The World Bank Report No: ISR13988 Implementation Status & Results Kosovo Public Sector Modernization Project (P101614) Public Disclosure Copy Operation Name: Public Sector Modernization Project (P101614) Project Stage: Implementation Seq.No: 7 Status: ARCHIVED Archive Date: 25-May-2014 Country: Kosovo Approval FY: 2010 Product Line: IBRD/IDA Region: EUROPE AND CENTRAL ASIA Lending Instrument: Specific Investment Loan Implementing Agency(ies): Key Dates Board Approval Date 04-Feb-2010 Original Closing Date 30-Jun-2013 Planned Mid Term Review Date 30-Jun-2013 Last Archived ISR Date 28-Dec-2013 Effectiveness Date 17-Jun-2011 Revised Closing Date 31-Dec-2014 Actual Mid Term Review Date 30-Oct-2013 Project Development Objectives Project Development Objective (from Project Appraisal Document) (a) To strengthen the performance of key budget organizations in budget formulation, budget execution, and public procurement; (b) To establish the foundations for fiscally sustainable payroll management and effective human resource management in the core civil service; and (c) To create conditions for further automation of government work processes and for development of e-government applications. Has the Project Development Objective been changed since Board Approval of the Project? Yes No Component(s) Component Name Component Cost Component 1: Improving public financial management performance in selected budget organizations 3.00 Component 2 - Improving payroll administration and laying the foundations for a professional civil 2.05 service Component 3 - Increasing the security and efficiency of government information systems 2.30 Component 4 - Project management, including project audit and evaluation 0.40 Public Disclosure Copy Overall Ratings Previous Rating Current Rating Progress towards achievement of PDO Moderately Unsatisfactory Moderately Satisfactory Overall Implementation Progress (IP) Moderately Satisfactory Moderately Satisfactory Overall Risk Rating Moderate Moderate Implementation Status Overview IMPLEMENTATION STATUS OVEVIEW Project implementation has accelerated. The earlier advances have been reflected in the previous ISR (archived on December 28, 2013). The current ISR records solidification of Page 1 of 9 The World Bank Report No: ISR13988 these improvements over the latest supervision period andtherefore justifies an upgrade of the progress toward achievement of the PDO from Moderately Unsatisfactory to Moderately Satisfactory. Overall Implementation Progress remains Moderately Satisfactory. In order to fully and satisfactory complete the project, remaining activities would benefit from restructuring while the project closing date needs to be extended by 12 months, i.e. until December 2015. Public Disclosure Copy Component 1 – Improving Public Financial Management Performance in Selected Budget Organizations: progress with implementation remains MS and while significant progress is made on numerous activities, the World Bank Team believes that more time is needed for the two sub-components to be fully completed. Sub-Component 1.a: Capacity building for PFM in line budget organizations continues to progress smoothly and without major delays. The most recent PEFA assessment conducted in 2013 shows good progress on aggregated level indicators. The Bank Team is working with the Client to ensure that all disaggregated data necessary for assessing detailed progress and identifying areas of further improvement is captured. The Government Team is working on producing these disaggregated data. These data will be also used to update relevant PDO monitoring indicators. The existing contract with the company assisting in implementation of this sub-component is expected to be successfully closed in December 2014. Sub-Component 1.b: Public procurement, including e-procurement has recently started showing signs of accelerating progress. The team has seen renewed Government commitment to introduction of the e-procurement systems supported by the project. In his April 15th, 2014 letter to the Country Director (CD), the Minister of Finance of the Republic of Kosova stated that Development of transactional modules for E- Procurement system including IT infrastructure and contract management system is “one of the very important components of the PSMP”. He also requested an extension of the project in order to allow for the activities under this (and other components) to be completed. Completion of the e- procurement sub-component will require additional time - beyond the actual closing date of the project. The main reason for the delays was low local capacity - it took the government a lot of time to prepare technical specification for e-procurement development contract. To mitigate this, the Bank has funded an international advisor who helped with the development of technical specifications. To assure continuity, the adviser is expected to remain in place throughout preparation and implementation of this sub-component. The Bank has already received bid evaluation report prepared by the government. The review of this report has been completed by the Bank on May 02, 2014; request for clarifications is being drafted by the Bank team. More time is needed to complete the evaluation, and then hire a company and developing the e-procurement system. Component 2: Improving Payroll Administration and Laying the Foundation for Professional Civil Service is the most sensitive component that faces additional pressures due to the political cycle (general elections to be held sometime between June and September 2014), as a result implementation progress remains MU. Some actions advancing policy agenda supported by this component have been taken, e.g. certain work toward job classification has been completed; at the same time, some planned regulatory and legislative work related to Public Administration and training of the HR staff are not yet completed. A recent across the board salary increase in the public sector announced by the Government in February 2014 may have undesirable fiscal implications in the near future. Component 3 - Increasing Security and Efficiency of Government Information Systems: Tangible progress that has been made during the last supervision cycle, notably culminated in the completion of the main activity for Component 3 of the project - inauguration of the National Data Center (NDC) that took place in February 2014. This is a government wide success: functioning NDC will have significant impact on the IT development and service delivery to citizens and businesses. This justifies upgrading component implementation from MU to MS. Public Disclosure Copy Locations No Location data has been entered Results Project Development Objective Indicators Page 2 of 9 The World Bank Report No: ISR13988 Indicator Name Core Unit of Measure Baseline Current End Target Improved quality o f budget formulation and Text Value PEFA assessment 2009 PEFA PI-1 score B; execution in the budget organizationsthat indicators: PEFA PI-12 (iii), (iv) score B; Public Disclosure Copy would participate in the proposed project # PI-1: score: C (actual At least 4/5 beneficiary expenditure deviated from organizations meet at least budget by more than 15% in 5/7 intermediate outcome one of the last three years); indicators # PI-12 (iii, iv): Multi- year perspective in fiscal planning, expenditure policy & budgeting # score: C PI-12 (iii) score: C; PI-12 (iv) score: D; # Only 3/7 quality indicators of budget submissions met by all 5 beneficiary BOs; no BO meets 3 quality indicators for budget execution Date 30-Jun-2009 30-Nov-2011 30-Jun-2013 Comments Increased bidder participation in public Text Value 8,270 bidders participated in Bidder participation increases procurement tenders and cost savings procurement tenders in 2008 by 15% achieved through Quick Gains actions and e- (1.7 bidders per contract); procurement modules No electronic procurement Price disparities in QG transactions; procurement categories do QG study reports significant not exceed 10% in the same price disparities within year procurement categories in the same year (2008): Cost savings of at least 5% # Civil works/ roads: for each category achieved up to 90%; # Maintenance: 39% Public Disclosure Copy # Security: 41%; # Buildings rental 64%; # Food 95%; # Medicines 17-70%; # Office supplies 26%; # Fuel 9.3% in a year/ up to 31% in a month No electronic procurement transactions Page 3 of 9 The World Bank Report No: ISR13988 QG study reports significant price disparities within procurement categories in the Public Disclosure Copy same year (2008): # Civil works/ roads: up to 90%; # Maintenance: 39% # Security: 41%; # Buildings rental 64%; # Food 95%; # Medicines 17-70%; # Office supplies 26%; # Fuel 9.3% in a year/ up to 31% in a month Date 30-Sep-2009 01-Nov-2013 31-Dec-2014 Comments The international consultant started the assignment on April 29, 2013. The local consultant however has not been selected yet, theMoF/ PIU should finalize contract negotiation and have the consultant in place who should work in parallel with the CPA internationalconsultant. The CPA has submitted on March 2013 to the MoF for approval a list of ten (10) items for centralized procurement witharecommendation of start two items as part of the centralized procurement. The Public Disclosure Copy MoF needs undertake a decision for both the issuesin order to unlock and avoid further delays Transparent and coherent pay and grading Text Value No grading system in the civil 100% of permanent civil structure introduced in the core civil service service; servants graded; supported by improved ICT systems that Wide pay variations among Equal bases pay for posts of enable effective fiscal and management civil service bodies; equal grade and salary step controls in payroll administration PEFA indicator PI-18 across civil service bodies; (effectiveness of payroll Improved PEFA PI-18 score Page 4 of 9 The World Bank Report No: ISR13988 controls) score: D+; (C+ or above) No link between HRMIS, payroll, and Treasury Date 30-Sep-2009 01-Nov-2013 31-Dec-2014 Public Disclosure Copy Comments The Company supporting the MAP on this regard started work only in September 2012. Initial results are expected to be seen by June 2014 Enhanced security and interoperability of Text Value No adequate, secure data Data center is operational; government information systems (through storage and backup facility for Reduced risk of data loss; centralized data storage and systems major ICT systems; Improved access to data maintenance,and interoperability framework) No interoperability between control and physical security; major ICT systems New systems developedaccording to interoperability framework Date 30-Sep-2009 01-Nov-2013 31-Dec-2014 Comments The data center package is The National Data Center was currently under inaugurated in February 2014 implementation since April and is fully operational. 2013 and is expected to be up and running at the beginning of2014 Intermediate Results Indicators Public Disclosure Copy Page 5 of 9 The World Bank Report No: ISR13988 Indicator Name Core Unit of Measure Baseline Current End Target Improved quality of budget and MTEF Text Value Beneficiary BOs comply with All 5 beneficiary BOs meet submissions of beneficiary budget 3 out 7 budget submission the 7 quality criteria Public Disclosure Copy organizations quality criteria (see comment for explanation) Date 30-Sep-2009 01-Nov-2013 31-Dec-2014 Comments (a) Compliance with ceilings Largely met - some new set by MTEF and MoF budget projects were brought forward circulars. (5=NO) without prior inclusion in PIP (b) Consistency with MTEF and sectoral policy priorities (5=YES) (c) Clear explanation of budget objectives and priorities (5=NO) (d) Fully developed cost estimates in budget plans for three separate, consecutive years. (5=NO) (e) Explanation and justification of proposed changes from previous budgets consistent with announced policies and MTEF. (5= YES) (f) Inclusion of all capital projects in PIP prior to their inclusion in budget submissions. (4/5= NO) (g) Compliance with deadlines set by MoF circulars. (5=YES) Improved budget execution rates by beneficiary Text Value (a) Deviation from original All beneficiary BOs meet the Public Disclosure Copy budget organizations (BOs) approved budget expenditure interim outcome indicators for by beneficiary BOs does not budget execution exceed 10 percent (in aggregate and by BO) for the year. (3/5=NO) (b) Variance in expenditure composition exceeds overall deviation in primary expenditure by no more than 5 percentage points for the Page 6 of 9 The World Bank Report No: ISR13988 year. (5=NO) (c) Targets (expenditure and milestones) for at least 70 Public Disclosure Copy percent of projects in approved budgets are achieved. (5= NO) Date 30-Sep-2009 01-Nov-2013 31-Dec-2014 Comments The project component only began in October 2012 so had negligible influence on the 2012 budget outcome Status of public procurement activities is Text Value No central capacity exists to PPA and PPRC use regularly monitored through contract monitor procurement cycle electronic system to regularly management information system monitor public procurement activities by all contracting authorities in Kosovo Date 30-Sep-2009 01-Nov-2013 31-Dec-2014 Comments SEPA software is no longer available as the contract management information system will be one of the modules included in the e- procurement solution. HRMIS functions as a civil service registry and Text Value HRMIS does not include HRMIS rolled out in all civil online data links between HRMIS-payroll- grade or salary step data; service organizations Treasury systems enable effective fiscal and includes only personnel data management controls in payroll administration for 3 civil service organizations Date 30-Sep-2009 01-Nov-2013 31-Dec-2014 Comments Performance appraisal system is introduced Text Value No regular performance Managers trained (no.); Public Disclosure Copy and used as a basis for progression along appraisal system or Performance appraisal salary steps mechanism for salary launched in pilot organizations progression Date 30-Sep-2009 01-Nov-2013 31-Dec-2014 Comments The support has just started Ministry responsible for public administration Text Value MPA Department of Civil Department responsible for has necessary capacity to exercise key human Service Administration has 25 civil service management has resource management functions for the core staff (14 in payroll unit) staff trained in all core HR civil service functions Page 7 of 9 The World Bank Report No: ISR13988 Date 30-Sep-2009 30-Nov-2011 30-Jun-2013 Comments Civil service training based on training strategy Text Value No civil service training Training impact assessment Public Disclosure Copy and monitored according to training impact strategy. KIPA training covers methodology developed; assessment methodology only basic needs of all public KIPA training program service. Training effectiveness revised; not systematically monitored. MPA & KIPA staff trained in using the methodology Date 30-Sep-2009 30-Nov-2011 30-Jun-2014 Comments Centralized data management and systems Text Value Approx. EUR 0.15 million Cost savings from ICT maintenance leads to efficiency gains annual spending on systems maintenance of 30% duplicated maintenance, plus (compared to stand-alone some EUR 0.4 million in systems) duplicated equipment and development of stand-alone systems Date 30-Sep-2009 06-Mar-2013 30-Jun-2013 Comments This activity has been Procurement of Government dropped as it will be part of data is completed and the the e-procurement system contract will be signed within 2 weeks. Data on Financial Performance (as of 20-Mar-2014) Financial Agreement(s) Key Dates Project Ln/Cr/Tf Status Approval Date Signing Date Effectiveness Date Original Closing Date Revised Closing Date P101614 IDA-46920 Effective 04-Feb-2010 10-Mar-2010 17-Jun-2011 30-Jun-2013 31-Dec-2014 P101614 IDA-H5450 Effective 04-Feb-2010 10-Mar-2010 17-Jun-2011 30-Jun-2013 31-Dec-2014 Disbursements (in Millions) Public Disclosure Copy Project Ln/Cr/Tf Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P101614 IDA-46920 Effective XDR 2.90 2.90 0.00 0.45 2.45 16.00 P101614 IDA-H5450 Effective XDR 2.30 2.30 0.00 1.89 0.41 82.00 Disbursement Graph Page 8 of 9 The World Bank Report No: ISR13988 Public Disclosure Copy Key Decisions Regarding Implementation Progress toward achievement of the PDO rating was upgraded from MU to MS. During current supervision period, the most noticeable progress has been made in implementation of Component 3: - Increasing Security and Efficiency of Government Information Systems. Successful inauguration of the National Data Center is an important milestone in the project implementation. Implementation of Component 1: Improving Public Financial Management Performance in Selected Budget Organizations is largely on track. The PFM sub-component enjoys smooth implementation; there also observable improvements in staff capacities and procedures in the budgetary institutions benefiting from the Technical Assistance. After some delays, the e-procurement sub-component shows signs of progress. The Government commitment to procurement reforms and introduction of e-procurement remains strong. At the same time, in order for this sub-component to produce tangible results, the project closing date would need to be extended. Implementation of Component 2: Improving Payroll Administration and Laying the Foundation for Professional Civil Service is delayed. Successful completion of this component would also require additional time beyond current project closing date of December 2014. Public Disclosure Copy During next supervision cycle the team intends to initiate project restructuring and request a 12 months extension of the project closing date (from December 2014 to December 2015). Disbursements have picked up significantly. Almost 50 percent of total project funds have been disbursed and almost 75 percent of funds have been committed to-date. Restructuring History Level two Approved on 23-Jul-2012 Related Projects There are no related projects. Page 9 of 9