Uganda Working Brief Series
Insights from the District Development Project: Table of Contents
Production Arrangements:
from Design through Appraisal and Supervision
Evaluation Review Team
- Abstract
Introduction- Findings
- 1.0 Specifications, Technical Assistance, and Budgeting
- 2.0 Project Appraisal
- 3.0 Tendering and Contracting
- Conclusion
- Evaluation Review Team Participants
- Findings
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The most complex part of the DDP formulation process was to determine the procedures for identifying, planning and prioritising investments, and the construction of facilities or the provision of services to be financed by the Local Development Fund (LDF). Although the Local Government Act, 1997 assigned these responsibilities to the lower level local governments, it did not define how to implement them. Therefore, the local production arrangements varied from district-to-district. In addition, many of the Districts were and, many still are, lacking the technical expertise to carry out the revised production arrangements laid out in the DDP Project Document. As was discovered during the DDP Review, the Local Governments' production arrangements are still very weak, but some progress is being made. This Brief highlights some of the areas of weakness and offers specific recommendations for improving production arrangements in the Districts. |
This is one of a number of Working Briefs that extracts highlights from the first District Development Project Evaluation Review carried out from 18th November to 19th December 1998 (DDP Pilot Evaluation Review: Findings and Recommendations, January 1999). The overall purposes of the Review were to document progress made at the time of the Review and suggest changes to the design of DDP where necessary. The priority areas of focus were identified based on field reports presented by the District Planners that highlighted project 'hot spots' (challenges or contributions to project implementation).
This Working Brief
focuses on the Local Governments' experiences with production arrangements.
For purposes of this Brief, the production arrangements include a number
of important issues coming out of the District, Sub-county, and Parish.
These issues do not cover all areas of production, ut fall roughly into
three major areas of interest: Specifications, Technical Assistance,
and Budgeting; Project Appraisal; and Tendering and Contracting. (return)
Findings
1.0 Specifications, Technical Assistance, and Budgeting
1.1 Standards and Specifications
Team members, prompted in part by Local Councils (LCs), debated the question of standards. It was noted that communities have in the past, and still do, have responsibility for meeting the bulk of their own infrastructure requirements, e.g., schools are built from local materials and clinics of various types exist in many communities. In all cases, they are not in accordance with regulations and building standards.
The DDP is being implemented entirely within the existing local government regulations, including the provisions of the LG Act and its associated financial regulations, but also building existing design and construction standards for Schedule II services as specified in the LG Act 1997. Therefore, unlike other projects, it is not appropriate that "the project" turn a blind eye to practices that are not in accordance with regulations. It is a pilot project with one primary purpose being to "test" the boundaries, the wisdom, and the impact of existing regulations. If adoption and observance of standards unreasonably increases the cost of investments, then this should be documented and used to prompt a review of the standards. This is the key role of the Pilot DDP. Therefore, it is important that the MoLG follow up on earlier efforts to clarify this issue at the central level.
1.2 Design and Costing
The formal responsibility
to ensure investments are adequately designed and costed rests with
the technical departments of the District Councils. This can be achieved
directly, by the technical staff, or through contracted outsourcing,
funded through the 10% of the LDF that is available for investment servicing
costs. The Review revealed that while the design and costing of District
projects is generally carried out and in a satisfactory way, this is
not true for Sub-county and Parish investments. Of all the Parish projects
visited during the Review, none had received technical backstopping
from the District and only some Sub-counties received technical assistance.
Sub-counties and Parishes are very reluctant to outsource.
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"People remark. 'Why should we get a proper plan for a structure which will cost US$20 million when we can build the same structure, five times for US$4 million each?'" The same argument is advanced in relation to District Tender Boards. "Why should we go through the Tender Board when we know we can build it quicker and more cheaply ourselves using local artisans?" Kabale Notes |
There seem to be three reasons for this reluctancy. First, as implied in the quote from Kabale (right), Sub-counties and Parishes think that outsourcing services is expensive. Second, where outsourcing has been done, the quality of the assistance has not been satisfactory. It is apparent that the persons engaged are not suitably qualified and experienced. Third, there is the perception that outsourcing is "non-local."
Therefore, it is necessary for District technical staff to give more attention to verifying and approving designs and drawings consistent with their statutory responsibilities.
Lack or inadequate technical assistance during design and costing has had three significant consequences:
- There is poor
quality of investments because there is no baseline for contract management
and supervision.
- Projects are
under budgeted and/or over-ambitious. Cases examined during the review
showed widespread under-budgeting. Most Parish projects and to a lesser
extent sub-county projects are grossly under-budgeted. For example,
a District Medical Unit staff quarters in Butagaya Sub-county, Jinja
District was budget at UShs 3.8 million.
- At the time of
the Evaluation Review, UShs 5 million had been spent but the final
cost is projected to be in the range of UShs 15 million (about four
times higher).
- Communities/Local Governments fail to adequately budget for and commit resources to recurrent cost obligations. Where Districts have not been involved in the design and costing exercise, either directly or in a regulatory way, they are not in a position to accept recurrent cost obligations of lower council investments.
1.3 Technical Supervision
A similar situation to that noted above exists in relation to technical supervision. District projects are generally well supervised, but the bulk of Sub-county and Parish investments have never been visited by appropriate technical people. District officials everywhere say this is because resources are inadequate. In some Districts, technical staff is unprepared to offer technical services unless entirely paid for by the Sub-counties. This is at odds with the Project Support Implementation Agreement (PSIA). The Districts do have some responsibilities for technical supervision. It cannot be entirely left on the shoulders of the Sub-counties.
1.4 Use of Investment Servicing Provision
As noted, lack of supervision from the District is compounded by the reluctance of Districts and Sub-counties to outsource. This is exacerbated by the District and Sub-counties' lack of clarity about the ten percent of the LDF that can be used for investment servicing costs. There are a number of variations on the use of this provision in the Sub-counties visited:
- Some fold all
the 10% into the LDF, as part of the capital fund.
- Others, very
few, use the 10% to outsource technical assistance.
- Some Sub-counties
use the 10% to pay District staff (fees and allowances).
- Many use the
10% to pay allowances for councillors who "supervise" the
investment.
- Many draw on the 10% to pay for transportation of local materials.
It is vital that the lack of clarity about the purpose of the 10% Investment Servicing Cost is resolved.
1.5 Recommendations on Design, Costing, and Supervision
Based on the findings coming out of the Review, the Team made five key recommendations for improving design, costing, and supervision of projects in the districts.
Standard Specifications and Drawings
Where it has not already been done, the District Engineering Department should prepare and circulate to the Sub-counties standard drawings and Bills of Quantities (BoQs). In addition, it should prepare a schedule of nominal charges for each. Standard drawings and BoQs for the Sub-counties should be appropriate for Parishes by keeping construction and fitting costs to a minimum without compromising on durability or safety.
Review of Standards
The PMU/MoLG have prepared modular designs for investments, but they are not being applied. MoLG should review previous efforts and assemble a listing of building standards, codes and regulations for typical infrastructure investments. Each should then be costed (on a representative range of District cost situations) and reviewed in order to provide advice on reduction/modification in light of community financial capacity. The review of the standards should relate purely to safety and reasonable durability and within this, adopt a "least cost" approach.
Applying Standard Designs and BoQs
Standard designs for BoQs and health units, classroom blocks, and so on, should be applied to the site to take account of factors such as the gradient, wind vectors, and drainage. Even if a Project Management Committee (PMC) has obtained a good general design and the site does not appear problematic, an engineer should be brought to the site and agreements should be reached for supervisory visits. These agreements should be part of the appraisal process (see following section on Appraisal).
More Engineers in Housing and Construction
Districts should review all their engineering positions, including those from sectoral departments, and rationalise them so that a greater complement of housing and construction engineers is achieved without increasing overall staff numbers. This will require shedding some engineers, recruiting others with the skills required, or retraining or reassigning existing engineers.
Maximising Use of All Engineering Resources
The Engineering Directorate should call a meeting, inviting engineers working privately within each district, to develop a strategy and action plan for collaborating to meet the need for technical assistance and supervision at the Sub-county and Parish levels. (return)
2.1 Is It Being Done?
Project appraisal was noted during DDP formulation as a particular weakness. This remains the case. Appraisal is a key process in the planning cycle. Firstly, it should ensure that investments are identified and prioritised with the participation of the beneficiaries. Secondly, it should ensure the technical feasibility and financial viability of the investments. Thirdly, it should address the adequacy of supervision and operation and maintenance arrangements. This is intended to determine if the investment is being undertaken at the right level and complies with regulatory provisions.
Parish investments should be conceived by the communities and appraised by a higher local government, in this case the Sub-county Technical Committee. Also, the Sub-county Technical Committee should appraise Sub-county projects. However, projects are simply not being appraised at these levels because the concept of appraisal is not really understood. The Sub-county Technical Committees, if even functional, do not seem to be aware of the independent role they should be playing in ensuring that the projects are technically sound.
The situation at the District level is not much better. The District Council is supposed to originate District level projects. Next, these projects should be designed and costed by the relevant departments before being appraised by the Technical Planning Committee (TPC). Generally the departments initiate the projects themselves and, although the TPC may discuss them, only rarely do they conduct an appraisal in the proper sense.
Appraisals are not being carried out at the Sub-county and Parish level because it is not considered important. As far as they are concerned, "everyone was already involved." At the District level, the lack of adequate appraisal relates to the role of the departments in identifying and prioritising investments, and to the fact that appraisal criteria and techniques are not yet well developed.
Because critical appraisal is not done, there has been no effective filtering of projects to detect those that do not fulfil essential criteria such as social acceptability, technical feasibility or financial viability. The inevitable outcome is that scarce resources are being sunk in inappropriate investments. Some investments are just too ambitious and may not be completed.
The Team felt that the focus should be on introducing appraisal techniques to sectoral and technical committees rather than ensuring the separation of roles. The DDP is focusing too heavily on having different committees perform the appraisal function. More progress can be made by focusing on developing and promoting appraisal techniques that increase the transparency and inclusiveness of appraisal procedures. In many respects, it is impractical to insist on separation of roles at the Sub-county level, at this stage, because the technical capacity does not exist in the Technical Committee (or Investment Committee). Appraisal has to be taken seriously. It is better that appraisal be on the agenda of the expanded Parish Council and Sub-county Council meetings where it can be dealt with publicly. At the District level, the technical appraisal capacities of technical departments must be enhanced.
2.2 Recommendations on Appraisal
Appraisal Responsibilities
Thought should be given to the nomination of ex-officio members to the Technical Committee of the Sub-county Council to provide advice and to assist in the appraisal of investment proposals. The ex-officio member(s) should broaden the expertise available to the Technical Committee not duplicate it.
Appraisal Format
It is essential that standard appraisal formats be developed for District and Sub-county projects. Parish projects should have standard appraisal formats also, but in lesser complexity. It should be confirmed that Sub-counties are responsible for the appraisal of all Parish investments.
These formats should cover key appraisal criteria such as:
a) Social desirability. This can be demonstrated by giving evidence that direct beneficiaries have been consulted about the project and have approved it as priority project.
b) Technical feasibility. The Project should go beyond simply stating tha "all materials are locally available and that community will contribute labour," to include statements such as: whether this kind of investment project has been attempted before; whether people are familiar with the type of project proposed; and whether it is within the experience of the potential contractors and supervisors.
c) Financial viability. The Project should show an understanding of the recurrent cost implications and, where the project requires additional financing, that alternative sources to the LDF have been secured. No project should be considered financially viable unless more than 70% of total funding requirements, excluding community contributions, has been secured for the forthcoming budget year. The funding sources should be detailed.
d) Supervision arrangements. These arrangements should include details such as the name of the nominated Supervisor, a statement on agreed supervision costs, a statement on duties, and the frequency of site visits for direct supervision.
e) Recurrent cost implications. There are two recurrent cost questions to be addressed: i) does the project require commitment (staff, furniture, and equipment) at District and/or Sub-county level? If so, has this approvaland commitment been given (evidence referenced)? and ii) have arrangements been made for routine operation/maintenance costs? If so, what are these?
f) Regulatory approval. Any project in the education, health, and roads sector must have signed approval by the responsible District authority.
- a) the fully
completed Appraisal Format;
b) a detailed design/plan of works, endorsed by the responsible authority where relevant;
c) a quarterly workplan; and
d) a financing plan corresponding to the quarterly work plan. (return)
3.1 Regulations too rigorous?
Tendering and contracting
under the DDP is supposed to follow the Local Government regulations.
These are spelt out in the Financial and Accounting Regulations, 1998.
This is a marked contrast with the situation prevailing at the time
of the DDP formulation.
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"Districts have generally only been involved in the evaluation of tenders and awarding contracts for major construction works with substantial supervision and control by donors and/or central ministries."
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The main finding from the review is that Districts and Sub-counties perceive that these regulations are too rigorous and unreasonable. They do not think the tendering process is fair and assume it will cost them more to use town-based suppliers and contractors.
3.2 Avoidance and/or Contravention of Regulations
The avoidance and/or contravention of regulations take different forms, but some of the most common are:
- Many Sub-counties
do not seek competitive quotes from suppliers nor do they pay by cheque
as required by regulations.
- The practice
of successive purchasing, where materials of the same nature (e.g.,
cement) for one project are broken down into successive purchases,
is widespread contrary to Section 78 of the LG Financial and Accounting
Regulations.
- Sub-Counties
split the labour and materials components of work in order to keep
the contracts below the threshold. They award separate labour contracts
and, in some cases, split the labour into several contracts.
- The awarding
of contracts to Councillors, members of project committees and employees
of council occurs although it is contrary to Section 79 (4) of the
LG Financial and Accounting Regulations.
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"In general it is found that:
DDP Technical Annexures I, August 1997, p. 37. |
3.3 Unfamiliarity with Procedures
In some Districts, it was obvious that DTBs, District Departments and Sub-counties were not familiar with the tendering procedures. In one District, the DTB awards contracts immediately after opening without evaluation. However, most Districts complained that the training on tendering and contract management was too short and too rushed so they did not grasp the procedures. This was confirmed during the District and Sub-county forums. Tendering and contracting emerged as one of the key problem areas.
3.4 Procedural Bias against Local Contractors
The LG Financial
and Accounting Regulations (Section 74) advocate for the promotion of
local contractors and suppliers in local government contracts. Sub-counties
and Parishes are generally in favour of this, but the Review findings
indicate that some of the procedures are biased against local contractors
(where "local" means from within the administrative area of
the LC concerned). For instance, in one District pre-qualification for
the manufacture of desks required the supplier to have an electric plane,
yet this requirement is often beyond the reach of local contractors.
High fees for securing tender documents lock out local contractors and
suppliers. These discriminatory practices have resulted in widespread
dissatisfaction among the local contractors.
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"The LGTB is required to maintain a list of approved suppliers and contractors. The list shall be reviewed annually. ...copies of the list including names, addresses and any other information of the Directors to be submitted to the Executive Committee, the Chief Internal Auditor, Auditor General and IGG." Section 77 (1) & (5), LG Act 1997 |
Local contracting has advantages. It promotes local economic development. If the contractor is a "born of the place," then pressure can be applied on the contractor to complete a job even if the amount agreed proves to be inadequate. Moreover, if the job stalls for lack of funds the contractor is at home and will wait for work to resume. These grievances should be addressed by review of tendering procedures and expenses.
3.5 District Tender Board's Mode of Operations
In most Districts, the DTB operates on ad-hoc/demand basis. There is normally no timetable for meetings. This method of work has led to delays in the tendering process as the DTB takes time to decide whether there is sufficient business.
The Review also found that the DTB and the users of their services are not communicating. Most DTBs do not distribute lists of "pre-qualified," "dropped," and "blacklisted" contractors and suppliers. On the other hand, Departments and Sub-counties do not give feedback to the DTB about the contracts they have awarded locally nor do they submit copies of Local Purchase Orders for review, as required under the LG Act.
3.6 Contracting
PMU together with a team of National Consultants conducted training in tendering and contracting. During the training, Districts and Sub-counties were introduced to standard contract documents. Although a number of Districts and Sub-counties have started using these documents, many confessed that they do not understand them. Also, some contractors pointed out that they do not know what they have signed.
Inadequate contract preparation is another common shortcoming. Inadequacies include omission of key clauses that define the obligations of the parties such as timeframe/milestones, defects liability and schedule of payments. In addition, other relevant documents that are part and parcel of the contracts, like drawing and bills of quantities, are sometimes not attached.
In one extreme case, the contract document consisted only of signatures without any other provisions. In another case, a document drawn by a District lawyer had contradictory payment clauses.
3.7 Key Recommendations on Tendering and Contracting
Tender Regulations
Failure to observe the DTB regulations is adversely affecting the quality of investments in infrastructure and services. MoLG needs to give a clear determination:
- a) on the implications
(in terms of their access to LDF resources, interdiction and punitive
measures) for local governments which fail to observe existing tendering,
construction, and delivery standards; and
- b) under what conditions and with what kind of supporting documentation, MoLG and relevant line ministries will review, waiver, or modify regulations and standards.
Successive Purchasing
The Financial Regulations prohibit successive purchasing. The same should apply to the entire contract for materials and for labour. All materials contracts for projects should be one contract, all labour contracts should be one contract. This does not close out the possibility of sub-contracting or the possibility of having one contract for both labour and materials, as proposed in Jinja District.
Standard
Contract Documents
The MoLG should urgently revise and modify the Standard Documents for
contracts in line with the Sub-counties' understanding of contract provisions
and its capacities to manage the contract relationship.
Pre-qualification of Contractors
The DTB should receive
lists of favoured local contractors for supplies and labour. It should
review them, seek advice on previous performance, and circulate a list
of pre-qualified contractors to all Districts each year. This list should
also explicitly note contractors who have failed to perform previously.
The issue of conflict of interest must be resolved. One way to resolve
this issue is for the DTB to step in and put in place a pre-approved
list of suppliers and contractors that excludes councillors and members
of various committees. (return)
Generally, District-level
projects are being well handled. The lack of technical capacity at the
Sub-county level is a serious problem. Few Sub-county and Parish investments
are being adequately designed or costed leading, in many cases, to sub-standard
work and under-budgeted investments. The DDP design anticipated that
this would be a problem. Not just because procedures for production
arrangements are new, but because it is difficult to find the required
technical expertise at the Sub-county and Parish levels. This need for
technical expertise at the lower levels of local government puts even
more emphasis of the importance of "mentoring" by the Districts.
(return)
Evaluation
Review Team Participants
The Review process was ably facilitated and guided by consultants Milton Ogeda and Bernard Broughton. Other Core Team and District Team members included the following:
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- Paul Kasule - Principal Engineer - Sylvia Keera - Senior M&E Officer - Assumpta Tibamwenda - Community Management Specialist - Ben Okana - Engineer - Sam Emorut - Senior Planner/Economist - Rebecca Batwala - M&E Officer Kotido
District - Sabitti - District Supervisor of Works - Johnson Gumisiriza - Senior Economist/Planner - Turyamwesiga Vanance - Supervisor of Works - Mugisha James - Senior Finance Officer - Tugumizemu Ivan - Internal Auditor - Francis Twesigye - Population Officer
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In addition, the Teams would like to record with appreciation the efforts of Local Council officials and staff, NGOs and community members who contributed freely, frankly and with good spirit to the Evaluation Review process.
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