July 16, 2012 INAL REPORT. Improving... · SPP/Surat Permintaan Pembayaran Payment Request Tim Pengendali National Level Oversight Body of PNPM TKPP Government Management Team an

FINAL REPORTImproving management of PNPM

July 16, 2012

July 16, 2012

FINAL REPORTImproving management of PNPM

PT INDEPENDENT RESEARCH & ADVISORY INDONESIA Page 1 of 134

Page

List of Abbreviation 4

List of Figures and Tables 6

List of Tables 7

I. EXECUTIVE SUMMARY

1.1. About the report 8

1.2. Objectives of the study 9

1.3. Methodology 9

1.4. Main findings 9

II. PROJECT BACKGROUND AND RATIONALE

2.1. Project Background 16

2.2. Objectives of the study 18

2.3. Methodology 18

2.4. Data Collection 19

2.5. Research Location 19

III. PNPM TRANSFORMATION AND CHRONOLOGY

3.1. Overview of Program Nasional Pemberdayaan Masyarakat (PNPM) 20

3.1.1. History of Rural-PNPM 22

3.2. Kecamatan Development Program (KDP) 23

3.2.1. KDP in 1998 23

3.2.2. KDP Phase I (1998/1999–2002) 23

3.2.3. KDP Phase II (2003 - late 2005) 24

3.2.4. KDP Phase III (late 2005 - 2006) 24

3.2.5. KDP was officially rebranded as PNPM Mandiri Perdesaan (2007) 24

3.3. The Objective of Rural PNPM, Setting Up PNPM and PNPM Transformation 25

3.3.1 The Objective of Rural PNPM 25

3.3.2 Setting Up PNPM and PNPM Transformation 25

3.4. PNPM Stakeholders 28

3.4.1. Central Management and Coordination 29

3.4.2. PMD and Management Structure 31

3.4.3. Local Management Structure 31

3.4.4. PNPM Support Facility 32


IV. PNPM MANAGEMENT BY PMD

4.1. PNPM Vision and Mission 33

4.2. PNPM Transformation Process 34

4.2.1. Growth of Location Coverage 34

4.3. PNPM Operational System 34

4.4. Organizational Function of MOHA 36

4.4.1. Organization Chart of MOHA 36

4.4.2. The Umbrella Secretariat 38

4.4.3. Project Secretariat for Rural PNPM 40

V. DIAGNOSTIC SUMMARY

5.1. Element 1 - Budget 42

5.1.1. Diagnostic Summary on Budget 51

5.2. Element 2 - Human Resources System and Staffing in managing PNPM 55

5.2.1. Diagnostic Summary on Human Resources 59

5.3. Element 3 - Program Implementation 65

5.3.1. Diagnostic Summary on Program Implementation 75

5.4. Element 4 - Contract Fulfillment 79

5.4.1. Diagnostic Summary on Contract Fulfillment 83

5.5. Element 5 - Responses to complaints/corruption 84

5.5.1. Diagnostic Summary on Complaints 96

5.6. Element 6 - Mechanisms for risk evaluation and responses 99

5.6.1. Diagnostic Summary on Risk Evaluation 101

5.7. Element 7 - Impacts of scale-up 105

5.7.1. Diagnostic Summary on Impacts of Scale Up 107

5.8. Element 8 - Going forward, core functional requirements for managing PMD 109

5.8.1. Diagnostic Summary on Core Functional Requirement 114

5.9 Element 9 - Generating change – How to improve current practices 117

5.9.1. Diagnostic summary on how to improve current practices 118

5.10 Element 10 - Policy Issues 119

5.10.1 Diagnostic Summary on Policy Issues 122


VI. MAIN FINDINGS AND RECOMMENDATIONS

6.1. How has PMD been able to successfully manage the implementation of PNPM? 123

6.2. What are the existing managerial strengths and weaknesses of the program? 127

6.3. What are the core functional requirements for successfully managing PNPM? 130

6.4. What options exist to improve the management of the program in the short to

medium term (including through the proposed creation of the Umbrella Secretariat)

in ways that will positively advance program performance and outcomes? 131


List of Abbreviation APBD Local Government Budget

APBN National Government Budget

Bappenas/Badan Perencanaan dan Pembangunan

Nasional

National Development Planning Agency

Bawasda District Level Auditor General Office

BKAD Board for Inter – Village Coordination

BPKP/Badan Pengawas Keuangan dan

Pembangunan

National Government Audit Agency

BP-UPK Community – Appointed Financial Management

Oversight Body

CDD Community Driven Development

CHS Complaint Handling System

DG Director General

EIRR Economic Internal Rate of Return

GoI Government of Indonesia

HH Household

HR Human Resources

IT Information Technology

JMC Joint Management Company

KDP Kecamatan Development Program

KPPN/ Kantor Pelayanan Perbendaharaan Negara Treasury Office

M & E Monitoring and Evaluation

MAD Inter Village Meeting

MD Village Assemblies

MDG Millennium Development Goal

Menko Kesra Coordinating Ministry for People’s Welfare

MIS Management Information System

MOF Ministry of Finance

MOHA Ministry of Home Affairs

MPW Ministry of public Works

NGO Non Government Organization

NMC National Management Company

OP Operational Procedure

PDO Project Development Objective

PJOK/Penanggung Jawab Operasional Kegiatan Local Project Management at sub-district level

PMD Directorate General of Village Community


Empowerment

PMU Project Management Unit

PNPM/Program Nasional Pemberdayaan

Masyarakat

National Program for Community Empowerment

PSF PNPM Support Facility

POT Provincial Oversight Teams

RESPEK/Rencana Strategis Pembangunan Kampung Strategic Plan for Village Development

RLF Revolving Loan Fund

RMC Regional Management Consultant

Satker Project Management Unit

SOP Standard Operating Procedure

SP2D/Surat Perintah Pencairan Dana Remittance Order

SPM/Surat Perintah Membayar Payment Order

SPP/Surat Permintaan Pembayaran Payment Request

Tim Pengendali National Level Oversight Body of PNPM

TKPP Government Management Team an provincial level

TNP2K/Tim Nasional Percepatan Penanggulangan

Kemiskinan

National Team for the Acceleration of Poverty

Reduction

TPK/Tim Pengelola Kegiatan Village Implementation Team

UPK/Unit Pengelola Kegiatan Activity Management Unit


List of Figures

Figure 1 Diagnostic Snapshot 15

Figure 2 PNPM Stakeholders 28

Figure 3 Directorate General of Village and Community Empowerment – Organization Chart 38

Figure 4 The Umbrella Secretariat – Organization Chart 39

Figure 5 The Project Secretariat (Rural PNPM) – Organization Chart 40

Figure 6 Mechanism of funds disbursed to UPK 48

Figure 7 Existing Business Process Review 60

Figure 8 Strengthening Organizational Structure 61

Figure 9 Coordination Process in Organization Changes 63

Figure 10 PNPM Information System Concept 76

Figure 11 Complaint Handling System 84

Figure 12 Distribution of Number of Complaints in November 2011 92

Figure 13 Trend on Number of Cases 93

Figure 14 Six Steps toward Risk Management 102

Figure 15 Benefits of Risk Management 103

Figure 16 PNPM Roadmap Action Plan 121

Figure 17 Feedback Model 131

Figure 18 PNPM Feedback Model 134


List of Tables

Table 1 Strength and Weakness in Several Area of Managing PNPM 10

Table 2 PNPM Coverage 34

Table 3

Table 4

Project Cost Component for Rural PNPM IV

List of Reports

43

46

Table 5 Strength and Weakness - Budget 54

Table 6 Strength and Weakness - Staffing 64

Table 7 Strength and Weakness – Program Implementation 78

Table 8 Strength and Weakness – Contract Fulfillment 83

Table 9 Strength and Weakness – Complaint/Corruption 98

Table 10 Strength and Weakness – Risk Evaluation 104

Table 11 Area that Creates the Most Strain on PMD 105

Table 12 Options for Organization and Management Arrangement 113

Table 13 Options for the Organization Structure 125

Table 14 Strengths and Weaknesses in Current Managerial Arrangement 127


I. EXECUTIVE SUMMARY

1.1. About the report

The Kecamatan Development Project (KDP), the predecessor of Program Nasional

Pemberdayaan Masyarakat (PNPM) or National Program for Community Development, began in

1998. After successfully implementing the program, the Government of Indonesia (GoI)

officially rebranded KDP as PNPM in 2007, a countrywide Community Driven Development

(CDD) project in Indonesia. The scale of PNPM has rapidly grown since its inception, expanding

to become the government’s national flagship poverty-alleviation programs.

During the early years since 1998, the KDP project had assigned responsibilities for policy,

financing, monitoring and audits to civil servants, while outsourcing technical and social

facilitation to private sector suppliers. Government coordination teams (TKPP) at the province

and district levels oversaw the activities of the field consultants at the corresponding levels, with

high variation in how effective these teams were. This kind of managerial arrangement has

been maintained until later years of KDP and later PNPM operation. Despite massive changes in

Indonesia’s landscape – extensive decentralization of functions and functionaries to local

governments; maturation of democratic institutions; changes of governments; and sustained

robust economic growth – the managerial arrangements for KDP and later PNPM have

remained relatively the same. The program, run by the Ministry of Home Affairs (MoHA) since

2000, operates along the same basic principles as KDP – a network of consultants execute the

program based upon management contracts overseen by a relatively small group of

government officials.

The purpose of this study is to identify the managerial reforms and systems strengthening that

the GoI will need to undertake to support transition into a better PNPM in 2014. This study is

designed to examine the manner in which the PNPM program is managed and to suggest

possible ways to enhance PMD’s capacity to manage the nation’s flagship anti-poverty program

in rapidly changing conditions. In addition this study is designed to support the leadership in the

MOHA in general and its Directorate General of Village and Community Empowerment (PMD)

in particular in identifying and implementing a number of practical measures that will make it

easier for PMD to manage PNPM.


1.2. Objectives of the study

This study attempts to answer the following core questions:

a. How has PMD been able to successfully manage the implementation of PNPM?

b. What are the existing managerial strengths and weaknesses of the program?

c. What are the core functional requirements that need to be developed or established to

continue and even improve the successful implementation of PNPM?

d. What options exist to improve the management of the program in the short to medium

term in ways that will positively advance program performance and outcomes?

1.3. Methodology

The study used qualitative methodologies and field surveys to answer the research questions.

The review on the secondary data such as internal documents and previous reports has been

conducted to complete the study.

All data were collected mostly through our counterparts in PMD, PSF, as well as our key

informant interviews at the provincial and lower government levels. Cross interviews, especially

with other informants were used to verify and clarify the answers during the field survey. Field

surveys were conducted in two provinces, namely West Java and Banten, from January to May

2012.

Interviews in the central level were conducted during January to July 2012.

1.4. Main findings

a. Strengths and weaknesses in several functions/areas of managing PNPM:

The following table 1 describes the strengths and weaknesses in several functions of managing

PNPM :


Table 1 – Strength and Weaknesses in serveral areas of managing PNPM

continued

*) Note : Budget variance is the difference between the budgeted or baseline amount of expense or

revenue (in this case is expense) and the actual amount. The budget variance is favorable when the actual

revenue is higher than the budget or when the actual expense is less than the budget.

BUDGETBUDGET

Strengths Weaknesses

• With limited number of dedicated staff and insufficient system used, budget for KDP has been successfully distributed nationwide since its inception 1998 and later since 2007 when the program was renamed PNPM.

• No online system for budget approval and monitoring process

• No risk management and compliance division within the directorate general to assess and evaluate the risks for budget determination and implementation.

• The indicators for success have so far been based on the number of funds being used, not on the actual program outputs.

• No measurement on budget variance*)

STAFFING AND HUMAN RESOURCES MANAGEMENT SYSTEMSTAFFING AND HUMAN RESOURCES MANAGEMENT SYSTEM


• With limited number of dedicated staff, insufficient capacities and limited supporting facilities, PMD can successfully manage and implement the Rural PNPM.

• MoHA has reliable and dedicated employees who have been able to manage PNPM for 14 years.

• Many employees are very loyal and willing to work overtime.

• The PNPM Secretariat has already had a fairly good division of management and been able to cover all functions and tasks required of it.

• Insufficient Human Resources Management System at the national level and insufficient continuous recruitment process for facilitators in the regional government levels.

• Need to strengthen and synchronize the coordination and communication system between functional and structural reporting line.

• PMD as an executing agency is not only in charge of PNPM, but also several other programs such as PNPM, Green-PNPM, as well as PNPM Generasi that have created excessive workloads for the Directorate General.

• MOHA has not yet assigned people according to their competencies.


PROGRAM IMPLEMENTATIONPROGRAM IMPLEMENTATION


• Number of area/villages covered by the program has increased significantly since 1998

• Need to develop an integrated Management Information System (MIS) that can support the provision of timely and reliable data/information reports.

• Need to improve existing MIS staffing.

• No interface system between PMD’s PNPM database with other Ministry’s database system.

• Database unavailability to further evaluate the project deepening or project enrichment.

• Need to strengthen the learning center or Ruang Belajar Masyarakat, managed by KPM-PMD.

• Coordination, planning, implementation, and reporting between all of the state agencies with interest in PNPM is overly time consuming. The bureaucracy at the central level causes delays in program formulation and implementation.

• Several state agencies as well as the World Bank are involved in the supervision of the PNPM, which slows down the process and delays the outcome

COMPLAINTS AND CORRUPTIONCOMPLAINTS AND CORRUPTION


• High awareness to publish and disclose cases.

• The existence of national satker’s system for complaint handling has motivated and given opportunities to the communities to be pro-active and involved in problem-solving activities until the problem are resolved.

• Data and Information provided are insufficient to directly handle cases of corruptions or just any complaint.

• Insufficient system for handling cases/complaints to speed up the process.

• Need to improve guidelines/procedures for handling cases/complaints.

RISK EVALUATION AND RESPONSERISK EVALUATION AND RESPONSE


• No formal dedicated function/division for risk evaluation and response, is defined in the existing organizational structure or new organizational structure at the secretariat team designed by MOHA.


b. Based on the above strengths and weaknesses, improvement in the following

areas are needed so that PMD is able to further successfully manage the

implementation of PNPM:

(i) Continue to improve the organizational structure of managing PNPM

A fully dedicated team of staff with sufficient capacities needs to be appointed to

manage PNPM, under a competitive selection process. HR Management System

needs to be developed, which enables staff movement in line with government HR

Regulations.

In order to develop HR Management System and meet staffing needs, MoHA is

currently drafting a Ministerial Decree on organizational and work procedures for

secretariat to effectively manage PNPM Rural for year 2012. The ministry needs to

accelerate the deliberation of this decree, and the Director General of PMD and/or

the Minister needs to sign it as soon as it is ready. With the new decree, the number

of newly appointed staff who manage PNPM program will increase according to

specific roles and responsibilities. In addition, a comprehensive training needs analysis

and a structured training program (combining soft and technical skills) should be

provided to the new dedicated team.

Another effort to strengthen organizational structure has been planned and initiated

by PMD, i.e. to establish a joint secretariat at the Directorate General Secretariat

Office (Sekditjen). PMD needs to coordinate all programs under the Directorate

General to avoid overlapping functions among directorates under PMD, especially

those directorates that manage similar programs. The organizational structure at the

Sekditjen level should be developed to accommodate similar processes in managing

all programs under PMD including but not limited to Rural PNPM, Green PNPM,

PNPM Generasi, PISEW etc. Therefore the overlapping responsibilities for each

directorate in managing the programs can be avoided. Coordination functions should

be built, which can be derived and enlarged from the existing functions at the

Sekditjen level.

(ii) The establishment of knowledge management

Should GoI would like to strengthen its institutions and organizations to increase the

management capacity on rural PNPM and to ensure the sustainability in the long-

term, then the knowledge management should be improved at both central and local


government levels. Building and strengthening knowledge management are key

success factors by (a) ensuring access for knowledge management at the Vice

President level (TNP2K), at ministerial levels (Menko Kesra, Bappenas, MoHA), and at

Governor and Mayor/Bupati levels; (b) providing a handbook for rules, regulations

and standard operating procedures in obtaining data and information for each

related institution; (c) providing open access for the rules, regulations, and standard

operating procedures from item (b) above through website and printed publications

and; (d) developing clear roles for Umbrella Secretariat and Project Secretariat.

(iii) Accelerate the audit process on the Management Information System (MIS)

and develop an integrated MIS with detailed procedures

A well functioning and integrated MIS (including but not limited to Accounting, Fund

Disbursement, Project or Revolving Fund Approval Process and HR) needs to be

developed. The existing MIS may lead to an inconsistent system, insufficient checks

on data quality, inefficiencies/gaps in reporting, and time lag in the reporting period.

An audit process of current MIS needs to be completed, and a third party needs to be

assigned to redesign a new platform for managing Rural PNPM. The integration of

computer software combined with well qualified staff is necessary to support the

MIS. After the MIS audit is completed, it needs to be followed by a review of

functions for MIS positions, which should then be continued with the new MIS

design and implementation plan.

(iii) Accelerate the improvement of an integrated reliable complaint handling

system

PNPM actually has a built-in-system of promoting a downward accountability in

terms of handling complaints and fraud reports. Nevertheless, the capacity of the

current system to receive complaints is inadequate and needs to be improved.

Moreover, there are technical problems with the existing complaint handling system,

such as the SMS gateway that often does not work properly. Because of insufficient

MIS system, data integration and dissemination are not yet adequate to support

consistent follow ups on fraud cases. Limited capacities of staff recently recruited by

NMC or RMCs is another issues in the Complaint Handling System (CHS). The CHS

needs to be further reinforced to ensure a better capture and follow-up processes of

cases, including escalation of cases that could or were not resolved at the local levels.


A better access to information for stakeholders on how to respond to complaints

should accelerate problem solving in all levels of the PNPM management.

(iv) Continue to improve the quality of facilitators as the backbone of PNPM.

Qualified PNPM facilitators are deployed, retained and their performance should be

managed adequately. Strong facilitation skills are one of the important factors for

PNPM’s success. The facilitators who are familiar with social dynamics of the villages

should be recruited from the district or sub-districts in which they work and, are

provided with training and mentoring. An incentive scheme for facilitators who are

posted in remote areas needs to be developed to make the posting more attractive.

A transparent selection process combined with a regular performance evaluation

needs to be established to ensure that recruitments meet qualification standards and

the non-performing facilitators can be quickly replaced or improved.

Field visit Banten in 2012


The following figure 1 shows the summary of PNPM’ strengths and weaknesses in the

operational level (tactical) as well as in more strategic/policy issues:

Figure 1 Diagnostic Snapshot


II. PROJECT BACKGROUND AND RATIONALE

2.1. Project Background

The purpose of this study is to identify possible managerial reforms and system strengthening

that the Government of Indonesia needs to undertake to support transition to a better PNPM in

2014. As the government’s flagship community-based program for reducing poverty in rural

Indonesia, PNPM has undergone a major scale-up since being launched by President Susilo

Bambang Yudhoyono in 2007. Now that the scale-up of program has come to its completion

and that GoI is preparing a policy package to ensure its long-term sustainability, it is time to

review what managerial lessons can be drawn from the more than one decade of PNPM in

operation as a guide in developing a strengthened managerial system. This study is designed to

examine how the PNPM program has been managed and to suggest possible ways to enhance

PMD’s capacity to manage the nation’s flagship anti-poverty program in the rapidly changing

condition.

The Kecamatan Development Project (KDP), the predecessor of PNPM, began in 1998 at a time

of political upheaval and financial crises as an experimental project limited in area coverage and

scope. The design of the project was shaped around an appreciation of operating practice in

the Indonesian public sector and the challenges of implementing an effective community-driven

project. The project assigned responsibilities for policy, financing, monitoring and audit to civil

servants, while outsourcing technical and social facilitation to private sector suppliers.

Government coordination teams (“TKPP)” in the province and district levels oversaw the

activities of the corresponding level of field consultants, to make sure the effectiveness of the

teams in carrying out their works.

Within the project, pressure for outputs was derived from the top of the government (due to

keen interest on the part of the Office of the President) as well as the bottom of the community

(due to the interest of communities to get full value from their participation in the project). The

World Bank and other donors also played a major role in the accountability arrangements due

to their continuous and intensive supervision of project activities and outcomes.

The scope and scale of the program have expanded exponentially since its inception, growing to

become the government’s national flagship anti-poverty program. Program offshoots have

multiplied so that now a significant number of programs operate under the “PNPM” banner.

The changes in Indonesia have been equally dramatic – extensive decentralization of functions


and functionaries to local governments; maturation of democratic institutions; and sustained

robust economic growth. The government has grown in size and complexity as the public

budget has increased and social expectations on the government have been rising.

While the program has grown big and the government has changed, the managerial

arrangements for PNPM have remained relatively constant. The program, run by the Ministry of

Home Affairs since 2000, operates along the same basic principles – a network of consultants

executing the program based upon management contracts overseen by a relatively small group

of government officials. Program designs, such as fund flow arrangements, the mechanisms for

TA, remain basically unchanged from when they were established over ten years under very

different conditions.

The longevity of the current managerial arrangements is, in many ways, a testament to their

strength and flexibility. PMD’s ability to manage the implementation of a nationwide program

with very limited resources is extraordinary in Indonesia and worldwide. PMD’s achievements

are even more striking in light of the changes that have taken place in the overall environment

and the enormous expansion of the program.

PMD’s ability and success in managing the PNPM program has been apparent in time of long-

standing struggles in a range of areas. Problems with delays in budget formulation and release,

oversight of execution, and insufficient pro activity in addressing problems or learning from

successes have been consistent features of the program since its inception.

This study is designed to yield insights into possible ways to enhance the clarity and coherence

of managerial arrangements for PNPM. It is undertaken with a deep appreciation of the

importance of the program for Indonesia and the need to ensure that the program remains on

a solid footing especially after 2014.The proponent of this study is well aware of an

understanding of the past – of the tendency for external organizations to propose managerial

fixes that were not appropriate for the organizational context and environment.


2.2. Objectives of the study

The overall objective of the preliminary diagnostic report is to identify, clarify, synchronize and

ensure the coherence of managerial arrangement for PNPM, covering preliminary assessments

of the program to answer the following main questions:

a. How has PMD been able to successfully manage the implementation of PNPM?

b. What are the existing managerial strengths and weaknesses of the program?

c. What are the core functional requirements that need to be developed or established to

continue and even improve the successful implementation of PNPM?

d. What options exist to improve the management of the program in the short to medium

term in ways that will positively advance program performance and outcomes?

This study also covers the following elements:

a. PNPM budget formulation and determination processes and people responsible in

managing the budget.

b. Staffing in managing PNPM

c. Program implementation

d. Contract fulfillment

e. Response to complaints/corruption

f. Mechanisms for risk evaluation and responses

g. Impacts of scale-up

h. Going forward, core functional requirements for managing PMD

i. Generating change – how to improve current practices

j. Policy issues

2.3. Methodology

The study adopted the qualitative methodology and field survey to answer the research

questions. Reviews on the secondary data such as internal documents and previous reports of

the program have been conducted to complete the study.

All data were collected mostly from our counterparts in PMD, PSF as well as our field survey and

interviews with key stakeholders and key informants. Cross interviews, especially with other


informants were used to verify and clarify the answers during the field survey. Field surveys

were conducted in two provinces of West Java and Banten from January to May 2012.

The overview of the systems included reviews of relevant documents and policies at the central

and provincial levels as well as interviews. Analysis on persistent performance issues was

conducted on the basis of the interviews with a number of primary informants drawn from each

of the stakeholder groups. The information from these interviews combined with the existing

operating manual forms the basis for a mapping of interests, incentives, and resource flows.

The study examined only the managerial practices and performance of Rural PNPM.

2.4. Data Collection

To answer the research questions, this study adopted the qualitative method. Data was

collected through in-depth interviews with informants, participant observation, and secondary

data collections combined with reviews of previous reports.

Data collection was conducted from January to June 2012. Two teams of researchers were

assigned to two provinces. Each team was comprised of one researcher coordinator and four

other researchers. Research teams spent three days in each village. During their fieldworks, the

teams conducted discussions regularly with stakeholders to compare and verify their data.

2.5. Research Location

This study covered two villages in West Java and one village in Banten. This study chose West

Java and Banten, based on the following factors:

(i) The two provinces are already included in the PNPM Marginalized Study.

(ii) The two provinces are located close to Greater Jakarta.


III. PNPM TRANSFORMATION AND CHRONOLOGY

3.1. Overview of PNPM

Originally known as the Kecamatan Development Program (KDP) with sole focus on rural area,

the sub-district-based poverty alleviation initiative has been transformed into National Program

for Community Empowerment (PNPM) with a larger scope in less than a decade.

The Ministry of Home Affairs (MOHA) and its Directorate General of Village and Community

Empowerment (PMD) envision that by 2015, the program will reach all villages in Indonesia.

New pilot projects such as National Program for Community Empowerment-Green(Green-

PNPM) and PNPM Generasi under the Rural-PNPM are currently underway.

Other ministries have also created their own PNPM-related programs targeting specific issues

pertinent to their respective activities (example: Ministry of Fisheries, Ministry of Tourism and

Ministry of Public Works). This is the most successful bottom-up approach for a poverty

alleviation program.

The pressure from the top level of the Government of Indonesia (GoI) and the interest from the

communities where the programs are carried out have created additional demand to PNPM’s

existing central management board to further improve the quality of its programs.

Despite the recent growth, the managerial arrangements of PNPM remain the same. This

situation has created the need to conduct a managerial reform and an organization

restructuring that the Indonesian government will need to undertake to support PNPM’s

expansion by 2014.

National Program for Community Empowerment in Rural Areas (PNPM-Mandiri Perdesaan),

commonly known in English as the Rural PNPM, is the flagship program administered by the

government to accelerate poverty reduction efforts by empowering and supporting rural

communities in increasing their quality of life, general welfare, and self-reliance.

While the program and the government have changed a lot since the program’s inception, the

managerial arrangements of PNPM have relatively remained the same. The program, run by the

Ministry of Home Affairs since 2007, is still carried out under the same basic principles – the

program is executed by a network of consultants under management contracts overseen by a


relatively small group of government officials namely National Working Unit or National Satker

at the Central Government Level.

The program design, such as fund flow arrangements and the mechanism for disbursement also

remains basically the same from when they were established over 10 years ago under very

different conditions.

The philosophy of PNPM Mandiri is community empowerment, which is the basis for the

implementation of PNPM’s poverty reduction programs. The program is implemented through:

a. Community involvement in determining how funds should be used

b. Synchronization and coordination with other government development

programs

c. Strengthening and capacity building of government institutions at the village

level

The synchronization and coordination of the PNPM program with other government

development programs are important in meeting the Indonesia government’s millennium

development goals.

Across many ministries in Indonesia, there are numerous programs that share similar goals of

poverty alleviation. The coordination among these institutions should, therefore, be

strengthened to remove redundancies so that poverty alleviation efforts in Indonesia could be

carried out more effectively.

The strengthening and capacity building of government institutions at the village level is equally

important as the PNPM program is based on bottom-up empowerment. By strengthening the

institutions in the communities where the funds are disbursed, the implementation of the

projects and the monitoring of the funding will be more effective.

Over the past 10 years, the PNPM management still focuses mainly on the first agenda item that

is to encourage community involvement in determining how the funds should be used.

However, it is also important that the second and third agendas be addressed in the near-and

medium-term. This management review will be able to provide solutions to help the

government administer their entire programs more effectively.


3.1.1. History of Rural-PNPM

As mentioned in the above paragraph, in 2007, KDP was officially rebranded by the

government as a nation-wide poverty program, called Program Nasional Pemberdayaan

Masyarakat-Mandiri or National Program for Community Empowerment or PNPM, Rural-PNPM,

or PNPM-Mandiri Perdesaan.

This program is originated from the KDP, a three-year project financed by a loan from the

World Bank at the beginning of the major economic crisis of 1997-1998. During the economic

crisis, the main objective to establish this program was to channel money quickly and directly to

the villages, covering over six sub-districts (kecamatan) in 1997, and increased to about 500

sub-districts in selected provinces in 1998.Initially, the project was designed to be a three-year

program.

KDP turned out to be popular among villagers. Nevertheless, the disbursement process took a

long period of time. Villagers were allowed to propose projects to be financed by the fund that

was channeled by KDP, but the realization of the projects often took a year after the proposal

was submitted. It is, therefore, needed to accelerate the fund disbursement process.

In 2007, after transforming KDP into PNPM, the government has formed two types of PNPM

programs:

a. The Core PNPM or PNPM Inti is regionally based community empowerment activities,

which consist of Rural-PNPM, Urban-PNPM, PNPM for Disadvantaged Areas (SPADA),

PNPM for Rural Infrastructure, and PNPM for Regional Socio-Economic Infrastructure.

b. The Supporting PNPM or PNPM Penguatan is sector-based, regional-based, and special

economic empowerment programs designed to support poverty reduction related to the

achievement of specific goals. PNPM consists of PNPM Generasi Sehat dan Cerdas or

PNPM Generasi (PNPM-Healthy and Smart Generation), Green PNPM and PNPM

Smallholder Agribusiness Development Initiative (SADI).

Other Program has also been introduced in line with RESPEK, PNPM RESPEK (Rencana Strategis

Pembangunan or strategic development plan) to support the provincial governments of Papua


and West Papua in 2007. This program focuses on five priority areas: (i) nutrition; (ii) education;

(iii) healthcare; (iv) village infrastructure; and (v) community livelihoods.

3.2. Kecamatan Development Program

3.2.1. KDP in 1998

Established in 1998, the KDP was the Indonesian government’s program designed to alleviate

rural poverty and to improve local governance in villages, sub-districts and districts (kabupaten)

levels.

The program provided block grants ranging between IDR 350 million and IDR 1 billion directly

to villages and sub-districts to finance small-scale infrastructure projects, social and economic

activities. It empowered poor rural communities through its participatory development approach

while delivering cost-efficient and sustainable public goods and services.

The program enjoyed a favorable atmosphere by the passing of new decentralization laws in

1999, which gave districts greater authority and decision-making power to plan and manage

their own development.

The decentralization was undertaken in an effort to help local government adapt to local

circumstances that could no longer be handled under the old, rigid, and authoritarian

centralized government structure.

3.2.2. KDP Phase I (1998/99 – 2002) began with 501 sub-districts and 20 provinces.

By the third year of its existence in 2002, KDP’s program was expanded to 986 sub-districts,

reaching approximately 35 million Indonesians. The program put the Commodity Driven

Development (CDD) approach firmly on the government’s development agenda, making it a key

part of the government’s response to improve local governance and to support decentralization.

By the end of KDP I, a number of district governments took the CDD approach seriously by

starting their own KDP-style initiatives with local funds and management. Their primary aim was

to make their own rural development programs more responsive to local needs and more cost-

efficient by mobilizing local communities along similar lines to KDP. Between August 1998 and

June 2002, KDP I received a loan of US$273 million from the World Bank.


3.2.3. KDP Phase II (2003 – late 2005) repeated the same success.

By the end of KDP II in 2005, the program reached 13,685 villages, 868 sub-districts, 213

districts and 30 out of 33 provinces in Indonesia. The program continued the general objective

of KDP, which is to accelerate poverty reduction efforts by empowering local communities and

strengthening local governments through capacity building and provision of basic social and

economic infrastructure and facilities.

KDP II funded over 65,000 infrastructure projects, economic and social activities across the

country, worth IDR 2.6 trillion. 78 percent of those funds were spent on infrastructure projects,

16 percent on economic activities, 8 percent on education, and 2 percent on health activities.

The majority of funds for health and education were spent on the construction of schools,

health clinics and multi-year scholarships for children from poor families. By December 2005,

KDP met or exceeded all but five of the 27 performance targets specified in the World Bank’s

loan agreement.

3.2.4 KDP Phase III (late 2005-2006) witnessed a major transition.

The program became involved in post-disaster locations and entered an institutionalization

phase marked by increasing involvement of local governments in facilitating and funding

development at the village level.

In early 2006, KDP activities were continued in 496 sub-districts that had not completed their

projects from KDP II. During the year, KDP’s programs reached 1,144 sub-districts listed as KDP

III’s sites and 318 post-disaster locations in Aceh, Nias in North Sumatera, Yogyakarta, and

Klaten in Central Java.

During this period, the National Coordination Team and KDP Secretariat in PMD managed

KDP’s activities, and received technical assistance from the National Management Consultant

(NMC).In the same year, President Yudhoyono announced the government’s decision to

implement a new policy on poverty reduction and job creation, a nation-wide poverty reduction

program called Program Nasional Pemberdayaan Masyarakat - Mandiri (National Program for

Community Empowerment) or PNPM.

3.2.5. KDP was officially rebranded as PNPM Mandiri Perdesaan under the new,

integrated PNPM approach (2007)

At this time KDP and many other similar empowerment programs were put under the

coordination of the Coordinating Ministry of People’s Welfare (CMoPW).


During this year, all of the government’s community empowerment and poverty alleviation

programs were asked to focus primarily on reducing overall poverty levels and increasing

employment. In the case of Rural-PNPM, these objectives were pursued in rural areas.

3.3 The Objective of Rural – PNPM, Setting Up PNPM and PNPM Transformation

3.3.1 The Objectives of Rural-PNPM

The overall objective of Rural-PNPM is to reduce poverty and improve local-level governance in

rural areas of Indonesia through the provision of investment resources to support productive

proposals developed by communities, using a participatory planning process.

3.3.2 Setting Up PNPM and PNPM Transformation

Since 2007, the coordination of PNPM including the provision of regional contributing fund, the

planning for the PNPM implementation in the region within provincial and municipal or regents

has been under the secretariat for the coordination team or Satuan Kerja Pelaksanaan Program,

a working unit under the Directorate General of Village and Community Empowerment at the

Ministry of Home Affairs. The transformation has indicated the Indonesian government’s

recognition of KDP’s success in its rural empowerment programs.

PNPM is a flagship program of the Government of Indonesia. As one of the world’s largest

community-based poverty reduction programs, PNPM is implemented nationwide in over

60,000 villages and recently expanded to the urban poor. The activities have absorbed funds

totaling a US$ 2.8 billion.

Among the PNPM Programs, the Rural PNPM is the largest. Its targeted communities are the

villagers in all location in Indonesia, which are usually determined by the poverty level of each

respective village.

Rural PNPM began in 2008 covering 2,600 sub-districts. In 2009, Rural PNPM II was launched to

cover 4,258 sub-districts. Rural PNPM III began actively addressing the system and managerial

stresses caused by the rapid expansion of the program for the period of 2010-2012. This will

target around 4,791 sub-districts. Rural-PNPM IV, in addition to providing financial support, will

conduct programs based on the achievements and lessons learned under Rural-PNPM III in order

to strengthen the management and implementation systems.


Rural PNPM IV will target around 4,798 sub-districts. Other areas of the country will be covered

by PNPM-Urban and three other core projects under the PNPM umbrella.

Activities that will be supported through Rural-PNPM IV include (source: World Bank Report No:

62151-ID, page 19):

• Continued capacity building in community-level governance, participatory planning and

management of socio-economic infrastructure.

• Building or repairing basic infrastructure facilities, such as small roads, bridges, irrigation,

and clean water supply systems.

• Building or repairing social infrastructure such as school buildings and clinics.

• Training women's savings and loan groups for revolving funds management and capital

for village-level revolving funds.

• Developing district and sub-district management and technical capacities.

• Utilizing the PNPM platform to implement pilot programs, including PNPM Generasi that

focuses on improving health and education outcomes and the Green PNPM that supports

community investment in natural resource management and renewable energy activities.

The most pressing issues in the preparation of Rural-PNPM IV were those related to its

implementation and the management. There should be an improvement in the management

quality to ensure that arrangements are good enough to manage a program of this scale and

complexity.

The Rural – PNPM IV will be enriched with special programs/pilot programs (e.g., PNPM

Generasi, which focuses on health and education, and Green PNPM, which focuses on natural

resource management and village-level renewable energy) and associated analytical works.

The Rural PNPM continues to attract supports because of its strengths and successes. The

strengths of the program are considered as follows:

a. Cost effectiveness – village tertiary infrastructure is being built at significantly lower cost

(a third to half as expensive as under conventional contracts) and returns have also been

very high, with EIRRs of 53 percent on average;


b. Welfare effects – evaluations have shown that welfare rates have improved about 5%

faster in project locations compared to locations not covered by the program; and the

vulnerable are less likely to slip into poverty; and

c. Inclusiveness – the planning and management processes reach out to all groups in the

village and women play a particularly important part in Rural PNPM. Women also have

special access to funding through a window that allows up to 25 percent of all block

grant funds to be used as capital for women's savings and loans groups.

The three above strengths will be further focused for the implementation of Rural – PNPM.

PSF, PMD, and IRAI site visit to Cipanas in December 2011


3.4. PNPM Stakeholders

The stakeholders of PNPM include the Central Management and Coordination, the Director

General of Village and Community Empowerment (PMD) and the Key Management Structure,

the Local Management Structure as well as Public Support Facility which are developed to

supervise, monitor and implement the program designed by the government and financed by

state budget, regional budget as well donor agency. Each stakeholder has specific function to

support the implementation of Rural PNPM in order to achieve the objective to reduce the

nationwide poverty as well as to improve the community welfare. The figure 2 below shows the

stakeholders of Rural PNPM:

Figure 2.PNPM-Stakeholders


3.4.1. Central Management and Coordination

As a national program, the central management of PNPM involves a number of government

agencies and coordination, such as the Ministry of Home Affairs, National Development

Planning Agency (Bappenas), Ministry of Finance, related coordinating ministries, and the

National Team for the Acceleration of Poverty Reduction (TNP2K).

They all have agreed that the PNPM is an instrument to accelerate poverty eradication and

expansion of employment opportunities. The Coordinating Ministry of People’s Welfare

proposes the allocation of BLM (direct assistance program) funds to the Ministry of Finance

while the Ministry of Home Affairs requests the governors and regents or mayors to deliver

proposals for the locations. Bappenas drafts the PNPM funding.

Tim Nasional Percepatan Penanggulangan Kemiskinan (TNP2K) - The National Team for

Accelerating Poverty Reduction

The TNP2K is a national coordinating body consisting of stakeholders from various ministries

and departments that are involved in the poverty alleviation efforts in Indonesia. Chaired by the

Vice President, the team works under and is accountable to the President. The tasks of the

TNP2K include the formulation of policy and programs related to poverty reduction efforts, the

coordination and integration of poverty reduction programs undertaken by different ministries

and institutions, and the supervision of the poverty reduction program implementations. One of

its short-to-medium term priorities is to integrate all community empowerment programs into

the PNPM.

Kementerian Koordinator Bidang Kesejahteraan Rakyat (Menkokesra) / Coordinating

Ministry of People’s Welfare (CMoPW)

The CMoPW’s main task is to assist the President in synchronizing and coordinating planning,

formulation, and implementation of people’s welfare related policies. Deputy 7, one of the

deputies under the CMoPW is in charge of the coordination for the poverty eradication and

community empowerment. The deputy is also the chief executive of the PNPM-Mandiri

Oversight Body. The PNPM-Mandiri Oversight Body coordinates the preparation for the PNPM-

Mandiri implementation at the national level, which includes program development and general

policies, zoning, communication strategies, development of information system, monitoring and

evaluation. The PNPM Oversight Body develops the monitoring system and evaluation for all

activities of both PNPM-Inti (PNPM-Core) and PNPM Penguatan (PNPM-Support).


Kementerian Dalam Negeri (Depdagri) / Ministry of Home Affairs (MoHA)

The MoHA administers the home affairs of the Republic and assists the President in the

governance. Within these tasks, the ministry has developed a number of strategic programs

including the empowerment of the rural communities and village administrations whose goal is

to create the village autonomy and improve the community’s independency particularly of the

economic, social, and cultural aspects.

The Director General for Village and Community under the Ministry of Home Affairs’ Village

and Community Empowerment Office is in charge of the program implementation, and acts as

the executing agency of PNPM. A comprehensive discussion of the PMD and the way they

manage PNPM is given in different section of this chapter.

Badan Perencanaan Pembangunan Nasional (Bappenas) / National Development

Planning Agency

With the input from the other government agencies, Bappenas sets up the National Long-Term

and Medium-Tem Development Plan. Starting from 2009, the implementation of PNPM Mandiri

refers to the mechanism design for the implementation of PNPM Mandiri 2009-2015. Bappenas

drafts the planning documents based on the input gathered through the participatory planning

at the community level.

Bappenas is the chair of both the Joint Management Committee (co-chaired by the World Bank

as Trust Fund administrator) and the Technical Committee, which are parts of the PNPM

Support Facility (PSF) management structure.

The Joint Management Committee provides overall policy guidance and review, promotes

harmonization across all poverty programs, and decides funding allocation. The Technical

Committee monitors the PSF activities, discusses the technical issues, and prepares alternative

solutions for the Joint Management Committee. The discussion on PSF is provided in the

separate section of this chapter.


Kementerian Keuangan (Depkeu) / Ministry of Finance

The Ministry of Finance synergizes the financial balance between the central and local

government. Funds from donor contributing to PSF are pooled into the PSF Trust Fund, which

will be registered in the government’s budget in the Ministry of Finance.

3.4.2. PMD and Key Management Structure

Teams at the provincial and municipal or district levels coordinate planning for the PNPM

implementation in the region. The coordination includes the provision of regional contributing

fund, which comes from the regional budget, the establishment of a secretariat for the

coordination team, and the creation of Satuan Kerja Pelaksanaan Program or the working unit

of program implementation. Related departments or institutions carry out the selection process,

training, and placement of the consultants and facilitators and the region based on the

implementation guidelines provided by the respective Satuan Kerja.

The Directorate General of Village and Community Empowerment at the Ministry of Home

Affairs conduct the administration of Rural-PNPM. This department, together with the National

Development Planning Agency or Bappenas (which focuses on monitoring, evaluation, and

preparation of the project) and the Ministry of Finance (which focuses on fund disbursement)

form a steering committee that is the highest level of the decision-making process in Rural

PNPM policy. At the provincial and district levels, Regional Development Planning Agencies

(Bappeda) and local governments coordinate the Rural-PNPM at provincial and regional level to

monitor Rural PNPM’s progress. There are consultants at the national, provincial, and district

levels.

3.4.3. Local Management Structure

The local management prioritizes the target and selection of the location for the empowerment

program.

The coordination is to ensure that there is no activity overlapping. The focus of the activity is at

the sub-district level. In each sub-district or kecamatan, there is only one program of PNPM-

Core such as the PPK, P2KP, PISEW, and P2DTK.


The regional government allocates and formalizes the budget that comes from the regional

government budget (APBD) to support the PNPM program.

This arrangement can be found in the Rencana Kerja dan Anggaran Satuan Kerja Perangkat

Daerah (the Working Plan and Budget of Regional Working Units).

3.4.4. PNPM Support Facility (PSF)

The Indonesian government establishes the PSF to harmonize and coordinate development

partner efforts, including the planning and targeting of financing assistance, as well as the

monitoring and evaluation of PNPM operations and impact.

PSF receives overall policy guidance and oversight from the Joint Management Committee

(JMC) which comprises the government’snon-executing agency (National Development Planning

Agency or Bappenas, the Ministry of Finance,and the Coordinating Ministry for People’s Welfare

( Menko Kesra) and donor partners.

The JMC Chairman is the Deputy for Poverty, Labor and Small & Medium Enterprises in

Bappenas. The World Bank’s Country Director serves as co-chair of the JMC. The bank

administers the PSF Trust Fund into which grant funding is channeled.


IV. PNPM MANAGEMENT BY PMD

4.1. PNPM Vision and Mission

The Indonesian government has a high awareness to further successfully manage PNPM,

especially Rural PNPM. Therefore since 2007, the long term Vision of Rural PNPM has been

developed. Its long-term vision is to achieve the social welfare and self-reliance of the poor in

the rural areas.

The Social welfare is translated as provision of community basic needs, and self-reliance is

formulated as capacity to self organize in mobilizing the local resources in their environment

and capacity in accessing the available resources outside of their environment; and then to

manage all respective potential resources in solving the current poverty problems in the local

area.

Mission of the Rural PNPM, during the medium-term up to 2015, is to assist and facilitate the

programs in:

(a) Developing the community capacity/capability and community institutions therein.

(b) Institutionalizing participatory development system.

(c) Strengthening the role and function of local government.

(d) Increasing the social economic condition of community through basic infrastructure

provision.

(e) Encouraging the networking for building development partnership.

These missions constitute the realization of the vision of Rural PNPM in time period of 5 to 6

years up to 2015. It is expected that the missions could be achieved within such period of time.

These missions can be reviewed and reevaluated within period of maximum 2 to 3 years, and

are subject to a change or revision due to certain local conditions or because they are no longer

relevant to what happens in dynamic growth and trends (Annual Report, Rural PNPM, 2009).


4.2. PNPM Transformation Process

4.2.1. Growth of location coverage

The success of PNPM is indicated by the increase in village coverage since 1998 as shown in

below table 2:

Table 2. PNPM Coverage

Source: PMD Report, 2009

4.3. PNPM Operational System

At Central Level:

The implementation of Rural PNPM is managed by the central government in cooperation with

local government and involving the private sector as consultants, specialist/expert and facilitator.

Community is also involved in every implementation stage. At the central government level, the

Executing Agency is Directorate General of Village and Community Empowerment of the

Ministry of Home Affairs, which plays a key role as Central Development Secretariat for Rural

PNPM.

The Central Development Secretariat Team is supported by consulting services called National

Management Consultant (NMC or KMN). In addition, in coordination with Coordinating

Ministry of People Welfare (Menkokesra), a Controlling Team in the central level has also been

established to monitor the implementation of Rural PNPM.

Level of Government

Area CoverageArea CoverageArea CoverageArea Coverage

Level of Government1998-2003 2004-2008 2009

Total Areas Covered up to

2009

Provinces 32 30 30 32

District 348 335 342 348

Sub-district 2,668 2,230 3,905 3,905

Village 42,319 34,032 50,201 50,201


At Regional level:

The Regional Management Consultant (RMC) provides consulting services at the regional level.

RMC has six regional working areas consisting of regional-1 to regional-6, in which they

coordinate and responsible for Rural PNPM in several provinces. In every province, there is

Working Unit of Rural PNPM, which works under the Village and Community Empowerment

Agency (BPMD) in each respective provincial government.

The Provincial Working Unit is not only in charge of implementation of Rural PNPM in the

provincial level, but also in charge of the recruitment of regency and sub-district facilitators. To

support the implementation of the programs in the provincial level, the Provincial Coordination

(Korprov) has established a consultant and expert unit, whose members are recruited by each

Regional Management Consultant (RMC).

At District level:

District Rural PNPM Working Unit has also been established to conduct Assistance Task

activities. This include the monitoring of the District Direct Community Aid (BLM) funds as well

as the supporting fund related to Activities Operational Fund (DOK) which is placed in DIPA

Assistance Task (TP).

To carry out technical activities at the field in the regency level, three facilitators are assigned for

regency, i.e. Regency Empowerment Facilitator, Regency Technical Facilitator and Regency

Finance Facilitator.

At Sub-District Level:

There is an Inter Village Cooperation Body (BKAD), which is voluntarily based on agreement

between two or more village in the sub-district. This body is established to maintain all

program/activities financed by PNPM.

At the sub-district level, although the sub-district head is in charge of project development, the

program is also monitored by a working unit called Local Project Management (PjOK),

comprised of government officials. In order to support the facilitation and program


implementation, every sub-district will have two facilitators sub-district facilitator and technical

facilitator, with a background of civil engineering.

At Village Level:

At the village level, the village head is the person who is in charge of activities conducted in the

village. At this level, the program is also overseen by Activities Management Team (TPK) assisted

by two Village and Community Empowerment Cadres (KPMD) and a special team which is

assigned to monitor all activities phases in the village level.

Notes:

The regional governments, both at provincial and regency (district) levels, are involved in

implementation of Rural PNPM as the executive of the de-concentration activities and

Assistance Task Force. As the de-concentration task executive, the provincial government

through the working unit of the provincial Rural PNPM is responsible for caring out recruitment

and contracting for Regency Facilitator and District Facilitators based on the Standard Operating

and Procedure (SOP) already determined by the working unit of Central Rural PNPM.

4.4 Organizational Function of MOHA

4.4.1. Organizational Chart of MOHA

MOHA’s role and responsibilities to supervise local government activities are including but not

limited to :

• Formulate national, operational and technical policies in the field of domestic

governance.

• Conduct governance affairs

• Manage state properties that fall within its responsibilities

• Determine the development of local government structure and operations;

To support the above roles and responsibilities, there are: one Inspectorate General, one

Secretariat General, seven Directorate Generals, one Research and Development Body as well as

one Education and Training Body. The 7 (seven) Directorate Generals (DG) to support MOHA

are as follow :


i. DG for National Unit

ii. DG for General Government Administration

iii. DG for Regional Autonomy

iv. DG for Regional Development

v. DG for Community and Village Development

vi. DG for People and Civil Administration

vii. DG for Regional Financial Management

Other functions are five expert staff support MOHA in the field of (a) legal, political, and

institutional relation, (b) government, (c) development and community, (d) human resources

and population, and (e) economics and finance.

DG for Community and Village Empowerment has managed Rural PNPM since 2007. During the

last few years, around 80% of MOHA’s total budget was allocated to Rural PNPM. In 2012,

Rural PNPM will be allocated to around 70% of MOHA’s budget (DIPA), nevertheless the Rural

PNPM is only managed by sub-directorate level. The day to day operations of the Rural-PNPM

(“Project Secretariat”) is handled by the Sub-Directorate of Participatory Development under the

Directorate for Institution and Community Training (Direktorat Kelembagaan dan Pelatihan

Masyarakat). This project secretariat carries the flag of MOHA in managing Rural PNPM as well

as in the implementation of the program.

Actually, DG for Community and Village Development also manages (including but not limited

to) other program such as PNPM Generasi, PNPM LMP, PISEW and PAMSIMAS, PNPM RESPEK.

Each program has developed their own guidelines, schemes, mechanisms, facilitators, and

institutional schemes based on their needs and are managed by different project secretariats. A

different management has also been applied in the village level, creating confusion during the

implementation process. The Separate planning activities implemented in the village level

weaken the village development planning for all programs outside of Rural PNPM. The creation

of coordination management which is initiated by DG for Community and Village

Empowerment may ease the integration of each component of the program variation.

The following figure 3 shows the organization chart of DG for Community and Village

Empowerment. Rural PNPM is handled under the Directorate for Institution and Community

Training under this DG.


Figure 3 . DG of Village and Community Empowerment - Organization Chart

Source : Ministry of Home Affairs, 2012

4.4.2. The Umbrella Secretariat

As mentioned before, the need to create a coordination based organization approach is

essential, therefore the DG is currently proposing the creation of the Umbrella Secretariat. The

role of this secretariat is to coordinate and integrate the functions of each secretariat in

different directorates. This creation is aimed to improve the coordination and integration

between all programs under PNPM within different directorates.

The Umbrella Secretariat as shown in the following figure 4 will be managed by the Sekditjen of

PMD as a budget holder authority. The day-to-day operation will be handled by the Planning


sub-directorate (or Kepala Bagian Perencanaan), acting as a Daily Executive Head or Kepala

Pelaksana Harian.

Figure 4 . The proposed creation of Umbrella Secretariat

Source : PSF and PMD , 2012

The secretariat will have four main functions: (a) program and budget planning; (b) data and

information which includes public relations, MIS and, CHS; (c) evaluation and reporting; (d) pilot

project within 1-2 years before distributing to Program Secretariat under Directorate.

The role and responsibilities of the Umbrella Secretariat includes:

a. Attend meetings and improve coordination between project secretariats.

b. Coordinate with other institutions outside PMD including but not limited to TNP2K.

c. Review all activities within PNPM managed by PMD.

d. Develop and draft integrated policies, guidelines, and SOP’s covering integrated scheme,

facilitation, and project management system.

e. Integrate system and schemes of the program.

f. Consolidate PNPM program planning and budget.

g. Develop HRD including to support all staff perception in line with capacity development

and community facilitation design.


h. Evaluate quantitative and qualitative data and prepare executive summaries.

i. Provide recommendation to all PNPM under PMD.

j. Manage information, education, communication, and publication of the program.

k. Consolidate the CHS

4.4.3. Project Secretariat

The Project Secretariat for each specific PNPM is developed based on program specification.

PNPM Secretariat for each directorate who manage PNPM are positioned under each director as

a contract authority. The day to day operation will be handled by echelon 3 officers in each

directorate. Aside from Rural PNPM, at the moment there are two project secretariats under the

Directorate for Social Community and Culture as well as Director for Natural Resources and

Appropriate Technology who manage PNPM Generasi and PNPM Green respectively.

We have identified the following (figure 5) as the project secretariat organization chart under

the Directorate of KPM who manage Rural PNPM.

Figure 5 - Project Secretariat for Rural PNPM :

Source : PMD - MOHA, 2012


The above chart shows that the Sub-Directorate of Participatory Development head has a

functional line to coordinate five functions including (a) advisor, (b) finance and administration,

(c) project management consultants, (d) program support and problem handling, (e) NMD

individual contracts. All five functions has a direct reporting line to Director for KPM.

Each Project Secretariat will be supported by PMD’s staff and consultants with related expertise.

The Project Secretariat will monitor the implementation of the related program and provide

administrative support.

The main functions of the Project Secretariat in related to Rural PNPM are as follow :

a. Develop budget planning and annual activity plan as a part of the Ministry Work plan.

b. Maintain and manage project administration.

c. Manage HRD including recruitment, training and placement and performance

evaluation.

d. Plan and provide support to procurement activities.

e. Monitor and administer all documents related to fund disbursement.

f. Manage and maintain data and report related to the program.

g. Monitor and control program implementation


V. DIAGNOSTIC SUMMARY

5.1. Element 1 - Budgets

a. The process in determining budgets for PNPM

At the Central Level:

The government at the central level determines budget for PNPM based on the

following sources :

• APBN or State Budget

• APBD I, Provincial Budget

• APBD II, Municipality or Regency Budget

• Private Sector Contributions

• Community funds

Fund from APBD, private sectors and communities should be synergized with the

state budget. Other budget from donor and IBRD (if any) will also be

consolidated for Rural PNPM purposes.

The above budget will be used to finance the program components such as Community

Development, BLM or Community Direct Support, Capacity Improvement of local player

and sub-district government as well as Support for Maintenance and Improvement

Programs

The budget allocation to the sub-district level is based on several criteria including: (a)

number of citizens, (b) number of citizens below the poverty line (c) Java and Bali versus

outside Java and Bali profiles, (d) regional fiscal capacity. At the moment, budget

allocation per kecamatan or sub-district is about IDR 1-3 billion.


Table 3 - Project Cost Component for Rural IV – PNPM 2011-2014

Source : Project Appraisal Report 14 June 2011 No. 62151- ID

From the above table 3 we see that around 43% of the total fund allocated to Rural PNPM IV

was sourced from IBRD. Around 75% out of the total USD 531.2 million fund from IBRD was

allocated to subsditrict grant whilst the remaining of 25% will be distributed from facilitation

suport, technical assisstant as weel as project management support. From our interview at the

Central level, we understand that about USD 750 million loan will finance Rural PNPM V,

however only 40% will be distributed to sub-district level.

At the regency level:

Proposals submitted by the sub-district level are inspected by the regency’s facilitator. The

person in charge of the budget (operational executive or PJOK at the regency level) then issues

an SPM or instruction letter to disburse the proposed funds to the district level to finance all

proposed activities.The authorized person for budget at the regency level also issues an SP2D or

a disbursement order to KPPN or the state treasury office, which is in charge of disbursing the

funds through Bank Indonesia (central bank) branch.

The treasury office issues a payment order to the bank accounts of sub-districts for the fund

disbursement. Based on a field survey in Banten, we find that the TPK (village implementation

team) proposes the budget,which is then reviewed by the local facilitator.

If the proposed budget meets the cost required to develop the project, the project is approved

and the funds are disbursed to the village from the sub-district level. In addition, sometimes,

No. Project Cost Component in USD Mio (Rural PNPM) IBRD APBN APBD Community Donor Total

1 Sub-district grant 400 461 178 35 23 1,098

2 Facilitation Support 99 11 - 110

3 Implementation Support and TA 31 4 - 35

4 Project Management Support 1 20 18 38

Total 531 495 196 35 23 1,280

No. % Project Cost Component in USD Mio (Rural PNPM)

1 Sub-district grant 1 1 1 1 1 1

2 Facilitation Support 0 0 0 0 0 0

3 Implementation Support and TA 0 0 0 0 0 0

4 Project Management Support 0 0 0 0 0 0

Total 1 1 1 1 1 1


materials for the proposed project are purchased in advance, prior to fund disbursement. The

practice can cause discrepancies in the budget implementation or could create anopportunity

for an overbudget proposal.

At the village and sub-district levels:

After getting an approval from the Inter Village Consultative Forum (MAD), the proposal is

submitted to the financial management unit in the village level (UPK Desa), then to the

implementation team at the sub-district level. The budget proposal has to be reviewed and

agreed upon by the local operational executive (PJOK) at the sub-district level. If the proposal is

approved, the PJOK will then issue an instruction letter to disburse the funds to finance PNPM’s

programs.

b. Identify the office or individual who has to sign off at each stage of the budget

process.

At the regency and sub-district levels, the TPK team has the authority to approve the

disbursement process. From field survey, we understand that:

At the provincial level:

Budget allocated from the state budget (ABPN) are combined with the provincial governnment

budget (APBD). From our field survey in Banten, the funds from the provincial level contribute

about 5-10 % of the total funds distributed to each province.

At the district level:

• Proposals are inspected by district technical facilitator. PJOK is at kecamatan level. At

district level is PjOKab, then PjOKab, the PjOProv. UPK request of PjOk. Funds are

transferred to an account of the UPK from a BI branch

• Proposals from the sub-district level are inspectedby regency-facilitators after an SPC

(sub-district head implementation letter or Surat Penetapan Camat) and then submitted

to the operational executive (PJOK) assigned by the local subdistrictto take in charge of

the budget.

The PJOK issues an instruction letter for the sub-district to disburse the proposed funds

for the proposed activity. The disbursement letter or SP2D is submitted to the state

treasury office (KPPN).

• KPPN issues an instruction letter to transfer the approved funds froma Bank Indonesia

branch to the UPK account.


At the sub-district and village level:

• The community through the Village Forum appoints a team to write a budget proposal

(TPU). The TPU prepares activity ideas proposed by the Village Forum and the Women’s

Village Forum, and all documents as required by the PTO.

• The TPU is appointed by the community based on their expertise and skills related to the

activities proposed by the community.

• The verification team reviews the proposal, but does not give any approval. Each TPU

can write three proposal; one from general meeting, one from women’s meeting, and

one for SPP.

In the district level, the PJOK submits a request letter to the regency, attached with an

approval letter, an account number and amount of funds to be disbursed. The KPPN official

reviews the proposal, and issues a payment order to KPPN within 1-3 days.KPPN then

orders BRI and BNI, the paying banks, to disburse the funds under the following terms:

• First step: 40% of total approved funds

• Second step: 40% of total approved funds (APBD included)

• Third step: 20% of total approved funds

c. Identify the time required for every step in the process by which budgets are

determined.

There is no specific time determined in the guideline for every step in the budget process. The

duration is only determined on the fund disbursement. It generally takes seven days from the

submission of the proposal from UPK to sub-district level. According to a field survey that we

conducted in West Java, usually the delay in the disbursement process is mainly due to: (i) a late

process in one of the district level, resulting in the delay in proposal processing in the whole

regency level and (ii) also because the person who has the authority to give disbursement

approval is not available.


d. Who is responsible for managing the overall budget process?

i. What are their responsibilities?

From the Operating Manual we understand that :

• TPK in the village level has responsibilities to coordinate the implementation of all

activities in village and manage administration and finance (including budget) of

Rural PNPM. Person in charge in each level prepares weekly and monthly reports

using a designated template.

• UPK in sub-district level has responsibilities to manage the operational of inter-

village activities including fund for financing the activities/program. Supervisory

Board of UPK in district level reponsible to supervise the program/activities’

implementation as well as budget implementation managed by UPK.

ii. What reports do they produce and who get these reports?

Based on PTO Section VII, reports produced covering activities financed by Rural PNPM

are described in the following table 4 :

Table 4 : List of Reports

Source : Operating Manual, PMD – Explanation Section VII.

Nevertheless, based on an interview with the National Management Consultant

in Jakarta in March 2012, we know that weekly and monthly reports that also

covers financial statements and program activities in each governmental level

Submitted by Received by Copy Date of Submission Report

KPMD, TPK and UPK Subdistrict facilitator

n.a. 1st day of the month

• Problem Report

• Activity Report

Sub-district facilitator District-facilitator PjOK and District Facilitator

7th day of the month

• Activity report and plan

• Activity progress report

• Problem Handling report

Management Consultant – Provincial Level

Team Leader of National Management Consultant

Coordinating Team – Rural PNPM at provincial level

21 day of the month • Analysis report based on data compiled from sub-district/district facilitators

Team Leader – Management Consultant at National Level

National Satker 28th day of the month


must be submitted using the standard and applicable format both in hardcopy

and soft files.

iii. What information do they receive to monitor progress?

Information provided in the reports from the TPK and PJOK, as well from the facilitators,

comprise a progress report of the activities and the use of funds. Field surveys indicated

that the bookkeeping process on the use of funds is still carried out manually, which

time is consuming.

iv. What mechanisms are used to define budget priorities, review draft

budgets, and approve final budgets?

Typically the forum can submit three proposals. Before submitting the proposal to the

Village Forum, the Women’s Village Forum conducts their own meeting to decide on

activities that may include those related to education, health, or community

development. The proposal writer (TPU) then prepares three proposals to be submitted

to the sub-district level.

Based on PTO – Explanation No, IV, the Verification Team submits the recommendations

which will be discussed in the Inter Village Forum (MAD). All proposals will be discussed

within the groups. The discussion result then will be further socialized in the panel

forum to produce a list of activities based on priority.

e. Who is responsible for budget implementation?

The budget or the fund is disbursement directly from the state treasury office (KPPN) or State

Budget Service Office or Regional Cash Office to the PNPM account managed by the financial

management unit (UPK) through the following procedures:

a) Funds from the Central Government are allocated and determined by the Budget Office

at the Ministry of Finance.

b) Fund from Regional Government is taken from the Regional Budget or APBD under

regional regulation.

c) The proposal for fund disbursement to the State Treasury Office (KPPN) is managed

under the Directorate General of Village and Community Empowerment (PMD)

Regulations.


The field survey indicates that the fund will be disbursed from the sub-district level to the

financial management unit (UPK). Our field survey in Banten in April 2012, indicated that funds

can also be trasferred to Head of UPK’s account. For Papua, the regional cash office handles

RESPEK funds. A joint signature policy for this account is required. This is signed by the UPK,

village representatives, and the facilitators. UPK has no legal entity. At the moment, PMD is in

the process of reviewing and looking for solution for the legal entity issue.

The below figure 6 shows the mechanism of fund disbursed to UPK.

Figure 6 . Mechanism of fund disbursed to UPK

Source : Operating Manual – PMD, MOHA.

i. Who are responsible to and what are their responsibilities?

PIC who is in charge of the fund disbursement relied on the disbursement process in

each government levels. Each level has an assigned staff, who has a responsibility to

manage the disbursed fund/budget. In the sub-districtlevel, we know BKAD (inter village

coordinating board) and in the district level, an operational executive (PJOKab) is

assigned to manage the disbursed fund.The internal audit team in PNPM Mandiri in


Rural Areas has the duty to control the internal audit activities in many levels including

the auditing of fund disbursement.

For budget evaluation purposes, PMD uses the financial management unit (UPK)

evaluation.UPK is an institution at the sub-district level managing activities program and

revolving fund. In the interest of technical assistance by the finance facilitator and

district facilitator, and evaluation is also conducted on the UPK. It is intended to evaluate

UPK condition in conducting the finance management and revolving fund management.

ii. What reports do they produce and who gets these reports?

They produce weekly and monthly reports using a standard format. According to our

field survey in West Java, at the end of the activities program, TPK will prepare report to

be submitted to PJOK, which will in turn verify the report and submit them to the higher

level covering description of the activities.

The soft file format is also submitted for reporting activities based on our interview with

Natinal Managemetn Consultant in March 2012.

iii. What information do they receive in order to monitor progress?

The village implementation team (TPK), operational executive (PJOK) and facilitators are

all required to submit progress reports on the program and also the use of fund. The

reports are needed to monitor Rural PNPM activities such as:

• Activity performance

• Target achievement

• Progress Report(financial report and description of the activities)

• Target and Cost Realization

• Problem needed to be addressed.

• Community Participation Level

iv. What mechanisms are used to identify and address problems during the

year?

Regular evaluation of the report and complaint handling mechanism are used to identify

the problem.


The Operating Manual has defined the structural and functional reporting system. The

structural reporting system includes the person who prepares the report and who

receives the report such as head of TPK, PJOK, TK-PNPM Mandiri in regency level,

regent, TK-PNPM Mandiri in province and TP-PNPM Mandiri through the working team

of Central Rurap PNPM. On the other hand, functional reporting system includes

facilitator at district level, as well provincial level combined with head of team of KM-

National.

As mentioned above, although Operating Manual has clearly defined the reporting

process, it often takes time to prepare and complete the report. All reports are prepared

on computer-based documents that are manually inputted.

v. What are the consequences for poor budget implementation?

Poor budget implementation usually causes the postponement on program or activities

financed by PNPM, resulting a disadvantage for the community to recieve better

opportunies in infrastructure/facilities/education in their village or community. A delay in

the fund disbursement may also be caused by poor budget implementation. According

to our field survey in Banten on April, we have discovered that the delay in fund

disbursement from the provincial level can last for months. The budget has often been

allocated from the central level, but it should be first combined with the regional budget

(APBD), causing a delay in its disbursement. The delay in the fund disbursement could

also occur if there is a problem in the accountability reports in a village level.

In the broader view, the poor budget implementation could also result in the suspension

of the financial aid from donor agency. Nevertheless, the percent contribution form

donor agencies has reduced during the last few years.

The requirements that have to be fulfilled in order recieve the loan is that the program

should be implemented according to objectives determined by the lender. A failure to

meet the project development objective level result indicators as determined and agreed

by the lenders may cause the reduction of the funding for the next stage of this

program. These factors include improved HH expenditure rates and improved access to

economic and social services in a minimum of 4,978 sub-districts, EIRR of greater than

30% for main rural infrastructure categories, greater than 80% satisfaction level from

beneficiaries regarding improved services and local governance. (Source : Project

Appraisal Document Report No. 62151-ID, June 2014).


f. What role do parties outside of PMD play in regard to monitoring budget

implementation?

i. What other organizations are involved in monitoring or oversight?

Referring to PTO section 4.1.4, actually the implementation of Rural PNPM including

monitoring the budget and program implementation, has been conducted by the

independent parties such as legislators (DPR/DPRD), non-profit organization as well as

journalists.

From our survey in Sukabumi Regency, the monitoring process on Rural PNPM is

conducted by FITRA (the Indonesian forum for budget transparency), a Non Government

Organization (NGO). However, field surveys showed that monitoring process conducted

by NGO was often time consuming for facilitators in the field because they have to

spend long time to ask their questions on the implementation of the program.

ii. What organizations are responsible for or accountable for?

The organization is responsible to the Indonesian government, the public as well as for

donor agency/country.

5.1.1. Diagnostic Summary on Element 1 - Budget:

In the private sector usually budget is determined using a bottom up approach. Each division or

branch (in relation to Rural PNPM similar to village, sub-district and district levels) need to

prepare budget proposal that need to support the day-to-day activities in order to achieve the

company overall objective. Budget is prepared based on the need of each division/branch to

support their activities. The activities need to be financed should be clearly defined and

determined to support the overall company objective.

The proposal is then submitted to higher level of hierarchy to get approval before sending it to

the head office for consolidation purposes. The process of sending the budget proposal with

the same format from each division and branch to the higher level of authority can be passed

through the integrated online system. This process may accelerate the consolidation of overall

budget required to operate the company.

In the head office, after getting a consolidated budget proposal, usually the Corporate

Planning Division together with the Finance Director will review and analyse the budget


proposal proposed by all divisions as well as all the nationwide branches. After discussing,

meeting and getting further information from all key persons, the team at head office level will

align the budget proposal with the funds available to finance the activities or budget. The

analysis will also include the opportunity to get external funding and if internal funding (in

relation to Rural PNPM from APBN and APBD as well as other domestic sources) is insufficient to

meet the budget requirement.

There should be an annual review for budget implementation for each division/branch. Any

discrepancies or any budget variances occurred in each branch or division should need to be

explained by the division or branch. Overbudget asssessments may cause disincentives for the

next year budget proposal and may impact the individual perfomance evaluation. As mentioned

in the previous section, budget variance can indicate the difference between the proposed

budget versus the actual budget, indicating an opportunity to provide better policy option for

budget allocation.

With the similar analogy, before allocating amount of fund per sub-district in the range of IDR

1-3 billion, the GoI has to determine how much budget is actually needed to be distributedthe

each sub-district in Indonesia. Different approach for budget allocation to different region then

can be implemented.

Nevertheless, with the current situation of having limited staff assigned to monitor this

significant amount of budget, the Director General of Village and Community Empowerment

(PMD) has successfully provided national working units in both functional and structural

positions, with a proper budget implementation process including the procedure to determine

how the budget can be disbursed to finance the proposed activities. Amount of budget

disbursement has increased sicne Rural PNPM was launched in 2007.

KPM-PMD is considered successful in managing PNPM in order to provide transparent

disbursement process and facilitation to the community. In the transition period, if GoI will still

use the existing mechanism to allocate budget amount of IDR 1-3 billion based on total

population and poverty category, we need to:

(1) Strengthen budget procedures, completed with the duration on the activity proposal

submission, the review and disbursement process, with a standaridzed report format and code.

Therefore each authorised person can prepare what kind of work plans should be done to

monitor the progress of the proposal and when the budget will be distributed to them, and


(2) Establish new structure/functions in the organization at central and provincial levels for risk

management and compliance role with regard to budget allocation.

1. Redefine budget determination and implementation procedures

The existing procedures only cover the general overview on the disbursement of budget as

well as how budget will be transferred to the village account. The overview for budget

determination is only in the central level. As the budget for Rural PNPM will also be sourced

from provincial budget (APBD), procedures with a detailed flow chart on how the process

should be, how long the process should be taken, and which other functions will be

involved in this process must be clearly determined.

2. Establish new structure in the organization at central and provincial levels for risk

management and compliance

In the current structure of National Satker (national working unit) and new structure of

Secretariat Team of Rural PNPM established by the Ministry of Home Affairs, there is no

function related to risk management and compliance.

In the future, the bottom up approach applied to determine different budget amount for

different sub-district all activities related to budget/fund allocation should be strengthened

by the risk management and compliance function.

The approval should involve second opinion from the risk management and compliance

function. The risk assessment will include a report on the advantages and disadvantages on

the approval or disapproval on the budget proposed by a certain region. The risk

management function will help the decision maker provide the best decision for budget

allocation and implementation from the internal perspective.

On the broader view, we need to establish a compliance team who can comply the bugdet

allocation with the regulation established by the government or other stakeholders.

The below table 5 shows the strength and weaknesses on element of budget.


Table 5 . Strength and Weaknesses - Budget

BUDGETBUDGET


• With limited number of dedicated staff and insufficient system used, budget for KDP has been distributed nationwide since 1998 as well as for PMPN since 2007.

• A increased disbursement value

• No measurement on budget implementation.

• No budget variance analysis

• No assessment on real budget/fund requirement for each sub-district based on bottom up approach

• No risk management and compliance division within the organization to assess and evaluate the budget implementation.


5.2. Element 2 - Staffing and Human Resources Management

a. Provide a pictorial staffing plan for PMD

i. Identify how staffing is organized

1. By function, theme, geographic responsibility

At Central Level:

The National Satker or Secretariat of Rural PNPM with support from the NMC (national

management company) is expected to regularly review the function of payment controls of

the program. The Secretariat consists of around 60 staff. It has been supported by NMC for

national level monitoring and RMC (regional management consultant), which employs

consultant in each province to provide technical assistance and monitoring support.

PMD is currently in the process of formulating the structure and work flow of Secretariat to

manage the Rural PNPM. The draft of the Ministry’ Decree has been completed to

effectively and efficiently make the implementation of management of Rural PNPM. The

operational activities of the organization structure of the Rural PNPM Secretariatthat will be

daily led by the Sub-Directorate Participatory Development which will cover the following

roles (please see section 4 for detailed organization chart) :

• Programs, General Administration and Finance

• Institutional, Pilot Project and Problem Handling

• Project Management Consultant and Rural PNPM

• National Management Consultant

b. Identify each step in the process of hiring staff – and identify who needs to sign

off at each stage

i. Identify key bottlenecks in the hiring process.

Human Resources System covering recruitment and selection process system and

training needs an analysis to improve employee capacity, as performance evaluation is

limited.


Based on interview at the Central level, PMD’s recruitment process for government

officials (PNS)is not based on qualification for particular skills required in the position

due to the nature of recruitment for government officials.

An improvement on HR system is needed for career development and job

enrichment/job enlargement as well as staff placement. As a consequence, the job

grading – that provides grade and levels as well as clear job description of staff – needs

to be improved further.

c. Provide information on HRD staff for PMD at the central level, their core

responsibilities, and their primary work outputs.

Under the PMD, the Secretariat of Directorate General of Village and Community

Empowerment (PMD) handles the HRD functions. The division at the secretariat is called

Regulation and Personnel Division covering sub-division on regulation, sub-division on

personnel and sub division on system and procedures.

For managing PNPM, the program is handled by National Satker in the central level,

supported by 32 working units in the provincial level and 393 working units in the

regency level. There are two types of managerial functions - a structural function, which

is responsible for HR programs related to policy and regulation and a functional

function, which is responsible to control the whole HR program.

At the moment, PMD is in the process of finalizing the formulation of the organizational

and workflow for PMPN Rural including the HR function as explained in the below

section e (i).

d. Identify how PMD staff are evaluated – at each level and for each type of

function. Identify who does the evaluation. Define the consequences of good

performance and bad performance.

At the moment, the personnel department under Sekditjen evaluates PMD staff. All

supervisors should evaluate their staff in each directorate/sub-directorate.

Such evaluation is needed to develop proper HR performance-based system for PMD staff

in managing PNPM including, but not limited to transparent recruitment and selection

process. Training program based on training need analysis, performance evaluation,

incentive and disincentive system may cause the capacity of existing staff difficult to grow

with the program.


Therefore the consequence of good and bad performance can be properly assessed and

measured.

For facilitators:

Field survey in Sukabumi regency indicated that trainings have been provided to the

facilitator at least once a year. There is also a training provided prior to the work.

Although the number and quality of the trainings provided to facilitators are considered

in deteriorating trend, said some of the facilitators. The non-performing staff/facilitator in

the regency level as stated in every individual contract will be reported by regency level.

However the termination process will be done by working unit in the provincial level. The

cross-examined evaluation process from provincial level to the regency level will be

completed prior to the termination process. The difficulties to find replacement for non

performing staff should be resolved to continue the implementation of the program.

e. Who is responsible for overseeing HR performance:

i. To whom are they responsible and what are they responsible for?

Actually under the organization structure of Directorate Generate of PMD, the secretariat

of DG-PMD is responsible for human resources function under the government’s human

resource law.

Core responsibilities will include but not limited to:

• Manage HR for whole PMD, Prepare SOP and any related HR regulation.

• Prepare HR budget

• Monitor staff performance evaluation system as well as early warning system for

the consultant/facilitator assigned.

Note:

National Satker at Central Level and Provincial Level will be responsible for the appointment of

consultants and facilitators of Rural PNPM.

Under new organization structure and workflow as written in a Ministry of Home Affairs

ministerial decree draft (Source : draft decision letter Project Secretariat on Rural PNPM for the

year of 2012), the secretariat of Rural PNPM in the directorate level is proposed to have sub-

section of HRD function with the following responsibilities:


• Manage the development of HRD related to appointed consultants and facilitators who

manage Rural PNPM in central and province level.

• Prepare SOP and other policies in managing appointed consultants and facilitators

including recruitment process, staffing, performance evaluation and termination of

employment.

• Prepare budget related to Technical Assistance.

• Monitor the implementation of SOP and policies issued by Working Unit of the

Directorate General of PMD starting from recruitment process, staffing, performance

evaluation of termination of employment).

• Monitor and support the provincial Working Unit of Rural PNPM in managing facilitators

in regency and sub-district levels.

• Monitor the performance of National Management Consultant and Provincial

Management Consultant in implementing Rural PNPM and supervising the facilitators.

• Manage an early warning system related to consultant/facilitator management.

ii. What reports do they produce and who get these reports? :

The performance evaluation report is conducted by each directorate/sub-directorate.

Evaluation report from each directorate will be compiled and gathered at the personnel

department of the secretariatof the Director General of PMD.


Information received in order to monitor the progress is as follows :

a) knowledge on the program/activities,

b) how to handle the problem/issues,

c) how to manage the project/activities.


year?

The evaluation has been implemented for all levels of sub-district facilitator and approved

by the PJOK at regency level. The non performing facilitator could be replaced by other

facilitator who is selected by the provincial level as stated in their contract.

Nevertheless, provincial level will cross check the performance of evaluatin of the

facilitator prior his/her working contract termination.


v. What are the consequences for poor staffing performance?

Poor staffing performance could undermine the future of PNPM programs and cause

ineficient program implementation. As a consequence, the disbursement target as well as

other indicator determined by donor agency cannot be fulfilled, reducing the amount of

fund granted from donor agency and central GoI.

One of our field survey in Banten indicated that facilitator performance evaluation has

been conducted quarterly. Therefore,any irregularties on incompliance with the internal

procedure as well as irregulaties occured can be used as basis for the issuance of a

warning letter and the termination of contracts of the facilitators.

f. What role do parties outside of PMD play in regard to monitoring staffing

The initial role is to monitor how the facilitator and staff implement their work on day-to-day

basis. Parties outside PMD can provide information to the public or to the higher level if there

are irregularities occurring in the program implementation done by the facilitators/staff.

i. What other organizations are involved in monitoring/oversight?

Referring to PTO section 4.1.4, the implementation of Rural PNPM including staff who

manage the program, is also monitored by independent parties such as House of

Representatives and provincial councilors, Non Profit Organization as well as journalists.

In addition, under the proposed benchmark for a strengthened management and

government framework issued on June 10, 2011, the Ministry of Home Affairs has

asked for an improvement of the recruitment system and the evaluation of staff in order

to improve the qualification of the facilitators hired in the program.

ii. What are these organizations responsible to/accountable for?

The organization such as House of Reprensentative is responsible to the Indonesian

government, the public as well as for donor agency/country.

5.2.1. Diagnostic Summary on Element 2 - Staffing:

In spite of having insufficient capacity and limited number of staff in KPM-PMD, which manage

PNPM, PMD has successfully managed this significant fund for the PNPM program.

Nevertheless, we view that (1) the need to develop HR system including resource allocation and


incentive-disincentive policy which enable staff movement in line with government HR

Regulation, (2) and the effort to improve and strengthen PMD’s capacity should be further

developed to keep up with demands and monitoring of the program for effective management,

(3) and finally the synchronization activities and coordination between PMD and other

supporting consultants (NMC and RMC) in national and regional levels should be further

developed.

1. The development of HR system including resource allocation and incentive-

disincentive policy which enable staff movement in line with government HR

Regulation.

The revised HR Policy which clearly defined the HR function starting from selection and

recruitment, training need analysis, performance evaluation, job grading, incentive and dis-

incentive system and staffing should be provided to the new team of the secretariat. The

assessment can be started from the people itself, which cover organization restructuring and

remodeling, executive support on the strategic planning and implementation strategy as well as

corporate culture development. Business Process for every activities and workflow within the

organization as illustrated in figure 7 should be reviewed and redesigned (if necessary) to

provide the organization with the more effective process. The technology development will be

discussed further in the segment of program implementation.

Figure 7.Existing Business Process Review

Source : PT Independent Research & Advisory Indonesia, 2012

People

OrganizationModel

ExecutiveSupport

HR System andCapacity

Development

Process

GoodGovernance

PoliticalFactors

Strategic andImplementation

Planning

Technology

MIS Audit,Preliminary

Assessment ofGAP

Integration ofcomputer

application,interface and

Design Architecture


In the human resources strategic planning, the resource allocation is a plan for using available

resources, especially in the near term, to achieve goals for the future. It is the process of

allocating resources among the various projects or organization functions. Currently, the

management spends too much time on lower level administrative work that could be

automated by a system. Instead, the management should focus more on strategic concerns for

the PNPM program. Incentives can be among the most important drivers in individual and

community performance. Disincentives are needed to prevent staff from falling behind or not

performing. These are important in maintaining staff performance and retention. In the case of

PNPM, these apply to both the civil servants and the hired professionals. The revised HR system

which include the development of new structure of placement as well as performance

evaluation will enable the management to apply the incentive and disincentive mechanism for

its staff both in functional and structural lines. Performance evaluation may provide score for

individual assessed. Above average and outstanding result gained from performance evaluation

are used for determining future incentive or benefit to the staff/facilitator. Nevertheless, any

negative evaluation should be given a “disincentive” to the evaluated staff/facilitator through a

low increase in salary growth or no promotion or even terminate the employee/staff/facilitator.

Figure 8 shows the step to achieve high performance value and behaviour of the staff by

developing corporate culture and strengthening the organization structure.

Figure 8.Strengthening Organization Structure

Source : PT Independent Research & Advisory Indonesia

According to our interview at central level, the Ministry of Home Affairs is one of the ministries

that will implement bureaucratic reforms starting in June 2012. Therefore, the structure and

number of civil servants are expected to meet the ideal number to efficiently perform the


necessary governmental duties and functions. Based on the experiences at the ministries that

have previously implemented the reforms, such as the Ministry of Finance, BPK (Supreme Audit

Agency), and MA (Supreme Court), it appears that the bureaucratic reforms have indeed

resulted in positive impact in staff performance.Thus, this reform policy, in turn, is likely to bring

about better implementation of the Rural PNPM program. One positive aspect of the reform is

the evaluation of structural assignment, as each employee will have a clear job description. Their

performance will be measured based on their assigned responsibilities and completed tasks. The

optimization of budgets will also occur.

2. The improvement of PMD’s capacity should be further developed to keep up

with demands and monitoring of the program for effective management.

At the moment only limited staff assigned to manage PMPN under National Satker. The

capacities of the staff in terms of number of staff and knowledge that they need to have should

be fully planned by the Government. It will take time to prepare PMD’s staff to fully manage

PNPM. Training program both in technical and soft skills should be conducted regularly. In

addition a fully dedicated staff need to be appointed to manage PNPM, under the selection

competitive processes.

The important action to support the above factor has been conducted by the Ministry of Home

Affairs. At the moment the ministry is in the process of finalizing the Ministry Decree covering

organization and work procedures for team of secretariat to manage effectively Rural PNPM for

the year of 2012. This can be seen as part of the management action to establish more focused

team to manage PNPM. The formalization of this decree need to be fastened by getting the

signature and approval from the Minister and/or Director General for PMD. It would be better if

the team of secretariat structure can be implemented not only for 2012 but also for the next 3-

5 years. We need to give opportunity for the team to show their works during 3-5 years period

on how they manage the program. However, the performance evaluation system for the

appointed/assigned staff within the National Satker or Umbrella Secretariat, can be completed

once a year.

Another initiative initiated is to develop an “umbrella secretariat” at the ‘Sekditjen’ level to

coordinate all PNPM-programs under PMD.


3. The synchronization and coordination improvement between PMD and other

supporting consultants (NMC and RMC) in national and regional levels

One of the significant factors to continue manage this program more effectively is by using the

effective communication and coordination system as illustrated in figure 9. A new committee

which is derived from senior management in functional and structural lines will be essential to

be developed that make easier for government to review the progress and to know PNPM

status.

Figure 9. Coordination process in organizational changes

Source : PT. Independent Research and Advisory Indonesia, 2012

The coordination system between functional and structural line should be clearly defined to

avoid miscommunication and confusion for facilitators as well as duplication of assignments.

The higher level committee should be established to make coordination process between

functional and structural line more effective. Detailed job description for structural and

functional lines in all government level, should be determined. The job analysis, to assess the job

weight and load will first determined before finalizing the job description. The following table 6

indicates the strength and weaknesses in staffing:

COMITTEE(comprised of seniormanagement from

function and structuralline in central and

provincial level)

StructuralFunctional


Table 6 . Strength and Weaknesses - Staffing



• Even with limited number of dedicated staff, insufficient capacities and limited supporting facilities, PMD can successfully manage and implement the Rural PMPN.

• No dedicated staff for managing PNPM.

• Insufficient Human Resources Management System and Guidelines


• Need to further improve the involvement of provincial and lower government levels in managing PNPM.


5.3. Element 3. Program Implementation

1. Program Implementation

a. Identify the procedure/processes that currently exist to monitor program

implementation – at central, provincial, and local levels.

At the Central Level

As stated in the manual, monitoring activities conducted by the National Management

Consultant or other relevant parties became a very important matter to maintain the quality and

quantity of the implementation of program activities, as well as input material to perform the

evaluation or plan the anticipatory measures in implementation activities. The supervision and

control process shall be made according to the result of the evaluation of the progress of the

activities and performance of program implementation. Actually the real monitoring of PNPM

Rural is handled by functional reporting line which is under coordination of the national

management consultant team leader (TL-KMN). TL-KMN will report directly to National Satker at

the central level, who is led by sub-directorate level in PMD-KPM.

At the provincial level:

Coordinator at the provincial level are the one who directly report to the central level, and

manage the program implementation under their scope.

At district level:

From our interview in regency level in West Java, a feasibility study test for project

implementation is completed after a project proposal has received verification results.

However,according to our sources, there are no quantitative measuring devices in the PNPM

system to evaluate the quality of the project.

The factors that are measured are achievements, number of beneficiaries, level of employment,

paid salaries, workload, as well as community usage of the project/program.

i. Be specific – what is being monitored.

The level of community participation is monitored. A higher level of community

participation may lead to positive impact on the program to society. In addition, the

amount of disbursed fund and number of infrastructure/facilities developed by the

program are also another factors that are monitored by the central level.


b. Identify the specific information that is provided – by who, in what frequency, in

what form. Be specific about information required regarding each aspect of

project implementation.

Structural reporting line involves several parts from the creator of the report and the receiver

such as TPK Head, PjOK, sub-district head, regency PNPM work unit, the Regent, provincial

PNPM work unit, the PNPM Rural controlling team, and the central PNPM working unit. The

following points show the Mechanism of the structural reporting line:

• The TPK Head with the guidance of the sub-district facilitator will create a monthly report

that is submitted to PjOK

• PjOK with the assistance of the sub-district facilitator will review and begin to take the

necessary actions after receiving the report from the TPK head.PjOK will then compile a

monthly report that is submitted to the Regency and the regional PNPM working unit with

copies of the report delivered to the sub-district head and the archives.

• The PNPM Regency Work Unit Head will then create a quarterly report based on the reports

from PjOK, results from the evaluation meetings, and field visits. The quarterly reports are

submitted to the Governor through the Provincial PNPM-Rural working unit with copies

sent to the regent and archives.

• The provincial working unit will then create a summary from quarterly reports from every

district or regency that is then forwarded to the PNPM-Mandiri control team that is

addressed to the Rural PNPM working unit with copies delivered to the Governor and the

archives.

Important or urgent matters can be reported anytime. There are no policy regarding the format

or timing of the submission of the report.

On the other hand, functional reporting line involves the creator of the report and the receivers

of the report. These include sub-district facilitators, regency facilitators, the provincial

management consultants, and the national management consultant team leader. The

mechanism of the functional reporting line goes as follows:

• The sub-district facilitator will create a monthly report regarding the development of the

implementation of the PNPM rural program in the sub district level. The report is then

given to the regency facilitator coordinators (KF-Kab) on every 7th day of the month

with copies submitted to PjOK and archives


• The district facilitator will then create a monthly report based on the reports from the

sub-district facilitators and site visits along with the coordination of related parties. The

reports are then submitted to the provincial management consultants on every 15th day

of the month with copies delivered to the Provincial PNPM working unit and archives.

• The regional management consultants will then administer, keep, and use them as a

basis for further analysis (if required)all the data and information from the KF-Kab

reports, results from coordination from several parties, and site visit reports. The

consultants would then take necessary measures and include the steps into a monthly

report to the Team Leader of the national management consultants on every 21st day of

the month with copies delivered to the PNPM- provincial working unit and archives.

• The National management consultant team leader will then report to the Central PNPM

Rural working unit regarding the development of the entire implementation of PNPM

Rural as well as issues that require further action. The report is delivered to the working

unit every 28th day of the month.

Urgent or special cases can be reported outside of the regular reporting line.

c. Based on interviews and spot checks - what proportion of information required

to be provided is actually provided.

From field survey, the required information is presented in its entirety. For example, for technical

reports, the information includes;

• the types of the infrastructure

• name of the village

• project budget and its realization.

However, based on interview with Planning sub-directorate in the central level, there are no

tools to measure the quality of the project within the sub-district level in relation to

impact/outcome, eg village performance which is measured before and after community

development. This reason is also confirmed by Coordinating Ministry of Social Welfare.

It is written in the PNPM Manual that in the report should at least present the following six

important factors:


• Current activities

• Achievement of the objectives and or the goal for the activities

• An overview to the progress of the activity

• The target and realization of funds distributed to the project/activities.

• Problems or constraints that are faced, including their follow up

• A description on the level of community participation in the program implementation

d. What are the mechanisms by which project implementation information in

reviewed and analyzed?

The controlling mechanisms for PNPM Rural are done through monitoring, supervision,

evaluation and reporting towards implementation and follow-up activities. The control towards

the entire process and activities of PNPM Rural is to:

• Ensure that each process of the program is according to rules, principles, and policies of

PNPM Rural

• Ensure that the results of every step of the activity goes through the right mechanism

and procedures

• Control the implementation process according to specified plan

• Protect the quality of every activity to fulfill the specified criterion

• Regulate the utilization of funds according to the planned budget and ensure

transparency

i. For each dimension of project implementation that is monitored, define who is

responsible for receiving the reports, and their responsibilities for

reviewing/analyzing the reports.

Each levels at central, provincial, regency and district has an authorized person who are

responsible in receiving and reviewing the reports as described in the above section 5.3.b.

ii. Based on interviews and spot checks, what types of information are typically

reviewed and where does review most often breakdown.

Types of information are typically reviewed as mentioned previously are as follows:

• the types of the infrastructure or activities financed by PNPM

• name of the village

• project budget and its realization.


Other information includes implementation process, problems and improvement plan to face

the problem.

f. Who has overall responsibility for overseeing program implementation – at

each level?

i. To whom are they responsible and what are they responsible for?



At Village level:

Village Head: In charge of coordinating all PNPM related development activities in the

village. He/she will also inspect every report, including the closing report from the

physical, administrative, and financial aspects

Village Consultative Forum: They play a role as an agency to oversee every process of

the PNPM Rural from socialization, planning, implementation, and maintenance of the

facility. The report that is made is not known.

Management Team (TPK):

Their task is to:

a. Ensure that the labor force comes from the poor households (RTM),

b. Monitor and regulate work,

c. Make monthly reports,

d. Socialize the accountability of project funds and its progress during village

meetings and placing the reports on village information board

In carrying out its activities, the team will receive input from the sub-district facilitators.

The management team will also need to make a plan for the procurement of materials

and tools, coordinate labor, payment incentives as well as materials according to

standard. This information is needed as a data to create monthly reports

Once the activities have been finished, the team will provide a fund accountability report

as well as its disbursement phases in the village meetings.


Monitoring Team: This team is tasked to monitor the progress of activities in the

village. The monitoring result will then be submitted at Musyawarah Desa (Musdes) and

MAD.

Village Community Empowerment Cadre: To facilitate and to coach village

community in implementing PNPM’s process covering planning, implementation and

maintenance of the projects/activities.

At Sub-district level :

Sub-district Head: The sub-district head on behalf of the regent acts as an adviser for

the PNPM Rural program. He/she is in charge in monitoring and evaluating

accountability reports from every village. The sub-district head monitors the

maintenance and development plan of the revolving fund activities. He/she is also

responsible in the managing activity reports of both financial and non-financial nature.

Operational Executive (PjOK): They are responsible in executing the operational

activities and the performance on PNPM’ activities in sub-district level.Activity

Management Unit (UPK): The Unit is responsible for managing and operating the

activities inter villages. The Unit is also assigned by MAD/BKAD to manage PNPM’s fund

as well as revolving fund.

Verification Team: This team is responsible for reviewing and evaluating the proposed

activities from the village on Rural PNPM and for providing rcommendation to MAD as a

condiseration for decisiong making process.

Local Assistants: To help Regency Facilitator in facilitate community in implementing

Rural PNPM’s process starting from planning, executing as well as maintaining the

project/activities.Sub-district Facilitators: The facilitators are responsible for facilitating

community in every step of Rural PNPM’s implementation process including

socialization, planning, executing as well as maintaining the project/activities. In

addition, the Sub-district facilitators is also responsible to train and coach cadres and

other Rural PNPM’s person in the village and sub-district levels.

Activity Management Unit (UPK) Supervisory Board: They examine and evaluate

transactions, receipts, project documents, administration, and financial management

reports and loans that are managed by the management unit. The Board’s function and

responsibilities are assigned by MAD/BKAD.


Inter-Village Cooperation Agency: They are responsible for the inspection,evaluation

and performance of the activity management unit.

At Regional Level

PNPM Rural Regency Level Coordination Team: The team is responsible for

evaluating and monitoring the implementation of the program. They analyze documents

from PjOK from every aspect of the activity, which includes preparation of the

community, activity, technical, empowerment, implementation, management, and

maintenance. They compile monthly and quarterly reports to be submitted to the regent

and submit a copy to the provincial level coordination team. This includes issues found

within the program as well as recommendations. They assess program performance in

the village and regency level. They are responsible for the management of both financial

and non-financial documents.

Regional Operational Executives (PjoKab): They report the results from the SAI

meeting to the national secretariat for PNPM Rural through the regional coordination

team. They produce periodic and incidental repots to the coordination team. They also

select, monitor, and evaluate consultant performance they exist in their area. They

perform monthly supervisions and monitoring technical and administrative issues.

Regional Facilitators: They carry out examination and evaluation of the

implementation and financial management at the UPK and TPK. They conduct site visits

to enforce the program principles from the aspects of planning, disbursement,

utilization, implementation, and management. They conduct monthly meetings with

district facilitators to evaluate monthly reports. They also discuss issues and increase the

capacity for each facilitator. They document and archive every report from various

formats. They evaluate district facilitator performance according to the agreed

indicators. They then report to the provincial management coordinator. They produce

monthly reports according to the program rules to the NMC through the provincial

management coordinator and the regional working unit. They produce the closing

report and report activity progress and budget realization to the regent through the

coordination team with a copy submitted to the regional operational executive.

Regional Technical Facilitator. They manage surveys to measure the activities

facilitated by the district facilitator. They review RKTL in relations to the community

implementation schedule. They supervise the certification process that is conducted by

the district facilitator towards the acquisition of materials and tools, as well as


construction completion. They gather samples towards the certification of materials and

labor. This is at least done to 2 random villages. They conduct monthly progress

meetings with district facilitators. They report any progress on the technical issues and

efforts to solve them to the regional working team. They submit copies to the provincial

coordination management team. They prepare and submit a monthly or incidental

progress report to the regional management coordinator.

UPK Assistants: They monitor development of the UPK and community. They facilitate

the revolving funds systems within the district level. They data and review the

development of microfinance institutions and local economies. They prepare reports on

financial performance analysis of the UPK.

At Provincial Level

Governor. The governor oversees the Provincial coordination team’s performance

Provincial Coordination Team for PNPM Rural: They monitor and evaluate the

implementation of the program and it’s follow up. They prepare a quarterly report that

is submitted to the governor and submit copies of the report to the central coordination

team. This report includes issues and recommendations. They evaluate performance of

the program on the village, district, regional and provincial level.

Provincial Operational Executives (PJO Provinsi): They monitor technical and

administrative aspect. They produce periodic reports to the provincial coordination team

regarding the SP2D, SPM, SAI programs and report them to the national secretariat of

the PNPM Rural program.

Regional Management Consultants: The consultants monitor and supervise

socialization, planning, implementation, and management activities and coordinate

quality control. They produce periodic and incidental reports to the provincial

coordination team regarding the SP2D, SPM, and SAI programs and report them to the

national secretariat. They monitor and coordinate performance evaluation of the

consultants according to their working area. They provide regular and incidental reports

to the national secretariat as well as manage progress reports and issues encountered to

the national secretariat.

Province-Based Monitoring (PBM): This division observes and collects information

and report their findings to the persons involved with the PNPM Rural program. They

also directly observe every step of the activity from its conception, implementation,


control, management, and maintenance. They monitor financing and accounting of

every district and village. They provide reports that require immediate attention to the

provincial management coordinators with copies submitted to the national secretariat.

They also present findings from monthly provincial coordination meetings.

At National Level

National Secretariat under KPM-PMD: They monitor and facilitate the maintenance

of the PNPM Rural programs of the communities that are no longer funded by the

program. They supervise and monitor the overall performance of the program and

perform evaluations based on the target achievements of the program, which include

physical and socio-economic goals. They prepare and submit monthly reports that are

consolidated from consultant reports, which include findings from their supervision to

the national coordination team. They select, recruit and propose placements according

to the characteristics and backgrounds of consultant assistants.


year?

PMD through its Standard Operating Procedure Manual has defined the structural and

functional reporting system covering the program implementation. The reporting system

should be submitted on regular basis.The structural reporting system includes persons

who prepare/create the report and who receive the report eg. Head of TPK, PJOK, Head

of District, TK-PNPM Mandiri in Regency level, Regent, TK-PNPM Mandiri Province and

TP-PNPM Mandiri through Working Team of Central PNPM. On the other hand,

functional reporting system will include facilitator at district level, regency level as well

provincial level combined with Head of Team of KM-National. Any deviation on the

implementation of the program should be identified and addressed during the year. In

addition, the manual also allows the important or urgent matters can be reported

anytime. There are no regulations regarding the format or timing of the submission of

the urgent matters reports.

v. What are the consequences for poor program implementation?

The consequence for poor program implementation is a delay in village development,

disadvantage on the community and reduction on budget allocation.


From broader point of view:

One of fund sources that government used to finance this program is a loan from the

World Bank. To ensure the program including its budget is implemented according to

the expected objectives, the lender determines/agrees several indicators of performance

for the successful program. A failure to meet the indicators or parameter determined by

the lender such as improve HH expenditure rate and improved access to economic/social

services in am minimum of 4,978 sub-districts, EIRR of greater than 30% for main rural

infrastructure categories, greater than 80% satisfaction level from beneficiaries

regarding improved services and local level governance may result in the change on the

loan covenant for next stage of this program.

g. What role do parties outside of PMD have in regard to monitoring program

implementation?

The role of parties outside of PMD in monitoring program implementation is:

• To maintain all programs are implemented in line with the policy and regulation of

PNPM Rural.

• To keep the output/outcome for any activities obtained through the proper processes

and mechanisms.

• To control the utilization of funds in line with its plan transparently

• To maintain the quality of any activities carried out in order to meet the criteria and

procedure established

• To audit the financial of PNPM Rural

i. What other organizations are involved in monitoring/oversight?

Usually the monitoring process can be conducted by all persons related to PNPM Rural such as

community, government officials in all levels, facilitators and consultants assigned to this

program. Nevertheless, other organization such as House of Representatives and Local House of

Representatives, Non Profit Organization, the press, and donor agencies and the community

have also been given the opportunity to monitor the project implementation and to establish

the special team to monitor the project through village forum. By having cross sectoral

monitoring team, the success of PNPM Rural can be further improved.


The formal external monitoring team is BPKP, a state auditor assigned in Loan Agreement

between the Indonesian government and the World Bank in collaboration with Local

Supervisory Board or Bawasda.

ii. What are these organizations responsible for/accountable for?

The organization is responsible to the Government of Indonesia, the public, as well as to Donor

Agency/Country.

5.3.1. Diagnostic Summary on Element 3 - Program Implementation

At the moment:

• Documents for program implementation are placed in storage without a proper

cataloging system making it difficult to find necessary documentswhen they are needed.

• Documents or report format varies and there is no standard report form.

• The hard copies of the reports pile up and cannot be efficiently used by staff.

• The physical amount of report piles that are stored in humid conditions are a health

hazard to the secretariat staff

• Current SOP is without attachment on detailed flowchart on how the program

implementation system should be executed (with person in charge, reporting format

and code as well as time to finish the process).

A Management Information System (MIS) provides information, which is needed to manage

organizations efficiently and effectively. The management information systems involve three

primary resources: people, technology, and information or decision-making. Current MIS design

has led to a fragmented system, insufficient checks on data quality as well as gaps in

reporting.On one of our site visits to the Secretariat, we noticed piles upon piles of document

folders with 60 – 80 page reports that are only used if needed. Due to the deteriorating

condition of the building, water leakages have destroyed some of the documents. The humid

conditions combined with stacks of untouched paper also provide a health hazard to the staff.

The poor working conditions of the Secretariat office suppresses the moral of the secretariat

staff that oversee an important and nationwide program. In addition to this, the lower level

facilitators would present their reports via SMS, which in turn will be inputted manually into

Microsoft Excel and then sent to a top layer to manually process into a report. The Excel

document itself is not simplified. In one of the excel spreadsheets that contained a

disbursement report, we find it difficult to draw generalizations due to the massive amount of

directly inputted data into the document. On the middle to top layer of management, key


stakeholders such as the Minister, the Director General, and the donors have to wait an

unnecessary amount of time to receive general progress reports on the program due the

inefficient reporting system that cause a massive bottleneck in the secretariat level. To further

success the program implementation, PMD needs to have:

1. An integrated Management Information System that supports the provision of

timely and reliable data/information is highly essential to properly monitor the

implementation of the program and to accelerate the decision making process (if

needed).

An integrated information system is needed to streamline the reporting process, which in turn

will ease the reporting burden that is currently facing PMD. A comprehensive system analysis

will be carried out for a complete redesign of the MIS platform, an interface system that link

with existing system and other system in other Ministry.The method which will be used is a

combination of the use of mobile phones at the data collection level and database management

software at the analytical and policy making level.By simplifying the checking process in each

bureaucratic layer, data inputted by the lower levels will be collected into a centralized

database.The system will integrate both reporting and monitoring in a simple interface through

a system of text messages so that the system can be accessed to any kind of mobile phone.

Data received will be uploaded into the main database in which reports are updated real time

and produced instantly. Staff associated with data collection and reporting will input their data

directly into the central database, which supervisory staff can easily access and approve. Not

only will this save time, but it may also reduce the amount of staff needed for this program.

Figure 10 below illustrates the concept of the program.

Figure 10. PNPM InformationSystems Concept

Source : PT. Independent Research & Advisory Indonesia, 2012.


In our concept, facilitators in the lower to middle level hierarchies will be responsible in

inputting their findings towards the central system via SMS. There will be a simple SMS

interface, designed similar to network provider options, in which users will input the data

according to the category. It can also be a simple checking system which ensures that data

entered is complete and in the right format. Mid-level facilitators are also required to input data

to verify the validity of the data from the low-level facilitators.A simple notification system will

also be included in order to remind the facilitator of deadlines or missing data required. Each

user will have a unique identification code based on their mobile phone network. The interface

will also include a complaint section that will be processed immediately to the central data and

delivered to the complaints handling sub-division in the secretariat.

For the middle to upper layer of management, data will be organized according to their job

description and things they need to monitor and verify. They will be able to use their mobile

phones for brief data snapshots or access the database via computer to either view the

automatized real-time reports or extract data. This will facilitate the spread and processing of

information to all layers of management for the PNPM program, thus bringing information to

their fingertips.

This will make it easier for PMD to do further analysis on performance in project areas

throughout Indonesia. Ultimately, the data provided will make it easier for the management to

strategically plan human resource and financial allocation. With the simplification process, this

will ease the workload of the Secretariat and even reduce the amount of consultants needed at

the provincial and government level. Additionally, the digitization of data will solve the ever-

present storage issue that plagues the Secretariat. Therefore, the point of implementing an

integrated MIS is not to change the management structure, but it is to simplify and streamline

the already existing bureaucracy. Initiative to explore the development of interface system with

other ministry should be considered by the Directorate General of PMD.

At the moment, PMD assisted by AusAID is in the process of auditing their information system.

The dealine for finalizing IT auditing process will be on the third quarter of 2012.

2. Capacity improvement for a new MIS and existing MIS staffing

A new MIS requires an integrated database system that can both collect and use data from

various media, such as mobile phones and computers. Additionally, training need analysis to

prepare training program/sessions would be necessary for all facilitators and users of the

system. The recruitment and selection process for all MIS vacancies would also be essential to


support the implementation of the new MIS in addition to review of all MIS function and

position in coherence with overall job analysis.

The project secretariat organization structure for 2012 for Rural PNPM as provided by PMD, is

not equipped with the function of MIS. A new division focused on MIS is therefore necessary.

Nevertheless, for the new proposed creation of Umbrella Secretariat, a function of Data and

Information is established.

The table 7 below shows the strength and weaknesses on PNPM program implementation.

Table 7 : Strength and Weaknesses – Program Implementation



• Increased number of village significantly since 1997.

• Increased number of program variation.

• MIS audit to support the program implementation

• Need to accelerate the development of an integrated Management Information System which can support the provision of timely and reliable data/information. MIS is highly essential to properly monitor the implementation of the program and to make right decision.

• Need capacity improvement for existing MIS staffing


5.4. Element 4. Contract Fulfillment

a. How is the performance of the national and regional contractors monitored?

1. What information do the national and regional firms provide to PMD – in what

form, in what frequency?

NMC and RMC are teams that support the National Satker of PMD at the Central Level,

handling the implementation of Rural PNPM, which has been designed by PMD. NMC reports

directly to the Institutional and Community Development Director of PMD who is also under

coordination of PPTK (technical executive). NMC has the responsibility to prepare monthly,

quarterly and annual reports covering recapitulation of the number of villages, total budget,

funds disbursed and other data such as complaints, number of problems that need to be

addressed, and the identification of problems in each sub-district.

In addition to the above reports, the consultants also provide monitoring and supervisory

reports, audit reports, and early warning system reports as well as other documentation related

to Rural PNPM activities.

2. How does PMD monitor contractual fulfillment in the following areas:

a. Recruitment of facilitators

Recruitment is done through a bidding process for corporations, conducted by the management

of National Satker at Central level. Open recruitment for individuals is conducted at provincial

Working Unit. The bidding process usually starts at the beginning of each year. To comply with

the World Bank policy and procedure, the bidding process takes approximately 6-18 months to

complete for corporation and around 1 to 1.5 months for individual. Based on our interview

with National Management Consultant, since 2009 PSF has asked PMD at central level to be

involved in the appointment process of facilitators in provincial level in order to avoid collusion.

b. Management of facilitators.

At the regency and provincial levels, there are meetings conducted annually to formulate and

provide guidelines for program implementation. The meetings also serve as a learning forum for

each party involved in the implementation of Rural PNPM. Supervising implementation as a

basis for evaluation has also been conducted by PMD twice a year by district facilitators. This

can be used as a learning forum for district facilitators.


c. Training of facilitators

Based on the interview with NMC, the purpose of the annual training program for facilitators

conducted by PMD is to provide a refreshment for facilitators/consultants. The NMC called is a

refreshment program for the facilitators. Nevertheless, there was no training program

conducted last year.At the provincial and regency level, there are routine monthly meetings to

discuss any problems in each region.

The need to deploy and retain qualified facilitators and manage their performance adequately is

essential for PMD. Based on a draft report dated June 10, 2011, we understand that the

training program must be further developed through a training need analysis in order to comply

with training requirements. In addition, the quality of management of facilitators has declined,

and therefore, a system to replace non-performing facilitators should be established. The

selection and recruitment process for facilitators, including a system of incentives and

disincentives must be designed to avoid difficulties in recruiting qualified facilitators for remote

areas.

To monitor the performance of the facilitators, PMD has reviewed the facilitators regularly using

assigned performance evaluation instrument.

Note :

At the moment, government is in the process of establishing an institution called Lembaga

Sertifikasi Profesi (proffessional certification institution), which will also associated to

professional associations. Based on interview with Planning Sub-directorate, the institution will

be formally launched in year 2013. To become a facilitator, people will have to go through a

certification process. By next year, PMD is estimated to have 1,000 certified facilitator

professionals. There are about 30,000 facilitators for managing PNPM including Rural PNPM. In

the next five years, PMD aims to have full coverage for the basic certification.

3. What does PMD do with the information it receives? What mechanisms exist to

review the information?

Based on the field survey, currently there is no mechanism to review all reports submitted from

all regions. Reports are only documented for audit purposes.NMC has collected all reports from

the regions, and none of these reports have regularly been further reviewed or analyzed by


PMD. Occasionally the quarterly reports are compiled by NMC and used as a basis for

formulating further policy by the Controlling Team (if required).

From the manual of implementation management and working mechanisms designed by PMD,

we understand that the National Satker at the central level has the authority to manage the

functional tracking of information distribution in Rural PNPM as well as the authority to issue

manuals/guidelines/systems and procedures. The National Satker can also supervise and

evaluate the performance of the NMC or RMC companies based on reports provided to the

National Satker in PMD/Ministry of Home Affairs. Finally, the National Satker also develops an

evaluation team for monitoring the performance of specialists assigned by the NMC or RMC

companies.

4. Who has overall responsibility for overseeing contract performance at each level?

Provincial Working Unit is responsible for supervising and monitoring of contract performance.

They directly evaluate the facilitators at the regency and sub-district levels. Nevertheless, due to

collusion, some evaluations are not objective, resulting an above average performance result for

the affiliated facilitators.

From a Rural PNPM Consultant, we have information indicating that PMD controls the contracts

for all facilitators. In 2010, instrument to evaluate the facilitators’ performance was established.

In 2011, however, the system is needed to be upgraded since unfair and subjective evaluation

of the facilitators was found. The evaluation is conducted quarterly. Ideally, non-performing

facilitators cannot be extended beyond 6 (six) months.

i. To whom are they responsible to and what are they responsible for?

Reports are supposed to be submitted to the working unit at the provincial level

through regency facilitators. The regency facilitators


The reports produced are called Individual Facilitator Reports. There is no indication that

the person who receives individual reports from more than one facilitator should

compile and analyze the individual reports.



As mentioned in PTO or Operation Mannual, the facilitators are required to provide

monthly individual reports. The reports contain information related to individual

contracts such individual implementation/realization of assignments. The content of the

reports also includes the implementation of main task/assignments as well as

administration report such as activity report, Call Report, Work Plan and Realization of

the monthly activities.


year?

Facilitators in the sub-district level prepares monthly report on the development of the

Rural PNPM’s activities in the sub-district level. The report then will be submitted to

District Facilitator (KF-Kab). Based on this report and further field visit reports conducted

by Provincial Facilitator, the Provincial Facilitator will submit a report to the Management

Consultant at the Provincial Level (KM-Prov). KM-Prov will administer the data and

report submitted by the lower level, and prepare monthly report to be submitted to KM-

Nas (or National Management Consultant).

The facilitators at the lower level willl identify the problems arising on a monthly basis

(from village, sub-district, regency, provincial and central level).

v. What are the consequences for poor contract performance?

The poor contract performance may lead to termination of the non-performing

facilitators although it will take time to find candidates to replace the non-performing

facilitator.


5.4.1. Diagnostic Summary on Element–4 - Contract Fulfillment:

Though they have limited support facilities, PMD and TL-KMN have successfully managed the

large number of consultants and facilitators- more than 10,000 staff. Through the

Implementation and Working Mechanism Guideline on Rural PNPM, PMD (including the

National Satker) has provided a general overview on how to evaluate both individuals and

companies who manage the consultants or specialists. The National Satker at the Central Level

also has the authority to establish an evaluation team that can give performance evaluations to

both specialists and consultants appointed by the NMC/RMC Companies. Nevertheless, the

procurement process needs to be simplified and the staff capacity need to be improved to

accelerate the appointment of the third party. The evaluation will be based on the actual

performance versus the terms and conditions as agreed upon in the contract. Nevertheless, the

guidelines should be incorporated, with detailed procedures and a summary of important

factors for the contract, evaluation process, and replacement process. Evaluation reports need

to be submitted to the authorized person for evaluating NMC/RMC as well as the facilitators on

every level. Table 8 below shows the stengths and weaknesses on contract fulfillment.

Table 8. Strength and Weaknesses - Contract Fulfillment

CONTRACT FULFILLMENTCONTRACT FULFILLMENT


• Limited staff can manage large number of consultants and facilitators.

• General overview to manage the facilitators is available.

• Terms and Condition of contract should be attached in procedures/manual

• Selection and Recruitment Process should be transparent and nationwide coverage all the year.

• Performance Evaluation Form and System should be upgraded or improved

• Need further guideline on how to monitor the information and report provided by the lower level team.

• Socialization and Simplification on the procurement process to accelerate the appointment of the facilitators/corporation.


5.5. Element 5. Response to complaints/corruption

a. Identify each step in the process of receiving and responding to complaints

regarding corruption – for each step, identify the party who is responsible for

performing the required action.

Figure 11. Complaint Handling Process Flow

Source : Operating Manual-Rural PNPM – MOHA, 2008

The above figure 11 indicates the process of receiving and responding to the complaints

regarding corruption as stated in the Operating Manual.

Complaint

Disseminate the results of the problem handling

to the public

Reporting of the perpetrator

O!cial Intervention

Problem handled by higher level o!cer

Case Closed

Case Not Closed

Cross examination/ clari"cation

Not Con"rmedCon"rmed

Complaint Handling Process Flow


i. Who needs to approve required actions on complaints?

Top executives in the structural and functional functions at each government level should ideally

have the power to approve required actions needed to respond to complaints regarding

corruption.

However, such a response cannot be made because there is no a clear guideline on what kinds

and types of corruption practices that need to be resolved in each government level even

though the complaints have been categorized into four degrees.

From field survey in Sukabumi, we can understand any complaints, including complaints about

corruption can be reported via SMS to the people in charge at the sub-district and district levels

or to the technical facilitator by any stakeholders including the public.

Citizens may even SMS directly to the central phone line. However, there are many technical

problems, especially in the SMS gateway at each level of program implementation, which often

experience errors as well as mobile phone unavailability. There are telephone numbers available

in each sub district for complaints, but the telephones or mobile phones are often unavailable.

Complaints received through the press are also responded to. There is a mechanism for

complaint management at all levels of the community and the complaint hotline is open 24

hours per day. Everyone has a duty to take care of the complaints.

Field survey in Sukabumi also indicated that, at the sub- district level, complaints can go straight

to the UPK, while complaints regarding UPK performance are reported to the regency level.

Complaint reporting begins at the village and sub-district level and then is elevated to the

regency level. From there, complaints are sent to the provincial level. As mentioned in the above

paragraph, the complaints at sub-district level are handled by the sub-district facilitators, at

regional level by the regional facilitators, and at provincial level by the consultants.

As most of the facilitators are overwhelmed with their routine activities, they have a little time

to handle and manage the complaints.

The national management consultants at the Rural PNPM secretariat has a strong commitment

to improve a complaint handling system but no significant progress has been made due a

problem in the IT system. The problems with the current IT system include:


• Website not working properly

• Problems in sending text messages (SMS) because of many factors varying from use of

personal lines, borrowed mobiles, and inactive numbers due to unpaid bills

• Not optimal use of other types of media for complaints such as emails and letters in the

printed media.

There are reports that are directly sent to the central level, whereas other are sent to lower

government levels (such as provincial, regent as well as sub-district levels). Unfortunately, not all

provincial coordinators report what is needed by the NMC. Report handling is still done

manually via email and SMS. Often times, reports are directed straight to the central level and

are then sent back to the rural area, which then does not follow up to resolve the complaint.

(Note :In contrast, in the SOP, problems should be addressed within at least 3 days, questions

answered within 7 (seven) days, and issued followed up on within 2 weeks).

NMC then gives reports to the RMC team leaders.The reports are then signed by the Team

Leader and submitted to the Head of the Participatory Development Sub-directorate.

Reports from the provinces that arrive late or incomplete in turn cause the reports at the

national (NMC) level to be incomplete. The dysfunctional system severely delays the complaint

handling process.

Report Acceptance

Complaint handling is based on the principles of “DOUM,” an abbreviation for “Dari Oleh dan

Untuk Masyarakat” or “from, by, and for the community.” This means that all complaint

handling efforts must begin from the people, by the people, and for the people.

Citizens may submit complaints to the most convenient location. Aside from citizens,

complaints also result from field visit reports by the controlling PokJA, the

central/provincial/regional secretariats, World Bank, and many others.

All complaints are required to be submitted to the SP2M or Complaint Handling Unit so that

they can be compiled in the complaint register. Data synchronization occurs between the

executing agencies, including PNPM Mandiri – Rural Secretariat and KMN . Reports and follow

up on every incoming complaint is conducted on a routine monthly basis. The most complete

database of complaints within PMD is with the Resolutions and Complaints Coordinator,

specifically for Rural PNPM.


Other valid sources for complaints are:

• News

• Results of monitoring results by NGOs

• Monitoring and internal audits by facilitators/consultants

• External audits by the Inspectorate General of the Ministry of Home Affairs, Inspectorate

for Provincial/District, BPKP, BPK, or other independent auditors

• Complaint Handling

The response to incoming corruption complaints is carried out in stages. Complaints or cases

have to be resolved by authorized officers at the level where the problems first arise. If the

officers fail to resolve the issue, then their superior must help facilitate problem solving.If they

then fail, the complaint moves to the next level, ending at the national level.

In line with the principles of staged problem solving, as mentioned in the Problem Report -

November 2011, every issue is measured by the degree and category of the problem. These

degrees are used to determine at which level the problem must be supported or who should

provide more concrete management support.

Identifying the degree of the problem is done based on the status of the issues and the actors

involved. Based on the degree of a problem, the level of support for handling that problem can

be divided into:

Degree 1: the sub-district facilitator and district PjOK

Degree 2: the refency facilitator and the regency working unit

Degree 3 : the provincial coordinator, regional management consultant, and

provincial working unit

Degree 4 : national management consultants and national working unit

Whilst categorization is divided into :

Category 1 : not following the procedures

Category 2 : fund’s irregularities

Category 3 : intervention


Category 4 : force majeure

Assigning a degree to an issue does not mean that the issue is then transferred to another level.

It means that the scope of units involved in resolving the issue is widened. If an issue is assigned

a degree higher than where the problem originally arose, resolving the problem still requires the

involvement of the parties at the lower levels. However for large or strategic issues, the Problem

Handling Unit can ignore the degree of problem handling and can conduct investigations

directly in the field.

Nevertheless, at the moment, within the functional reporting system, there is only one specialist

in charge of handling complaints before reporting to the PMD at the central level. In order to

properly handle complaints within PNPM, it is essential that more than one person in charge of

handling complaints.

a. What information is currently collected on complaints/incidences of corruption at

all levels?

i. Who provides the information, in what form, and in what frequency?

From field survey at Sukabumi Regency, each level (village, sub-district, regency) collects

data concerning reports of alleged misuses of funds to reports of project deviation to

reports received from the public. The reports are then recorded and synchronized at each

level. The Inter-Village Cooperation Agency (BKAD) and also the UPK Supervisory Board

formulate reports. They gather to analyze and categorize problems, or just to find

information or miscommunication in order to follow up or do direct mediation concerning

the problem. If the problem occurred in the village, then it is resolved by conducting a

special village meeting to discuss the presented data.

From NMC-Complaint Handling expert, we understand that the NMC produces a monthly

report that includes information concerning the complaint that was received, problems

that were encountered, the amount of money that has been diverted, and the amount of

funds that have been returned. The NMC also provides data on the number of

problematic sub-districts and a list of sub-districts that have been identified as potential

problem areas.

A compilation of complaints and problems that have arisen and the associated follow- up

action is reported every two weeks from every level. Reporting problems that are

prioritized are included in the monthly report.


Data on complaints and corruption is held by the NMC at the PMD secretariat in the

special division that handles public complaints. This data is then consolidated every

month, then synchronized with data that is owned by the NMC’s Corporate Governance

and Anticorruption, Coordinating Minister of Welfare Controlling Team.

The status of complaint handling and a list of problems that have been deemed to be

solved is approved by PMD is then communicated by the Complaint Management Unit to

the Communication Department (IEC) to be broadcasted to the public through websites

and mass media.

ii. How comprehensive is the information?

1. Based upon spot checks and interviews – how complete is the

information being provided on complaints/corruption?

From the public data that can be accessed through www.pnpm-perdesaan.or.id we can

see a complete list of misused funds, dating back from the year the program was

implemented through November 2011. This public data also includes the number of cases

that have been solved. The site also provides data concerning whether the sources of the

alleged irregularities come from the community or from site visits, and provides trends in

data irregularity throughout Indonesia.

Reports from the provinces usually include the name of the reporter, the location, and the

subject of the complaint. Monthly reports are compiled based on the area, the types of

reports received, the reports that have been followed-up on, and the value of budgets

that have been corrupted.

Unfortunately, not all regions consider complaint reporting to be an important activity.

Generally, many biases are found in the reporting and many complaints are submitted but

never recorded. Alternatively, complaints are recorded but not reported because they are

not seen as problems. The reports, however, are not being categorized by types of cases

or how big it is, in terms of how much money has been returned to the government, or

how much money has been returned to the community.

2. Is there a mechanism to evaluate the quality of information provision?

Information that has been submitted is cross-examined through field visits and hearing

mechanisms.Incorrect complaints are clarified. Complaints with incomplete information


are returned for completion, whether it is missing the name of the reporter, the

issue/event, or the location of the event. Incoming complaints are also cross checked

against complaints received via news media, BPKP audits, and weekly or monthly reports

that are submitted by consultants/facilitators.The repetition of a complaint indicates that it

concerns issues that must be handled immediately.

Nevertheless, MOHA has already incorporated this mechanism into the standard

operating procedure (PTO).Any complaints that are submitted to PMD or the complaint

handling unit at the Welfare Ministry controlling team are immediately cross-checked in

order to verify the data. Data should be matched and synchronized between PMD and

the complaint-handling unit at the Welfare Ministry.

There are also cases in which incoming complaints are not considered to be a problem.

Complaints are first processed by the complaint-handling unit. The team checks to see if

there are indications of gaps occurring in the program regulations that should be fixed

based on the reality of what may harm or hinder the program. The problems are then

categorized into three types: implementation issues, managerial issues, and special issues.

At the National and Regency Level and below:

From field survey, incoming complaints are always verified and cross-examined.

National Management Consultant – Complaint Handling Specialist:

Incompleted complaints’ documents should be further verified (name, further explanation

on the problem also location of the problem occurred). Complaints will also be cross-

examined with the mass publication (if any), State Auditor report on the problem and

other reports submitted by consultant and/or facilitator. Usually, repeat complaint is one

of the indication to be further followed up.

Regency Facilitator :

Within three days, there should be an investigation, data gathering, and verification of

the report. In the analysis, the complaint is then categorized as either a managerial issue

or an implementation issue. All information received is confidential and the report is

recorded and synchronized at each level. During the analyzing phase, issues/complaints

should be categorised as managerial issues or non-managerial issues. The reports are also

formulated with the Inter-Village Cooperation Agency (BKAD), and also the UPK

Supervisory Board. They also analyze and categorize problems, to find information or


miscommunications, and then to determine whether to follow up or do direct mediation

concerning the problem. If the problem occurred at the village level, then the issue can be

resolved by conducting a special village meeting that discusses and finalizes the presented

data.

From Operation Manual or PTO :

All complaints received by PMD and Complaint Handling Unit in Coordinating Ministry

will be directly cross-examined to the location. All information should be verified and

synchronized between PMD and Coordinating Ministry. After data/infromation

completed, complaint received will be analysed and categorized based on issues on the

implementation program, managerial issues or special issues.

3. If yes, where is information provision most lacking?

a. Type of information

From central level perspective, the information provision is most lacking in the

implementation area. This is due to an insufficient complaint handling system as well as

weak implementation of SOPs by the facilitators.

Based on interview with Complaint Handling Specialist, not every case with incompleted

information is recorded or reported, except for those that have really become an issue. In

the future, the recording of complaints will be one of the performance points on which

facilitators are evaluated.

Nevertheless, our surveys in the regency, sub-district and village levels have indicated that

complaints can be reported directly from any stakeholders of the program. The facilitators

are on stand-by to receive case and corruption complaints 24 hours per day, but since

they usually cross-examine the complaint in order to ensure that they have the proper

information on the case, there is often a resulting delay in resolving the issues.

b. Geographic location of problem areas.

In almost every district or sub-district, there are incidents of incomplete reporting.

However, PMD Manual, provides all stakeholders a cross-examination process, which

enables the person in charge to obtain proper information concerning the reported

complaints.


c. What this information tell us about

The Rural PNPM website www.pnpm-perdesaan.or.id has data that shows the trends in

complaints and resolution of the complaints.

i. Trends in the frequency and distribution of complaints – overall, by

location, by type of corruption/underlying process.

Figure 12.Distribution of Number of Complaints in November 2011

Source : PNPM Mandiri Perdesaan, November 2011

Transparency and accountability of the PNPM program is important for the public. Public

high awareness about the program has put pressures on the Ministry of Home Affairs to

publicly disclose the progress on how the handling of cases and complaints may lead to

the further improvement in the program.

Figure 12 indicates the distribution of complaint in Indonesia as of November 2011. We

can see that the highest total number of reported cases (old and new) came from West

Java, which accounted for 22% of the total cases, followed by West Nusa Tenggara

with 8% and Central Java 6%. Only around 6% of all reported cases are resolved at the

local level. Most of the corruptions reported as of November 2011 were derived from

irregularities in fund usage (approximately 88% of total cases), followed by irregularities

in procedure (10%) and force majeure (1.6%). Approximately 6% of the cases have

been resolved, but the remaining 93% are still undergoing the review process. No

explanation disclosed on the reason for the significant procentage of the undergoing

review’ cases.

ii. Trend in the responsiveness of officials to act on complaints

# Complaints79

14151519212834353636373840434445474750 400 +

100 - 200

50 - 100

20 - 50

10 - 20

under 10

Province1 Bali2 DIY3 Papua4 Bengkulu5 Kalimantan Selatan6 Kepulauan Riau7 Papua Barat8 Lampung9 Maluku Utara10 Kalimantan Barat11 Jawa Barat12 Kalimantan Timur13 NAD14 Bangka Belitung15 Sulawesi Barat16 Gorontalo17 Kalimantan Tengah18 Sumatera Selatan19 Jambi20 Maluku21 Sulawesi Utara22 Nusa Tenggara Timur 5323 Riau 5724 Sulawesi Selatan 6425 Banten 7526 Sulawesi Tengah 9427 Sumatera Utara 9528 Sulawesi Tenggara 11629 Jawa Tengah 12330 Sumatera Barat 14731 Nusa Tenggara Barat 16132 Jawa Timur 465


As shown in figure 13 below, in the past few years, most cases were derived from sub-

district level (72%) totaling 1,312 cases, and the central/national level only handled 2

cases in 2009. As sub-district facilitators and their stakeholders began to closely monitor

the Rural PNPM Program, reported cases at the sub-district level dropped from 499

cases in 2010 to 290 cases in 2011. In the meantime, facilitators at the provincial and

regency levels should conduct more regular visits to the sub-district or village levels in

order to speed up complaint-handling processes.

Figure 13.Trend on number of cases

Source : Rural PNPM, November 2011

During the period of 2007 to 2011, most of the reported irregularities have been found

at the community level (42%), followed by the UPK (19.5%) and the TPK (11.1%).

Losses from corruption cases

Between 2007 and 2011, the total losses from corruption cases were reported at IDR

92.6 billion or approximately 0.32% of the total funds disbursed to Rural PNPM.

Roughly 40% (or IDR 37.1 billion) of the corrupted fund has been returned the

program. In terms of the percentage, 0.32% is considered to be insignificant.

Nevertheless, in terms of value, the amount is quite significant.A new procedure for on-

time complaint handling as well as a more effective monitoring system may further

reduce corruption cases in the Rural PNPM program.

d. Distinguishing the responsibility of PMD versus NMC.

0

125

250

375

500

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

year I II III IV Total1998 0 4 2 1 71999 0 5 0 1 62000 2 7 1 1 112001 10 36 4 0 502002 3 13 5 1 222003 9 17 5 0 312004 18 29 4 0 512005 24 19 1 0 442006 36 28 6 1 712007 92 56 11 0 1592008 166 78 12 0 2562009 265 93 20 2 3802010 499 161 20 0 6802011 290 47 5 0 342

*Degree I: Support from Sub-districtDegree II: Support from DistrictDegree III: Support from ProvinceDegree IV: Support from National


i. What is the precise responsibility of NMC in receiving complaints,

identifying problems, responding to the identified problems and

reporting on complaints/problems and their resolutions?

One of the NMC team’s responbility is to identify and to investigate complaints and

issues when the tier-based problem-solving process does not work. The NMC is

responsible for providing a monthly report that is submitted to the National Satker

under Directorate General of the PMD.

ii. What is the precise responsibility of PMD for ensuring that problems are

identified, complaints are received, and action is taken in response to the

identification of problem?

PMD is responsible for formulating problem solving policies. Other than that, the special

unit created for problem solving is also responsible for facilitating local governments in

problem and complaint handling, as well as developing data and monitoring problem

solving.

e. Who has overall responsibility for overseeing the manner in which

complaints/corruption is addressed in PNPM?

i. Who are they responsible to and what are they responsible for?

In every Central PNPM program development unit, there are specialists that deal

specifically with complaints and problems. In particular, in PNPM Mandiri – Rural, there

is a problem-handling unit within the secretariat whose duties and responsibilities

include:

• Formulating policies for problem handling

• Facilitating local governments in problem handing and community complaints

related to the management of funds

• Facilitating the local government in responding to the BPK audit

• Managing administrative data for problem handling

• Monitoring the development of problem solving


The national management consultants for GCG and anti-corruption unit produce

monthly and quarterly reports containing the total number of cases, the number of


cases handled at each level, case categorization, and the persons involved in the

corruptions cases.The reports and data/information are submitted to the Controlling

team to be used for evaluation and formulation of policies and problem solving.

The NMC unit for Complaints Handling at the PMD secretariat is responsible for

monitoring and producing monthly reports to be sent to the PMD Directorate General

for use as evaluation material during the controlling team meetings.


National management consultants, regional coordinators, provincial management,

district and sub-district facilitators, and local assistants are responsible for monitoring

Rural PNPM activities. They are responsible for conducting routine checks on the

complaints/problem received.

iv. What mechanisms are used to identify and address problems?

Complaints are received from several sources, and the information is then cross-

examined and verified. Problems are solved according to their degree.

v. What are the consequences for poor complaint handling performance?

• Poor complaint handling performance may cause the reputation risk to the

program.

• In addition, poor program complaint handling can also delay the fund

disbursement to the areas in which there are pending complaint cases.

• If the case drags on with no clear solution, the fund allocation is canceled.

• Non-performing facilitators will have their contracts reviewed and will not be

extended.


5.5.1. Diagnostic Summary on Element 5 - Complaint/Corruption:

There are several major concerns with PNPM’s complaint/corruption handling system. First, the

data and information provided by the citizens or stakeholders who report the problems is

insufficient for the cases to be handled without further information gathering. The cross-

examination process provided by MOHA, in some cases, may delay the authorized person at

each level in solving the issues. Second, the specialists are overloaded and there is an

insufficient system for handling the complaint/corruption cases. Third, the procedure for

handling complaints is weak and, the SOP does not dictate a detailed procedure with specific

timeframes or deadlines for the persons responsible for finalizing the process.

Specifically, the review of the complaint handling procedures has identified the following issues:

1. Data and information provided not yet adequate to directly handle the case.

Overall, incoming complaints/cases are always verified and cross-examined because they

typically do not contain all of the necessary information. Within three days, there should be an

investigation, data gathering, and analysis of the incoming report. As part of the analysis phase,

the complaint is categorized as either a managerial issue or an implementation issue. At times,

more time is necessary to cross-examine the incoming complaints, resulting in a longer period

for solving the problem. This issue is evident in the data, which indicates that 93% of the cases

that arose in 2011 are still undergoing the review process.In addition, there are cases in which

incoming complaints are not considered to be a problem by staff. The screening for incoming

complaints/corruption and detailed procedures for what kind of data/information should be

submitted for further processing needs to be further clarified.

2. Overloaded facilitators or specialists

At the lower levels, facilitators are responsible for both monitoring and evaluating the program,

including resolving complaints. However, the facilitators have been occupied with day-to-day

program management, and therefore have had limited time to handle and resolve incoming

complaints. At the moment, at the central level, there is only a limited number of specialists in

the reporting system in charge of handling the complaints before reporting to the PMD.It is

essential for proper program management that the program assigns more staff to handle

complaints.


Community meeting for PNPM in Cipanas during a site survey in 2011

3. Insufficient system for handling complaint/corruption cases and weak procedure

for complaint handling

The capacity of the current system to receive the complaints is inadequate and needs to be

improved. Moreover, there are technical problems with the existing complaint handling system,

such as the SMS gateway that often does not work properly.

From the central level perspective, information provision is most lacking in the implementation

areas due to weak implementation of SOPs by the facilitators. Because there are a limited

number of facilitators, not every case is recorded or reported, with the exception of those that

really become an issue. Although our field surveys have indicated that complaints can be

reported directly by any stakeholder and that facilitators actually receive corruption complaints

24 hours per day, response time is slow because facilitators typically need to conduct a cross-

examination process in order to obtain complete and accurate information on a case before

attempting to resolve the issue. The cross-examination process, combined with report analysis,

has either no deadline or an unrealistic deadline and thus results in longer times at each level to

resolve the complaint. A new SOP for complaint handling should include a standard service time


for (a) the central level to react to the cases, (b) the provincial, regency and sub-district levels to

submit reports and cross-examine the cases, (c) the cases to be processed.

In the future, the recording of complaints should be give more weight as a factor in the

facilitator’s performance evaluation. This is expected tofurther improve the performance of the

complaint handling system.

The Directorate General of PMD is fully aware one the need of a new MIS for managing PMD,

therefore as highlighted by the former Director General, who particularly requested the

assistance on area of improving the MIS using mobile-phone technology, should ease the

burden on reporting of PMD’s resources. The bilatera agency (AUSAid)is in the process of

auditing MIS to further success the implementation of PNPM.

Summary of strengths and weaknesses on the complaint/corruption handling process are

described in the following table 9.

Table 9. Strength and Weaknesses – Complaints and Corruption



• High awareness to disclose the cases

• Regularly publish the cases report in the website

• Data and Information provided is insufficient to directly handle the cases received

• Overloaded specialist/facilitators in handling the cases

• Insufficient system for handling the cases/complaints and to speed up the process

• Need to improve guidelines/procedures.


5.6. Element 6. Mechanisms for risk evaluation and response

a. What mechanisms, if any, exist to identify and evaluate risks of the program?

PMD or the National Satker currently has no risk management division to analyze and evaluate

risks associated with the Rural PNPM. All activities are determined based on data inputs

provided by the NMC. The head of the Sub-directorate of Participatory Community is in charge

of monitoring the implementation of Rural PNPM and reports to the Director of Institutional and

Community Development, who is responsible for evaluating the policy direction and

implementation of the Rural PNPM.

Likewise, the draft Organization and Working Mechanism of PNPM Secretariat has no specific

function/structure for risk analysis.

i. Is there anyone with responsibility for risk analysis?

The Sekditjen of PMD, who is responsible for developing targets and evaluating the

policy on Rural PNPM, and the Institutional and Community Development Director who

is responsible for evaluating the policy targets, are expected to undertake the risk

assessment/analysis function for the organization.

In the Ministry level, the Inspector General has inherent authority for internal audit

functions.

b. What are the greatest core risks to the program?

i. Risks associated with achieving disbursement targets?

The greatest risk to the program is the possible low disbursement of PNPM budget,

especially in remote areas, and therefore unable to achieve disbursement targets.

Nevertheless, IRAI views that unavailability of a performance analysis on the impacts of

the community development financed by PNPM aggravated the risk. The performance

measurement analysis in terms of impacts of the program can be developed and

implemented as a basis for budget allocation.

ii. Risks associated with achieving desired development impacts?

The greatest risk associated with achieving desired development impacts is the failure to

achieve targets related to household (HH) expenditure, satisfactory level of EIRR as well as

failure to improve community empowerment after project development is completed.


iii. Risks associated with reputation of the program?

• Diminishing public interest on the program

• Availability of other alternative financing

• Availability of other but similar programs, with different criteria and handled by

other institutions, that lead to different concepts of how to fulfill community needs.

iv. Specific risks evolving in the past five years

• In the past five years, specific risks to the program have evolved from corruption

issues to the maintenance of the projects once the project have been completed by

the community.

• Based on interview with National Management Consultant, at the moment, the

program has no maintenance mechanism or monitoring system for finished projects.

The local/regional governments avoid maintaining the finished projects since the

projects are considered to be the responsibility of the central government.

• Corruption cases have increased during the implementation stage of the projects at

the community level, although corruption cases comprise of less than 0.5% of total

funds disbursed.

c. To what extent is management attention focused on the core risks?

i. How much time of the senior management at MoHA is dedicated to

addressing the core risks?

There is no information concerning the amount of time allocated by the senior

management at MoHA to address the core risks identified during the last five

years.However, maintaining responsibility at the senior management level (especially the

Director General of PMD and Director of Institution and Community Training) for

evaluating the policy direction and implementing the whole program indicates MOHA’s

serious interest in the continuing success of this program.

ii. Who is in the senior management at MoHA responsible for addressing

any of the risks?

The Director General of PMD is the senior management at MoHA responsible for

addressing the core risks, supported by Sekditjen, Director of KPM and Sub-directorate

of Participatory Development.


5.6.1. Diagnostic Summary on Element 6 - Risk Evaluation and Response

Effective risk evaluation is one of the main factors for further successful implementation of the

Rural PNPM program. Risk refers to either uncertainty within the operational environment or the

possibility that a specific event(s), may derail a plan or service delivery outputs negatively.

Integrated Risk Management refers to an acknowledgement that risks are not only financial or

fraud related but includes the ability of a series of planned activities to accomplish relevant

social objective. Risk should always be managed with the public interest foremost in mind.

A continuous process to (a) identify risk elements, (b) determine the impact should a specific risk

manifest itself, (c) prioritise risk elements, (d) design and implement appropriate contingency

responses to remedy the risk caused and (e) monitor and evaluate the effectiveness of remedial

activities is needed to be implemented.

Risks that may occur in the area of operation of public services include the following: strategic,

reputational, social, economic, operational and system, resources (human and material),

financial, fraud, loss of asset, legal/litigation and nepotism.

Given the strategic and operational planning frameworks, risk identification and management

process within this context are infromed by an analysis of the full spectrum of risk categories, It

is required from MOHA (or specifally from PMD) to utilise risk management processes on a daily

basis to ensure the stated objective are achieve in terms of periods, quantiy and quality of

service standards. Risk management whithin this framework is normally informed by three

critical questions :

a. What is the objective? (b) What can go wrong or can threaten the accomplishment of the

objective? (c) What can be done within the limitations to manage or minimize the result of the

risk.

A organization culture should promote risk management as a day-to-day management tool to

ensure effective financial management, optimal resources utilization,prevention of corruption

and fraud and enhanced service delivery. The Following 6 (six) steps approach toward Risk

Management as seen in figure 14 can be followed to manage risk management of PNPM.


Figure 14. A six step approach toward Risk Management:

Source : Integrated Risk Management in the Public Service – Public Service Commission, 2001.

Managing a strategic issues using risk management approach will require decision makers to

further balance and make trade-off between competing public interests in their attempt to find

an optimal and acceptable solutions. Solutions to risk management problems will likely entail

making policy options to reduce risk via regulation or other instruments and/or to compensate

community and/or stakeholders impacted negatively by the risk event.

Risk management function established in the organization will provide second opinion to the

decision maker in providing policy option in any problem occured.

From our field survey and secondary data assessment, we see that (1) no formal dedicated

function/division is defined in the existing organizational structure or in the new organizational

structure of the secretariat team of Rural PNPM, (2) as a consequence, it has no formal

procedure for overall risk management function within the organization.

1. No formal dedicated function/division is defined in the existing organizational

structure or new organizational structure for the secretariat team designed by

MOHA.

Although there is no division dedicated to the risk management function, the senior

management of PMD, the Director General of PMD and the Director of Institution and


Community Training are all fully responsible for evaluating and determining any deviations from

the strategic direction of the program, a responsibility that, to some extent, can be considered

to be a general risk assessment function for the whole organization. Nevertheless, to manage

the significant amount of program funds nationwide, the organization should have a specific

and dedicated division for risk management similar to that of the banking sector. The risk

management division will assist the senior management by providing opinion concerning

program implementation, any risks that have the potential to impact the reputation of the

program, as well as any legal risks that may negatively impact the program and organization.

The evaluation of risks should compare program implementation against the pre-determined

criteria, and the risks should be assessed and reviewed by the authorized persons. By

establishing a proper risk management division, the organization can gain the following

benefits as described in figure 15 :

Figure 15.Benefits of risk management

2. No formal procedure for overall risk management, including strategic risk,

operational risk, reputational risk, financial risk (financial management combined

with risks related to revolving funds), compliance risk and legal risk

The consequence of having no formal procedures for overall risk management within the

organization is that it is difficult to assess and monitor: (a) the maintenance of the completed

project/activities in all districts, (b) budget determination process, (c) reputation risks associated

with irregularities in project implementation, (d) non-performing facilitators/consultants/staff, (e)

under-performing projects that are not meeting objectives as determined by their loan facility.In

%HQHӾWV�RI�5LVN�0DQDJHPHQWSupport strategic direction of the program

Increase certainty and fewer surprises

Better and strong program implementation

More efficient use of resources

Promote continual improvement

Focus to audit programs

Reassure stakeholders

Quick grasp of new opportunities for program implementation


addition, lack of formal risk management procedures may lead to project maintenance failures

since there is no procedure to monitor the completed projects.

If a risk management division is established and risk management procedures are formulated

and implemented, the strengthened monitoring and review process will lead to more successful

program implementation relative to the pre-determined criteria. Table 10 below describes the

strengths and weaknesses on PNPM’s mechanism for risk evaluation and responses.

Table 10 – Strengths and Weaknesses - Risk Evaluation and Response

Road financed by Rural PNPM in NTT



• No formal dedicated function/division is defined in the existing organizational structure or new organizational structure for the secretariat team designed by MOHA.

• No formal procedure for overall risk management, including strategic risk, operational risk, reputational risk, financial risk (financial management combined with risks related to revolving funds), compliance risk and legal risk


5.7. Element 7 - Impacts of scale-up

a. Where has the scale-up of the program coverage created the most strain on

PMD?

The scale-up of the program coverage as described in the below table 11 has strained PMD in

the following areas:

Table 11. Area that creates the most strain on PMD due to the scale up of the program

a. What changes, if any, have been made in organizational procedures and

management practices to deal with the scale up?

In dealing with the scale up, MoHA is currently in the process of finalizing the Ministerial Decree

that covers organizational and work procedures for the secretariat team to focus on managing

No. Areas Description

(i) Budget/Financing • Limited budget, since budget is only determined by available fund per sub-district.

• No performance budget applied for the program to ease the appropriate budget allocation.

(ii) Staffing and HR Management • Traditional bureaucratic model and bureaucratic reform required to further strengthen the implementation of PNPM.

• Dedicated staff needed to manage the program and strengthen the organizational structure

• Capacity improvement on PMD staff.

• Strengthen organization structure/

(iii) Program Monitoring • No proper databases available at the moment that can be used as a basis to produce an integrated analysis report on PNPM.

(iv) Contract oversight/monitoring • Insufficient number of facilitators for monitoring the program and time lag in replacing non-performing facilitators may lead to ineffective monitoring process.

• Continuous nationwide online facilitator recruitment with clear qualifications along with increased university involvement in providing facilitators may improve contract oversight /monitoring process of the program

(v) Knowledge Management • Imperfect information on institution, will create problem and make the roles and functions of each institution managing Rural PNPM are not-well functioned (please see section 5.8 for detail).


Rural-PNPM for 2012. This can be seen as part of the management’s action in establishing a

more focused team to manage Rural PNPM.

The decree, as of the writing of this report, was not ready yet and its signing by the Minister

and/or the Director General of PMD must be accelerated. It would be better if the new structure

of the secretariat team under the new decree come into force not only for 2012 but also for the

next 3-5 years. We need to give the team the opportunity to show how they manage the

program in a longer term, 3-5 year period. The performance evaluation for the

appointed/assigned staff can be conducted once a year.

Another initiative by PMD is the development of an umbrella secretariat at the Sekditjen level to

coordinate all programs under PMD. The purpose on this initiative is to eliminate conflicts and

overlapping tasks between directorates under PMD. This secretariat can also be used to

facilitate exchange of information and solve policy issues in relations to PNPM.

b. To what extent has program performance been affected by the scale-up?

The number of villages covered by the program as well as specialized offshoots of the program

such as Green PNPM, PISEW, and RESPEK have expanded due to the scale-up of the program.

However, performance of projects financed by PNPM has never been recorded because there

have been difficulties in analyzing the program performance since the beginning. A

combination of quantitative and qualitative based analysis can be used as a basis for Inter

Village Meeting in selecting existing activities to be further financed by PNPM’s fund. For

example: (a) a PNPM project financed the development of infrastructure in a certain village a

producer of agricultural products; however, agriculture performance or agriculture output in the

village before and after the development of the infrastructure is not evaluated. Any evaluation

performed before and after development can be used as a basis to reward the village by getting

more PNPM’s fund to finance their activities, (b) PNPM financed the development of small stalls

(or warung) in a village; however, due to lack of quantitative data analysis, the opportunity to

get more PNPM financing for the village to expand the small stall to be a, for example

minimarket will be difficult to be realized. The program performance report can be used by

MAD to select the proposed project/activities.

In other words, specific data for further analysis on the outcome of the program has not been

available since the scale up. The collaboration with other government agencies (such as BPS)

and the development of an interface system with other ministries can resolve this problem.


Nevertheless, since 2010, PNPM has launched Ruang Belajar Masyarat (RBM), as a learning

center for related participants in regency levels. This may help all activities financed by PNPM

fund to provide more benefits to the related region/area.

c. What are the changes in the external oversight of the program that has been

brought about by the scale up ?

No changes have been made in external oversight of the program since the scale up. At the

moment, external oversight of the program could come from the community itself, government

officers related to the program as well as legislators or councilors (DPR/DPRD), NGOs and

journalists. Financial audit of the program is carried out by the government auditor (BPKP) as

stated in the Loan Agreement between the World Bank and the Government of Indonesia.

Based on interviews with PMD officials, we understand that the involvement of DPRD, NGO and

middle-class community in the regencies is required to further help the formulation of local

regulations in relation to integrated regional development concept in the regency level.

5.7.1. Diagnostic Summary on Element 7 - Impacts of Scale Up

The scale up of the program requires more coordination and synergy in the Ministry of Home

Affairs’s overall planning, as governed by MOHA regulation No. 54/2010 regarding Regional

Development Plan, Control and Evaluation of PNPM (as derivative of Government Regulation PP

8/2008). PNPM as one of the PMD programs under MOHA should be linked to and integrated

with the Regional Development Planning, and it is supported with related tools to further

analyze the impacts of its implementation on the regional development planning.

MOHA is currently in the process of finalizing a ministerial decree to deal with the scale up and

focus more of its efforts in managing Rural PNPM. The decree covers organizational and work

procedures for the secretariat under KPM and enriches the existing functions of the planning

division under Sekditjen level to coordinate all programs under PMD.

Other factors to ensure successful National Scale Up on Rural PNPM is as follows :

a) Organization and Branding Structure

i. Establishing the key standard measurement for branding the program as PNPM

ii. Ensuring that any organization that was established as PNPM should include the

bottom up approach (from Musyawarah Desa) for describing rural needs and the

plan should ensure the poverty reduction or welfare improvement


b) Performance Management System need to be developed

i. Bureacratic Reform at Menko Kesra, Bappenas and MoHA should ensure the

poverty alleviation program performance are well measured (using the poverty

performance criteria). Currently the progress of bureaucratic reform is not

consistent with the need to increase people welfare (i.e. performance is only

measured by financial disbursement, not the overall performance on the program

and its impact to the community or region)

ii. The bureacratic reform process should synergy with public financial management

reform at the Ministry of Finance. Therefore the criteria for successful program are

not only financial disbursement, but also “poverty performance” (among others

reducing number of poor people in rural area, increasing their long term welfare

through providing education, health and access for job at individual and

household levels)


5.8. Element 8 - Going forward, core functional requirements for

managing PNPM

a. What are core functional requirements for managing PNPM?

Going forward, the core functional requirements for managing the implementation of PNPM

are as follows:

• Planning (budget and village planning)

• Product/Program Development including area development

• Program Implementation

• HR and Capacity Building

• Program Administration, Monitoring and Analysis

• Risk Management and Compliance

• MIS

The above core functional requirements have to be supported by the following factors:

1. An integrated Management Information System equipped with detailed

procedures


Disbursement, Project or Revolving Fund Approval Process and HR) needs to be developed. The

existing MIS may lead to an inconsistent system, insufficient checks on data quality,

inefficiencies/gaps in reporting, and time lag in the reporting period. An audit process of current

MIS needs to be completed, and a third party is assigned to redesign the new platform for

managing Rural PNPM. Integration ofcomputer applications, combined with upgraded staff

with related capacities, is necessary to support the MIS. After the MIS audit is completed, it

needs to be followed by review of functions for MIS positions.

Unfortunately the organizational structure of the new secretariat is not equipped with MIS

functions; therefore a new chart with new positions in MIS will help the implementation of the

new system. At the central government level, the Directorate General of PMD is fully aware of

the need for a new MIS. A former government official in charge of PMD has requested

assistance from a third party in improving the MIS using mobile phone technology, which

should ease the burden of PMD resources involved with reporting processes. MoHA has asked a

grant from a bilateralagency (AUSAid) to help finance MIS.


2. A comprehensive Human Resource System.

A comprehensive HR System includes organizational restructuring, resource allocation

and incentive-disincentive policy, which will ensure staff career development in line

with government regulation.

The revised HR Policy that clearly defines the HR functions starting from selection and

recruitment, training need analysis, performance evaluation, job grading, incentives and

disincentives system and staffing should be provided to the new secretariat. The assessment

must cover organizational restructuring and remodeling, executive support on the strategic

planning, implementation strategy, and corporate culture development. Business process for

every activity and workflow within the organization should be reviewed and redesigned (if

necessary) to provide the organization with a more effective business process.

2.1. Organizational Restructuring

To further success the implementation of all programs under PNPM, strong coordination and

integration process should be applied and strengthened in relation to guideline, scheme,

workflow and mechanism of the programs. The efforts conducted and planned by DG of PMD

to create and strengthen the organization chart by proposing the creation of the Umbrella

Secretariat to coordinate and to integrate the functions of each secretariat in different

directorate. This creation is aimed to improve the coordination and integration between all

programs under PNPM within different directorates. The Umbrella Secretariat will be managed

by Sekditjen of PMD as a Budget Holder Authority with day-to-day operation will be handled by

Head of Sub-directorate of Planning, acting as Daily Executive Head or Kepala Pelaksana Harian.

Project Secretariat is still under relevant directorate.

2.1.1. Project Secretariat

Secretariat PNPM for each directorate who manage PNPM will be positioned under each

Director as a Contract Authority. The day to day operation will be handled by echelon 3 in

MOHA. Beside Rural PNPM, at the moment there are two other Project Secretariats under other

Director such as Director for Community Social and Culture as well as Director for Natural

Resources and Appropriate Technology who manage PNPM Generasi and PNPM Green

respectively.

Under the Project secretariat, The Head of Sub-Directorate of Participatory Development has a

functional line to coordinate (coordinating line) 5 (five) functions including (a) advisor, (b)


finance and administration, (c) Project Management Consultant, (d) program support and

problem handling, (e) NMD individual contract. The all 5 (five) functions has a direct report

(instructing line) to Director for KPM.

Each Project Secretariat will be supported by civil servant and consultants with specific expertise.

The Project Secretariat will monitor the implementation of the related program and provide

administrative support.

2.1.2. Umbrella Secretariat

As mentioned in the previous paragraph, at the moment DG is in the process of proposing the

creation of the Umbrella Secretariat to coordinate and to integrate the functions of each

secretariat in different directorate. This creation is aimed to improve the coordination and

integration between all program under PNPM within different directorates.

The Umbrella Secretariat will be managed by Sekditjen of PMD as a Budget Holder Authority.

The day-to-day operation will be handled by Planning Division Head (or Kepala Bagian

Perencanaan), acting as Daily Executive Head or Kepala Pelaksana Harian. The establishment of

Umbrella Secretariat will solve coordinating issues between program managed by PMD and will

create more efficient process in managing PNPM.

2.2. Development of Resource Allocation System

A comprehensive and clear organization structure with proper allocation of staff who will

manage the program, will reduce the management time to do low-level administrative works

that could be carried out by an automated system. Instead, the management should focus more

on strategic aspects of the PNPM program, such as managing the human and financial

resources.

2.2.1 Establishment of Incentives and Disincentives System

Incentives can be one of the most important drivers in individual and community performance.

Equally, disincentives could discourage people and community to perform. Incentives and

disincentives are important elements in maintaining staff performance and retention. In the case

of PNPM, these apply to both the civil servants and hired professionals. MoHA is one of the

ministries that will implement bureaucratic reforms starting in June 2012. Although it will take

time to smoothly implement the reforms, the structure and number of civil servants are


expected to be adjusted accordingly so that they will efficiently perform the necessary

governmental duties and functions. The bureaucratic reforms aim to boost staff

performance.The reforms in turn are likely to bring about better implementation of the Rural

PNPM program. One positive aspect of the reforms is the evaluation of structural assignment, as

each employee will have a clearer job description. Each staff will have a clear target and timeline

to complete their job description. Their performance will be measured based on their assigned

responsibilities and completed tasks.

b. What would be a suitable organizational structure?

Strong organizational structure should be developed to accommodate the similar process of

managing all programs under PMD including but not limited to Rural PNPM, Green PNPM,

PNPM Generasi, PISEW etc. Therefore, overlapping responsibilities for each directorate to

manage the program can be avoided. Coordination functions should be built, which can be

derived and enlarged from the existing function at the Sekditjen level. This can be achieved by

doing the following:

(a) Strengthen the role of Sekditjen of PMD by enriching its existing functions to

coordinate the implementation of PNPM under PMD as well as to strengthen the

responsibility of the Directorate General – Umbrella Secretariat.

(b) Establish a dedicated secretariat team for Rural PNPM to manage the program (instead

of only being handled by the national satker). – Project Secretariat.

i. Identify critical design options or alternative organizational and managerial

arrangements.

The critical design option of organizational and magerial arrangements is described in

the following table 12.


Table 12 . Options for organizational and managerial arrangements

c. What would be suitable staffing requirements to carry out functions of the

o organization?

The Ministry of Home Affairs (MOHA) needs to fulfill staffing requirements of the team,

including their capacities, number of staff, and the required knowledge and skills. Training

program both in technical and soft skills should be conducted regularly. The national satker’s or

next secretariat role is similar to the head office in the banking sector. A fully dedicated staff

needs to be appointed to manage PNPM, under a selective and competitive process. Within the

PMD itself, the human resources should be prepared so dhat the staff at the PMD will be able

to execute the clear and targeted job responsibilities; therefore the new organizational design is

expected to come into effect within two years.

Facilitators and consultants are still needed to assist PMD in managing PNPM. They need to

transfer their knowledge to PMD staff, therefore PMD can further success to manage PNPM.

Refering to section 5.1, further allocation on IBRD fund to finance tehnical assistance in PNPM

will increase after year 2014. This condition may provide more opportunities for facilitation

support and technical assistance to transfer their knowledge as well as to provide capacity

building to PMD staff. At the moment, GOI is in the process of preparing the establishment of

an institution for certification. By next year, MoHA is estimated to have 1,000 certified

professional facilitators.

Options Description

• Assign a dedicated team for secretariat of Rural PNPM

• Dedicated team will help manage the program, currently managed solely by the national satker.

• Dedicated team will focus on day-to-day operations of Rural PNPM.

• Strengthen the role of Sekditjen of PMD by enriching the existing functions to coordinate the implementation of all PNPM programs including Rural PNPM, Green PNPM, etc.

• Establish coordination among programs under PMD.

• Centrally solve any policy issues related to the program.

• Avoid overlapping processes among directorates in managing PNPM.

• No reporting line at the directorate level


5.8.1. Diagnostic Summary on Element 8 - Core functional requirements

1. Core functional requirements improvement.

Core functional requirements improvement are essential with regard to planning (budget and

village planning); product/program development including area development; program

implementation; HR and capacity building, program administration; monitoring and analysis,

risk management and compliance and MIS. Dedicated staff is required to meet core functional

requirements during the transition period. These staff can manage PNPM with limited assistance

from external parties. An initiative to establish dedicated team for secretariat in managing

PNPM as well as to enrich the existing job functions under Sekditjen level will need to be further

finalized to make smooth transformation. As a consequence, it needs to establish (a) a well

functioning and integrated MIS (including but not limited to Accounting, Fund Disbursement,

Project or Revolving Fund Approval Process and HR) and (b) a comprehensive Human Resource

System that includes organization restructuring, resource allocation and incentive-disincentive

policy, which will ensure staff career development in line with government regulation.

2. The establishment of knowledge management and its decription to change on

role and functions on the organization :

The main problem in public organizations at both central and local levels is the imperfect

information on institutions. This is also the problem in managing rural PNPM. As a result, it

makes the roles and functions of each institutions function poorly. Should the GoI would like to

strengthen its institutions to increase the management capacity on rural PNPM and to ensure

the sustainability in the long-term, then the knowledge management should be improved at

both central and local government levels. Building and strengthening the knowledge

management are key success factors.

For this purpose we need to include the following systematic plan for establishing the

knowledge management and its description to the changes or role and functions on several

organizations that are managed the Rural PNPM:

a) The short term and long term plan (road map/blue print) should include clearly

integrated roles and functions for knowledge management on rural PNPM and the

timeline for completing the tasks


i. The central government should establish and ensure access for knowledge

management at the vice presidential level (TNP2K), at ministerial levels (Menko

Kesra, Bappenas, MoHA), and at both governor and mayor or bupati levels.

ii. The central government should provide a handbook for rules, regulations and

standard operating procedures for obtaining data and information for the

related institutions

iii. The central government should provide open access for the rules, regulations

and standard operating procedures in item (ii) above , among others through

website and printing the publications

iv. At the PMD level, the proposed Umbrella Secretariat (Sekber) should have clear

roles and functions in managing rural PNPM. PMD receive reports from regions,

it should have the management capacity for both in data and operational

policyies. Since PMD currently lacks those capacities, we should ensure that

these are built in the next two years (2013-2014) through changes of rules and

regulations needed, and through UPK training at local governments.

v. TNP2K and Coordinating Ministry should have direct access to information

system at the PMD level. Currently, they both rely heavily on PSF for data

information and policy support. While PSF is only a temporary function at central

government level until the loan period is completed, thus the central

government should strengthen its own capacity in the next two years period

(2013-2014)

vi. The Umbrella Secretariat at MoHA should have a clear role and functions on

data management. The data could be collected at PMD at central or local

government levels based on reports from each UPK and the new information

system established should provide an interface for all institutions that need the

access.

vii. Based on a report from interviews, the Ministry of Home Affairs (MoHA) is in the

process for establishing an information system financed by an AusAID grant.

Thus, the knowledge management system that is built should provide direct

access for TNP2K and Menkokesra to get information and data required for

further analysis.

viii. The function for providing information on PNPM was previously done by PMD.

However, the role has been replaced by Menkominfo and there is very limited

coordination among the two institutions


ix. PMD has transformed to be the organization that comprehensively manages

PNPM, far different from it’s previous role in managing KDP in the 1990’s.

However, the current expectation on PMD’s function is beyond it’s current

capacity.

b) Each government institution and organization should be monitored regularly on the

implementation stage to ensure the improvement capacity on data and operational

policy management.

c) The performance of organization that manage rural PNPM should be announced

publicly, so that the intra-community and ministries could access what happens at both

central and local government performance, and the lesson learned.

Clean water reservoir project funded by PNPM in West Java


5.9. Element 9 - Generating change – How to improve current practices

a. What are possible core barriers to changing organizational practices and managerial

behavior?

The major core barriers to changing organizational practices and managerial behavior are as

follows:

• The capacity of human resources associated to the program and the unavailability of

performance management system.

As a part of bureaucratic reform, the performance management system needs to be

established, strengthening the correlation between budget utilization and people in

charge of implementation.All related staff should be provided with key performance

indicators as a basis for evaluating their performance regularly. By having key performance

indicators, all related staff is aware of the targets and timeline in which the projects

should be carried out and completed with regard to budget, program implementation,

contract fulfillment, and complaint/corruption handling. Any deviation between the target

determined in the beginning of the year and the evaluation period at the end of the

program may impact the staff performance.

• The characteristics of PNPM as a project-based budget/fund (not program based budget)

have led to difficulties in spreading job responsibilities among the directorates under PMD.

The budget is with the Directorate of KPM, and therefore this directorate is responsible for

managing the fund and the project, although other directorates in PMD have similar

projects.

b. What changes the PMD management can make?

The PMD management can pursue the following changes:

• During the transition period of transforming the PNPM from project based budget to

program based budget, MoHA may establish a dedicated team supported by appropriate

functions to manage the implementation of Rural PNPM as initiated by Directorate of KPM.

• A joint or umbrella secretariat team under the Setditjen level will be established to

coordinate programs under the management of PMD (including but not limited to Rural


PNPM, Green PNPM, PNPM Generasi, PNPM-LMP). This initiative may eliminate conflicts and

overlapping job responsibilities among directorates under PMD.

• In the future, this joint or umbrella secretariate will lead village development with a more

comprehensive mechanism and concept such as the “One village, One plan” concept. Each

village will produce one community proposal that will cover infrastructure, education,

health, family planning, and environmental issues for each village.

c. What changes the internal MoHa actors can make?

Community empowerment is highly correlated to “processes” inside the community and

“supports” from the government, and therefore synergy among all Directorates under PMD,

Sekditjen of PMD, Director General of PMD, Sekjen of MOHA as well as the Inspector General is

required in order to provide solutions for policy issues regarding the type of budget model, the

legal entity of Financial Management Unit (UPK), the role of Revolving Loan Funds, and

strategizing approaches for different parts of the country.

d. What changes require the involvement of outside parties?

BPKP as the government auditor should expand its role not only for financial audits but also for

system/process audit as well as performance audit. Based on interviews with PMD officials, we

understand that the involvement of DPRD, NGO and middle class community in the regency

level is required to help the formulation of local regulations in relation to integrated regional

development concept in the regency level.

5.9.1. Diagnostic Summary on Element 9 - How to improve current practices:

To improve the current practices, it is important to accelerate the implementation of the

bureaucratic reform, especially the establishment of the performance management system that

strengthen the correlation between budget utilization and people in charge of budget

implementation. In addition, a development of joint or umbrella secretariat team under the

Setditjen level as well as strengthening current project secretariat need to be accelerated.


5.10 Element 10 - Policy issues

A number of important policy issues have emerged as a result of the national scale up. The

questions in this section explore how the PMD team and other areas of MoHA and the

government in general work to examine and resolve major policy issues.

a. What are the approaches adopted by PMD team in identifying and responding to

policy issues?Does the team have a clear understanding of how to resolve key

policy issues in the context of PNPM?Does the PMD team have a person or persons

in charge of responding to policy matters?

The following is the answer to the three questions above:

The Director for KPM has the responsibility to identify and respond to any policy issues related

to PNPM. Other sub-directorate under Sekditjen level, naemly Planning has initiative to identify

the policy issues in regard to the program implementation. The policy issues can be gathered

from directorate levels. A coordination meeting involving the Directorate General, Sekditjen,

Planning Division of Sekditjen, the Directorate of Institutional and Community Development,

Participatory Development and other related Directorates are regularly conducted to discuss and

find solutions for policy issues that arise.

b. What are the primary hurdles in resolving policy issues that the team needs inputs

from other directorates or other Ministries?

The understanding on community empowerment in other Ministries is different than PMD.

Community empowerment under PMD’s concepts covers three clusters covering PNPM:

(a) Cluster I: Community Mobilization

(b) Cluster II: Community Development

(c) Cluster III: Community Management.

The development of similar programs managed by other ministries with different concept and

objectives may create difficulties in implementing the program in the village level.

c. What are the resolutions to the following policy issues?

i. The legal identity of the UPK

Here are specific issues on the legal identity of UPK in relation to rural PNPM fund:


a) There is no clear accountability process on spending the rural PNPM fund.

Currently, the fund is received and managed by the UPK, however it is a grant to

the community, thus the ownership is at the community level.

b) The weakness is that the UPK is the temporary organizations that was established

by the Bupati, thus the bank account was opened individually. Legally, the

community is not a legal entity and the individual who opens the bank account

could easily escape since there is no direct accountability in the management

process. For example, if there is no regular meeting for reporting the financial

statement, then the bank account can be used for individual purposes.

c) We suggest that the UPK should be established as a legal entity for economic or

social purpose at the community level.

i. If the purpose is mainly econominc, the most appropriate one is

“KOPERASI” (such as for revolving fund on developing micro or small

scale businesses at rural areas). KOPERASI is a legal entity that is based

on Indonesian constitution and government rules and organizations and

has already been accepted culturally. In the KOPERASI, the voters own

same right (thus village head vote carries the same weight as other

members in a decision made in the KOPERASI)

ii. The second option is YAYASAN if the rural PNPM fund is for social

purpose such as schools or health centers.

ii. The degree to which PNPM should have differentiated approaches to

different areas of the country.

By implementing budget performance measurement and bottom-up budget

proposal approach for determining budget allocation to the sub-district level,

PNPM could have a differentiated approach to different areas of the country.

Budget is allocated based on the approved activities/program proposed by lower

government levels (ie sub-district proposal). This proposed budget should be

synchronized with the provincial government level covering the sub-district level.

iii. The extent to which PNPM should emphasize its impacts on women (and

the manner in which it should monitor its impacts).

a) Start with an evaluation on female roles/participation in PNPM


b) Central and local governments should build a consensus on targetted females

roles/participation based on the evaluation

i. The target should be made specific at each level of government: at central,

provincial and district/sub-district levels.

ii. The roles/ participation of females should be made clear, whether dominant

(such as in Grameen-model of revolving fund which targeted on females) or

just a type of follower model (as number of females involved in the

capacity)

c) Central government should then provide guildelines on how provide access for

females on developing PNPM programs

d) Central and local government should monitor the progress

e) Central and local government should promote whether the female participation

target has been achieved at rural PNPM program

Figure 16. PNPM Roadmap Action Plans – Sustainability of Community Empowerment

Source : Coordinating Ministries of People’s Welfare, 2012 (reprocees)

The Directorate of KPM and Sekditjen are reviewing the above policy issues (i,ii and iii). At the

moment Coordinating Ministries are also tackling such policy issues and has developed the

following figure 16 roadmap of 5 (five) pillars covering (1) integrated program of community


empowerment inclunding determination of indicative ceiling for sub-district level; (2) continuous

facilitation; (3) capacity strengthening and legal entity of community empowerment institution,

including legal entity of UPK; (4) Local Government Involvement; and (5) Good Corporate

Governance. The combination of this roadmap action plans with the establishment of

knowledge management centre as mentioned in section 5.8 will support further success of

managing PNPM. The legal entity of UPK is also stated in the road map under pillar 2 of

continous facilitation, but there needs to be a determined time frame to start and complete the

issue. In addition, a different approach on budget determination also included in pillar 1 of

Integrated Program of Community Empowerement is one of the strategic issues in development

since July 2012.

From PMD and KPM’s point of view, the other main policy issue is the government’ decision to

determine the budget model for PNPM. PNPM should be allocated under a program-based

budgeting not a project-based budgeting, and therefore it can be routinely managed by PMD

not only at KPM level and coordinated under Sekditjen level. Issue on this budget model should

be discussed and decided at Bappenas and MOF level.

d. What mechanisms that will be used to protect the PNPM brand name (addressing

the issue of ‘copycat’ PNPM programs)

The MOHA management has developed PNPM Integrasi, a PNPM offshoot that focuses on

bridging together similar ad-hoc programs. Nevertheless, the Coordinating Ministry should be

involved to effectively protect PNPM brand name.

5.10.1. Diagnostic Summary on Element 10 - Policy Issues:

Major policy issues associated with PNPM include the decision on budget model for PNPM, legal

entity of UPK, revolving funds, village women involvement, PNPM brand name – all of which

require cross ministries’ decision such as Bappenas, MOF, the Coordinating Ministry levels. The

Directoratet General, the Directorate and Sub-Directorate levels will only support the decision

maker at the cross ministries level with related documents, data and information to fasten and

strengthen the decision making process. When policy decision is taken, it should be

communicated properly to the stakeholders so that there would be better and similar

understanding among the stakeholders about certain policy.


VI. MAIN FINDINGS AND RECOMMENDATION

6.1. How has PMD been able to successfully manage the implementation of PNPM?

PMD should be able to further successfully manage the implementation of PNPM if it is

supported by the following factors:

(i) PMD institutional and managerial capacities need to grow with the program.

PMD’s capacity should be further enriched to keep up with demands and program

monitoring for effective management. Capacity buidling through intensive relevant

training program as well as transfer knowledge from the Consultants to PMD’s staff

need to be implemented. Reporting line should be clarified, and synchronization

between PMD and supporting consultants in national and regional levels should be

developed to ease the transfer knowledge process. A clear and new standard

operating procedures or SOP (with flow chart, timeline, authorised person, form and

report) in both project secretariat and the proposed creation of umbrella secretariate

need to be established to clarify reporting lines, roles and responsibilities between

key players or key staff of the PNPM management.

(ii) The establishment of knowledge management.

Should GoI would like to strengthen its institutions and organizations to increase the

management capacity on rural PNPM and to ensure the sustainability in the long-

term, then the knowledge management should be improved at both central and local

government levels. Building and strengthening knowledge management are key

success factors by (a) ensuring access for knowledge management at the Vice

President level (TNP2K), at ministerial levels (Menko Kesra, Bappenas, MoHA), and at

Governor and Mayor/Bupati levels; (b) providing a handbook for rules, regulations

and standard operating procedures in obtaining data and information for each

related institution; (c) providing open access for the rules, regulations, and standard

operating procedures from item (b) above through website and printed publications

and; (d) developing clear roles for Umbrella Secretariat and Project Secretariat.

(iii) Perfecting the organizational structure of PNPM management

IRAI has identified the following points in order to refine the structure of PNPM

management:


a. A fully dedicated and qualified team needs to be appointed to manage

PNPM under a selective and competitive processes.

The HR Management System needs to be developed in order to enable all staff

have career path development which is in line with government HR Regulations.

In order to do this, MoHa is drafting a Ministerial Decree that covers

organizational and work procedures for the secretariat in order to effectively

manage Rural PNPM for year 2012. This decree should also attach a document

containing a list of PMD staff with their titles and responsibilities. The

formalization of this decree needs to be accelerated by getting the signature and

approval from the Minister and/or Director General of PMD. In addition, a

comprehensive training need analysis combined with a structured training

program of soft and technical skills should be provided to the new dedicated

team.

By formalizing the new ministerial decree on a new secretariat organization

structure and workflow in managing Rural PNPM at the directorate level, the

number of newly appointed staff managing this program will be increased in

accordance to specific roles and responsibilities. Nevertheless, it would be better

if the structure can be implemented not only for 2012 but also for the next 3-5

years. We need to provide the opportunity for the team to work in a 3-5 years

period to see how they manage the program. The performance evaluation for

the appointed staff can be completed once or twice a year.

b. Accelerate the establishment of a joint or umbrella secretariat at the

Sekditjen level as initiated by PMD

This is important since it will prevent overlapping tasks and responsibilities with

other directorates under PMD that manage similar programs. The organizational

structure in Sekditjen level should be developed to accommodate similar process

of managing all programs under PMD including but not limited to Rural PNPM,

Green PNPM, PNPM Generasi, PISEW etc. The coordination function should be

built and can be derived and enlarged from the existing functions at the

Sekditjen level.


The options and description of the organizational structure can be seen in table 13 below :

Table 13 . Options and Description of the organizational structure

(iv) Accelerate the audit process on MIS supported by AUSAid and start to

…....develop an integrated Management Information System (MIS) with

…....detailed procedures



developed. The existing MIS may lead to an inconsistent system, insufficient checks

on data quality, inefficiencies/gaps in reporting, and time lag in the reporting period.

Current audit process of current MIS needs to be completed, and a third party is

assigned to redesign the new platform for managing Rural PNPM. Integration of

computer applications, combined with upgraded staff with related capacities, is

necessary to support the MIS. After the MIS audit is completed, it needs to be

followed by review of functions for MIS positions.

Unfortunately the organizational structure of the new secretariat is not equipped

with MIS functions; therefore a new chart with new positions in MIS will help the

implementation of the new system. At the central government level, the Directorate

General of PMD is fully aware of the need for a new MIS. A former government

official in charge of PMD has requested assistance from a third party in improving the

MIS using mobile phone technology, which should ease the burden of PMD resources

involved with reporting processes. At the moment, by using a grant from bilateral

agency, MoHA Is in the process of auditing its MIS.

Options Description

• Strengthen the role of Sekditjen of PMD by enriching the existing functions to coordinate the implementation of all PNPM including Rural PNPM, Green PNPM, etc. (“Umbrella Secretariat”)

• Establish coordination process among programs under PMD.

• The central government level solves any policies issues in relation to the program.

• Avoid overlapping processes among directorates in managing PNPM.

• Establish and strengthen a dedicated team for Rural PNPM secretariat .(“Project Secretariat”)

• The program will not only be managed by the national satker.

• The dedicated team will focus on day-to-day operations of Rural PNPM.


(v) Accelerate the improvement of a reliable complaint handling system (CHS)

PNPM actually has a built-in-system of promoting a downward accountability in

terms of handling complaint and fraud reports. Nevertheless, the capacity of the

current system to receive complaints is inadequate and needs to be improved.

Moreover, there are technical problems with the existing complaint handling system,

such as the SMS gateway that often does not work properly.

Because of insufficient MIS system, data integration and dissemination are not yet

adequate to support consistent follow ups on fraud cases.Limited capacities of staff

recently recruited by NMC or RMCs is another issues in the Complaint Handling

System (CHS). The CHS needs to be further reinforced to ensure a better capture and

follow-up processes of cases, including escalation of cases that could or were not

resolved at the local levels. A better access to information for stakeholders on how to

respond to complaints should accelerate problem solving in all levels of the PNPM

management.

(v) Futher improve the quality facilitators as the backbone of PNPM

Qualified PNPM facilitators are deployed, retained and their performance should be

managed adequately. Strong facilitation skill is one of the important factors for

PNPM’s success. The facilitators who are familiar with social dynamics of the villages

are typically recruited from the district or sub-districts in which they work and, are

provided with training and mentoring.

An incentive scheme for facilitators who are posted in remote areas needs to be

developed to make the posting more attractive. A transparent selection process

combined with a regular performance evaluation need to be established to ensure

that recruitments meet qualification standards and the non-performing facilitators

can be quickly replaced or improved. A plan to establish an Institution of Facilitator

Certification as well as collaboration with university in creating special education or

department for facilitator as described in PNPM Roadmap Action Plan can be further

accelerated to support the further success of managing PNPM.


6.2. What are the existing managerial strengths and weaknesses of the

program?

Despite the limited number and capacity of staff assigned to this program, PMD has successfully

managed the program. From stakeholder interviews, framed by concerns listed in the ToR, IRAI

has identified some strengths and weaknesses in current managerial arrangements of the

program as summarized in the following table 14:

Table 14. Strength and weaknesses in current managerial arrangements

continued

BUDGETBUDGET


• With limited number of dedicated staff and insufficient system used, budget for KDP has been successfully distributed nationwide since its inception 1998 and later since 2007 when the program was renamed PNPM

• Increasing disbursement value.

• No online system for budget approval and monitoring process

• No risk management and compliance division within the directorate general to assess and evaluate the risks for budget determination and implementation.

• The indicators for success have so far been based on the number of funds being used, not on the actual program outputs.

• No measurement on budget variance.



• With limited number of dedicated staff, insufficient capacities and limited supporting facilities, PMD can successfully manage and implement the Rural PNPM.

• MoHA has reliable and dedicated employees who have been able to manage PNPM for 14 years.

• Many employees are very loyal and willing to do their job overtime.

• The PNPM Secretariat has already had a fairly good division of management and been able to cover all functions and tasks required of it.

• Insufficient Human Resources Management System at the national level and insufficient continuous recruitment process for facilitators in the regional government levels.


• PMD as an executing agency is not only in charge of PNPM, but also several other programs such as Green-PNPM and PNPM Generasi that have created excessive workloads for the Directorate General.

• MOHA has not yet assigned people according to their competences.


continued



• Need to develop an integrated Management Information System (MIS) that can support the provision of timely and reliable data/information reports.

• Need to improve existing MIS staffing.

• No interface system between PMD’s PNPM database with other Ministry’s database system.

• Database unavailability to further evaluate the project deepening or project enrichment.

• Need to strengthen the learning center or Ruang Belajar Masyarakat, managed by PMD.

• Coordination, planning, implementation, and reporting between all of the state agencies with interest in PNPM is overly time consuming. The bureaucracy at the central level causes delays in program formulation and implementation.

CONTRACT FULFILLMENTCONTRACT FULFILLMENT


• Limited number of PMD staff can manage and monitor a large number of consultants/facilitators.

• General overview in the manual book is available to manage the facilitators/consultants’ performance.

• Terms and conditions of the contracts should be included in procedures/manuals to ease monitoring on the contract’ performance.

• Facilitator selection and Recruitment Process should be transparent.

• Performance Evaluation Form and System should be upgraded or improved

• Need further guidelines on how to monitor information and reports provided by the facilitators from the lower level team.




• High awareness to publish and disclose cases.

• Regularly publish case reports in the website. Rural PNPM already has a good standard operating procedure for problem handling. Communities are involved in sharing the information or filing the complaints. They appreciate the system.

• The national satker has a text message number and address for complaints, which stimulates critical discussion about the programs.

• The existence of national satker’s system for complaint handling has motivated and given opportunities to the communities to be pro-active and involved in problem-solving activities until the problems are resolved.

• Data and Information provided is insufficient to directly handle cases of corruptions or just any complaint.

• Insufficient system for handling cases/complaints to speed up the process.

• Need to improve guidelines/ procedures for handling cases/complaints.



• No formal dedicated function/division for risk evaluation and response is defined in the existing organizational structure or new organizational structure at the secretariat team designed by MOHA.

• No formal procedure for overall risk management, including strategic risk, operational risk, reputational risk, financial risk (financial management combined with risks related to revolving funds), compliance risk and legal risk

PHYSICAL FILING AND MANAGEMENT INFORMATION SYSTEMPHYSICAL FILING AND MANAGEMENT INFORMATION SYSTEM


• Physical reports contain a comprehensive overview of all reported data

• Reports are delivered routinely using SMS as a method for data reporting

• Multilevel report system currently has better data accuracy and enables officials to perform analysis. The reports are also in accordance to auditing standards.

• The reports are physical evidence required for multilevel approvals

• Documents are placed in storage without a proper cataloging system, making it difficult to find necessary documents when the need arises.

• Document presentation varies and there is no standard reporting form.The consequence is that the reports often cannot be used as a reference, particularly when a quick evaluation is needed.A concise report system is needed for a quick use or analysis.

• The existing MIS produces unstandardized reports.

• Hardcopies of the reports pile up and cannot be used efficiently by staff.

• The huge number of physical reports stored in a humid condition could pose as health hazards for the secretariat staff


6.3. What are the core functional requirements for successfully managing

PNPM?

• Planning (budget and village planning)

• Product/Program Development including area development

• Program Implementation

• HR and Capacity Building

• Program Administration, Monitoring and Analysis

• Risk Management and Compliance

• MIS

The above core functional requirements have to be supported by the following factors:

(a) An integrated Management Information System with detailed procedures.A well

functioning and integrated MIS (including but not limited to Accounting, Fund


developed. The existing MIS may lead to an inconsistent system, insufficient checks on

data quality, inefficiencies/gaps in reporting, and time lag in the reporting period. An

audit process of current MIS needs to be completed, and a third party is assigned to

redesign the new platform for managing Rural PNPM. he integration of computer

application combined with upgraded staff who equipped with related capacities will

beessential at the moment and;

(b) The development of HR system including organizational restructuring, resource

allocation and incentive-disincentive policy that enables staff movement in accordance to

government HR Regulation. The revised HR Policy that clearly defines the HR functions

starting from selection and recruitment, training need analysis, performance evaluation,

job grading, incentives and disincentives system and staffing should be managed by the

new secretariat.


6.4. What options exist to improve the management of the program in the

short to medium term in ways that will positively advance program

performance and outcomes?

Based on the preliminary diagnostic summaries, we try to answer what options exist to improve

the management of the program by using the feedback model approach. The (four) box basic

approach to provide feedback for tactical issues and policy issues in managing PNPM as

described in figure 18 are as follows.

a. Blue box (Compliment) : What IRAI think is Good ? “We thought it was good and it

can stay it is in future”.

These are the things we see as good and can stay as it is for the future. In our review of the

current PNPM management, we have identified several features that has been achieved by

PNPM and should be continued by the future management. They are listed as the following:

(i) An increasing fund disbursement allocation.

(ii) A reliable and dedicated number of management staff that is efficient to manage PNPM

(iii) A strong awareness to maintain transparency in PNPM planning and development

towards the public in complaint and case handling process

(iv) Increase of coverage area for PNPM in Indonesia as wellas program variation.

Figure 17. Feedback model

Source : The Decision Book, Mikael Krogerus and Roman Tschappeler, Profile Book, 2008.

What can be further improved?“It is good, but it still need to change”

What IRAI think is Good?“It can stay as it is in the future”

The things we think are bad.“It has to change”

What we think was bad?“But we can live with it”


b. Green box (Advice) : What can be further improved ? “We taught it was good, but

it still need to change”

There areitems that we see as good, but they still need some improvements to make them more

optimal. IRAI has identified several features of the program that is good, but can still be refined.

These are the following:

(i) An efficient amount of management staff for PNPM needs to be maintained, however the

quality of the dedicated staff should be improved. Things to consider in recruiting new

staff or placement strategy are the motivations, capacities as well as the experience that

should be well suited towards the job position. There should also be a clear career path

for the person to develop.

(ii) The PNPM program and its offshoots have achieved a large area coverage, however there

needs to be further measured analysis on the impacts on the village community and its

positive effects. In order to support this, there must be a strong information management

system that is continuously updated, monitored, and analyzed by a number of dedicated

team of experts. The information will be valuable for further development and knowledge

sharing for Indonesia as well as other countries interested in studying the model.

(iii) A Human Resources Management System including but not limited to improve existing

MIS staffing, placement of staff according to their competences and facilitators selection

process.

(iv) The need to strengthen the existing Operations Manual. The need to have detailed

explanation on system and procedure including report/form code needs to be prepared

and submitted by the related staff within the given timeline.

(v) Improve existing Complaint Handling System and its guidelines.

b. Yellow box (Suggestion) : What we think was bad ? “We thought is was bad, but

we can live with it”

There are several functions of the program that still needs improvement but nothing can be

done because the situation is not possible. These have been identified as the following:


(i) Change the organization structure of PMD in managing PNPM by restructuring the

organization immediately.

(ii) Change the project based budget model to program based budget that involves other

Ministries’s decisions.

(iii) Establish a formal and dedicated function/division for risk evaluation and compliance

immediately.

(iv) Develop the interface system between PMD and other ministries in managing PNPM data

and information.

c. Red Box (Criticism) : The things has to change.

IRAI has identified several features that urgently needs to be changed because it is an obstacle

for progress in the development of the PNPM program. The following issues are classified in this

box :

(i) Establish an online system for budget approval and monitoring process;

(ii) Prepare measurement on budget variance;

(iii) Prepare indicators for program performance;

(iv) Establish knowledge management center to improve communication across ministries

(v) Accelerate the audit of MIS and establish an integrated management information system

(MIS);

(vi) Provide analytical tools to evaluate the project deepening or project enrichment

(vii) Provide further guideline on how to monitor information and reports provided by the

facilitators from the lower government level;

(viii) Establish a formal and dedicated function/division for risk evaluation/risk management and

compliance;

(ix) Provide recommendations for selecting program or project based budget model as a basis

for decision making process and further managing/implementing PNPM;

(x) Establish a dedicated team of Rural PNPM at the directorate level;

(xi) Strengthen the management of PNPM by formulating and enlarging the existing functions

at the Sekditjen under joint/umbrella secretariat to coordinate all PNPM program under

PMD;

(xii) Accelerate the formal establishment of insitution of certification for facilitators;

(xiii) Finalize issue related to legal entity of UPK and revolving fund;


(xiv) Establish a one-village one-plan concept and to synchronize it with the existing regulation

on Regional Development Planning (Ministerial Decree No 54/2010) and its derivates on

the micro level target/indicator and;

(xv) Determine a strategy on PNPM brand protection.

The following figure 19 explains the profiles categorization of Rural PNPM.

Figure 18 PNPM – Feedback Model

What can be further improved?“It is good, but it still need to change”

What IRAI think is Good?“It can stay as it is in the future”

• PMD secretariat shall be provided with dedicated staff with capacities.

• Need to maintain and increase the area coverage.

• Need to improve HR Management System including but not limited to improve existing MIS staffing, placement of staff according to their competences, facilitator selection and recruitment process.

• Need to strengthen existing operations manual

• Improve existing CHS and its guideline/procedure

• An increasing fund disbursement allocation.

• Reliable and dedicated number of management staff to manage PNPM

• A strong awareness to maintain transparency in PNPM planning and development towards the public in complaint and case handling process

• The increase of coverage area for PNPM in Indonesia

• Increase in number of program variation

The things we think are bad.“It has to change”

What we think was bad?“But we can live with it”

• Prepare measurement on budget variance

• Prepare indicators for program performance

• Develop proper cataloging system

• Establish institution of certification for facilitators.

• Accelerate the audit process of MIS and establish an integrated management information system (MIS) including budget approval and monitoring process

• Provide analytical tools to evaluate the project deepening or project enrichment

• Provide recommendation to establish a formal and dedicated function/division for risk evaluation/risk management and compliance

• Provide recommendations for selecting program or project based budget model as a basis for decision making process and further managing/implementing PNPM.

• Establish a dedicated team of Rural PNPM at the directorat level

• Strengthen the management of PNPM by formulating and enlarging the existing functions at the Sekditjen under joint/umbrella secretariat to coordinate all program under PMD,

• Finalize issue related to legal entity of UPK and revolving fund

• Establish and finalize a one-village and one-plan concept

• Accelerate the establishment of institution for facilitators’ certification.

• Determine a strategy on PNPM brand protection

• Establish knowledge management

• Change the organization structure of PMD in managing PNPM by reorganize the directorate level immediately

• Change the project based budget model to program based budget model immediately

• Establish a formal and dedicated function/division for risk evaluation and compliance immediately.

• Develop interface system between PMD and other ministries.

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