM and IPD design. *Fiscal Affairs Department, International Monetary Fund — cr17269, “2. Develop on the Job Training Approaches”* --- _Source: https://www.imf.org/-/media/files/publications/cr/2017/cr17269.pdf_