Launching Workshop of Operational Risk Assessment …siteresources.worldbank.org/INTSARREGTOPTRANSPORT/Resources/... · Local Government Engineering Department, June 22, 2008

Launching Workshop of Operational Risk Assessment (ORA) of

Local Government Engineering Department, June 22, 2008

Initial Findings, ORA Team

Overview

BackgroundExternal Factors

– Political Environment – Review of decentralization process in context of LGED

Internal Factors– Human Resources Management– Internal Organizational Assessment – Financial Management System– Procurement System– Engineering System– Corporate Governance– Land Use and Resettlement– Information and Communications Systems

Institutional Strengths and ChallengesNext Steps

Background-1

LGED annual budget of more than US$ 700 million each year with about 62 percent from the Government of Bangladesh (GOB) and the remaining 38 percent from donors. This represents on average 40 percent of the Government Annual Development Program for transport.

Background-2

LGED has the reputation as an “island of excellence” in the GOB, with high standards of professionalism, reliability, decentralization of operations, strong work ethic, quick decisionmakingInnovative approaches in promoting community awareness: e.g. work with RUPANTAR educating citizens in community-based water resource management practices and goals.

Hifab-DHV Study on Rural Transport Improvement Project RDP 26, Ref: RTIP Contract Package S1, Sept 2007

In 2003 a Baseline Survey on RTIP Projects was carried out which covered 25 Upazila roads, union roads,jetties and growth centres.This included collection,interpretation,compilation and analysis of baseline data.24 projects were from RTIP-S1 and 33 from RTIP-2 totalling 57 projects. Report submitted in 2004 March.The Report succeeded in highlighting the benefits that accrue from the development of rural infrastructure.

25 Selected Upazila Roads

District UpazilaNawabganj- ShibgonjRajshahi- DurgapurRajshahi – BaghaNaogaon – RaninagarNaogaon – MahadevpurNatore – Natore SadarBogra – Bogra SadarSirajganj – UllaparaPabna – Pabna SadarManikganj – GhiorMaulavi Bazar – KulauraSunamganj - Satak

District Upazila

Dhaka – SavarMunshiganj – LohajangMunshiganj – TongibariNarayanganj – SonargaonNarayanganj – RupganjNarshingdi – ShibpurSylhet – ZakiganjSylhet – Sylhet SadarChandpur – KachuaComilla – HomnaComilla – ChandinaBrahmanbaria – Akhaura

Rural Roads Construction Impact and Achievements of LGED

Motorized vehicles movement increased by 360%. Share of motorized traffic went up from 21% to 26%Non-motorized vehicles movement increased by 242%53% of rural passengers now use motorized vehiclesAlmost all goods (93%) are carried by motorized transportIndividual expenditure on transport has gone done by 30% Transport freight for commodities decreased by 32% Easy availability of good rural roads has resulted in cash crop and food crop increase by 6%NGOs accessibility coverage has increased by 44%.Savings groups have gone up by 33% while disbursements by financial institutions have gone up by 75%

Background-3

However, some issues of concern raised in RTIP supervision missions, and other reportsBeing addressed through the roll out of the Public Procurement Rules, extensive staff training, expanded MIS and GIS, cancellation of some contracts, giving progress targets and deadlines to other contractors, expediting land acquisition and working to mitigate financial abuse risks in donor-funded projects.

Background-4

ISAP matrix recommendations will address some of these challenges when implemented:– Following Rural Road Master Plan for investment

decisions, and comprehensive framework for road maintenance planning and management for maintenance decisions

– Adopting effective quality assessment in all operations including technical audit

– Reviewing UFMS effectiveness and integrating it or suitable alternative in LGED-wide operation

Background-5

External Factors

Political Environment

CTG since 1-11-07, revitalized Anti-corruption Commission, which 75% of citizens say they have confidence in*78% of citizens think that corruption has gone down in the last year*Another survey** found increasing corruption in education, health, land administration, local government and NGOs, and declining corruption in law enforcement, judiciary, electricity, banking and tax through the middle of 2007.

*Fourteenth National Public Perception Study Report

**National Household Survey 2007 on Corruption in Bangladesh; LGcorruption reported here is not linked with LGED

Review of decentralization process in context of LGED-1

Directly elected and accountable units only exist at the lower tier of rural administration (Union Parishad) and for Municipal Corporations and Pourashavas Other sub-national units are deconcentrated units of central government and not democratically accountable, except for Upazila with indirectly elected chair and members


Most works funded by the UP are of a value of less than Tk 75,000 and implemented through a project implementation committee (PIC) headed a UP member. PICs receive technical support from LGED for scheme design, estimation and certification of project completion.


Works in UPs are typically of a higher quality than similar work undertaken by contractors, given the level of participation and ownership by the community. Yet overall, there is insufficient devolution of fiscal resources and administrative powers and functions to subnational units to render them efficient and effective units of decentralized government.


The lack of elected local government with responsibility and resources has helped to insulate the main political parties at the centre from challenges at the local level But, it has perpetuated a cycle of development in which commercial vested interests have colluded with political interests to create avenues for rent seeking at the cost of local development.

Internal Factors

Human Resources Management-1

HQ: 146 permanent staff, 800 project staffField: over 10,000 sanctioned posts, and 3,200 project staff.Nearly 60% of all staff on the revenue budget are working as Class III employees in posts such as Works Assistant, Accountant, Surveyor and Electrician There are about 240 female staff in LGED representing around 2.6% of all staff, mainly Class III and IV.


LGED Staffing Pattern by Class

GradeSanctioned % of

Total%

Vacant Total in

PlaceClass 1 1374 13 42 796Class II 1578 15 14 1352Class III 5832 57 8 5391Class IV 1503 15 4 1441Total 10287 100 13 8980


Average age EEs is 48, and for AEs 39.Most engineers have a bachelors degree, and 5% have post graduate degree25% of AEs have an international qualification


Overall vacancy level in LGED is low for a public sector agency at 13%Highest level (42%) Class I, mainly due to the time lag between the recent approval of 476 newly sanctioned posts of Assistant Upazila Engineer and the recruitment to these posts by PSC, which is now underwayAlso amending recruitment rules to allow LGED to fill 64 vacant sociologist posts at district level


All recruitment to Class I and II posts is undertaken by the PSC and is based on a written exam and interview.Class III and IV posts filled by concerned departmentThe average tenure of engineering staff in any particular post is around 3 years.


Strong management culture at LGED which is characterised by prompt reporting for work, low absenteeism and willingness of staff to work beyond office hours. Field supervision by inspection visits undertaken by supervising officers at different levels of the organisation. Most field inspection visits are undertaken without prior notification and are intended to verify the quantity and quality of work outputs.


Internal decision making is very rapidThe average turnaround time for formal communication of decisions is around 7-10 days for most routine matters and 10-15 days in cases where Chief Engineer’s approval is required. Officers often receive informal communication on a decision to facilitate speedy implementation. This will usually be conveyed over the phone, reflecting an organizational culture where staff have sufficient confidence to take action pending receipt of a formal approval.


203 disciplinary cases in 2007 leading to the dismissal of 6 Executive Engineers, the downgrading of 4 Executive Engineers to Assistant Engineers, 15 official warnings and a substantial number of enquiries. Most cases initiated by supervisory staff, though there are procedures for public complaints leading to disciplinary enquiry.


Training division: 14 senior training staff at HQ, along with 10 Regional Training Centres97% of training funds from donor projectsLGED has conducted 3 Training Needs Assessments in 1989-90, 1995-96 and most recently in 2004-05. In peak year of FY2005/6, LGED delivered average 11 days of training to each staff.


LGED Training Delivery

2003-04 2004-05 2005-06 2006-07Courses 2011 2099 3823 2281Training Days 86219 151664 201101 189564


LGED Training Budget Allocation (Lakh Taka)

2003-04 2004-05 2005-06 2006-07 2007-08GOB 16.00 20.00 30.00 45.00 50.00Project 652.80 922.80 1218.49 1218.36 1692.55

Internal Organizational Assessment-1

Mandate has expanded over the years from its core activity of rural infrastructure provision to cover urban infrastructure, small-scale water systems, cyclone shelters, rural markets, UP complexes, capacity development of local government bodies, strengthening community planning and implementation, coordination of integrated rural development projects.


Main functions of LGED comprise planning, design, implementation, maintenance, quality control, monitoring, inspection and training Also:

– Capacity development of local government bodies including Union Parishad and Pourashava chairpersons, ward members and staff (local level planning at Upazila level discontinued since 1990s due to lack of funds

– Strengthening community based planning, implementation and monitoring of village roads, paths, culverts etc and facilitation of training in agriculture, fisheries, livestock, micro-credit and cooperatives


Rural roads construction and maintenance, accounts for 70% of its ADP allocation (2006-07); but substantial increase in recent years in other areas such as primary school construction and urban infrastructure provision which now account for 18% and 7% respectively of the ADP allocation


Structure: Chief Engineer supported by four Additional Chief Engineers (ACEs) responsible for planning, implementation, maintenance and urban management respectively. 7 Superintending Engineer positions at HQ and a further 10 at regional level (6 of which have been recently sanctioned by GoB.) 17 Executive Engineer positions at HQ and 64 at district level and 481 Upazila Engineers positions with Sub Assistant Engineer Over 50 Executive Engineers working out of HQ as Project Directors on donor funded programs


Project Directors approve tenders Tk 40-80 million; Chief Engineer Tk 80-140 million. Approvals above Tk 140 million and up to Tk 500 million are approved by the MoLGRD&CTk 500 million requires Cabinet approval. Within LGED, CE has delegated financial and administrative powers to the ACEs

Financial Management Systems-1

Although keeping records to report financial activity to the Government and donors is important, it is equally important to be able to provide financial analysis to management and improve budget preparation and administration. To expand the financial support function in LGED it is necessary to strengthen the financial institution and to include accounting and financial professionals in the staff.LGED’s institutional capacity for financial management and project accounting lacks the ability to efficiently plan, coordinate, monitor and take timely remedial action for GOB and donors.


Recent studies (MANCAPS and ISAP) have concluded that LGED lacks a sufficient number of qualified accounting staff. The impact is:

Poor internal control environmentInadequate control over cash (EEs were fired in

2007 due to this)Lack of separation of duties No meaningful input at managerial level


Efforts to upgrade technical capacity of accounting staff include:

All new recruits must have commerce degreeTraining programs

Impediments to upgrading of technical capacity of staff:Lack of career opportunitiesMany of existing staff do not have basic

education requirementsFunctions are primarily clerical


Accounting systems and procedures are:Largely manual Records management is limitedMost transactions occur at district level where capacity is

limitedExcel used for reporting

Uniform Financial Management SystemSlow in comingNot tested technicallyNo in-house capacity to maintain


Central Accounts and Finance Unit:Recommended by MANCAPS and ISAPThe unit would:

– Strengthen internal controls– Provide support to budget planning & execution– Improve management information– Strengthen accounting staff

New staff could be directly recruited, not deputized from C&AG

Procurement Systems-1

LGED needs strengthened monitoring and risk mitigation of the procurement function, giving attention to increasing competition, and reducing obstacles to competitionThese tasks may be led by a small budget revenue procurement unit within the LGED organization


LGED presently carries out many small procurements, relying on small contractors facing difficulties in complying with complex bidding requirementsBidding documents for small NCB contracts in Bangla (and acceptance of bids in Bangla) should be made available soonest


LGED needs to use further simplified bidding documents in Bangla as soon as allowed by procurement regulations and in cooperation with the CPTU LGED needs to find incentives for small contractors to form joint ventures or associations whenever possible so they are able to be better prepared for bidding processes and larger contracts.


Under revenue budget-financed roads contracts, qualification requirements include average annual turnover of about 0.5 times the official cost estimateUnder donor-financed projects such requirement is as high as 1.5 timesIs the latter stringent requirement inducing under qualified contractors to misrepresent the qualifications?

Good Practice: LGED is one of the few GoB entities publishing procurement performance

Good Practice on tracking procurement performance

Challenge is to collect and process data on a larger and more representative sample of procurement actions

Anticorruption: 50% of the debarred contractors pertain to LGED projects

CPTU list: debarred contractors

LGED50%

Others27%

Railways8%

Highways3%

PWD12%

Why? Because LGED takes action when evidence warrants

Engineering Systems-1

Quantities and EstimatesQuantities for earthworks (embankment) established as part of design can be manipulated

Possible Remedy:Random audit could help to ensure that the quantities calculated are correct


Unit CostsEngineer’s estimate is based on LGED unit rate schedule which is updated every 1 - 2 years

Possible Remedy:Random audits to check real market rates for major items like sub-base, base and bitumen carpet (BC) and concrete against LGED rate schedule.


Quality Control and Quality AssuranceAssure quality of work achieved conforms to the specifications to get best value for money. Quality Assurance Audit Report of May 2008has determined that quality of bricks in the districts of Hobiganj, Moulvibazar, Sylhet and Sonamgang is suspect. Aggregates produced from these bricks do not meet the desired grading.Bitumen content in bitumen carpet was found to be less than specified in most cases where sample tests were taken.

Possible Remedy:Currently, Quality Control Unit is part of Field Unit under District Engineer. As per findings of ISAP-June 2008, develop an effective Quality Assurance strategy, including Technical Audit. All field laboratories could be brought under a Superintending Engineer, QC at HQ.


Road Maintenance Planning and ManagementRoad network constructed under development projects not effectively maintained.

Possible Remedy:Strengthen the capacity of RIMMU at HQ for sustainable management of the rural network, as noted in ISAP-June 2008.

Corporate Governance

LGED follows Government Servant's Code of Conduct and Disciplinary Rules, 1979Three categories of rules:

– Prohibitions, e.g. taking part in politics, favoritism, approaching donor to secure invitation for foreign training/visit

– Prior permissions, e.g. acceptance of gifts, management of companies

– Asset (over Tk 10,000) declaration at time of entry to service, and every year in December.

Corporate Governance - 2

Strong and cohesive sense values of technical professionalism and civic mindedness Legacy of top management leading by example, precedent and tight control Readiness to exercise disciplinary procedures Corporate social responsibility initiative. Opportunity for LGED to formulate Corporate Governance Framework (internal code of ethics & council, Global Reporting Initiatives)

Land Use and Resettlement

Escalation of land acquisition and resettlement costs from lengthy, non-transparent practices of PWD, Forestry, Fisheries and other concerned agenciesDelays in compensation payment; landowners may be evicted from land first and civil works begun before payment made.

Information and Communications Systems-1

LGED has been one of the early pioneers in the use of ICTs among GoB departments.Extensive ICT infrastructure spread over the country, including over 700 computers connected through a fiber optic backbone in HQ, and internet connectivity for each district officeComputer in each Upazila, but no or poor Internet connectivity.


Almost the entire MIS / GIS / IT work within LGED has been done by IT professionals drawn from different donor funded projects; there is no permanent ICT Unit providing support across uniform, essential systems. More than 15 different MIS applications, most of them having being initiated as part of a donor funded project and subsequently mainstreamed for multiple or all projects. Fiber optic backbone not yet extended to second HQ building; many staff lack basic ICT skills, and not required for promotion or increment.


All the MIS software used by LGED have been designed primarily as reporting system and not as transaction processing system or workflow system,Files pertaining to payments, receipts, bids, evaluation reports, contracts, letters, faxes, and circulars are filed and stored in the office in which they originate or where the budget for that particular activity is held.


LGED has a digitized base map of entire Bangladesh on a scale of 1:50,000 with many spatially referenced databases:

– transport infrastructure (roads, culverts, bridges, etc.); economic infrastructure (growth centres, rural markets); drainage infrastructure;

– small scale water resources infrastructure (embankments, sluice gates, regulators etc.);

– administrative institutions (UPs, Upazila / District HQs etc.); – Educational Institutions (Schools, Colleges, Madrasas etc.); – Social Features (Mosques / Shrines, Clubs etc.); rivers, etc.


Time series analysis using GIS databases not possible.M&E Unit prepares periodic reports on physical and financial progress. Inspection Reports, Inquiry Reports and Complaints appearing in news paper are also compiled and sent to the senior management for information and decisions CPTU is working on e-tendering

Institutional Strengths and Challenges-1

Excellent reputation for professionalism, and quality delivery on time and on budget This being challenged by allegations of incomplete bridges without approach roads, roadworks that failed testing, and reported cases of corruption.Disciplinary action against officials involved in some cases has been taken.Need stronger evidence of performance, e.g. effective monitoring to ensure conformity to Rural Road Master Plan, competitiveness of all LGED contracts (est. 2000 p.a.)

Institutional Strengths and Challenges-2

Next Steps

Based on analysis of processes, strengths and challenges, and LGED’s absorptive capacity, ORA team will make suggestions:– For improvements that can be carried out by

LGED– For improvements that can be carried out by

LGED in coordination with other agencies– For improvements needed in the external policy

and institutional environment beyond LGED’s control

Documents

Launching Workshop of Operational Risk Assessment …siteresources.worldbank.org/INTSARREGTOPTRANSPORT/Resources/... · Local Government Engineering Department, June 22, 2008