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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of The World Bank FOR OFFICIAL USE ONLY IMPLEMENTATION COMPLETION REPORT (IDA-26330) ON A CREDIT IN THE AMOUNT OF SDR 6.9 MILLION TO THE REPUBLIC OF ALBANIA FOR A SCHOOL REHABILITATION AND CAPACITY BUILDING PROJECT South East Europe Country Unit Human Development Sector Unit Europe and Central Asia Region SEPTEMBER 28, 2000 Report No: AL This document has a restricted distribution and may be used by recipients only in the performance of their I official duties. Its contents may not otherwise be disclosed without World Bank authorization.

2 CURRENCY EQUIVALENTS (Exchange Rate Effective on September 27, 2000) Currency Unit = Albanian Lek (LEK) LEK I = US$ US$ 1 = LEK FISCAL YEAR January I -- December 31 ABBREVIATIONS AND ACRONYMS AEDP CAS CEAE CPAR EMIS ECA FY IDA MOES MOF MOP PCU PHRD STPH TDE UNICEF Albania Education Development Project Country Assistance Strategy Center for Evaluation, Assessment, and Examinations Country Procurement Assessment Report Education Management Information System Europe and Central Asia Fiscal Year of the World Bank International Development Association Ministry of Education and Science Ministry of Finance Ministry of Privatization Project Coordination Unit Population and Human Resources Development State Textbook Publishing House Textbook Distribution Enterprise United Nations Children's and Education Fund Vice President: Country Manager/Director: Sector Manager/Director: Task Team Leader/Task Manager: Johannes F. Linn, ECAVP Christian J. Poortman, ECCO4 James A. Socknat, ECSHD Sue E. Berryman, ECSHD

3 FOR OFFICIAL USE ONLY IMPLEMENTATION COMPLETION REPORT ALBANIA SCHOOL REHABILITATION AND CAPACITY BUILDING PROJECT CREDIT ALL CONTENTS Page No. 1. Project Data 1 2. Principal Performance Ratings I 3. Assessment of Development Objective and Design, and of Quality at Entry 1 4. Achievement of Objective and Outputs 6 5. Major Factors Affecting Implementation and Outcome 9 6. Sustainability Bank and Borrower Performance Lessons Learned Partner Comments Additional Information 17 Annex 1. Key Performance Indicators/Log Frame Matrix 18 Annex 2. Project Costs and Financing 20 Annex 3. Economic Costs and Benefits 22 Annex 4. Bank Inputs 23 Annex 5. Ratings for Achievement of Objectives/Outputs of Components 24 Annex 6. Ratings of Bank and Borrower Performance 25 Annex 7. List of Supporting Documents 26 Annex 8 Borrower Contribution to ICR 27 MAP 28467R This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization.

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5 Project ID: P Project Name: SCHOOL REHAB. AND CA Team Leader: Sue Ellen Berryman TL Unit: ECSHD ICR Type: Core ICR Report Date: September 28, Project Data Name: SCHOOL REHAB. AND CA Country'Department: ALBANIA Sector/subsector: EP - Primary Education L/C/TF Number: IDA Region: Europe and Central Asia Region KEY DATES Original Revised/Actual PCD: 05/13/93 Effective: 10/06/94 10/06/94 Appraisal: 02/08/94 MTR: 10/15/96 06/22/98 Approval: 06/23/94 Closing: 03/31/99 03/31/2000 Borrower/lImplementing Agency: Other Partners: REPUBLIC OF ALBANIA/MINISTRY OF EDUCATION STAFF Current At Appraisal Vice President: Johannes F. Linn Wilfred Thalwitz Country Manager: Christiaan J. Poortman Kemal Dervis Sector Manager: James A. Socknat Ralph Harbison Team Leader at ICR: Sue Ellen Berryman Terrice Bassler ICR Primary Atuthor: Anna Kokotov-Litnan 2. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainabilitv: L Institutional Development Impact: M Bank Performance: Borrower Performance: S S QAG (if available) Quality at Entry: Project at Risk at Any Time: No ICR S 3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective: The objectives of the project were to help the Government sustain delivery of basic education services during Albania's difficult economic transition and build institutional capacity for planning, management and quality assurance of education in an increasingly decentralized system. Its specific objectives were defined as follows:

6 (a) accelerate rehabilitation of damaged and dilapidated school facilities in Albania's 37 districts; and (b) build capacity of the key sector institutions to stimulate efficient use of fiscal resources and assure quality of learning outcomes. The present assessment of the objectives is based on: (1) their relevance to sector priorities; (2) consistency with Bank's priorities and areas of special interest to the Bank; (3) Borrower's understanding of and commitment to the objectives; and (4) the ease of implementation. Both objectives were consistent with the priorities of the Albania education sector in the early nineties and remain relevant today. The rehabilitation objective was necessitated by the severe deterioration of the education infrastructure to the point where it impeded learning. By the early 1 990s, 60 percent of the basic and secondary school system's total classrooms needed either repair or compete replacement, with the total rehabilitation bill exceeding $80 million, as estimated by the Ministry of Education (Ministry). The project could meet only a part of the overall needs in Albania's school infrastructure rehabilitation. The Bank's sector study of the Albania education sector (May 2000) showed that these needs still persist. There were further episodes of school vandalism in More importantly, Government has been financing education inadequately. The result has been poorly funded preventive maintenance of schools, where what start as minor repairs balloon into major repairs. The Capacity Building Objective was also important for Albanian education in the early 1 990s. At that time, the country's move to a market economy and a more decentralized democratic society created unprecedented challenges for the education sector. However, key education sector institutions lacked the capacity to deal with these challenges. Decades of isolation meant that frames of reference for managing the sector were frozen in time and badly out of date. Capacity building remains a long-term objective for Albania's education sector. The project was only a starting point for a process of profound changes in institutional culture and organizational behavior of the key players in the sector. Both objectives were consistent with the core elements of the 1993 IDA Country Assistance Strategy (CAS) for Albania (rescuing basic public services and capacity-building of indispensable govemment agencies); and with the 1998 IDA CAS (governance and institutions building, promotion of human development, and poverty alleviation). The objectives were also consistent with one of the areas of special interest to the Bank: poverty alleviation. Although it did not explicitly target poverty, the project was intended to benefit poor Albanian children. The rehabilitation objective envisaged a large school rehabilitation program to protect access to basic education particularly, in poor rural and remote parts of the country. The project objectives enjoyed different levels of support by the Borrower. The rehabilitation objective was clear to the Borrower and had its full support and commitment. However, the capacity building objective was not well understood, accepted, or intemalized by the Government. There were several reasons for this. First, in , the Ministry was interested primarily in donor support that could alleviate shortfalls in the sector's physical inputs, such as deteriorated school facilities, overcrowded urban schools, and textbook shortages. Second, even during negotiations, the Albanian Govemment signaled a reluctance to borrow for the intemational technical assistance needed to reach the capacity building objective by reducing the amount of credit allocated for technical assistance. This reluctance only deepened as the project began to implement. Finally, many concepts envisioned by the objective, such as quality assurance and learning assessments, accountability, or education efficiency, were still alien concepts to the Albanian counterparts and therefore did not have their commitment. -2-

7 Both objectives were overly ambitious for the early 1990s. They implied a high level of coordination and supervision efforts. For example, the rehabilitation objective envisaged an intensive and geographically dispersed rehabilitation program, but the poor state of the roads, transportation, and communication in Albania made it difficult to ensure proper supervision of the works. The capacity building objective envisaged technical assistance and multiple training activities in more than one area of education reform (i.e., management and planning information, quality assurance, and improving the competitiveness of textbook provision) when such organizational behavior patterns (e.g., the use of consulting services or staff development) were still a novelty to the sector. Moreover, the Government had to internalize many new concepts in education and management for which it was not ready. 3.2 Revised Ohiective: The development objectives were broadly formulated, and therefore, there was no need to formally revise them. During the mid-term review, in June 1998, some modifications were introduced into the capacity building objective to better relate it to progress in project implementation and changing conditions in the country. The objective was split into three more specific objectives corresponding to each project sub-component: a) create a school mapping database that can be used to rationalize the sector's infrastructure; b) train professional staff and equip the Center for Evaluation, Assessment, and Examinations (CEAE), thereby improving the existing evaluation, assessment and examination system; c) convert the State Textbook Publishing House (STPH) and Textbook Distribution Enterprise (TDE) into private sector enterprises. 3.3 Original C(omponents: The Project had two components. The largest component, School Rehabilitation, had expected financing in the amount of US$10.3 million. This component included: (i) a school rehabilitation program providing for repairs and basic furniture in 1,630 classrooms in 237 schools in all districts; and (ii) a school replacement program providing for replacement of 200 classrooms in 38 schools in the northern districts of Kukes, Puke, and Shkoder, and a purchase of furniture and equipment for these schools. The project was expected to finance civil works, school furniture, and service fees for a local specialist and administrative support to the district Economic Centers that were responsible for the implementation of the component at the district level. The second component, Key Sector Capacities (US$1.0 million), included four sub-components: (i) Planning and Management Information (US$0.2 million); (ii) Quality Assurance in Basic Education (Pedagogic Institute) (US$0.2 million); (iii) Textbook Improvement (US$0.1 million), and (iv) Project Coordination Unit (US$0.4 million). * Planning and Management Information. This sub-component was designed to build on activities started during project preparation with the technical assistance financed by a PHRD Grant provided by the Government of Japan. These activities included a study to review and streamline the powers and duties of the various actors in the management of education and a computerized rural planning model for the three districts to assist in rationalizing education provision in rural areas. In addition, the project allocated credit funds to finance computerization of an education planning and management information system in the Ministry and in three pilot districts and management training for the Ministry's staff and education administrators at the district level. The project funds would finance equipment and materials for district offices and the Ministry, international and local technical assistance, and external training. The Economics Department of the Ministry was responsible for this sub-component. -3-

8 * Quality Assurance in Basic Education. This sub-component was designed to build on an activity that had also started during the project preparation under the PHRD Grant: the development of a strategic plan for the Pedagogic Institute to review its functions and reorganize its structure. The project funds were to be used to acquaint staff of the Pedagogic Institute and others with recent developments in quality assurance in education, cognitive and adolescent development, and teaching and learning processes. Training was to be provided locally by external specialists ("Tirana Lectures Series"). The sub-component included training a core group of learning assessment specialists for the CEAE and setting up an initial "twinning" or partnership linkage between the Pedagogic Institute and a center with similar functions in another country. The Pedagogic Institute was responsible for this sub-component. * Textbook Improvement. This sub-component was designed to assist the Ministry with the development of textbook provision policy through external study visits, technical assistance to key staff, as well as training in publishing and financial management for a new commercial environment. It would provide a follow-up support to a roundtable on textbook policy and action planning that was planned to be carried out by the Ministry with the support of UK Know-How Fund. In addition, modest equipment was to be purchased for the STPH to enable it to effectively use its newly acquired computers for book design and page layout. The Ministry was responsible for this sub-component. * Project Coordination Unit. The project envisaged the establishment of a PCU comprised of a project coordinator, accountant, multi-lingual secretary, and a lead engineer/architect. It was also planned that the PCU would contract staff to assist as necessary with procurement, supervision of works, organization of external training, and other services as required. The Project allocated funds for: (i) purchasing computers, office furniture, equipment, and supplies, as well as two vehicles for project supervision for the PCU; (ii) basic office equipment for the district Economic Centers; (iii) services of an independent auditor to conduct the annual audits of project-related expenditure; and (iv) technical assistance to assist PCU and other Ministry's staff involved in the project on procurement and disbursement, such as external training to observe implementation management practices in IDA/Bank-supported projects in other countries. The Ministry of Education, designated as implementing agency, had the overall responsibility for the implementation of the project. Project design was clearly related to the development objectives. Each objective was to be realized through a relevant component. Due to the urgency of school rehabilitation needs, the School Rehabilitation Component was made the major component. The priority was given to eight-year schools. This priority was consistent with one of the elements of the Bank's strategy in education, i.e., ensuring that everyone completes a basic education of adequate quality. The design of the Key Sector Capacities Component included the most critical areas of the education system, such as management and planning, quality assurance, and textbook provision. The sector study on Albania's education conducted in 2000 reaffirmed these priorities for the sector. However, the design of the project did not take into consideration risk factors that later compromised the quality of civil works under the School Rehabilitation Component and threatened the implementation of the Key Sector Capacities Component. The risks for the School Rehabilitation Component included: lack of construction guidelines and school furniture standards; variations in the capacity and incentives of district Economic Centers to design technical specifications, properly evaluate bids, and provide adequate supervision of civil works; and an under-developed market of construction firms that made it easier for unqualified firms to secure contracts by offering low prices. The risks for the Key Sector Capacities Component included: insufficient capacity on the part of the Ministry to absorb the envisaged amount of - 4 -

9 technical assistance; lack of experience in coordinating technical assistance and training contracts under the Bank's guidelines; a volatile political environment that led to high tumover of the technical staff in the sector, and therefore losses of investments in training; and low incentives to retain trained staff in the public sector. 3.4 Revised Components: The Project components were not formally revised. However, at the time of the mid-term review (July 1998), some activities were modified to target more effectively the objectives of the project. Under the School Rehabilitation Component, the number of schools to be rehabilitated and replaced was adjusted to reflect increased prices and changing needs for school infrastructure. Due to the delays in the implementation of the Key Sector Capacities Component, some of the originally planned activities had to be dropped. Other activities were expanded. Specifically, under the planning and management sub-component, a governance review study and external fellowships in management training were dropped as part of the project while the school-mapping initiative was pursued. Under the quality assurance sub-component, the Tirana Lectures Series, and "Twinning" Exercise had not been carried out by the time of the mid-term review and, therefore, were dropped. The sub-component was re-focused to aggressively pursue and expand the capacity building activities for the CEAE. Previously planned training was complemented with other activities that were deemed necessary to set up a functioning Center, such as technical assistance, rehabilitation of the premises, and equipment. Under the textbook improvement sub-component, project resources were focused on launching a privatization initiative through intemational technical assistance. The initiative, under the project, would provide for development of a textbook policy and conversion of the STPH and TDE into joint-stock companies as a first step to full privatization. Such conversion could not and was not planned as a project output under the original Key Sectors Capacities Component. However, by mid-1998, Albania's move to a market economy as well as a resumed interest of the Ministry in improving how it procured textbooks created a good window of opportunity for the project to assist with gradual privatization of the textbook sector. 3.5 Quality at Entrv: Since the Quality Assurance Group (QAG) had not yet been established, a formal assessment of quality at entry by the QAG could not have been conducted. In the ICR, the quality at entry is rated satisfactory. The project objectives were in line with the CAS, sector needs, Govenmment's priorities, and the relevant Bank safeguard policies. The project design generally corresponded to its objectives. The assumptions about Government's demand for the project outputs were realistic: (i) enrollment in basic education remains relatively high; (ii) the Ministry is keen on the development of educational management information systems to improve its management and planning functions; (iii) the Government is planning to participate in international comparative tests in order to have relevant information on the quality of Albanian education; (iv) the Govenmment is also introducing standardized assessments, first in higher education, and then in basic education; and (v) the Government is moving ahead with privatization of the textbook industry. At the same time, the overall design of the project suffered from several shortcomings stemming from the underestimation of project risks. First, project risks were identified only for the Rehabilitation Component. Second, even for this component, certain risks were overlooked. (see para. 3.3). As a result, the project's design did not include mechanisms that could have addressed those risks. Finally, the assumptions about mitigating factors, such as the collaboration of Albania's major external partners in education - IDA the European Union, Soros Foundation, and UNICEF - were not fully realized during the project implementation period. By the end of the project, the relations among the donors had become more constructive. -5 -

10 4. Achievement of Objective and Outputs 4.1 Outcome/achievem7ent of objective: The implementation of the project can be divided into two periods. The first period occurred before the mid-term review from 1994 to mid During this period, the School Rehabilitation Component was implementing, though unevenly. However, there was little or no progress under the Key Sector Capacity Component due to the Ministry's unwillingness to use the Credit for technical assistance and training. The second period occurred from mid-1998 to March 2000 and included the mid-term review (June 1998). The implementation of the School Rehabilitation component was completed by the end of 1998, and the Ministry focused its efforts on implementing activities under the Key Sector Capacities Component. Overall, the project's outcome is rated satisfactory. The project achieved its objective for the major component: - to rehabilitate and replace a large number of schools. The objective for the Key Sector Capacity Component can also be considered as having been essentially implemented. The Project, primarily during its last two years, did develop an initial capacity in each of the three areas of the education reform. This provided a good basis for the capacity building activities now underway in the Education Reform Project, which was effective in July Outputts by conmponents: The School Rehabilitation Component funded investments - largely civil works and basic school furniture - for rehabilitation of 157 schools in 14 districts (versus targeted 237 schools in 37 districts) and replacement of 26 schools in three northern districts of Kukes, Puke, and Shkoder (versus targeted 38 schools in the same districts). Fewer schools than originally planned were rehabilitated and replaced due to the following reasons: (i) increases in prices after price liberalization that occurred after the appraisal cost estimates; and (ii) movements of populations from rural to urban areas that made it necessary to build more urban schools that were generally larger and more expensive. Fewer districts participated in the project than had been estimated during the appraisal because the demand for schools followed the mass migration from numerous rural areas to many fewer urban areas. TIhe component achieved an overall positive result: 60,000 schoolchildren benefited from the school rehabilitation and replacement program, including children in the poorest and most remote areas. However, the quality of replaced and rehabilitated schools was uneven: based on unofficial rough estimates, the construction quality is high in 15% of schools; average in 65%; and low in the remaining 20%. There are a number of reasons for the variance: (i) construction guidelines and standards were never established; (ii) the District Economic Centers varied in their capacities and incentives to prepare proper technical specifications for competitive bidding, to evaluate bids adequately, and to ensure proper supervision; (iii) the construction skills and quality of materials available in remote areas were low; (iv) the construction market was nascent; (v) regulations and enforcement were insufficient, creating more opportunities for contract abuse; (vi) the PCU had insufficient capacity to ensure proper supervision of civil works procurement; (vii) Government was reluctant to use technical assistance or hire a private firm to supeivise contracts; and (viii) the scheduled rehabilitation was of an emergency nature, causing Government to "patch" quickly rather than to worry about construction quality. Given the lack of progress in the implementation of the Key Sector Capacities Component during the early years of the project, the component was modified at the time of the mid-term review (June 1998). Some activities had to be dropped (a governance study, Tirana Lectures, twinning exercise, etc.), and others were modified to better fit new conditions (see para 3.4). By the end of the project, the component -6 -

11 funded technical assistance and equipment for: (i) the development of a school-mapping database and "Decision" software under the planning and management sub-component; (ii) establishment of the CEAE under the quality assurance sub-component; and (iii) conversion of the STPH and TDE into joint-stock companies under the textbook improvement sub-component. The actual outputs of the component correspond to the outputs planned during the mid-term review. However, compared to the original plan, the component was implemented with a three year delay, and had fewer outputs. With the benefit of hindsight, the delay in the implementation or cancellation of some activities may have been a positive development. For example, investments in training activities, if implemented as originally planned in 1995/1996, would have been lost during the political upheaval of later years and subsequent changes in the sector's leadership and technical cadre. It would also have been too early to conduct a govemance study in the mid-nineties. There was not enough knowledge or experience in the region and at the Bank regarding the issues of decentralization and efficient allocation of govemance functions and responsibilities among the different levels within a decentralized governance framework. By the end of the decade, relevant experience was accumulating. Therefore, the governance study was included in the Education Reform Project. Overall, the activities accomplished under each sub-component can be considered successful. Under the planning and management sub-component, a school-mapping database and "Decision" software were developed, installed, and demonstrated in the Ministry. The personnel of the Ministry's Investment Department which is the prospective primary user of the database in the immediate term, received initial training in using the database and the software for resource allocation decisions for school rehabilitation and construction needs. Guidelines for the training manual were developed. The database and the software represent important building blocks for a comprehensive education management information system (EMIS) to be developed under the Education Reform Project. Therefore, the benefits of the school mapping activity have to be evaluated at a later stage, under the framework of the performance monitoring of the Education Reform Project. In the meantime, the database and the software were favorably evaluated by the Ministry in a formal evaluation session, although minor technical glitches remain to be worked out. As part of the school mapping exercise, a rural planning model was piloted on the basis of three regions and an alternative resource scenario for rural school construction and rehabilitation was presented to the Ministry. Remaining funds under the planing and management sub-component were used for ad hoc technical assistance for the Ministry to develop and carry out a donor coordination strategy in response to the flood of donor support to Albania at the time of the Kosovo crisis and influx of refugees to Albania. Under the quality assurance sub-component, an action plan for the establishment of a functional Center for Assessment was developed. The staff of the CEAE was expanded from 3 persons to 5. Each of the staff received training in learning assessment concepts and methods. The Center's premises were rehabilitated, and the necessary equipment was purchased and installed. At the Ministry's order, the Center completed its first large assessment task: the development of an item bank for the standardized portion of the higher education entrance examinations of The Education Reform Project continues to focus on strengthening the Center to develop feedback on the teaching and leaming process in Albania. Launching a privatization initiative became the focus of the textbook improvement sub-component (see also para. 3.4). By the end of the project, the initiative achieved significant results. With the technical assistance of an international textbook expert, the Ministry developed a privatization strategy which takes into consideration issues of uninterrupted textbook provision. Based on the strategy, the STPH and TDE were converted into joint-stock companies as the first step of privatization. The staff of these two firms received training in a business plan development, and were introduced to commercial publishing and distribution practices in other countries through external studies. Under the Education Reform Project, the privatization - 7 -

12 process will continue. The implementation of the project management sub-component followed the same pattern as implementation of the other sub-components: slow and insufficient development of capacity building of the PCU during and significant improvement during the final two years of the project due to changes in the Ministry and strengthened Bank supervision of the project. Until 1998, the PCU was part of the Development and Coordination Department of the Ministry, and consisted only of the Director. The procurement and financial functions, as well as engineering supervision under the project, were perforned by the staff of the Development and Coordination Department, along with their routine functions. Such an arrangement deviated significantly from the legal agreements that specified a PCU staffed full time by four people and a driver. Given the unwillingness of the Minister of Education during that period to use IDA funds for technical assistance or training, the procurement specialist and budget staff did not receive systematic training in Bank standards and processes for project management, procurement, and disbursement. At the time of the mid-term review, there was only a skeletal PCU with virtually no experience or capacity in managing technical assistance contracts for the Key Sector Capacities Component. The PCU could not even oversee the School Rehabilitation Component with the degree of managerial and supervisory rigor that had been agreed and expected. In late 1998, the PCU was finally reconfigured to comply with the project legal agreements. By the end of the project, the PCU had become a functional unit staffed with a director, a procurement officer, and a disbursement officer, and each of them received training in IDA procurement and disbursement guidelines. The PCU is now suitably equipped and capable of managing project activities under the Education Reforn Project. The annual project audits have shown overall compliance of the PCU's financial management procedures with acceptable international standards. 4.3 Net Present lvalue/leconomic rate of return: N.A. 4.4 Financial rate of return: N.A. 4.5 Institutional development impact: The institutional development impact of the project activities is modest. The School Rehabilitation Component failed to develop any capacity at the district level to manage procurement and supervision of civil works. Project design did not provide sufficient technical assistance to district Economic Centers, and the PCU was unable at that time to mentor the centers in better procurement practices due to its own limited procurement capacity. Under the Key Sector Capacities Component, the Ministry did not use the project's activities to help Ministerial departments build their capacities to manage and improve the functions for which they were responsible. At the same time, some of the project activities provided a good example of effective management. For example, the school-mapping exercise was organized by an international consultant as an interactive process involving various staff at the Ministry and district level and other donors, such as the Albania Education Development Project (AEDP). It also demonstrated the benefits of using local capacity when possible. Albanian high school students participated in the development of the school database, which was cost-effective for the project and beneficial for the students. Another positive development has been the Ministry's higher awareness and understanding of the necessity to improve effectiveness and efficiency in the use of human and financial resources. For example, the Government of Albania has embarked on a civil service reform, and the Ministry of Education through its own initiative has become a pilot ministry for this reforn. -8 -

13 5. Major Factors Affecting Implementation and Outcome 5.1 Factors outside the control of government or implementing agency: During project implementation, three major episodes of political disturbances affected the implementation of the project and its outcomes. From March to December 1997, the collapse of a pyramid scheme led to civil unrest, vandalism against government buildings, including schools, and widespread anarchy. During that time, all project activities were put on hold. The Government officially requested and received from the Bank a year's extension of the project implementation period to compensate for the time lost during the 1997 disturbances. In September- October 1998, the ousted President, Sali Berisha, attempted a coup. The accompanying violence forced delays in the implementation of the Key Sector Capacities Component because technical assistance had to be postponed until the situation stabilized. Finally, in 1999, the Kosovo crisis imposed further delays on project implementation from March to September, The influx of refugees to Albania, especially Tirana, again created security problems and an overload on the Ministry as a result of the need to respond to the schooling needs of refugee children. 5.2 Factors generally suibject to government control: The implementation of the School Rehabilitation component was affected by insufficient capacity at the district level to ensure quality of civil works. Lax Governmental procedures for licensing civil engineers and construction companies produced an unreliable and poorly qualified pool of bidders and supervisors at the district level. Many licensed engineers and technicians were not able to prepare adequate technical specifications for civil works contracts. Licensed private construction firms turned out to have no qualifications to perform adequately under their contracts. Vague liability provisions for non-performance under procurement contracts precluded enforcement of certain contractual obligations. The Key Sector Capacities Component suffered from cross-sectoral unwillingness of the Government to use IDA funds for technical assistance. This reluctance emerged in However, by 1998, the Government's receptiveness to technical assistance had changed, and the Ministry's new leadership was eager to move forward with education reforms. These two factors had an extremely positive effect on implementation of the component. Another factor was a high turnover of the technical cadre across the sectors, and in the education sector in particular. The entrenched system of political patronage produced wholesale staff turnover with every shift in political power. This was exacerbated by low incentives for attracting and retaining qualified staff in the public sector. The new civil service reform is designed to reduce this problem by creating technical cadres that are selected on merit, better paid, and politically insulated. The Ministry's request to become an early pilot in this reform stemmed from the leadership's desire to stop the debilitating turnover of technical staff. 5.3 Factors generally subject to implementing agency control: There are three major factors of this type that affected project implementation: (i) the Ministry's failure to establish an adequate PCU; (ii) the Ministry's unwillingness to use technical assistance and training; and (iii) the lack of construction guidelines and furniture standards for schools. School Rehabilitation Component. These three factors affected the implementation of this component, leading to uneven quality of the school rehabilitation and replacement programs. First, the Ministry's failure to establish a separate PCU during the first half of the project hampered the supervision of civil works in many ways. For example, the PCU staff had to divide their time between supervising civil works under the project and the Ministry's own construction program; the staff could not make field trips as often as it required since the two vehicles purchased for the project were appropriated by the Ministry for its own -9-

14 needs; and the PCU configuration did not allow a fast resolution of any implementation problem since any decision that could have been made at the PCU level had to be approved according to the cumbersome bureaucratic procedures at the department level. Second, the lack of technical assistance and training for the PCU during the first half of the project resulted in its insufficient procurement and supervision capacity to ensure quality of civil works. Although supervision missions tried to provide on-site procurement training, these efforts could not replace the more rigorous training needed by the PCU. Proper training did not start until The Ministry did not follow the recommendations of the supervision missions to hire an independent supervisor for the school rehabilitation program. The third factor, the lack of construction guidelines, contributed to the wide variation in the accuracy of technical specifications and bills of quantity and, ultimately, to variations in construction quality. In the absence of any school furniture standards, the quality of purchased furniture also varied widely. In some cases, the furniture for students suffered from poor workmanship, ergonomically unacceptable designs, and unsafe components. The lack of standards for materials, basic designs, or construction component did not allow for the economies of scale that standardization can yield. Key Sector Capacities Component. Implementation of this component was affected primarily by the Ministry's unwillingness to use technical assistance and training from 1994 to mid As a result, only 15 percent of the Credit allocated for the component was disbursed by June, 1998, reflecting virtually no progress in its implementation during that time. Consequently, some of the activities envisaged under the component had to be dropped, and education reforms were delayed. The Bank's supervision team had to work under enormous pressure during the two final years of the project in order to assist the Borrower to achieve the capacity-building objective of the project. 5.4 Costs and financing: During project appraisal, the total estimated project cost was US$11.3 million, with an IDA Credit of US$9.6 million equivalent, and a Government contribution of US$1.7 million. The IDA Credit was for SDR 6.9 million. At closing SDR 277, remained undisbursed and these funds were canceled effective the date of the last transaction (26-May-2000). The project largely followed the financing plan. However, there were two deviations from the estimated costs by category. First, the estimated costs for civil works could not cover the number of schools targeted by the project objective. At the mid-term review, the targeted number of schools to be replaced or rehabilitated was adjusted. There were four main reasons for the shortfall: a) the costs for rehabilitation were originally underestimated; (b) schools that were not repaired in the first year of the project continued to deteriorate, making the bill more expensive when they were finally repaired; c) construction costs increased, in some cases at rates higher than average inflation; and d) mass migration from rural to urban areas meant that more urban schools had to be rehabilitated, resulting in a reduced number of rehabilitated schools at increased costs per school. Second, at the Government's request, the remaining funds in the Project Preparation Facility (PPF) in the amount of US$240,000 were reallocated to "Consultant Services" category. The undisbursed amount of the PPF had been allocated for training purposes, but the envisaged training did not take place. 6. Sustainability 6.1 Rationale for sustainiability rating: The project is rated as "likely sustainable." The sustainability of the School Rehabilitation component depends upon the Government's ability to allocate necessary funds and effectively organize a school maintenance program. This issue was discussed at the time of the preparation of the School Rehabilitation Project. One of the project conditions stipulated selection of schools for rehabilitation or replacement under the project to be based, inter alia, on evidence of regular maintenance. Although some schools selected for the project proved their ability to properly maintain their facilities, the selection criterion was not - 10-

15 stringently enforced due to the overwhelming rehabilitation needs and scarce resources at the district level to comply with such a criterion. Another condition under the project stipulated maintaining recurrent expenditures for eight-year education, expressed as a percentage of overall recurrent expenditures in the education budget, at least at the 1994 level equivalent. In addition, the Bank had to review annually with the Government the arrangements for financing preventive maintenance in the education system. Again, this condition was not enforced due to the substantial decline in real terms in the recurrent education budget over the past decade. However, the Government is well aware of the maintenance problem and its implications, as well as costs, for any current or future investment in school infrastructure. With the assistance of the Education Reform Project, the MOES will be encouraging communities to participate in school rehabilitation and maintenance efforts. Although the Education Reform Project could not address the fiscal aspects of the preventive maintenance problem, the public expenditure review that is now being conducted jointly by Albania's Ministry of Finance (MOF) and the World Bank will provide Government with fiscal strategies for redressing the shortfall in funds for school maintenance. The MOF is also gathering international experience on financing school maintenance and drafting alternative proposals for the Parliament's review and approval. All the outputs of the Key Sector Capacities Component will be used as the basis for further institutional reforns under the Education Reform Project. Therefore, the sustainability of the component is directly linked with results and sustainability of the Education Reform Project. The Government expressed its commitment to the objectives of the Education Reform Project and met the conditions for its effectiveness in a timely and satisfactory manner. 6.2 Transition arrangenmento regular operations: School Rehabilitation Component. The project investment in rehabilitation and replacement of school facilities can be protected only through their regular maintenance. However, it is not clear at this point how the Government will be able to provide it. A completion of the public expenditure review may serve as a first step towards the development of transition arrangements for the continuous operation of the investment (see para. 6.1). Key Sector Capacities Component. Since all the outputs of the capacity building component are building blocks for different activities under the Education Reform Project, these activities can be considered transition arrangements to regular operations: (i) The school-mapping database will become part of a comprehensive education management information system to be developed in the MOES and two pilot districts. The database itself will be used for selecting schools for rehabilitation to assure equitable distribution of credit funds. (ii) The established CEAE will continue to develop its capacity. Additional training programs and study visits envisaged by the Education Reform Project will allow the CEAE to expand its main responsibilities in learning assessment. (iii) The newly converted joint-stock companies, the STPH and TDE, will receive technical assistance to develop them into fully functioning commercial companies capable of efficient provision of quality textbooks for Albanian students. During the ICR mission, it was agreed between the Bank and the MOES that the performance monitoring indicators for the operation of the School Rehabilitation Component and the Key Sector Capacities Component would be the Government's attention to the issue of preventive maintenance, and the relevant performance indicators under the Education Reform Project, respectively: -11 -

16 School Rehabilitation Component: Under the public expenditure review framework, the Government designs fiscal strategies for redressing the shortfall in funds for school maintenance. Key Sector Capacities: Planning and Management: MOES Directorate of Investment allocates IDA rehabilitation funds equitably among districts, relative to school mapping database. Qualitv Assurance: Learning Assessment of the 4th grade internationally certified as professional; new 8th grade examination conducted and graded; and new "matura" examination pretested. Textbook Improvement: MOES and Ministry of Privatization (MOP) bring STPH and TDE to point of sale according to timelines specified in detailed plan of action. An appropriate monitoring and evaluation system to monitor these performance indicators is a part of an overall monitoring system designed for the Education Reform Project. The mid-term review for the Education Reform Project is a good opportunity to evaluate the impact of the School Rehabilitation and Capacity Building Project. 7. Bank and Borrower Performance Bank 7. / Lending: Bank performance during project preparation is rated as Satisfactory. The project objectives responded to the Government's immediate priority in the education sector, i.e., massive rehabilitation of a dilapidated school infrastructure, as well as to the longer-term goals of education reform. Project components fit well with project objectives. However, some major risks for the School Rehabilitation component were not identified (e.g., lack of construction guidelines), and consequently, were not reflected in project design. The Bank also overestimated the capacity of the Ministry of Education in the mid-90s to absorb the envisaged amount of technical assistance under the Key Sector Capacities component. The SAR did not provide a formal list of performance indicators, since this was not required at the time of project appraisal. 7.2 Supe-vision: Overall, Bank performance in project supervision is rated as Satisfactory, although it was uneven during the project. Several factors affected the Bank's project supervision efforts. First, the Bank's supervision was carried out during particularly difficult times for Albania (see para 5. 1). Second, the Bank began the project supervision with new people on both Bank and Government teams who had not been involved in the preparation of the project. Third, the Ministry in 1994 was not committed to the use of technical assistance for capacity building activities. Fourth, in 1994, the Bank did not have enough supervision experience in ECA's education sector, since this was only the second education project in ECA (excluding Turkey). In its turn, the Ministry lacked any experience in working with the Bank. Finally, at the beginning of the project, communication with the Ministry was hampered by energy problems in the country, and the Ministry's poor communication systems. To sum up, the reality in Albania was not conducive to significant accomplishments. At the same time, there was a narrow window for learning opportunities and for gaining experience by all project players. To have used this window of opportunity, Bank supervision would have had to be pro-active, patient and persistent. That was not the case until Although early in the project, the Bank's supervision missions identified problems hindering the implementation of the project and suggested appropriate remedies, the Bank failed to follow up sufficiently on their implementation. In addition, in 1996, the Bank decided to move supervision to the Bank's local office, but local staff at that time did not have enough experience in project management. The Bank did not provide necessary training to the local - 12-

17 staff, and this factor even further weakened the supervision efforts. A mid-term review of the project scheduled for 1996 was not conducted. In mid- 1998, the Bank renewed and strengthened its supervision efforts. Responsibility for supervision was shifted back to headquarters. A comprehensive mid-term review was conducted in June Although the School Rehabilitation Component had mostly been completed by that time, the mid-term review provided useful recommendations that were later reflected in the design of the Education Reform Project. The Bank also clearly indicated to the Govermmenthat the Bank's decision on lending for a follow-on project in the education sector would be based on the Government's commitment and record on the implementation of the Key Sector Capacities component during the time remaining in the project. The supervision team, in collaboration with the Ministry, selected the most feasible activities for implementation during the remaining project time, and provided all necessary support for their accomplishment. By the end of the project, the Bank had developed constructive relations with the Ministry that culminated in the preparation of the Education Reform Project. The design of this second project was based on the accomplishments and lessons learned from the School Rehabilitation and Capacity Building Project. During the last two years of the project, the Bank maintained relations with all the major donors working in Albania's education sector. Although the participation of the donors in the project activities was rather limited, the dialogue led to cross-fertilization of ideas. For example, the Bank will be using the AEDP's experience in involving communities in school rehabilitation and maintenance in the Education Reform Project. In its turn, the AEDP has strengthened its focus on the issues of governance and management. 7.3 Overall Bank performance: To sum up the Bank's performance during the project, the Bank initially underestimated project risks, entertained unrealistic expectations about project outputs, and showed insufficient aggressiveness in using the window of learning opportunities. At the same time, the Bank demonstrated an excellent performance in client responsiveness and sector analysis, as well as proving during the final phase of the project its capacity to re-evaluate and strengthen its efforts to follow the project through, despite political and other factors that interfered with project implementation. Therefore, the overall Bank performance is rated satisfactory. Borrower 7.4 Preparation: During project preparation, the Government was keenly interested in the project, mostly in the School Rehabilitation Component. A key official at the Ministry of Education was appointed to participate in and oversee the project preparation. There was good collaboration between the Bank and the Ministry teams during the preparation of the School Rehabilitation Component. At the same time, the Ministry had less interest in capacity-building activities. Its reluctance to use even grant money for technical assistance precluded completion of most of the capacity building activities that had started during project preparation. 7.5 Government implementation performance: The major factor that affected project implementation was the Government's unwillingness to use IDA Credit funds for technical assistance that emerged across all the sectors of Government in In addition, the Government has failed to date to ensure allocation of sufficient funds for preventive maintenance of the school infrastructure and to design optimal mechanisms for the use of such funds. However, the Government is aware of this problem and is looking for possible solutions in the framework of the public expenditure review

18 7.6 Implementing Agency: From 1994 to mid-1998, the Ministry failed to provide effective management of the project. It did not establish the PCU according to the legal project agreements; it was late with key staff appointments for project implementation; it did not follow the recommendations of the supervision missions, nor did it use allocated credit funds for proper training of the PCU procurement and disbursement staff. As a result, the PCU had a limited capacity to ensure effective implementation of the project components. It did not provide progress reports on a regular basis, and there were two separate occasions when the procurement rules were violated and, the Bank after a careful deliberation, had to give waivers with the warning that any more violations would result in cancellation of the project. Until mid-1998, the Ministry did not want to use the Credit funds for technical assistance or training. Therefore, there was no progress under the Key Sector Capacities Component until the Ministry recommitted itself to the capacity building objective during the final two years of the project. The Ministry also remarkably improved its project management. Based on the Bank's recommendations, the Ministry changed the PCU configuration and strengthened its capacity through the Credit-funded training, rehabilitation of facilities, and equipment. 7.7 Overall Borrower peijbrniance: According to the PSRs of June, 1998 and December, 1999, the project was "unsatisfactory" at mid-term review and "satisfactory" by project close. 8. Lessons Learned The School Rehabilitation and Capacity Building Project was the first project in Albania's education sector and the second project in the ECA education sector. As such, it provided an opportunity to derive significant lessons that would benefit the Bank's work in the ECA education sector, particularly in Albania. These lessons can be grouped as follows: (i) lessons for project preparation and supervision; and (ii) lessons for improving Bank/Client relations. L. Lessons for Project Preparation and Supervision 1. Project design should be grounded in the analytical work relevant to design decisions. Such analysis should include, inter alia, an analysis of all sectors that may affect the implementation of the project. For example, the preparation of the School Rehabilitation and Capacity Building Project did not include a substantial review of the construction market, capacities, or practices, which led to underestimation of several major risk factors, and, consequently, omissions in the project design. 2. Project objectives and expectations for project outputs and outcomes should be realistic within the project timeframe in countries that are inexperienced Bank clients, that are undergoing major political, economic and social changes, and/or whose players work with conceptual frameworks that differ radically from those associated with effective management of the sector. Political upheavals that occur during such changes may cause delays in project implementation. In addition, an outdated conceptual framework for the sector or little experience with Bank-financed projects may prolong the learning period and, consequently, result in fewer outputs or outcomes than initially planned. For example, under the School Rehabilitation and Capacity Building Project, the expectations for the outputs of the Key Sector Capacities Component were set too high for Albania in the mid-90s. As a result, these expectations were not fully realized within the project timeframe

19 3. Project supervision in Albania and in any country with similar political, economic, and social challenges requires labor-intensive supervision. The Bank has to be prepared for intensive supervision of projects in Albania or in countries with similar conditions, using all available means, such as supervision missions, video-conferences, regular communication with the PCU and other key players, sufficient training and mentoring for the local Bank staff to strengthen local supervision capacity, etc. 4. The Bank should regularly review and assess possibilities for reaching the project objectives and feasibility of the designed activities. Based on project progress, the Bank should be flexible in modifying project components, if sufficiently justified, and should be firm in indicating to the Borrower that poor performance or lack of commitrnent with regard to the project will endanger the Bank's willingness to invest in a follow-up project. 5. Project preparation and supervision should be carned out with broad participation by the Government and other stakeholders. Such participation will result in a stronger sense of project ownership. It will also serve as a remedy against high turnover of the technical cadre in countries with a volatile political environment and low incentives to work in the public sector. 6. The Bank should maintain an intensive dialogue with international donors. A continuous dialogue with international donors, even if they are not a part of the current project, can lead to better coordination within the sector and create opportunities for collaboration. At the same time, Bank operations cannot be "held hostage" to donor decisions on co-financing or parallel financing. Donors differ from the Bank in their agendas and time frames for taking action. 7. Quality of rehabilitation and construction works should be a focus of project design and implementation. This lesson is very important for any civil works financing in ECA countries. Although these countries have substantial experience in construction, inefficiency and poor quality assurance are pervasive problems. 8. Strengthening procurement capacity is essential to ensure quality of civil works. Weak local capacity in interpreting and applying the Bank's procurement guidelines and national procurement laws and regulations results in overly rigid interpretations, weak procurement practices, and, consequently, poor results. Strengthening of PCU procurement capacity can be achieved through adequate and timely training, both before project effectiveness and periodically during the course of implementation, as well as close supervision by the Bank. The Borrower can also be encouraged to fulfill Country Procurement Assessment Report's (CPAR) recommendations, if available. 9. School rehabilitation and construction should include community consultations and participation. The Bank's recent experience in other ECA countries (e.g., Tajikistan, Azerbaijan) as well as donor experience in Albania (e.g., AEDP) demonstrated that significant value can be gained from modest investments in promoting community interest and participation in school projects. Community participation may serve as a safeguard measure for ensuring quality of works, timeliness of completion, as well as further maintenance to preserve the investment. 10. The project capacity building objective can be achieved only if it enjoys a strong commitment by the Borrower during project implementation. Capacity building activities are essential for sustainable reforms. However, these activities are usually a time- and labor-consuming process that cannot produce quick and tangible results. In addition, these activities involve technical assistance that many client countries consider an ineffective use of credit/loan funds or a luxury. Therefore, if the capacity building - 15-

20 objective does not have Government's commitment and support during project implementation, the activities designed to achieve the objective will surely fail. For example, under the School Rehabilitation and Capacity Building Project, capacity building started only when the Ministry was willing to use IDA Credit funds for technical assistance and training. The Bank should clearly indicate to the Government that such lack of commitment to agreed objectives may jeopardize future lending operations. At the same time, the Government's unwillingness to use technical assistance can be overcome by carefully designing such technical assistance and demonstrating its benefits. For example, it is important to avoid any strain on the Government's capacity to absorb technical assistance. Under the School Rehabilitation and Capacity Building Project, successful consultancies were those that were based on close collaboration, an awareness of the client's needs, the Albanian cultural context, and tangible results. I 1. High turnover in the technical cadre in the public sector erodes project investments in capacity building. The Bank should encourage the Government to increase stability in the technical cadre through a range of means, including a well conceived and implemented civil service reform. In addition, a project design should envisage more specific, short-term training as a way to avoid concentrating training on a few individuals. 12. The responsibilities of the Borrower's implementing agency and the PCU should never blur. Under the School Rehabilitation and Capacity Building Project, weak capacity in the Ministry of Education made it difficult to separate the responsibilities of the PCU from those of the Ministry. The PCU should coordinate all project activities and handle all procurement and disbursement actions required by the project. The Ministry and its associated agencies should implement the project. Among the remedies are close supervision as well as stabilization of the technical cadre through a successful civil service reform. II. Lessons for Bank/Client relationships 1. The Bank should learn more about the Client's political and social history to better understand the motivations of different players and more effectively design and conduct its relations. Social needs assessments, as well as more effective involvement of local Bank staff, could be very helpful in this respect. 2. The Bank should continuously promote better understanding by the Client of the Bank's mission and goals in the country and the sector, its comparative advantages, as well as the guidelines and procedures to be followed with a Bank-financed project. Solid and consistent communication between the Bank and the Borrower is essential in building an appropriate climate for successful project implementation. 3. The Bank should be particularly concerned about properly conveying its intentions and ideas to counterparts, especially to those who have little experience in Bank-financed projects, different conceptual frameworks, and limited English capacity. There is always a danger that much of what the Bank is saying will be lost due to the excessive use of the Bank's jargon, unfamiliar terms, or inadequate attention to the quality of translation

21 9. Partner Comments (a) Bonrower/implementing agenc)y. Borrower's ICR attached as Annex 8 (b) Cofinanciers: N/A (c) Other partners (NGOs/private sector): 10. Additional Information None

22 Annex 1. Key Performance Indicators/Log Frame Matrix Outcome I Impact Indicators: *Outcome indicators were not developed at project appraisal since there was no such requirement. The indicators listed here were developed at the time of the mid-term review (June, 1998). Rehabilitate 237 schools and construct 38 schools Create a school mapping data base that players are motivated to update and use and that serves as inputo an embryonic management information system. Train professional staff and equip the Center for Evaluation, Assessment, and Examinations 157 schools were rehabilitated and 26 schools constructed. Fewer schools than originally planned were rehabilitated and replacedue to: (i) increases prices after price liberalization that occurred after the appraisal cost estimates; and (ii) movements of populations from rural to urban areas that made it necessary to build more urban schools that were larger and more expensive. Achieved. the school-mapping database and the decision support system with which the database is integrated were developed and installed in the Ministry. The personnel of the Ministry's Investment Department which will be the prospective primary user of the database in the immediate term, received initial training in using the database and the software. Guidelines for the training manual were developed. The database and the software represent important building blocks for a comprehensive education management information system (EMIS) to be developed under the Education Reform Project. Achieved. The staff of the CEAE was expanded from 3 persons to 5. Each of the staff received training in learning assessment concepts and methods. The Centeres premises were rehabilitated, and the necessary equipment was purchased and installed. At the Ministry's order, the Center completed its first large assessment task: the development of an item bank for the standardized portion of the higher education entrancexaminations of The Education Reform Project continues to focus on strengthening the Center to develop feedback on the teaching and leaming process in Albania. Convert State Textbook Publishing House Achieved. The STPH and TOE were and Textbook Distribution Enterprise into converted into joint-stock companies as the self-financing state enterprises by March, first step of privatization. The staff of these 1999 two firms received training in a business plan development, and were introduced to commercial publishing and distribution practices in other countries through extemal studies. Under the Education Reform Project, the privatization process will continue

23 Output Indicators: Indicator/M.9#1[ii:s i#t S *Output indicators were developed at project Though, project components were appraisal (May, 1994) based on original significantly modifieduring the mid-term components: review (June, 1998), output indicators were not formally modified. 237 schools rehabilitated and furnished with 157 schools rehabilitated and fumished with basic fumiture basic furmiture 38 schools repiaced and furnished in Kukes, Puke, and Shkoder districts trained personnel and computerized management information systems in 3 districts Cadre of MOE staff familiar with education management practces in a variety of other countries 26 schools were replaced and fumished in Kukes, Puke, and Shkoder districts the school-mapping database and the decision support system developed and installed in the Ministry. The personnel of the Ministry's Investment Department received initial training in using the database and the software. the management training activity was not pursued, and, therefore, canceleduring the mid-term review (June, 1998) Knowledge base: Resource library of seminars on recent development in teaching and leaming Core specialists on assessment trained Twinning: Links between the Pedagogical Institute in Albaniand similar centers in other countres established Desk-topublishing and equipment fully operatonal Training in publishing and financial management completed Action plan developed for restructuring of textbook provision End of project - 19-

24 Annex 2. Project Costs and Financing Project Cost by Component (in US$ million equivalent) X~~Prc cos B'' CmwWponent W " E $ m5io US nfn School Rehabilitation Planning and Management Infornation Quality Assurance in Basic Education Textbook Improvement Project Coordination Unit Total Baseline Cost Total Project Costs Total Financing Required Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent) Epnltr Ctry ' G t4c Oher._, 1. Works (0.00) (2.50) (3.30) (0.00) (5.80) 2. Goods (0.00) (2.50) (0.70) (0.00) (3.20) 3. Services (0.00) (0.00) (0.60) (0.00) (0.60) 4. Miscellaneous Incremental recurring (0.00) (0.00) (0.00) (0.00) (0.00) costs 5. Miscellaneous (0.00) (0.00) (0.00) (0.00) (0.00) 6. Miscellaneous (0.00) (0.00) (0.00) (0.00) (0.00) Total (0.00) (5.00) (4.60) (0.00) (9.60) Project Costs by Procurement Arrangements (ActuallLatest Estimate) (US$ million equivaient) X 4, X ~~~~~Prcueet Me!=thodlt Jc6 1. Works (0.00) (2.50) (3.33) (0.00) (5.83) 2. Goods (0.00) (2.40) (0.70) (0.00) (3.10) 3. Services (0.00) (0.00) (0.60) (0.00) (0.60)

25 4. Miscellaneous D Incremental recurring (0.00) (0.00) (0.00) (0.00) (0.00) costs 5. Miscellaneous (0.00) (0.00) (0.00) (0.00) (0.00) 6. Miscellaneous (0.00) (0.00) (0.00) (0.00) (0.00)_ Total (0.00) (4.90) (4.63) (0.00) (9.53) Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies. 2 Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local govemment units. Project Financing by Component (in US$ million equivlent) Percentage of Appraisal Component Appraisd Estimate Atum oatest EsI ak Gvtte =C_ ~~~~~~Blank GoL CO fbank Govt. COF. Bank G;ovt._ CoF. School Rehabilitation Planning and Management Information Quality Assurance in Basic Education Textbook improvement Project Coordination Unit Total

26 Annex 3: Economic Costs and Benefits N.A

27 Annex 4. Bank Inputs (a) Missions: Stage of Project Cyele No. of Persons and Specialty Performance Rating ( 2 Economists, I FMS, ete.) Implementation Development Month/Year Count Specialty Progress Objective Identification/Preparation May, January, 6 ITask Manager S S Education Specialists I Operations Officer 1 Procurement Specialist 1 Project Officer (Tirana Office) Appraisal/Negotiation February, May, 5 1 Task Manager S S Education Specialist I Operations Officer I Procurement Specialist I Project Officer (Tirana Office) Supervision October, March, 12 2 Task Managers/Team S S 2000 Leaders I Program Team Leader I Operations Officer 2 Project Officers 2 Procurement Specialists 3 Education Specialists I Architect ICR July, Senior Operations Officer S S I Education Specialist I Consultant (b) Staff Stage of Project Cycle Actual/Latest Estimate N_ o. Staff weeks u$ (,000) Identification/Preparation Appraisal/Negotiation Supervision ICR Total

28 Annex 5. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating O Macro policies OH OSUOM O N * NA L Sector Policies O H OSUOM * N O NA El Physical O H *SUOM O N O NA O Financial OH OSUOM ON *NA O Institutional Development 0 H O SU * M 0 N 0 NA El Environmental O H OSUOM O N * NA Social El Poverty Reduction O H OSU*M O N O NA LI Gender O H OSUOM O N * NA L Other (Please specify) O H OSUOM ON * NA El Private sector development 0 H O SU SM 0 N 0 NA El Public sector management 0 H O SU O M 0 N 0 NA El Other (Please specify) OH OSUOM ON * NA

29 Annex 6. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 6.1 Bank performance Rating El Lending OHS *S OU OHU O Supervision OHS OS OU OHU E Overall OHS OS O U Q HU 6.2 Borrowerperformance Rating E Preparation OHS OS O U O HU O Government implementation performance OHS OS O U O HU O Implementation agency performance O HS OS 0 U 0 HU El Overall O HS OS O U O HU Unsatisfactory at the mid-term review, and satisfactory by the end of the project

30 Annex 7. List of Supporting Documents School Rehabilitation and Capacity Building Project, Staff Appraisal Report No ALB School Rehabilitation and Capacity Building Project, Development Credit Agreement, July 8, 1994 School Rehabilitation and Capacity Building Project, Aide-Memoires, Form 590s, and Project Supervision Reports School Rehabilitation and Capacity Building Project, Audited Project Financial Statements, 1998, 1999 Miscellaneous disbursement and procurement information Education Reform Project, Project Appraisal Document, Report No ALB

31 Annex 8. Borrower Contribution to the ICR IMPLEMENTATION COMPLETION REPORT (IDA-26330) FOR A CREDIT OF SDR 6.9 MILLION TO THE REPUBLIC OF ALBANIA FOR SCHOOL REHABILITATION AND CAPACITY BUILDING PROJECT 1. Evaluation of project objectives The Ministry of Education and Science (MoES) has been responsible for implementation of project components. In this context MoES has disbursed $US 9.4 (contribution of IDA) and $US 1.7 million equivalent (contribution of GoA). The project has helped the MoES to sustain delivery of basic education services during Albania's difficult economic transition and to build institutional capacity for planning, management and quality assurance of education Formulation of Objectives: Project objectives were formulated as follows: (a) acceleration of teaching premises (schools) rehabilitation in 37 districts of Albania; and (b) building of capacities in important institutions to encourage effective use of fiscal sources and assure quality of education Reasons for selecting objectives: Project objectives were selected in compliance with the Education priorities in Albania in the 90-ies, which continue to be a priority also today. The project preparation preliminary study supported by the Japanese Grant indicated that 60% of primary and secondary education schools needed either rehabilitation or total reconstruction. The total value of rehabilitation or construction of new schools was estimated at US$ 80 million. This was the reason why 90.6% of IDA's credit was required to cover school rehabilitation. Priority was given to construction of new elementary and basic education schools. The second objective of capacity building was selected for the following reasons: I. Albania's entering into the road to democracy and the new economic rules effected the education sector; 2. The main education institutions were confronted with the lack of capacities to face these new challenges; 3. The long period of isolation has made the existing capacities outdated; and 4. The Government had no sufficient financial capacity to invest in building and renovation of capacities. Project objectives were divided in other specific objectives, each corresponded to a project sub-component: (a) Creation of a visual database for schools to be used to rationalize MoES decisions and structures; (b) Training of professional staff and equipment of Assessment Center; (c) Conversion of State Textbook Publishing House (STPH) and Textbook Dissemination Enterprise (TDE) into private entities. At the end of the project: (a) Visual database for schools was set up; (b) The professional staff of the Assessment Center was trained in the best training centers (including CITO) and the Center was provided with the principal equipment; and (c) STPH and TDE were not privatized because privatization would have enormous impact on textbooks and provisions of privatization law could not force these enterprises to implement the education policy made by MoES and the Government

32 2. Evaluation of project components and activities The goal of the project was to support MoES in connection with School Rehabilitation and Capacity Building and the project was developed in these components: (i) (ii) (iii) (iv) School Rehabilitation Planning and Direction of Information in Education System Quality Assurance in Elementary Education (Assessment Center and Pedagogic Institute) Improvement of Textbooks School Rehabilitation (US$ 10.3 million): Activities of this component included: (i) A school rehabilitation program to ensure repair works in 1,630 classrooms in 237 schools countrywide and purchase of equipment for these schools; and (ii) a program to replace 200 classrooms in 38 schools in Kukes, Puke and Shkoder and purchase of equipment for these premises. The component was implemented according to the following arrangement: Economic Centers in the districts would select the schools and teaching premises in accordance with the agreement between GoA and IDA at the time of signing of this agreement; draft technical specifications and equipment needs and provide a preliminary cost estimate; prepare bid documents for civil works and equipment using standards prepared by PIU and approved by IDA; conclude contracts under US$ 40,000; administer all civil works contracted under their jurisdiction; supervise contractors' work; and make payments to contractors upon completion of civil works. PIU would collaborate with the Investment Dept. of MoES and Economic Centers to make sure that selection criteria and construction standards were observed. PIU shall check bid packets prepared by Economic Centers, sign bid packets for over US$ 40,000; manage the project plan for counterpart funds, and verify whether civil works were completed in compliance with the required standards and whether payments were effectuated appropriately. Project financing has covered only a part of the needs. Project funds were used only for basic (8-year) and elementary education schools. School rehabilitation program was coordinated by MoES and Economic Centers in the Districts and PIU, which has arranged for implementation and supervision of the project. Under the project were built 26 new schools with 186 classrooms and 157 schools with 1850 were rehabilitated. 48 contracts were concluded for supplying these schools. In general, the project was spread over 14 districts covering rehabilitation and supplying of schools with teaching materials. Planning and Management of the Education System (US$0.2 million). Activities of this component included: (i) A study to analyze the administrative capacities, duties and responsibilities of education administrators in Albania and provide recommendations on administration effectiveness; and (ii) Building of a computerized planning model for three districts to assist in administration and decision-making. The project provided funds for development of software to assist decision-makers; automation of planning and direction of education information to MoES and three districts; and provision of continuous training to MoES staff and education administrators at district level. The Department of Science and the Statistics Division of MoES were responsible for implementation of this component. Quality Assurance in basic education (Assessment Center at the Pedagogic Institute) (0.2 US$ million). The project helped with the rehabilitation of the Pedagogic Institute's offices for use by the Assessment Center. These premises were also provided with the hardware necessary to start assessment activities. The staff of the Assessment Center was trained in the best intemational institutes on matters of assessments. The Pedagogic Institute and the Assessment Center were the bodies responsible for

33 implementation of this component. Improvement of Textbooks: With the stabilization of the situation of basic textbooks was also created the possibility to aim at improving their quality, especially in relation to the creation of the private textbook market. Visits abroad and technical assistance was provided for the key administrative staff concemed with textbooks. This area was covered by international technical assistance on textbooks and was co-ordinated by the Directors of STPH and TDE. This collaboration has at last resulted in conversion of these two state-run enterprises in joint-stock companies. MoES was the body responsible for implementation of this component > Project Implementation Unit (US$0.4 million): The project had envisaged originally a PIU composed of a project co-ordinator, a procurement expert, a disbursement expert and a secretary, who was required to speak some foreign languages. It was also planned for PIU to contract additional staff for procurement, supervision and other services. The project had made available funds for PIU to: (i) purchase hardware, office equipment and two cars to be used by PIU for supervision purposes; (ii) equipment for office operations; (iii) auditing services; and (iv) technical assistance to help PIU and the MoES staff involved in the project in connection with disbursement and procurement, as well as in connection with identification of training courses in matters related to the project for PIU and MoES staff. 3. Outcome by Component In 1997, the political situation in the country caused interruption of activities. Therefore, project implementation may be divided in two phases: (i) from 1994 to 1997; and (ii) from 1998 to March School Rehabilitation: Funds for this component have been completely disbursed in connection with: (i) 157 schools rehabilitated and equipped in 14 districts, versus the objective of 237 schools in 37 districts; and (ii) 26 new schools built and equipped in three northern districts, Kukes, Puke and Shkoder, versus the objective of 38 new schools in the same districts. The number of rehabilitated or newly built schools is smaller than the target set out in the project objectives because: (i) the increase and/or liberalization of prices, which made a difference to those forecast in the cost estimate; and (ii) movement of population from remote areas towards urban areas, which required building of schools with more student space than the forecast. However, the end result of the project is positive, as 60,000 students benefited from this program. Planning and Information Management: At the end of the project two out of four planned project activities were completed, namely: a school database and a "Decision" software installed and tested in MoES. The staff of Investment Dept., which is potentially one of the key users, has received basic training for use of this system in allocation of funds. Instructions included in the users guide have already been prepared and disseminated for use. The database and software play an important role to the establishment of a modem system for planning and direction of information into the education system to be development under the coming "Education Reform I" project. These activities were considered to be successful. MoES used the remaining funds from this component for technical assistance to develop and maintain a donor co-ordination activity in response of Kosovo crisis. This technical assistance, however, did not bring positive results because of the scarce skills of the technical assistant, which resulted in a premature termination of his contract. In general, the component has been received well for the results it achieved in absorbing further projects in this field

34 Assessment Center: Training related to this component has been done in compliance with the goal of capacity building at the Center and for this reason group training was arranged for all the staff. Every employee of the Center has received training on assessment concepts and approaches. Training was provided through local workshops, study visits and international training programs. The Assessment Center has been provided with office equipment and electronic and hardware equipment, purchased with project funds, necessary to start its activity. On a Minister's instruction the Center prepared test sheets and assessment for academic year The next WB project will continue to support this component until it is fully completed. Improvement of Textbooks: This component has encountered difficulties in implementation, as it required expertise in a privatization area unknown to us as well as a legal framework to control implementation of education policy on textbooks. At the end of the project the privatization initiative has achieved good results. The help of international technical assistants and the collaboration of MoES experts helped in formulating a privatization strategy which takes into account the continuation of textbook printing. On the basis of this strategy, as a first step towards full privatization, STPH and TDE were converted into joint-stock companies. Privatization process will continues under the next project. Project Implementation Unit: During the period between 1994 and 1998 the PIU structure was not in full compliance with the project credit agreement. During this period PIU was part of the Investment Department of MoES and was responsible only for project co-ordination. The staff of the Investment Department apart from its day-to-day responsibilities had to cover also procurement, disbursements and supervision of the project. This practice and the equipment in use were far from the credit agreement, which provided for four persons and one driver. In the middle of the project a PIU still didn't have experience, especially in relation to component two. Moreover, the PIU was not able to supervise and implement satisfactorily the school rehabilitation component either. Between 1998 and March 2000 PIU was reconfigured in accordance with the project agreement. The PIU's managing capacity was strengthened through training, which improved considerably the ability to follow up on the project. Currently PIU is composed of a project Director, a procurement expert and a disbursement expert, who have received training pertaining to their specific duties. The PIU offices were provided with the necessary equipment, except the car. Auditing has demonstrated that PIU has acted correctly and in compliance with IDA's requirements. 4. Key factors effecting the project > Political situation: During execution of the project were experienced three political situations that have had an impact on project implementation: (i) The period March - December 1997, pyramid schemes and the aftermath of their collapse; (ii) The period September - October 1998, called the September events, which had considerable impact on capacity building because of governance destabilization; and (iii) the Kosovo crisis in 1999, which caused additional delays in project implementation because of the refugee inflow. The Position of the World Bank: The World Bank has been adaptable to political and economical changes that have happened in Albania during project implementation. In addition, its position has been determinant for the execution of the credit agreement, which has resulted in capacity building to ensure absorbency of similar projects

35 Consultants: The successful consultancy services have made possible to achieve the creation of the school database and the proper software for data processing. In addition, consultancy services were considered very successful in relation to the establishment and functioning of the Assessment Center and other capacities that resulted from the exchange of experience with the consultants hired under the project. )0. The position of the Government: Since project approval in June 1994 until June 1998 only 15% of the project funds were disbursed, which shows insufficient commitment. After 1998, however, the attitude of the Government towards technical assistance changed, which resulted in good progress in project implementation. MoES became more interested in furthering education reform. There have been other factors affecting project implementation, such as failure to structure the PIU in accordance with the project agreement, lack of construction and material standards, etc. 5. Evaluation of the Government's Performance The Government has been very interested in the implementation of the project. Specific MoES officials have been assigned the duty to follow up on the project components. There has been a good collaboration amongst the MoES and WB working groups. The Government, however, could not provide sufficient funds for school maintenance, which is foreseen to be rectified in a near future. We may say that the overall attitude of the Government towards the project has been positive. 6. Evaluation of the World Bank's Performance The Bank accurately identified project priorities to education reform on the basis of sector analysis. In addition, the World Bank responded to the immediate Government needs related to education, such as massive school rehabilitation. In general, the World Bank could not possibly anticipate the difficulties associated with the implementation of capacity building component. Nevertheless, given the fact that this part represented only about 7% of the project disbursements, it may be said that the attitude of the World Bank was correct. 7. Evaluation of the PIU Perfornance PIU has co-ordinated well the project activities. MoES and other agencies under its responsibility have assisted project implementation through the necessary co-ordination with PIU. PIU has performed all the disbursements and procurement required under the project. There have been, however, lessons learned, which have been reflected in the preparation of the new terms of references for PIU and the provision of PIU with the required staff. In general, it may be said that PIU has performed well. 8. Project cost: Project Costs by Components (in US$ million equivalent) Project Cost by Component Appraisal Estimate Actual I Percentage of US$ million Latest Appraisal Estimate US$ million School Rehabilitation % Planing and Management Information %

36 Quality Assurance in Basic Education % Textbook improvement % Project Coordination Unit % Total Baseline Cost Total Project Costs Total Financing Required Project Costs by Procurement Arrangements (appraisal estimate; in US$ million equivalent)l/ Expenditure Category ICB NCB Other- 2/ NBF Total Cost Works (0.00) 7.1 (0.00) (2.50) (3.3) (5.8) Goods (0.00) 3.5 (0.00) (2.5) (0.70) (3.2) Services (0.00) (0.00) (0.60) (0.00) (0.6) Miscellaneous Incremental Recurring (0.00) (0.00) (0.00) (0.00) (0.00) Costs Total (0.00) (5.0) (4-6) (0.0) (9.6) 1/ Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies. 2/ Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs. Project Costs by Procurement Arrangements (actual/latest estimate; US$ million equivalent) Expenditure Category ICB NCB Other NBF Total Cost Works (0.00) 7.1 (0.00) (2.50) (3.3) (5.8) Goods (0.00) 3.4 (0.00) (2.4) (0.70) (3.1) Services (0.00) (0.00) (0.60) (0.00) (0.6)

37 Miscellaneous Incremental Recurring (0.00) (0.00) (0.00) (0.00) (0.00) Costs Total (0.00) (4.9) (4.6) (0.0) (9.5) Project Financing by Components (actual/latest estimate; (in US$ million equivalent) Component Bank Government School Rehabilitation Planning and Management Information Quality Assurance in Basic Education Textbook Improvement Project Coordination Unit Total

38

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