Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No: 64358 - CN

PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED LOAN

IN THE AMOUNT OF US$50 MILLION

TO THE

PEOPLE'S REPUBLIC OF CHINA

FOR THE

YUNNAN TECHNICAL AND VOCATIONAL EDUCATION AND TRAINING PROJECT

April 12, 2012

Human Development Sector UnitEast Asia and Pacific Region

This document has a restricted distribution and may be used by recipients only in theperformance of their official duties. Its contents may not otherwise be disclosed without WorldBank authorization.

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CURRENCY EQUIVALENTS

(Exchange Rate Effective March 30, 2012)

Currency Unit = Chinese Yuan (CNY)US$1 = CNY6.30

FISCAL YEAR

January 1 - December 31

ABBREVIATIONS AND ACRONYMS

GDP Gross Domestic Product MIS Management of Information SystemBD Bidding Document MOE Ministry of EducationBER Bid Evaluation Report MOF Ministry of FinanceCAD/CAM Computer Aided Design / Computer MTR Mid-Term Review

Aided manufacturingCBT Competency-Based Training NCB National Competitive BiddingCNAO China National Audit Office OECD Organization for Economic Cooperation

and DevelopmentCQ Consultant Qualification OP/BP Operation Policy / Bank PolicyDA Designated Account ORAF Operational Risk Assessment

FrameworkECOP Environmental Codes of Practice PDO Project Development ObjectiveFM Financial Management PET Project Expert TeamFMM Financial Management Manual PIU Project Implementation UnitGER Gross Enrollment Ratio PMO Project Management OfficeIBRD International Bank of Reconstruction and PV Present Value

DevelopmentIC Individual Consultant QBS Quality Based SelectionICA Investment Climate Assessment QCBS Quality and Cost Based SelectionICB International Competitive Bidding CNY Ren Ming Bi (Chinese currency)IDA International Development Association SSS Single Source SelectionIRR Internal Rate of Return TVET Technical and Vocational Education and

TrainingM&E Monitoring and Evaluation YPFB Yunnan Provincial Finance BureauMHRSS Ministry of Human Resources and Social

Security

Regional Vice President: Pamela CoxCountry Director: Klaus Rohland

Sector Director: Xiaoqing YuSector Manager: Luis Benveniste

Task Team Leader: Xiaoyan Liang

ii

Table of Contents

I. Strategic Context....................................................1

A. Country and Provincial Context................. ..................... 1

B. Sectorial and Institutional Context................... .................. 2

C. Higher Level Objectives to which the Project Contributes....................7

II. Project Development Objectives (PDO)....................................7

A. PDO.........................................................7

a. Project Beneficiaries..............................................7

b. PDO Level Result Indicators ........................................ 8

III. Project Description...................................................8

A. Project Components............................................... 8

B. Project Financing................................................ 10

a. Lending Instrument................................................ 10

b. Project Cost and Financing.......................................... 10

C. Lessons Learned and Reflected in the Project Design7.......................1

IV. Implementation.................................................... 12

A. Institutional and Implementation Arrangements...........................12

B. Results Monitoring and Evaluation (M&E)..............................12

C. Sustainability.................................................. 13

V. Key Risks and Mitigation Measures.................................. .... 14

VI. Appraisal Summary .......................................... ....... 14

A. Economic and Financial Analysis............................... ..... 14

B. Technical ..................................................... 15

C. Financial Management (FM) ............... .. ....................... 16

D. Procurement ................................................... 17

E. Social and Environmental (including safeguards) .................... ...... 17

Annex 1: Results Framework and Monitoring ...and.Eva.uation.(M ............... ................ 19

Annex 2: Detailed Project Description........................................22

Annex 3: Project Institutional and Implementation Arrangements....................26

A. Project Administration Mechanisms...................................26

B. Financial Management and Disbursements..............................26

C. Procurement................................................... 29

D. Environmental and Social (including safeguards) ................... ...... 33

E. Monitoring & Evaluation (M&E)....................19.... .......... 35

iii

Annex 4: Operational Risk Assessment Framework (ORAF) ........................... 39

Annex 5: Implementation Support Plan....................................... 42

TablesTable 1: Yunnan's Pillar Industries ................... 2...... ................. 2Table 2: Yunnan Formal Technical and Vocational Education and Training in 2010 ............... 3Table 3: Project Cost and IBRD Financing ..................................... 10

FiguresFigure 1: School Reform Cycle ............................................ 16

iv

PAD DATA SHEET

China

Yunnan Technical and Vocational Education and Training Project

PROJECT APPRAISAL DOCUMENT

EAST ASIA AND PACIFIC

EASHE

Basic InformationDate: 12-Apr-2012 Sectors: Vocational training (100%)

Country Director: Klaus Rohland Themes: Improving labor markets (50%), Education for all (30%), Social

Sector Manager/Director: Luis Benveniste/Xiaoqing Yu Inclusion (20%)

Project ID: P122008 EA Category: C - Not Required

Lending Instrument: Specific Investment Loan

Team Leader(s): Xiaoyan Liang

Joint IFC: No

Borrower: People's Republic of China

Responsible Agency: Yunnan Provincial Dept of Education

Contact: Mr. Jie song Title: Deputy Director, PMO

Telephone No.: 868715155146 Email: sj132004@yahoo.com.cn

Project Implementation Period: Start Date: 01-Oct-2012 End Date: 30-Jun-2017

Expected Effectiveness Date: 01-Oct-2012

Expected Closing Date: 31-Dec-2017

Project Financing Data(US$M)

[X ] Loan [ ] Grant [ ] Other

] Credit [ ] Guarantee

For Loans/Credits/Others

Total Project Cost (US$M): 90.97

Total Bank Financing (US$M): 50.00

Financing Source Amount(US$M)

Borrower 40.97

International Bank for Reconstruction and Development 50.00

Total 90.97

V

Expected Disbursements (in USD Million)

Fiscal Year 2012 2013 2014 2015 2016 2017 2018 0000 0000

Annual 0.00 5.00 10.00 15.00 10.00 5.00 5.00 0.00 0.00

Cumulative 0.00 5.00 15.00 30.00 40.00 45.00 50.00 0.00 0.00

Project Development Objective(s)

To improve the quality and relevance of technical and vocational education and training to produce skills that respond to the labor market demand,contributing to Yunnan's economic development during China's 12th Five-Year Plan period.

Components

Component Name Cost (USD Millions)

1. Improving the quality and relevance of TVET programs in the project schools 49.37

2. Strengthening provincial capacity in coordination, policy development, monitoring 0.50and evaluation

Compliance

Policy

Does the project depart from the CAS in content or in other significant respects? Yes [ ] No [ ]

Does the project require any waivers of Bank policies? Yes [ ] No [ ]

Have these been approved by Bank management? Yes [ ] No [ ]

Is approval for any policy waiver sought from the Board? Yes [ ] No [ ]

Does the project meet the Regional criteria for readiness for implementation? Yes [ ] No [ ]

Safeguard Policies Triggered by the Project Yes No

Environmental Assessment OP/BP 4.01 X

Natural Habitats OP/BP 4.04 X

Forests OP/BP 4.36 X

Pest Management OP 4.09 X

Physical Cultural Resources OP/BP 4.11 X

Indigenous Peoples OP/BP 4.10 X

Involuntary Resettlement OP/BP 4.12 X

Safety of Dams OP/BP 4.37 X

Projects on International Waterways OP/BP 7.50 X

Projects in Disputed Areas OP/BP 7.60 X

Legal Covenants

Name Recurrent Due Date Frequency

Description of Covenant

Team Composition

Vi

Bank Staff

Name Title Specialization Unit

A. Juliana Williams Operations Assistant Operations Assistant EASHD

Sabrina Gail Terry Program Assistant Program Assistant EASHD

Kishor Uprety Senior Counsel Senior Counsel LEGES

Wenjin Wang Consultant Consultant EASHS

Xiaoyan Liang Senior Education Specialist Team Lead EASHE

Junxue Chu Senior Finance Officer Senior Finance Officer CTRLN

Xiaowei Guo Senior Procurement Specialist Senior Procurement Specialist EAPPR

Chaogang Wang Senior Social Development Senior Social Development SDVSpecialist Specialist

Haiyan Wang Senior Finance Officer Senior Finance Officer CTRLN

Chaoying Liu Evaluation Officer Evaluation Officer CDIAS

Liping Xiao Senior Education Specialist Senior Education Specialist EASHE

Haixia Li Sr Financial Management Specialist Sr Financial Management Specialist EAPFM

Anna Coronado Program Assistant Program Assistant EASHE

Tao Su Program Assistant Program Assistant EACCF

Yiren Feng Senior Environmental Specialist Environmental Specialist EASCS

Yunlong Liu Procurement Specialist Procurement Specialist EAPPR

Ofumilayo Fewo Olympio Temporary Temporary AFCAD

Maya Razat Program Assistant Program Assistant EASHD

Shuang Chen Consultant Consultant EASHD

Non Bank Staff

Name Title Office Phone City

Locations

Country First Administrative Location Planned Actual CommentsDivision

V11

I. Strategic Context

A. Country and Provincial Context

1. China has one of the fastest growing economies with its average annual growth rateof 10% in the past three decades. Average Gross Domestic Product (GDP) per capita reachedmore than US$4,000. China enters its 12th Five-Year Plan period in 2011. The Government'sNational Economic and Social Development 12th Five-Year Plan targets annual GDP growth of7.5% during the period. The Government is keenly aware that to sustain economic growth andsocial development, successful shifting of the economic development pattern from low to highervalue added industries, from export to domestic consumption, within a framework of inclusivegrowth and environmental conservation, will be critical. Improving the quality and productivityof its labor is explicitly put forth as an enabling factor to the success of the Plan.

2. Yunnan is a poor western province with 30% of its population belonging to 26 non-Han ethnic groups. Located at the southwestern border of China, Yunnan is an importantwestern border province with abundant natural resources and a high proportion of ethnicminorities. It is a medium-sized Chinese province with a population of 45 million, 30 million ofwhich reside in rural and 15 million in urban areas. 84% of Yunnan's land mass is mountainous.Yunnan further distinguishes itself from the other Chinese provinces by its high level of ethnicdiversity: only 66% of the Yunnan population is ethnic Han, and the remaining one third of thepopulation, or 15 million, is of the other 26 ethnic groups.

3. The total GDP of Yunnan increased from CNY8.4 billion in 1980 to more thanCNY616.9 billion in 2009 and CNY722 billion in 2010, registering an annual growth rate ofmore than 10%. However, compared to the rest of China and in particular to the coastalprovinces, Yunnan's economy is less developed. Its GDP per capita in 2010 was only half of thenational average. The per capita net income of its rural households was only CNY3,369 (aroundUS$530) in 2010. More than 10% or 5.4 million of its population is poor. It is considered thethird poorest province in China after Gansu and Guizhou.

4. The Government further prioritized Yunnan's development in the 12 th Five-YearPlan and formulated a "Bridgehead" ( CA) strategy to boost the provincial economicdevelopment. Yunnan's pillar industries including agriculture, tobacco, tourism, mining, andenergy sectors contribute to more than half of the total GDP in Yunnan. In the 12 th Five-yearPlan period, the government plans to at least double the value of each sector's contribution toGDP.

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Table 1: Yunnan's Pillar IndustriesIndustry Added Value in 2010 % Contribution to Expected Added

(CNY100 million) GDPI Value by 20152(CNY100 million)

Agriculture 1106.0 15.3 1650Tobacco 797.2 11.0Tourism 505.4 7.0 1235Mining 832.5 11.5Energy 255.74 6.0 1130Total 3496.8 50.8

Sources: Yunnan Bureau of Statistics, 2011

5. The structure of Yunnan's economy is undergoing fundamental transformation. AsYunnan's urbanization continues and the economic development pattern shifts towardshigher value added sectors, the skills in demand will likely change and bottlenecks willbecome more evident, constraining growth. In 1980, 43% of the Yunnan GDP was contributedby the primary sector. By 2010, the contribution of the primary industry was only 15% and theother 85% came from secondary and tertiary industries. To date, more than 65% of Yunnan's 26million active labor force is still engaged in the primary sector, while the demand for labor in thesecondary and tertiary industry and pillar sectors continues to increase and is yet to be met, asindicated by data from the quarterly labor force surveys. For example, in the second quarter of2010, there were a total of 179,250 job vacancies but there were only 140,021 applicants. Newjob vacancies are mainly in the areas of hotel and restaurant (20%), manufacturing (17%),construction (13%), and whole sale and retail (12%). There were also structural mismatches inthe demand and supply of skills. Only half of the positions were filled.

6. National data confirm the same trend: the growth of GDP is creatingproportionately fewer jobs and those created are requiring more skills. This is evidence ofskill-biased technological change. Rates of return to education and income inequality have risenduring this period as a sign of the demand for skills. The earnings of those without skills indemand are falling behind those with the necessary skills. As further evidence of the demand forskills, the World Bank's Investment Climate Assessment (ICA) survey ranks worker skills andeducation high as a constraint to China's growth.

B. Sectorial and Institutional Context

7. Education and training is the key to developing talent and building labor forceskills. To date, China has universalized the 9-year compulsory education. Gross enrollment ratesat senior secondary level have also increased from 29% to 78% during the past three decades.However, the overall quality of China's human resource is still low compared to the more

1 Total Yunnan GDP in 2010 is 722 billion.2 Expected total Yunnan GDP by 2015 is over 1163 billion. The expected numbers are based on the 12th Five-YearPlan of each industry.

Agricultural sector includes agriculture, forestry, animal husbandry and fishery.4 The 2010 statistics only includes electricity and thermal power, while the expected added-value in 2015 refers tothe entire energy industry.

2

developed countries. Tertiary Gross Enrollment Ratio (GER) is only 23%, well below the worldaverage of 30%. Two thirds (around 194 million) of the urban employees do not possess anyformal skills and 13% of them have the most basic Level 1 skill certificates only. Furthermore,there are about 200 million low-skilled temporary migrant workers in the cities coming fromrural areas.

8. Faced with the unprecedented growth, the Chinese government is increasinglyconscious of the value of highly skilled human capital. In 2010, the government published itsMedium- and Long-Term Talent Development Plan for 2010 to 2020, pledging to increase theskills of labor force and attract foreign talents. One of the main targets is to have 28% of the totallabor force to be highly skilled by 2020. Together with the talent plan, the government issued aMedium- and Long-Term Education Development Plan (2010-2020). The education plan sets upgoals and reforms to better align the education system with the demand of the economic andsocial development. In particular, the Plan aims to expand technical and vocational education atboth the secondary and tertiary level.

9. Technical and vocational education and training is available in China primarilyafter 9 years of basic education and tends to be formal with its provision dominated by thepublic sector. In the formal Chinese education system, the technical and vocational track (asopposed to the general academic track) becomes available at the junior secondary level after 6years of primary education and continues to be offered at senior secondary and tertiary levels.However, it is increasingly rare for students to proceed to junior vocational schools after primaryschool. Most would complete the 9-year basic education and then choose an academic,vocational, or technical secondary school, each typically lasting 3 years. Thus, formal vocationaland technical education' in Yunnan is offered at four different levels of schooling: juniorsecondary, senior secondary, tertiary, and adult Technical and Vocational Education andTraining (TVET) (Table 2). The majority of TVET concentrates at the senior secondary andtertiary level. In 2010, there were more than 300 secondary and 51 tertiary TVET institutions inYunnan, enrolling respectively 663,400 and 183,300 students. About 10-12% of the total TVETenrollment in Yunnan is in private institutions. Increasingly, these formal TVET institutionsoffer training programs targeting at the rural unskilled and urban migrant workers.

Table 2: Yunnan Formal Technical and Vocational Education and Training in 2010Level of Education Type of Institutions Number of Institutions Enrollment (1,000)Junior Secondary Junior Vocational Schools 14 6,900Senior Secondary Specialized Secondary 91 290,000

Skilled Workers Schools 36 93,800Vocational High schools 184 279,600

Tertiary Tertiary Specialized Colleges 35 183,300Tertiary Technical and 26Vocational Colleges

Adult education 134 7,800

There are more than 10,000 non-formal technical and vocational education and training which offer non-degreetraining programs to more than 3 million trainees per year.

3

10. Access to secondary and tertiary education in Yunnan will need to further increaseto expand the future pool of talent and skilled labor and to upgrade the skills of existinglabor, in particular given Yunnan's fast economic development, urbanization, and thegovernment's strategic emphasis on western provinces in the 12th Five-Year Plan. Yunnanexpanded access to the 9-year basic education to nearly all its population and is rapidlyexpanding post-secondary education. However, Yunnan's gross enrollment ratio was about 60%for senior secondary education (including TVET) and 18% for tertiary education (includingTVET) in 2010, implying that a significant portion of students do not yet have access to postbasic education. In recognition of the critical role education and training plays in the successfulshift of economic development pattern, in sustaining the economic and social development, andin reaching the targets set by the National Medium- and Long-Term Education DevelopmentPlan, the Yunnan province aims to reach 90% and 40% respectively for secondary and tertiaryGERs, half of which are expected to be on the technical and vocational track.

11. While there may be debate on the optimal balance of technical vocational education vs.general education especially at the secondary level, it is clear that regardless of its size in thefuture, the technical and vocational education system needs to be strengthened and transformedtowards an efficient, equitable, and demand driven one that can respond to the evolving needs ofthe economy and society. Based on international trends on technical and vocational educationand analysis of the context in China and Yunnan, the current system faces a number ofchallenges at the system and institutional levels. In particular, challenges remain in improvingthe overall governance and financing of TVET, as well as the quality and relevance of educationand training to expand the future skilled labor pool and to upgrade the skills of existing laborforce.

12. The TVET sector remains fragmented in China and in Yunnan. TVET institutionsare officially managed by a myriad of government agencies and their local departments,including the Ministry of Education (MOE), the Ministry of Human Resources and SocialSecurity (MHRSS), and other line ministries such as transportation, health, and urbanconstruction. There is no single central agency that is responsible for the TVET affairs. Since2008, the MOE assumed policy and technical responsibilities for all TVET institutions originallyunder sectoral ministries of transportation, health, and urban construction and of course includingthose under education, but not those under the MHRSS. Thus, all secondary and tertiary TVETinstitutions in China are managed either by the MOE or the MHRSS. For example, the MOEthrough local departments of education offers regular secondary schools, mainly for those whoplan to continue onto higher education, and specialized vocational secondary schools andvocational high schools for those who plan to enter employment. The MHRSS through its localdepartments and other administrative bodies also offer technical secondary education in skilledworkers schools.

13. Even after the MOE assumes the policy and technical responsibilities for otherinstitutions, personnel and some funding decisions still remain with those line ministries.Between education and labor, there are different policy directions and targets as contained in theMedium- and Long-Term Education (MOE) and Talent (MHRSS) Development Plans. Further,at the technical level, there are different requirements for standards, development of new trainingprograms, and curriculums between education and labor. The fragmentation of policy, funding,

4

and technical guidance reduced the overall efficiency and effectiveness of the TVET system inChina.

14. Government financing for education and training in China is low by internationalstandards at 3% of GDP while member countries of the Organization for Economic Co-operationand Development (OECD) spend on average 5.8%. Local governments cover more than 80% oftotal public spending on education. The 20% from the central government is primarily for the 9-year basic education and other special projects. Private spending by households and businessescovers up to 40% of the total cost of education and training, twice the average share of privatespending in other countries. In China, vocational and technical education is the responsibility oflocal governments. Central government funding for TVET is very limited and only for specialprojects for selected key institutions. For most of the TVET institutions, financing has beeninadequate for needed improvements in faculty, curriculum, pedagogy, equipment, and facilities.

15. In Yunnan, total enrollment in secondary TVET institution has increased to 669,000, butthe enrollment increase was not matched with improvement in education hardware and software,resulting in the lack of qualified teachers and overcrowding. TVET tends to be more expensivethan general education on per student basis due to higher demand for equipment and otherfacilities. However, expenditure per student for TVET is lower than that for universities andgeneral senior secondary school, indicating a lower investment in equipment and facilities. In2010, the student-teacher ratio in general senior secondary school in Yunnan was 15:1, but theratio was much higher in secondary vocational schools (28:1). The low level of expenditure perstudent in TVET schools seriously eroded the school's capacity to provide quality instruction,up-to-date curriculum, modern teaching and learning facilities necessary for quality TVETeducation.

16. Fragmentation of the TVET sector further reduces the effectiveness and equity ofpublic financing, due to varying funding mechanisms and standards. Specialized secondaryschools and the Skilled Workers' Schools began to be funded based on per student allocation in2010. However, those that are directly managed by the provincial-level departments tend to havea higher level of per student funding than those managed by the city- and county-levelgovernments. The Vocational High Schools managed by the county governments remain fundedby historical inputs and are subject to fluctuations in year-to-year local finances. They tend tohave the lowest per student allocation especially in poor counties with weak local revenues.

17. School-Industry Collaboration needs to be further strengthened. Key elements of ademand-driven education and training system include governance and management structure thatwould systematically incorporate industry representation at the system and institutional level.The TVET institutions across China and in Yunnan have indeed various collaborations withenterprises. However, these collaborations tend to be based on individual idiosyncratic effortsonly without system assurance.

18. Schools themselves are managed by heads of institutions appointed by variousadministrative bodies. Private TVET institutions are required by law to have a school board withvarious representations. However, the public TVET institutions are not legally permitted toestablish school boards. To respond to the demand from industry, some schools start to

5

experiment with management models including school industry advisory or consultativecommittee; and to start signing contracts with enterprises in the areas of graduate employment,teacher training, equipment donation, and bringing factory into school for training as well asproduction. In general, the school industry linkage is still nascent. On one hand, school capacityfor planning and management to strengthen the linkage of schools and industry is weak; on theother hand, there is a lack of incentive, culture, and legal framework for industries to providesystematic and sustained inputs to the management of TVET schools. In the case of industrialattachment, not all industry settings allow such student attachments due to the cost of simulatingvarious production problems for training in a real time production setting, and in other cases, thecost of downtime for production equipment inhibits training.

19. Competency-Based Standards and Curriculum can be further improved. Another keyelement of a demand-driven system is the content of curriculum materials and the methodologyby which the curriculum materials are developed. Across all types of TVET programs, there is alack of competency based standards as the basis for curriculum development. Vocational schoolsunder the Ministry of Human Resources and Social Security are required to use standardsdeveloped by MHRSS. However, these standards are widely considered to be of too low quality,out of date, and no longer reflecting the requirements of the ever evolving labor market. TheMinistry of Education issued a separate set of standards for TVET subjects in MOE schools, butexperts regard them as overly theoretical and do not reflect the real competencies of skilledworkers. These standards have been developed with little inputs from the industries and aredesperate in need for an update, seriously compromising the relevance of TVET educationprovided.

20. Vocational and technical schools in China are being stretched to keep their training up todate and match the competencies sought by industry. Where possible, schools are engagingindustry in helping set competency standards and providing students with experience in industrythrough attachments of up to one year duration. This is observed in a number of vocational andtechnical schools, in particular those key schools that over the past years have benefitted fromcentral government or donor special projects in TVET, which tends to emphasize curriculumreform. The majority of TVET institutions will need to revise its curriculum based on updatedstandards from the industries.

21. Quality of Instruction and Instructors needs to be upgraded. Teaching and learningobserved in schools emphasize the instructor as a lecturer providing knowledge of theory butlittle hands-on experience with the actual equipment and the production problems in a modernindustry setting. Instructors also need to upgrade their theory and practical skills. Few instructorshave both the necessary pedagogical skills and the technical skills needed to help students learnthe use of new technologies. Enterprises are searching for workers with teamwork experience,problem-solving skills, abilities to use newer production technologies, and good communicationsskills. While demand for workers is strong in China and placement rates for graduates are high(90% in many schools), schools are faced with the need to reinvent themselves and theirapproach to training workers to meet the demands of new industries and upgrading the olderindustries. Older instructional equipment such as hand lathes and personal computers are givingway to Computer Aided Design / Computer Aided manufacturing (CAD/CAM) equipment, robotics,

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and modem computers running graphics software. The classroom is changing to become a modelfactory providing the necessary instruction in theory and practice.

C. Higher Level Objectives to which the Project Contributes

22. The above country and sector context outlines main challenges facing the China andYunnan TVET system. Within the limited project period and financing, the Project attempts toaddress only some of the main challenges described. In particular, the Project will concentratemost of its resources on improving the capacity of the project schools in delivering quality andrelevant technical and vocational education programs. At the same time, it will also attempt toaddress system wide coordination and capacity issues and to contribute to the development of amore coordinated, efficient, and effective technical and vocational education and training systemin Yunnan.

II. Project Development Objectives (PDO)

A. PDO

23. The Project's Development Objective is to improve the quality and relevance of technicaland vocational education and training to produce skills that respond to the labor market demand,contributing to Yunnan's economic development during China's 12th Five-Year Plan period.

a. Project Beneficiaries

24. The Project will take place in the context of Yunnan's economic development duringChina's 12th Five Year Plan. The project will directly benefit the 24,078 students (about half ofthe total enrollments in the 9 project schools) who are currently enrolled in the targeted trainingprograms in four key economic sectors including bio-industry, geology and minerals, tourism,and automobile industries. Furthermore, the Project has interventions in the training of schoolmanagement, which would benefit all the students enrolled in the project schools. Almost 80% ofthese students are from rural poor areas and about 30% of them belong to the ethnic minoritygroups (non-Han). At the end of the project period, total enrollment in these institutions isprojected to increase to about 96,000. The proportions of students who are from rural poor andethnic minority groups are expected to further increase. In addition, the 9 project schools alsooffer short term training courses to rural farmers and urban migrant workers that need skillsupgrade. The capacity of such training is also expected to increase from the current 16,000trainees per year to 28,000 trainees per year. The project will have built-in subcomponents toencourage school-to-school collaborations so that the project schools can support similar reformsin non-project neighboring schools.

25. The project will contribute to the poverty alleviation goal of the central and provincialgovernment. As is often said in China amongst the TVET school community, one graduateemployed is one family out of poverty.

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b. PDO Level Result Indicators

26. Key results of the Project will be measured at two levels. The first level is the improvedcapacity of the TVET institutions in delivering quality TVET, as reflected in new and improvedstandards and curriculum modules, more and updated training facilities, better trained teachersand administrators, improved mechanisms for school-enterprise collaborations. The second levelPDO results will be measured by higher graduates' skill certification rate and improved labormarket outcomes, including: (a) graduate employment rate in the area of training; (b) employersatisfaction; and (c) proportion of graduates who obtain both skills certificate and diploma.

III. Project Description

A. Project Components

27. The project will have two main components: (a) Improving the Quality and Relevance ofTVET Programs in Project Schools; and (b) Strengthening Provincial Capacity in Coordination,Policy Development, and Monitoring and Evaluation (M&E).

28. Component 1: Improving the Quality and Relevance of TVET Programs in ProjectSchools (Total US$81.56 million, IBRD US$49.37 million). This component will have sixsubcomponents:

29. Sub-component 1.1: Strengthen School-Industry Collaboration and DevelopCompetency-Based Training (CBT) Standards. This component is designed to address the lackof systematic and substantive school-industry collaboration and also to address the lack ofrelevance in the training programs. It will strengthen and institutionalize the linkage betweenschools and industry by: (a) establishing formal School-Industry Collaboration Committee at theschool level and sector specific Industrial Advisory Committees at departmental level; and (b)based on inputs from the School Industry Collaboration Committee and the sector specificIndustrial Advisory Committees and following the scientific methodology of industrial andmarket needs assessment, the project will develop competency-based standards to revise theselected training programs under the project.

30. Sub-component 1.2: Develop School-Based CBT Curriculum and Teaching LearningMaterials. This sub-component is designed to address the challenges related to the curriculumbeing out of date, over theoretical, not sufficiently reflecting the needs of the industry, andteaching methodology being predominantly teacher-centered. This sub-component will: (a)develop core curriculum standards; (b) develop modular curricula and other teaching learningmaterials through a cycle of piloting, evaluating, and revising; (c) publish school-based newcurriculum materials; and (d) establish a school level teaching and learning resource bank.

31. Sub-component 1.3: Train School Managers and Teachers. This sub-component isdesigned to address the challenges related to improving management and instructional capacity.Relevant domestic and international training will be designed for both school managers andinstructors on school industry linkage and on the development and implementation of

8

competency-based training programs and on evidence based policy development andmanagement.

32. Sub-component 1.4: Develop Student and Teaching Assessment Systems that reflect thenew CBT curriculum and result-oriented approach to TVET. This sub-component is designed toaddress the challenges related to student assessment being overly theoretical, not reflecting thecompetencies required by the industry, and to the overall lack of effective teaching assessmentsystem. The sub-component will support: (a) the development and implementation of newstudent assessment instruments including a graduate tracer study and employer satisfactionsurvey; and (b) the development and implementation of new teacher and teaching assessmentinstruments.

33. Sub-component 1.5: Upgrade Key Instructional Facilities and Equipment. This sub-component is designed to mitigate the shortage of training centers and key training equipment inthe Project schools. The Project will provide financing to: (a) expand and upgrade facilitiesincluding construction of training centers within existing school campus of the selected schools;(b) provide key training equipment needed for the revised training programs, and consultanciesrelated to the design and supervision of works and goods contracts; and (c) develop schoolguidelines for the management of all training facilities and equipment.

34. Sub-component 1.6: Support Disadvantaged Non-Project TVET schools. This componentis designed to enhance project impact by allowing interested non-participating TVET institutionsto participate at their own expenses in some of the project training activities and by providingthem with access to the CBT and curriculum materials developed by the Project.

35. Component 2: Strengthening Provincial Capacity in Coordination, PolicyDevelopment, and Monitoring and Evaluation (Total US$1.00 million, IBRD financingUS$0.50 million). This component will have four sub-components.

36. Sub-component 2.1: Strengthen the Provincial Coordination of TVET Affairs. This sub-component is designed to strengthen the overall coordination of TVET matters in YunnanProvince. The Province of Yunnan in the past already created an inter-departmental TVETcoordination committee led by the Department of Education but with representatives from theDepartment of Human Resources and Social Security and other Departments that are involved inthe provision and management of TVET in the Province6 . The Project will provide support forthe Committee to: (a) organize study visits to provinces that have similar coordinationmechanism; (b) regular meetings of the Committee to discuss TVET affairs; and (c) Committee'svisits to project schools.

37. Sub-component 2.2: Support the School-Level Development of CBT Programs. This sub-component is designed to provide guidance and technical assistance to project schools indeveloping and implementing CBT standards and curriculum. The participating project schoolsare under different departmental management, ranging from secondary to tertiary institutions,and have different focus in training programs. It is important that the province provides guidance

6 The Chinese translation is ")TTJliK ", which has been established in other provinces such as Shanghai andXinjiang to improve the provincial level coordination of TVET matters and has shown some initial positive results.

9

and technical assistance and training to ensure that schools follow a standard scientificmethodology in the development of CBT standards, curriculum, and other teaching learningmaterials.

38. Sub-component 2.3: Policy Development and Sharing of Knowledge and Experience.This component is designed for the project to have expanded and sustained impact on TVETschools and policy development in TVET. In particular, the sub-component will: (a) carry outpolicy research and produce policy briefs related to various topics in TVET; and (b) organizeprovincial TVET workshops to exchange school-industry collaboration and curriculumdevelopment case studies and lessons learned.

39. Sub-component 2.4: Project Management, Monitoring and Evaluation. This component isdesigned to support project management including monitoring and evaluation of activities.Specifically, the sub-component will: (a) finance the training of provincial- and school-levelproject staff in project management, financial management, procurement, and monitoring andevaluation; (b) support provincial and school level procurement and financial managementactivities; and (c) carry out project monitoring and evaluation.

B. Project Financing

a. Lending Instrument

40. The International Bank for Reconstruction and Development (IBRD) loan of US$50million will be prepared as a Specific Investment Loan (SIL) to the People's Republic of China.The project will be implemented over a 5-year period from expected effectiveness date ofOctober 1, 2012 to December 31, 2017. This would allow at least one cohort of students tograduate out of the new TVET programs.

b. Project Cost and Financing

41. The Project costs and IBRD financing are summarized in Table 3.

Table 3: Project Cost and IBRD FinancingProject Components Project IBRD %

cost Financing Financing1.Improve Quality and Relevance of TVET 81.56 49.37 61

1.1 Strengthen School Industry Collaboration 1.09 0.44 401.2 Develop School based CBT Curriculum and Materials 2.95 1.76 601.3 Train Managers and Teachers 4.37 3.40 781.4 Develop Student and Teaching Assessment Systems 0.55 0.35 631.5 Upgrade Key Training Facilities and Equipment 72.51 43.42 601.6 Support Non-Project Schools 0.08 0.02 23

2.Strengthen Provincial Capacity in Coordination, 1.00 0.50 50Policy Development, Monitoring and Evaluation

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Project Components Project IBRD %cost Financing Financing

2.1 Strengthen Provincial Coordination of TVET 0.05 0.00 02.2 Support School Level CBT Development 0.48 0.22 452.3 Policy Development and Sharing of Knowledge 0.09 0.08 862.4 Project Management Monitoring and Evaluation 0.38 0.21 54

Total Baseline Costs 82.56 49.88 60Physical contingencies 6.96 0.00 0Price contingencies 0 0 0Total Project Costs 89.52 49.88 56Interest During Implementation 1.32 0.00 0Front-End Fees 0.13 0.13 100Total Financing Required 90.97 50.00 55

C. Lessons Learned and Reflected in the Project Design

42. This project design incorporates lessons learned in designing and implementing technicaland vocational education projects in China and other countries. In particular, lessons were drawnfrom the World Bank TVET pilot projects in Guangdong, Shandong, and Liaoning Provinces inChina. Lessons were also drawn from government-financed various TVET initiatives includingthe National TVET Model School Project and the trial of the provincial Inter-DepartmentalTVET Coordination Committee. The specific lessons learned and incorporated into the projectare:

* Improving TVET Governance. Provincial Inter-Departmental TVET CoordinationCommittee shows promise to address the fragmentation of TVET provision and improvecoordination of TVET matters including policy, financing, and technical assistance.According to a recent government supervision report on secondary education, a numberof provinces have established such coordination mechanisms. In Shanghai in particular,management of all secondary level TVET institutions, whether under the Department ofEducation or the Department of Human Resources and Social Security, has beenconsolidated into one entity.

* Strong links between schools and industry. Training success is tied to how closely theprogram is linked to the real demands of the labor market, which requires employers tobe involved in setting standards for training; engaging in validating these standards; andworking closely with training organizations to link theory and practice.

* Effective school management. Decentralization of management allows schools torespond flexibly to local labor market demands and improve the relevance of trainingoffered. School managers operating in a decentralized environment must be able to buildlinkages with local industry, understand broad economic trends, manage resources

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efficiently, and address human resource management and development needs to takeadvantage of the emerging market opportunities.

* Modular, competency-based training. Trainees come with a range of capacities andexperience. Modular, competency-based curricula can help accommodate such needs.This training model further supports market accountability, relevance, and quality byshifting attention to outcomes in the form of industry-established competencies ratherthan to inputs reflected in the number of classroom, instructors, and courses offered.

* Promotion of lifelong learning. The pace of technological change and the mobility ofcapital in a global economy place a premium on the ability of workers to upgrade andacquire new skills during their working lives. Competency-based training can promoteflexible entry and exit from training over the lifecycle supporting lifelong learning.

* Building a learning culture. Being able to capture lessons from experience and use themfor future policy development contributes to good policy outcomes. Tracer studies are animportant tool for evaluation of training programs and assessing the impact ofinnovations on labor market outcomes.

* Importance of pathways to further education. Demand for secondary technical andvocational education is enhanced where trainees are offered pathways to advanced skillsin tertiary education. This requires attention to the articulation of training programs withentry requirements for further education.

IV. Implementation

A. Institutional and Implementation Arrangements

43. The project will be implemented by the Yunnan Provincial Department of Education andthe 9 Project schools. The Project Management Office (PMO) in the Department of Educationwill have the overall day-to-day responsibility for coordinating project implementation in the 9Project schools and for executing provincial activities. The project will also establish aProvincial Expert Team to provide technical guidance to PMO and schools. Each of the projectschools will further establish a Project Implementation Unit (PIU) at the school level. The PIUswill be fully staffed with technical experts and administrators in charge of school reform,procurement, financial management, disbursement, monitoring and evaluation and coordination

44. A Project Implementation Manual (PIM) has been prepared and found satisfactory by theBank. The PIM will provide implementation guidelines for all aspects of the Project includinggeneral administration, procurement, financial management, environmental management, andmonitoring and evaluation.

B. Results Monitoring and Evaluation (M&E)

45. The progress and achievement of the project development objectives will be monitoredand assessed through three types of M&E activities: (a) regular/routine monitoring; (b) mid-termreview; and (c) an impact evaluation of project outcomes at project conclusion. A set of resultmonitoring indicators has been developed to measure project outputs, intermediate outcomes,

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and final development outcomes. To the extent possible, the results monitoring and evaluationarrangements for the project will be integrated into the existing data collection and utilizationmechanism of schools.

46. Regular/routine monitoring will look at the extent to which the proposed project activitiesare being implemented as planned and their direct outputs. A mid-term review will be conductedduring the third year of project implementation and it will focus on assessing earlyresults/effectiveness of project activities. Most data measuring outputs and intermediateoutcomes will be collected through school administrative sources. Individual school data will beaggregated at the project level for analysis at the mid-term review in order to help the projectrefine the next stage activities as necessary.

47. An impact evaluation will be conducted to assess the final development impact. Theimpact evaluation will assess the program's effects and the extent to which its final developmentobjectives have been attained. It will also identify lessons on types and modalities ofinterventions that work effectively and efficiently in contributing to the project achievement aswell as conditions or factors that can enhance or hinder the effectiveness and efficiency of thevarious intervention strategies at both institutional and policy levels.

48. To strengthen schools' capacity for data collection, documentation and utilization, theBank will, through the provincial PMO, provide technical assistance on M&E capacity buildingfor the project staff during the preparation period and will continue to do so during the projectimplementation on a needs basis to ensure that the monitoring and evaluation function has beenestablished and integrated into the school reform process.

C. Sustainability

49. Key elements for achieving project sustainability are political commitment, economicand financial viability, and stakeholder participation. At the level of political commitment, theGovernment of China recognizes the critical importance of technical and vocational educationand training to growth and poverty reduction and is fully committed to further investment in thissector. This commitment is reflected in the Government Medium- and Long-Term EducationDevelopment Plan Outline (2010 to 2020) and its 12th Five-Year Development Plan.

50. In terms of economic and financial viability, the project's economic analysis showsbenefits that significantly exceed the project costs with an estimated internal rate of return of7.9%. The capital and recurrent cost of the project are expected to be manageable. The Provincialand relevant Local Departments of Finances have confirmed their willingness to provideadequate counterpart financing to ensure that all activities will be adequately financed. The costsfor continuous activities after the completion of the project accounts for a small portion of schooltotal revenue (0.04% to 5.3%) and are lower than the level of the "school-earned revenue" aswell; at province level, the expenditures for continuous activities are also minimal (account foronly 0.043% of the province's total yearly expenditure on vocational education).

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51. Finally, the project is built on a good understanding and ownership by the governmentand consultation with school administrators and instructors. The investment package of reformswill enhance the opportunities for trainees to get better jobs and to better manage income risks.

V. Key Risks and Mitigation Measures

52. China has a stable macroeconomic and political situation. The Chinese government isoverall committed to education and to upgrading skills of its labor force to sustain economic andsocial development and to avoid the "middle-income trap." Detailed risk analysis and mitigationmeasures are provided in Annex 4: Operational Risk Assessment Framework (ORAF). Theoverall risk rating for the project is proposed to be moderate. Main risks relate to project schoolsnot having prior experience with implementing Bank-financed projects and will be mitigated bycarefully designed training in financial management, procurement, and monitoring andevaluation during implementation.

VI. Appraisal Summary

A. Economic and Financial Analysis

53. The purposes of the economic and financial analysis are to demonstrate the demand fortechnical vocational education training (TVET) in Yunnan, to calculate the rate of return to theproposed project interventions by using cost-benefit and associated sensitivity analysis, and todemonstrate the financial sustainability of the project. The Project aims to enhance quality andrelevance of technical and vocational education in 9 vocational tertiary and secondary schoolsusing a set of project interventions.

54. This study shows there is a growing demand for skilled workers. The finding is supportedby the shift in employment from low-skill industries to higher ones, an increasing rate ofemployment in manufacturing and other industries closely related to TVET, higher wages forgraduates from TVET, high placement rates of TVET graduates, and increasing admissionquotas and enrollments for the project schools. The demand for TVET schools is strong, basedon the excess demand for places in the project schools with 23.6% of applicants having to berejected for lack of space.

55. This study also shows the lower quality of TVET in the selected schools relative tonormal universities and senior middle schools and the need for further investment. Spending perstudent for TVET is lower than that for universities and senior middle schools indicating a lowerinvestment in equipment and facilities. The average unit cost of public vocational colleges ofYunnan Province was CNY9,924 in 2008, which is about 72% of the unit cost for universities.Likewise, the average unit cost for public vocational senior secondary schools in 2008 wasCNY4,784, which was lower than the average unit cost for general senior secondary schools(CNY4,895). The unit cost of rural vocational senior middle schools was even lower(CNY3,332).

56. The cost-benefit analysis of the proposed project indicates that: (a) the estimated numberof newly admitted students to vocational colleges due to the project will be 5,049 in 2013,increasing to 10,557 by 2015; (b) the total number of graduates benefiting from the projects is

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96,649; (c) the benefits of the project yield a net benefit of CNY9.76 billion in terms of itspresent value (PV) with a discount rate of 3.3%; and (d) the internal rate of return (IRR) is 7.9%.A sensitivity analysis was conducted to test the sensitivity of the results under variousassumptions such as higher project costs, higher opportunity cost for schooling, shorter projecteffective years and so on. The conclusion of the sensitivity analysis suggested that the initialresult is relatively robust and the project promises substantial economic benefits. Note that theestimates of this study are conservative in that the wage differentials between graduates fromvocational schools and their counterparts receiving lower level general education were set at thestarting level, no changes over time. Moreover, the estimates do not include social benefitsassociated with the curriculum clusters or its contributions to institutional capacity building.

57. The benefits associated with an investment in technical and vocational educationnormally accrue to private individuals through improved employment and earnings prospects,and fewer benefits are captured by society to justify public investment in this type of education.When social costs in the form of direct costs to schools and government are included in the cost-benefit analysis the social return (IRR) is 4.76% with a present value of CNY5.33 billion.

58. Public investment is further justified on grounds of market failures and social equity. Theproject will additionally improve social equity by investing in 9 schools that enroll large numbersof the rural and urban poor. 80% of students enrolled in TVET are from rural areas and 20% arefrom households with socio-economic status of the lowest level.

59. This study shows that the project is sustainable at the school level for project schools andprovincial governments. There is no major capital investment required after the completion ofthe project. Further, the costs for continuous activities after the completion of the projectaccounts for a small portion of school total revenue (0.04% to 5.3%) and are lower than the levelof the "school-eamed revenue" as well; at province level, the expenditures for continuousactivities are also minimal (account for only 0.043% of the province's total yearly expenditureon vocational education). In addition, the project increases the number of students in vocationalcolleges, which requires additional public financial resources, but the amount of the incrementalrevenue schools are expected to obtain from governmental sources will exceed the incrementalcosts.

B. Technical

60. The project design builds on international experience of developing demand driventechnical and vocational education and training systems. In particular the project design reflectsinternational trends in the following areas of TVET: (a) governance and management; (b)developing sustainable mechanisms for school industry collaboration and use such mechanismsto constantly improve curriculum content and teaching methodology to reflect the competencystandards required by the enterprise; (c) importance of teacher training in particular in improvingtheir practical skills; and (d) cultivating a results oriented and evidenced based policy makingculture and behaviors among school leaders.

61. The Project further reflects and builds on the Bank's knowledge and experience workingin China and Yunnan Province both within the education sector and in the specific TVET sector.

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A background study was carried out to scope the sector and issues in TVET in Yunnan. TheBank team also organized study visits for the Yunnan counterparts to learn about TVET systemsin Singapore, Korea, and other provinces in China such as Guangdong. In parallel, the Bank withcollaboration from local partner, is undertaking a comprehensive review of the labor force skillssupply and demand in Yunnan.

62. The Project follows similar conceptual framework and design as the ongoing Guangdongand Shandong and Liaoning TVET Projects also financed by the IBRD loans. In particular, theProject adopts the same school reform cycle as in the other two TVET projects, as illustrated inFigure 1. The Project is also structured with two components one at school level and the other atprovincial level with the overall management responsibility resting within the Department ofEducation. However, the Yunnan Projects goes beyond the other two projects. It is less of thepilot nature as the other two projects, due to its larger amount of investment and wider coverageof 9 secondary and tertiary level TVET institutions. Most importantly, the Yunnan Projectexperiments with the establishment of an Inter-Departmental TVET Coordination Committee toimprove the governance of TVET in the Province, to minimize resource wastage, coordinatepolicy, and to ensure coverage of TVET across the province in particular of the more vulnerablegroups.

Figure 1: School Reform Cycle

Provision of Assessment ofresources: performance of

teachers, facilities teachers andand technology for students

the delivery of & quality assurance

curriculum

Skill testing &certification

Development of Recognition by theCurriculum based on Nationaldefined standards Qualifications

Framework

\ i Participation ofindustry in defining

CompetencyStandards

C. Financial Management (FM)

63. The Bank loan proceeds, including overseeing the Designated Account, will be managedby the Yunnan Provincial Finance Bureau (YPFB). A financial management assessment has beenconducted by the Bank, and actions to strengthen the project financial management capacity

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were agreed upon with the relevant implementing agencies. The FM assessment has concludedthat with the implementation of these actions, the proposed financial management arrangementswill satisfy the Bank's minimum requirements under OP/BP 10.02. Annex 3 provides additionalinformation on financial management.

D. Procurement

64. A procurement assessment has been conducted, procurement risks identified andmitigation measures agreed to. The PMO, which will conduct the major procurements, is familiarwith Bank Procurement Guidelines and procedures through its experience in implementing pastBank projects. 9 PIUs, with the guidance of the PMO instruction, will conduct their worksprocurement separately because all PIUs have works procurement experience which wasobtained from previous open bidding for school buildings construction. The main risk is in thearea of selection of the consulting firms, which will be mitigated by hiring of a qualifiedprocurement agent and technical consultants to assist the PMO and PIUs. In addition,procurement training provided by the Bank or Tsinghua University will further help strengthenthe PMO's and the PTUs' procurement capacity. The initial 18 months procurement plan hasbeen approved by the Bank and will be updated at least annually (or as required) to reflectproject implementation needs.

E. Social and Environmental (including safeguards)

65. The proposed project will finance the rehabilitation of building, construction of newschool buildings, workshops, and laboratories for additional training space and skills training.All planned civil works will be built on the existing land within the campus of 9 schools. Norelocation of people is anticipated. By considering the type, location, sensitivity, and scale of theproposed project, the project will have very limited adverse impacts during the construction andoperation phase. The project is classified as Category C for its minimal adverse environmentalimpacts per the Bank OP 4.01. However, in order to avoid and minimize any potential impactsand risks, the team decided to take a prudent approach in planning for an Environmental Codesof Practice (ECOP) for the Project. The final ECOP which was found satisfactory by the Bank inSeptember 2011 was disclosed locally in the Yunnan Daily on September 19, 2011 and further inthe Bank's Infoshop on September 20, 2011.

66. In terms of social impact, the Project will benefit the rural poor and ethnic minoritystudents who are currently enrolled and who will enroll in the project schools through improvedcurriculum and teaching and will provide them with better and more relevant skills required bythe labor market. TVET is considered a second best option in China. Graduates from juniormiddle schools that achieve higher results in Zhong Kao (High School Entrance Exam) are ableto enter regular academic track high schools, whereas those that did not make the cutoff score forregular high schools enter the TVET track. 70% of the total student population in the TVETschools are from rural poor areas. And currently, 30% of students are from ethnic minoritygroups and the proportion is expected to further increase by the end of the project period.Investment in TVET will benefit much more the poor and the ethnic minorities in Yunnan. TheDali Secondary Vocational School is located in the Dali City of the Yunnan Province with 60%of the student population belonging to the Bai Ethnic Group.

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67. In consultation with the government, the Project further targets four specific high growtheconomic sectors including bio-industry, geology and minerals, tourism, and automobile sectors.While they are largely ethnic and gender neutral, a higher proportion of female and ethnicminority students are enrolled in these programs. Curriculum reform in the tourism sector and tosome extent in the geology and mineral sector, will also build on the rich cultural and artisanpractices from the ethnic minority communities. Ethnic folk stories and local artistic practices injade jewelry will be incorporated into the curriculum design.

68. Government policies on TVET expansion prioritize enrollment for the poor, ethnicminority, and female students with provision of tuition waiver and additional subsidies. Variousaspects of project design including the choice of project schools in Dali and the choice of sectorsalready reflect such priority. The project will further support school level efforts in expandingenrollment and improving the curriculum design for the disadvantaged population.

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Annex 1: Results Framework and Monitoring

Country: China

Project Name: Yunnan Technical and Vocational Education and Training Project

Results Framework

Project Development Objectives

PDO Statement

To improve the quality and relevance of technical and vocational education and training to produce skills that respond to the labormarket demand, contributing to Yunnan's economic development duringChina's 12th Five-Year Plan period.

Project Development Objective Indicators

Cumulative Target Values Data Source/ Responsibility for

Indicator Name Core Unit of Measure Baseline YRI YR2 YR3 YR4 End Target Frequency Methodology Data Collection

Percentage of graduates Tracer study/finding initial school

employment in Percentage 58.00 61.00 65.00 71.00 75.00 77.00 Annual administrative Schoolspecialties in which they recordswere trained

Employers satisfaction Percentage 73.00 77.00 81.00 83.00 85.00 88.00 Annual Employers survey Schoolwith graduatesI

Percentage of graduates - School dataobtaining both skills L Percentage 84.00 88.00 90.00 91.00 93.00 94.00 Annual based/Certification Schoolcertificate and diploma office

Intermediate Results Indicators

Cumulative Target Values Data Source/ Responsibility for

Indicator Name Core Unit of Measure Baseline YRI YR2 YR3 YR4 End Target Frequency Methodology Data Collection

Number of school-industry collaboration Schooland sector-specific Number 0.00 29.00 31.00 31.00 31.00 31.00 Annual administrative Schoolindustrial advisory recordscommittees established

Number of professional Number 0.00 22.00 35.00 37.00 37.00 37.00 Annual School Schooltraining programs with I N 0 2 3 administrative

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competency-based recordsstandards developed

Number of high-quality F Schoolmodular and Number 2.00 21.00 35.00 62.00 79.00 96.00 Annual administrative Schoolcompetency-based

recordscurricula (CBT)

rg s Schoolfrom n strtors Percentage 12.00 14.00 16.00 18.00 19.00 20.00 Annual administrative School

industry/enterprses records

Percentage of instructors Schoolwith both skills certificate Percentage 45.00 48.00 52.00 56.00 60.00 65.00 Annual administrative Schooland academic

recordsqualification

Percentage of Schoolteachers/instructors Percentage 2.00 7.00 11.00 15.00 19.00 23.00 Annual administrative Schooltrained in industry recordsattachments

SchoolStudent assessment Sho

manual Number 0.00 6.00 8.00 9.00 9.00 9.00 Annual administrative SchoolRecords

Percentage of practical Schoolunits implemented in the L Percentage 74.00 78.00 82.00 86.00 90.00 93.00 Annual administrative Schoolnew training programs records

Number of teachers Provincial PMUtraed d Number 0.00 0.00 120.00 390.00 540.00 540.00 Annual Management Provincial PMU

methodology Database

Number of peopleparticipating in Number 0.00 55.00 110.00 110.00 110.00 110.00 Annual Provincial PMU Provincial PMUcurriculum developmenttraining

Number of relevant Provincial PMUresearch or policy briefs Number 0.00 0.00 0.00 2.00 2.00 2.00 Annual Management Provincial PMUprepared Database

N e oProvincial PMUNumber of exchange Number 0.00 0.00 0.00 2.00 2.00 4.00 Annual Management Provincial PMUworkshops organized Database

Number of project Provincial PMUmanagement training Number 0.00 7.00 13.00 19.00 24.00 27.00 Annual Management Provincial PMUevents offered Database

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Project Development Objective Indicators

Indicator Name Description (indicator definition etc.)

Percentage of graduates finding initial employment in specialties in which Number of graduates finding initial employment within 6 months in specialties in which they were trained / totalthey were trained number of graduates in the same specialties

Employers satisfaction with graduates Number of employers expressing satisfaction with the graduates /Total number of enterprises surveyed

Percentage of graduates obtaining both skills certificate and diploma Number of graduates who obtain diplomas and vocational qualification certificates at the graduation/total number ofgraduates

Intermediate Results Indicators

Indicator Name Description (indicator definition etc.)

Number of school-industry collaboration and sector-specific industrial Newly established or improved the school industry collaboration and sector specific industrial advisory committeesadvisory committees established with at least 30% of the committee members coming from the enterprises

Number of professional training programs with competency-based standards Professional training program proposals reviewed and endorsed by the advisory committeesdeveloped

Number of high-quality modular and competency-based curricula (CBT) Number of modular and competency-based curricula (CBT) reviewed and endorsed by the advisory committees

Percentage of instructors from industry/enterprises Instructors participating in teaching greater than 32 hours per year/ total number of teachers (both professional andinstructorsfrom industry)

Percentage of instructors with both skills certificate and academic Instructors holding above intermediate level technical certificates and academic qualifications / Total number ofqualification Instructors in the project/ specialties

Percentage of teachers/instructors trained in industry attachments Percentage of instructors/teachers trained for more than 2 months/ Total teachers/instructors in the projects or in thesame specialties

Student assessment manual Student assessment manual reviewed and endorsed

Percentage of practical units implemented in the new training programs Practical units implemented/Required practical units by syllabus

Number of teachers trained in student centered teaching methodology Teachers attending training events that last one day or longer

Number of people participating in curriculum development training People who have participated in at least one day of training

Number of relevant research or policy briefs prepared A range of research reports

Number of exchange workshops organized Workshops sharing experiences and achievement among the project schools

Number of non-project schools that participated in project events Only include non-project schools

Number of project management training events offered Project management training events

Disbursement rate Cumulative reimbursement amount / Total loan amount

Number of evaluation reports Evaluation reports

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Annex 2: Detailed Project Description

CHINA: Yunnan Technical and Vocational Education and Training Project

69. The project will have two main components: (a) Improving the Quality and Relevance ofTVET programs in the Project Schools; and (b) Strengthening Provincial Capacity inCoordination, Policy Development, Monitoring and Evaluation. The project schools are listed inthe Table 1.

Table 1: Proposed Project Schools

Schools Location Full time Level AdministrationEnrolment

2009Tengchong No.1 Tengchong 5644 Secondary Baoshan CityVocational SchoolDali Secondary Dali 2826 Secondary Dali CityVocational SchoolYunnan Technician Kunming 6320 Secondary Provincial HumanCollege Resource and Social

Security DeptYunnan Jiaotong College Kunming 8403 Secondary Provincial

TransportationDepartment

Yunnan Traffic Kunming 8413 Tertiary ProvincialTechnician College Transportation

DepartmentYunnan Provincial Kunming 3901 Secondary Provincial TourismTourism School DepartmentYunnan Qujing Qujing 9474 Secondary Qujing CityAgricultural SchoolYunnan Land and Kunming 5150 Tertiary Provincial GeologyResources Vocational and MineralCollege Resources BureauYunnan Forestry Kunming 5229 Tertiary Provincial ForestryTechnological College DepartmentTotal Enrollment 55360

70. Component 1: Improving the Quality and Relevance of TVET Programs in ProjectSchools (Total US$81.56 million, IBRD US$49.37 million). This component will have sixsubcomponents:

71. Sub-component 1.1: Strengthen School Industry Collaboration and Develop CompetencyBased Training (CBT) Standards2. This component is designed to address the lack of systematic

7 In the Chinese version, the term used is "AJff #" which as confirmed by the government will containCompetency Based Standards as defined by the industry.

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and substantive school industry collaboration and also to address the lack of relevance of thetraining programs. It will strengthen and institutionalize the linkage between schools andindustry by: (a) establishing formal School Industry Collaboration Committee at the school leveland sector specific Industrial Advisory Committees at the departmental level; and (b) based oninputs from the School Industry Collaboration Committee and the sector specific IndustrialAdvisory Committees and following the scientific methodology of industrial and market needsassessment, the project will develop competency based standards to revise selected trainingprograms under the project. The Committees will have no less than half representation from theenterprises, industrial associations, or other civil society entities. The competency basedstandards developed will be incorporated into the revised Training Programs under the project.

72. Sub-component 1.2: Develop School Based CBT Curriculum and Teaching LearningMaterials. This sub-component is designed to address the challenges related to the curriculumbeing out of date, not sufficiently reflecting the needs of the industry, overly theoretical, andteaching methodology predominantly teacher centered. Based on the new Competency BasedTraining standards and the revised training programs developed in Sub-component 1, this sub-component will: (a) develop core curriculum standards' (b) develop modular curricula and otherteaching learning materials through a cycle of piloting, evaluating, and revising; (c) publishingschool based new curriculum materials; and (d) establishing a school level teaching and learningresource bank.

73. Sub-component 1.3: Train School Managers and Teachers. This sub-component isdesigned to address challenges related to improving management and teaching capacity. Forschool managers, the project will support domestic and overseas training of top and middle levelmanagers related to: (a) raising awareness of the importance and specific mechanisms tostrengthen linkages with industry; (b) improving technical understanding of the process ofdeveloping competency based curriculum; and (c) evidence based policy making and overallmanagement capacity. For teachers, the project will support domestic and overseas trainingrelated to: (a) development and using of competency based curriculum; (b) new student centeredpedagogy; and (c) skills training in relevant industries.

74. Sub-component 1.4: Develop Student and Teaching Assessment Systems that reflect thenew Competency Based Training curriculum and results oriented approach to TVET. This sub-component is designed to address the challenges related to student assessment being overlytheory based, not reflecting the competencies required by the industry, and to the overall lack ofeffective teaching assessment system. Specifically, the Project will support: (a) the developmentand implementation of the new student assessment instruments including a graduate tracer studyand employer satisfaction survey; and (b) the development and implementation of a new teacherand teaching assessment instruments.

75. For sub-components 1.1 to 1.4 and 1.6 below, the Bank loan will be used to financeconsultancies, training and workshops including but not limited to the rental of premises, theprovision of related materials and honorarium paid to industry/sector expert, and incrementaloperating costs incurred by each of the project schools during project implementation (whichwould not have been incurred absent the Project) including but not limited to, the reasonable cost

23

of office consumables, communication, transportation, per diem, printing, translation andinterpretation but excluding the salaries for staff of the project schools.

76. Sub-component 1.5: Upgrade Key Instructional Facilities and Equipment. This sub-component is designed to mitigate the shortage of training centers and key training equipment inthe project schools. The Project will provide financing to: (a) expand and upgrade facilitiesincluding construction of training centers within existing school campus selected schools; (b)provide key training equipment needed for the revised training programs; and (c) develop schoolguidelines for the management of training facilities and equipment. For this sub-component, theBank loan will be used to finance procurement of civil works, goods including trainingequipment, and consultancies related to the procurement of works and goods.

77. Sub-component 1.6: Support Disadvantaged Non-Project TVET schools. This componentwas designed to enhance project impact by allowing interested non-participating TVETinstitutions to participate at their own expenses some of the project training activities and byproviding them with access to project developed CBT and curriculum materials. Only two of the9 project schools included this sub-component in the project design, including the DaliSecondary Vocational School and the Forestry Technological College.

78. Component 2: Strengthening Provincial Capacity in Coordination, PolicyDevelopment, and Monitoring and Evaluation (Total US$1.00 million, IBRD financingUS$0.50 million). This component will have four sub-components.

79. Sub-component 2.1: Strengthen the Provincial Coordination of TVET Affairs. This sub-component is designed to strengthen the overall coordination of TVET matters in YunnanProvince. The Province of Yunnan in the past already created an inter-departmental TVETcoordination committee led by the Department of Education but with representatives from theDepartment of Human Resources and Social Security and other Departments that are involved inthe provision and management of TVET in the Province . However, the Committee does notfunction regularly. The purpose of the coordination mechanism is to share information andminimize redundancies in spending and in ensuring coverage in TVET. The Project will providesupport for the Committee to: (a) organize study visits to provinces that have similarcoordination mechanism such as Xinjiang Autonomous Region and Shanghai; (b) regularmeetings of the Committee to discuss TVET affairs; and (c) Committee's visits to projectschools.

80. Sub-component 2.2: Support the School-Level Development of CBT Programs. This sub-component is designed to provide guidance and technical assistance to project schools indeveloping and implementing CBT standards and curriculum. The participating project schoolsare under different departmental management, ranging from secondary to tertiary institutions,and have different focus in training programs. It is important that the province provides guidanceand technical assistance and training to ensure that schools follow a standard scientificmethodology in the development of CBT standards, curriculum, and other teaching learningmaterials. From an efficiency point of view, it is also more economical for the province to group

8 The Chinese translation is ")FTTJl rWiN:", which has been established in other provinces such as Shanghai andXinjiang to improve the provincial level coordination of TVET matters and has shown some initial positive results.

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similar consultancies together to achieve better results. In particular, this sub-component willsupport: (a) the establishment and operation of a Provincial TVET Expert Team to guide thecurriculum development in schools; (b) teacher training in student-centered pedagogy;(c) teachertraining in the development of CBT curriculum, and (d) teacher training related to developmentof curriculum cluster.

81. Sub-component 2.3: Policy Development and Sharing of Knowledge and Experience.This component is designed for the project to have expanded and sustained impact on TVETschools and policy development in TVET. In particular, the sub-component will: (a) carry outpolicy research and produce policy briefs related to various topics in TVET; and (b) organizeprovincial TVET workshops to exchange school-industry collaboration and curriculumdevelopment case studies and lessons learned.

82. Sub-component 2.4: Project Management, Monitoring and Evaluation. This component isdesigned to support project management including monitoring and evaluation of activities.Specifically, the sub-component will: (a) finance the training of provincial- and school-levelproject staff in project management, financial management, procurement, and monitoring andevaluation; (b) support provincial and school level procurement and financial managementactivities; and (c) carry out project monitoring and evaluation.

83. For sub-components 2.1 to 2.4, Bank loan will be used to finance consultancies, trainingand workshops, and other operating costs.

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Annex 3: Project Institutional and Implementation Arrangements

CHINA: Yunnan Technical and Vocational Education and Training Project

A. Project Administration Mechanisms

84. The project will be implemented by the Yunnan Provincial Department of Education andthe 9 project schools. The Project Management Office (PMO) in the Department of Educationwill have the overall day to day responsibility for coordinating project implementation in thenine project schools and organizing provincially managed activities. The project will alsoestablish a Provincial Expert Team to provide technical guidance to PMO and schools. Each ofthe project schools will further establish a Project Implementation Unit (PIU) at the school level.

85. Project Management Office (PMO). Yunnan Education Department will set up aprovincial-level PMO. The project director will be leader of the department. The PMO will befully staffed with technical experts and officers in charge of procurement, financial management,disbursement, and coordination. The PMO will support the implementation of activities managedat the provincial level and provide assistance to PIUs in their work. The PMO will facilitate thecommunication and coordination with the World Bank and also coordinate with project technicalexperts.

86. Project Implementation Unit (PIU). Each project school will establish a PIU to manageall school level activities and support some provincial level activities.

87. Provincial Expert Team. The project will establish a Provincial Expert Team (PET) toserve the project as an advisory group. The PET will consist of leading experts in key areas ofthe project such as vocational education and skills development, school reform, monitoring andevaluation. These experts will be called upon as consultants to provide comments andsuggestions on project content and proposals, prepare Terms of References (TOR), monitorproject progress, evaluate the results, analyze the issues of the research work financed by theproject, summarize best practices and experience, and provide technical assistance in thedecision-making process and project management. The TOR for the expert team has beendeveloped and agreed by the Bank.

88. A Project Implementation Manual (PIM) has been prepared and approved by theBank. The PIM will provide implementation guidelines for all aspects of the project includinggeneral administration, procurement, financial management, environmental management, andmonitoring and evaluation.

B. Financial Management and Disbursements

89. Overall, the residual FM risk has been assessed as moderate. The FM capacityassessment identified the following principle risks: a) the project schools and its project financialstaff do not have prior experience with Bank financed projects; b) the counterpart funds are yetto be confirmed and committed by local governments.

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90. Mitigation measures agreed include: a) tailored FM training will be provided to allproject financial staff before and during project implementation; b) a project FinancialManagement Manual (FMM) has been prepared to standardize the project FM procedures andprovide guidance to project financial staff; and c) the counterpart funds have been confirmed andcommitted by relevant local governments.

91. Budgeting. The project will prepare an annual implementation plan. In order to ensureproject activities will be implemented as plan, semi-annual variance analysis will be conducted.To make sure that the counterpart funds could be appropriated in a timely manner during projectimplementation, the counterpart funds availability will also be reflected in the budget report. Astandardized project progress report has been designed for the project. The semi-annual varianceanalysis should be furnished to the Bank along with the unaudited semi-annual financial reports.

92. Funds Flow. The Bank loan proceeds will flow from the Bank into project designatedaccount (DA) to be set up at and managed by YPFB. The loans are then disbursed either toprefecture/country finance bureaus or to relevant departments and then to project schools ordirectly to contractors or suppliers based on the withdrawal applications.

93. The Bank loan agreement will be signed between the Bank and the People's Republic ofChina through its Ministry of Finance (MOF). On-lending agreements will be signed betweenMOF and the Yunnan provincial government through YPFB. YPFB will further on lend to localfinance bureaus or other relevant departments and finally to project schools. Loan repayment willbe borne by project schools.

94. Accounting and Financial Reporting. The administration, accounting, and reporting ofthe project will be set up in accordance with Circular #13: "Accounting Regulations for WorldBank Financed Projects" issued in January 2000 by MOF.

95. The PMO and each project school will be managing, monitoring, and maintaining theirproject accounting records for the activities they execute. Original supporting documents will beretained by the PMO and each project school.

96. Each project school will prepare their project financial statements for the activities theyexecute and submit it to the PMO for consolidation. The PMO will prepare the consolidatedproject financial statements and submit it to the Bank for review and comment on regular basis.The unaudited semi-annual project financial statements will be prepared and furnished to theBank by the PMO within 45 days of each calendar semester, in form and substance satisfactoryto the Bank.

97. Internal Controls. The related accounting policy, procedures, and regulations wereissued by MOF to uniformly align the financial management and disbursement requirements forthe Bank financed projects. Additionally, the project FMM will align the entire project financialmanagement policies and procedures among project schools which can serve for the projectimplementation and management.

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98. There is no formal independent Internal Audit department for the project. However, thiswill not impact on the project's financial management as the management and monitoring fromvarious level of finance bureaus, which reviews each withdrawal application, and annual externalaudit will serve as the mechanism to ensure that financial management controls are functioningappropriately.

99. Audit. Yunnan Provincial Audit Office (YPAO) has been identified as auditors for theproject. Annual audit reports will be issued by them. The Bank currently accepts audit reportsissued by China National Audit Office (CNAO) or provincial/regional audit bureaus/offices forwhich CNAO is ultimately responsible.

100. The annual audit report of project financial statements will be due to the Bank within 6months after the end of each calendar year. This requirement is stipulated in the loan agreement.The responsible agency and timing is summarized as follows:

Audit Report Submitted Due dateby

Project financial statements PMO June 30 of eachcalendar year

101. Disbursement Arrangement. Four disbursement methods: advance, reimbursement,direct payment, and special commitment are all available for the project. Supporting documentsrequired for Bank disbursement under different disbursement methods will be documented in theDisbursement Letter issued by the Bank.

102. One Designated Account (DA) in US dollar will be opened at commercial banksacceptable to the Bank and will be managed by YPFB. The ceiling of the DA will be determinedand documented in the Disbursement Letter. The Bank loan would be disbursed against eligibleexpenditures (taxes inclusive) as in the following table:

IBRD LoanAllocated Percentage of Expenditures

Category Amount to be financed(1) Works and non-consulting services 30,282,500 75

(2) Goods, Consultants' services, Training and Study 19,592,500 100Tours, and Incremental Operating Costs for the Project

(3) Front-end Fee 125,000 Amount payable pursuant to Section2.03 of this Agreement in accordancewith Section 2.07 (b) of the GeneralConditions

(4) Interest Rate Cap or Interest Rate Collar premium 00 Amount due pursuant to Section 2.07(c)of this Agreement

TOTAL AMOUNT 50,000,000Total 50,000,000

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103. Retroactive financing will be applied for this project for eligible expenditures incurred onor after October 1, 2011 and up to a total amount of US$10 million, 20% of the loan.

C. Procurement

104. Procurement for the proposed Project would be carried out in accordance with the WorldBank's "Guidelines: Procurement of Goods, Works, and Non-Consulting Services under IBRDLoans and International Development Association (IDA) Credits & Grants by World BankBorrowers" dated January 2011, and "Guidelines: Selection and Employment of Consultantsunder IBRD Loans and IDA Credits & Grants by World Bank Borrowers" dated January 2011;and the provisions stipulated in the Legal Agreement. The applicable procurement proceduresalong with the thresholds for Bank review are determined in the Procurement Plan agreed withthe Bank during loan negotiations. The Procurement Plan will be updated regularly, at leastannually, and for each update or modification Bank no objection is required prior toimplementation of the plan.

Procurement Capacity Assessment (The Assessment in Details is recorded in the Bank's e-system)

105. Organization. Procurement under the project will be carried out by the YunnanEducation Department (PMO) and the project schools (PIUs). There is a procurement unit in thePMO which carries out all International Competitive Bidding (ICB) and National CompetitiveBidding (NCB) procurement. The PMO has implemented 3 Bank financed projects (the FirstBasic Education Project, the Fourth Basic Education Project and the Fifth Basic EducationProject), from which the PMO obtained rich Bank procurement experience particularly in thearea of works and goods procurement under ICB, NCB and Shopping. However, the PMO haslimited experience in the selection and employment of consultants.

106. All PIUs have experience in carrying out simple competitive procurement for goods andopening bidding for works under national procedures.

107. Staff. The PMO and the Project Schools confirmed that the working groups (PIU) havebeen established in the project schools, in which 1-2 full time procurement staff has beenassigned. The roles and responsibilities in procurement at the PMO and PIUs has been clearlyidentified in the PIM.

108. Based on the assessment, the overall procurement risk is "moderate".

109. Main Risks and Mitigation actions. The main risk which was identified was that thePMO and the PIUs do not have experience in the selection and employment of consultants inBank financed projects. The agreed mitigation actions include: (a) the procurement trainingshall be conducted periodically during the project implementation period as needed; (b) aqualified procurement agent with experience in procurement under Bank financed projects shallbe hired to provide support for all project procurement (including works, goods, consulting andnon-consulting services); (c) there shall be a designated procurement staff in each of the school

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PIUs and that to the extent possible trained PIU staff should be retained during the projectimplementation period; and (d) a technical support consultant shall be hired to assist in thepreparation of supply requirements, technical specifications, evaluation and qualification criteria,and the requirements for inspections and tests as part of the bidding documents/requests forquotation and also to assist during the evaluation of bids for the procurement of goods andequipment.

Procurement Arrangements and Procurement Plan

110. Procurement arrangements. Procurement will consist primarily of: works procurementfor project schools building construction; Goods procurement for teaching equipment andexperimental devices, Management of Information Systems (MIS) and software, etc.; Non-consulting services procurement such as publication, etc.; procurement of firms and individualconsultants to assist the PMO and PIUs as technical experts for education innovation; curriculumreform; improving of teaching methods; and teachers training during project implementation.

111. Procurement Methods and Thresholds. The applicable procurement methods under theproject and their thresholds are provided in the table in below.

Procurement Methods and ThresholdsExpenditure Category Contract Value Procurement Contracts Subject to

Threshold (US$) Method Prior Review

1. Works >20,000,000 ICB Specified in Procurementplan

<20,000,000 NCB

<200,000 Shopping

2.Goods and non-consulting >1,000,000 ICB Specified in ProcurementServices Plan

<1,000,000 NCB

<100,000 Shopping

<50,000 For Framework

Publication and Printing Agreement

3. Consultant services >200,000 QCBS, QBS Specified in Procurement

<200,000 CQ Plan

ICSSS

112. Procurement Plan. As part of the project preparation, the PMO and PIUs prepared apreliminary procurement plan, for the entire scope of the project. The PMO and the PIUs havealso prepared a detailed and comprehensive procurement plan including all contracts for whichprocurement action is to take place in the first 18 months of project implementation. The 18months procurement plan has been approved by the Bank. The procurement plan will be updated

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at least annually and the plan together with all its updates will be kept at the PMO and disclosedon the Bank's website in line with Bank procurement guidelines.

113. Government owned universities and research institutes may be hired for certainconsulting assignments only under the circumstances described in paragraphs 1.13 (b) and (c) ofthe Consultant Guidelines.

114. The applicable Bank standard bidding documents shall be used for all ICB and the mostcurrent Chinese Model Bidding Documents agreed with the Bank will be used for all NCBprocurement. The Bank's Standard Request for Proposals shall be used for all consulting servicescontracts with firms.

115. Record Keeping. The PMO will keep all the procurement and contract managementrecords for all consulting services, Goods ICB and NCB and any contracts procured by the PMOusing shopping procedures. The PIUs will maintain in their offices all the procurement andcontract management records for the contracts for which they are responsible for including NCBworks and Shopping goods and works contracts. All procurement records shall be maintained fora period from project preparation to at least two years after the project closing date.

116. An annual Bank procurement supervision is proposed to facilitate resolution of pendingprocurement actions and to carry out procurement post review of contracts which are not subjectto prior review.

Goods and Works and non-consulting services

117. Prior Review Threshold. Procurement Decisions subject to Prior Review by the Bank asstated in Appendix 1 to the Guidelines for Procurement:

Procurement Method Prior Review Threshold CommentsUS$

1. ICB and LIB (Goods) >1,000,000 All

2. NCB (Goods) packages >500,000 All and the First two contracts<$1,000,000 regardless the contract value

3 Shopping (Goods) The First two contracts<$100,000 regardless the contract value

4. ICB (Works) packages >20,000,000 All

5. NCB (Works) packages >5,000,000 All and the First two contracts<$20,000,000 regardless the contract value

6. Shopping (Works) The first two contracts<$200,000 regardless the contract value

7. (Non-Consultant Services) packages >200,000 All and the First contract

I_ regardless the contract value8. Framework Agreement (for Publication 50,000 All and the First contract

and Printing) regardless the contract value

Summary of the Procurement Packages planned during the first 18 months after projecteffectiveness

118. Works. The project will finance of upgrade teaching and training facilities in projectschools. The works contracts are mainly for the constructions of the teaching and experiment

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buildings in project schools. All works contracts will be procured by each project school throughNCB as the cost estimates for works are all lower than the ICB thresholds.

119. Goods. Teaching and Training Equipment would be financed by the project, the ICB andNCB Goods procurement would be carried out by PMO with the supporting of PIUs. SmallGoods contracts would be procured by project school through Shopping.

The Procurement plan for Works and Goods

1 2 3 4 5 6 7Ref. Description Estimated Procurement Domestic Review CommentsNo. Cost Method Preference by

US$ (yes/no) Bankmillion (Prior /

Post)1. Summary of the ICB N/A

(Works) packages2. Summary of the ICB 10.5 ICB Yes Prior 8 packages

(Goods) packages3. Summary of the 61 NCB N/A 5 Prior 11 contracts

NCB (Works) reviewpackages contract

4. Summary of the 6.3 NCB N/A Post First 2 amongNCB (Goods) 34 contractspackages will be prior

review5. Summary of the ICB N/A

(Non-ConsultantServices) packages

6. Framework for 0.50 Shopping N/A Post The firstPublication and contract orPrinting >50,000

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Selection of Consultants

120. Prior Review Threshold. Selection decisions subject to Prior Review by Bank as statedin Appendix 1 to the Guidelines Selection and Employment of Consultants:

Ref. Selection Method Prior Review CommentsNo Threshold1. Competitive Methods (Firms) >US$ 200,000 All QCBS/QBS

contracts and threeCQS contractsidentified inprocurement plan

2. Single Source (Firms) All3. Individual Consultant >US$ 50,000

121. Short list comprising entirely of national consultants: Short list of consultants forservices, estimated to cost less than US$300,000 equivalent per contract, may comprise entirelyof national consultants in accordance with the provisions of paragraph 2.7 of the ConsultantGuidelines.

122. Any Other Special Selection Arrangements: Government owned universities and researchinstitutes may be hired for certain consulting assignments only under the circumstancesdescribed in paragraphs 1.13 (b) and (c) of the Consultant Guidelines.

123. Consultancy Assignments with Selection Methods and Time Schedule.

1 2 3 4 5 6Ref. Description of Assignment Estimated Selection Review CommentsNo. Cost Method by Bank

US$ m (Prior /Post)

1. Summary of number of 1.5 QCBS Prior 6 contractscontracts that will be letunder QCBS

2 Summary of number of 0.46 CQS 5 contracts, thecontracts that will be let first contractunder other methods will be prior

review

D. Environmental and Social (including safeguards)

124. The proposed project will finance the rehabilitation of building, construction of newschool buildings, workshops, and laboratories for additional training space and skills training.All planned civil works will be built on the existing land within the campus of 9 schools. Norelocation of people is anticipated. By considering the type, location, sensitivity, and scale of theproposed project, the project will have very limited adverse impacts during the construction and

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operation phase. Therefore, the project is classified as Category C for its minimal adverseenvironmental impacts per the Bank OP 4.01. However, in order to avoid and minimize anypotential impacts and risks, the team decided to take a prudent approach in planning for anEnvironmental Codes of Practice (ECOP) for the Project. The final ECOP which was foundsatisfactory by the Bank in September 2011 was disclosed locally in the Yunnan Daily onSeptember 19, 2011 and further in the Bank's Infoshop on September 20, 2011.

125. Task Team has carried out initial social screening. Yunnan is one of the largest ethnic-inhabited provinces in China. There are 51 officially recognized ethnic groups. Populationcensus in 2000 indicated that total population of these ethnic minority groups was about 14million, about one third of total population in the province. On average, about 30% of students inthe 9 schools supported by the proposed project are ethnic minorities. This is consistent with theaverage proportion of ethnic minority population to the total population in the province.

126. However, the Task Team concluded that the policy will not be triggered considering thepurpose, design, and beneficiaries of the proposed project. The Project will benefit the rural poorand ethnic minority students who are currently enrolled and who will enroll in the projectschools through improved curriculum and teaching and will provide them with better and morerelevant skills required by the labor market. TVET is considered a second best option in China.Graduates from junior middle schools that achieve higher results in Zhong Kao (High SchoolEntrance Exam) are able to enter regular academic track high schools, whereas those that did notmake the cutoff score for regular high schools enter the TVET track. 70% of total studentpopulation in the TVET schools are from rural poor areas. And currently 30% of students arefrom ethnic minority groups and the proportion is expected to further increase by the end of theproject period. Investment in TVET will benefit much more the poor and the ethnic minorities inYunnan. The Dali Secondary Vocational School is located in the Dali City of the YunnanProvince with 60% of the student population belonging to the Bai Ethnic Group.

127. In consultation with the government, the Project further targets four specific high growtheconomic sectors including: (a) bio-industry; (b) geology and minerals; (c) tourism; (d) andautomobile sectors. While they are largely ethnic and gender neutral, a higher proportion offemale and ethnic minority students are enrolled in these programs. Curriculum reform in thetourism sector and to some extent in the geology and mineral sector, will also build on the richcultural and artisen practices from the ethnic minority communities. Ethnic folk stories and localartistic practices in jade jewelry will be incorporated into the curriculum design.

128. Government policies on TVET expansion prioritize enrollment for the poor, ethnicminority, and female students with provision of tuition waiver and additional subsidies. Variousaspects of project design including the choice of project schools in Dali and the choice of sectorsalready reflect such priority. The project will further support school level efforts in expandingenrollment and improving the curriculum design for the disadvantaged population.

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E. Monitoring & Evaluation (M&E)

129. The objectives of M&E are to: (a) monitor the progress of project implementation andprovide timely feedback to the project management (WB and government) and projectimplementers (project schools); (b) assess and summarize the achievement (outputs, outcome,and impact); and (c) draw lessons in project design and implementation that can guide futurereplication efforts in other regions.

130. Three types of monitoring and evaluation activities need to be carried out systematicallyduring and at the end of the intervention as outlined in the box below. The monitoring andevaluation activities are part of the project design, the sub-component 2.4.

Activity Timing Key Questions Concerned

Regular/routine Ongoing during the * If activities have been implemented as planned?Monitoring implementation * If expected deliverables/outputs achieved?

S*Reasons for achieving or not achievingMid-Term Review At the mid point of * If expected intermediate outcomes have been(MTR) the implementation/ achieved?

year 3 * If expected final outcomes move toward to the rightdirection (trend)?

* Reasons for achieving or not achievingImpact Evaluation At the end/close to * If expected final outcomes/PDOs have been achieved?

end of the project * Reasons for achieving or not achieving?* Lessons learned and experiences

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Arrangements for Results and Evaluation

Regular/routine Monitoring

131. To the extent possible, arrangements for the results monitoring will be integrated into theexisting school data collection and utilization system.

132. Regular/routine monitoring is concerned with the extent to which an individual activityhas been implemented in a timely fashion and expected outputs have been achieved as against aset of targets. It also is a mechanism to collect and monitor in a systematic fashion changes inproject outcome indicators over time. Systematic tracking and reporting of the achievement ofthe project at output and outcome levels will provide the project with information on the progressof the project implementation and help the project make adjustments as necessary.

133. A set of indicators capturing project results has been developed and agreed by the projectschools and the World Bank team. Individual project schools will track the results forintermediate outcome indicators pertaining to each reform area regularly during the projectimplementation through the existing school administrative system and project managementmechanism.

134. Key project outcome indicators: initial employment, starting salary, employer satisfactionand students obtaining both skills certificate and diploma at the graduation will be monitoredannually through the student tracer studies and the school administrative system. Graduates fromthe project schools or reformed departments will be surveyed. In addition to collecting keyoutcome data, the tracer studies will seek information on graduates satisfaction with the trainingreceived in the school and their recommendation for the improvement.

135. An independent consultant/consulting firm will be engaged to help design a standardsurvey instrument and methodology including sampling to ensure the consistency, quality andcomparability of the result data across schools.

136. The progress and results of the provincial level of activities will be tracked and analyzedby the provincial PMO.

137. The project results will be tracked and reported at two levels: (a) school level results; and(b) aggregate results at the provincial level. Both results will be reported to the World Bank, viaprovincial PMO on an annual basis, as part of the Project Progress Report.

Mid-Term Review (MTR)

138. The MTR will be conducted during the third year of the project implementation. TheMTR will analyze the early results/effectiveness brought by project activities. More specifically,it will look at the extent to which the schools' performance has been improved with respect tothe reform and innovation areas. It will assess the improvements at the student level followingthe school level reforms.

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139. At the MTR, data collected at both output and outcome levels will be analyzed at both theschool and project/provincial levels. In addition, the MTR will summarize some lessons learnedand experiences accumulated during the implementation. The results of the analysis will be fedinto project implementation and help the project refine the next stage of activities as necessary.

140. The provincial PMO will lead the mid-term review of the entire project. An independentconsultant/consulting firm will be hired to carry out the mid-term review, including dataaggregation, analysis at the project level, and producing a review report to the World Bank fourweeks prior to the World Bank Mid-Term Review commencement.

Impact Evaluation

141. An impact evaluation will be conducted for the project. The impact evaluation will assessthe program's effects and the extent to which its final development objectives have been attained.It will also identify lessons on types and modalities of interventions that work effectively andefficiently in contributing to the project achievement as well conditions or factors that canenhance or hinder the effectiveness and efficiency of the varies intervention strategies at bothinstitutional and policy levels.

142. Because the project schools have been pre-selected by the government, it is impossible toemploy an experimental design for the impact evaluation. Within the available resource, theproject proposes a pre-and post- design evaluation. The analysis will look at perform trends overthe project period and compare among three data points on the key outcome indicators: projectentry, mid-term, and conclusion. The analysis will control external variables as possible thatappear to have influences on the outcome indicators (e.g., school demographics, academicachievement, local labor market fluctuation, social and economic status). Analysis of studentlevel outcome data in relation to different school reforms activities and modalities of variousinterventions will be conducted. These analyses will provide information on the magnitude ofchange that has occurred and time-related trends.

143. In addition, the evaluation will collect qualitative data from various stakeholders toenrich information and analysis, including (but not limited): (a) interview of a sample ofstakeholders (graduates, industry expert served for industrial advisory committees, schoolprincipals/key administrative personnel and Project leaders and PMO staff); and (b) desk reviewon a variety of forms research articles, policy notes and other knowledge products (press releasesand newspaper and popular publications, reports on school and provincial websites), as well asworkshops for education policy makers and school administrators conducted during the projectperiod.

144. The impact evaluation is planned as part of project component 2. The provincial PMOwill provide an over coordination and leadership for the evaluation. An independentconsultant/consulting firm will be sought to design and implement the evaluation.

145. To strengthen schools' capacity for data collection, documentation and utilization, theBank will, through the provincial PMO, provide technical assistance on M&E capacity buildingfor the project staff during the preparation period and will continue to do so during the project

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implementation on a needs basis to ensure that the monitoring and evaluation function has beenestablished and integrated into the school reform process.

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Annex 4

Operational Risk Assessment Framework (ORAF)

China: Yunnan Technical and Vocational Education and Training Project

Stakeholder Risk Rating Moderate

Description: Risk Management:

RISK EXPLANATION AND RISK DESCRIPTION HAVE BEEN COMBINED Ongoing consultations with the industry. Establishment of School Industry(PLEASE REVIEW) Collaboration Committee and Sector Specific Industrial Advisory Committees

Industry participation in curriculum reform is key to developing a demand-driven Resp: Both Stage: Implementation Due Status: i Progresstechnical and vocational education and training system. Enterprises in China in Date:general are responsive to government initiatives. Further due to labor shortage,enterprises are competing to recruit top graduates from training institutions.

Experience from the ongoing Guangdong TVET project also shows thatparticipation in particular from larger enterprises is likely. Enterprises may notprovide substantial and sustained inputs to the development of competency basedstandards and school curriculum.

Capacity Rating Moderate

Description: Risk Management:

PLEASE REVIEW RATING FOR THIS CATEGORY Ongoing capacity building in financial management, procurement, and monitoring andevaluation through supervision missions and specific training organized by fiduciary

PPMO of Yunnan Education Department has demonstrated a track record of team.successful Bank project implementation including Goods and Works procurementand financial management. For the new project implementation, the Education Ongoing capacity building in key areas of financial management, procurement, andDepartment sets up a dedicated team in which the key staff have rich experience monitoring and evaluation, through supervision missions and training organized by theobtained from previous projects in areas of project management, procurement, fiduciary team.financial management, monitoring and evaluation. Resp: Both Stage: Implementation Due Status: In Progress

Date:The project schools. Though new to Bank operations and have high commitmentand have set up a team of 3 to 4 key staff to work on specific areas of curriculum

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and teaching, procurement, financial management, and monitoring and evaluation.

Lack of capacity in financial management, procurement at the PPMO and schoollevels in particular to meet Bank requirement may result in temporaryimplementation difficulties and delays.

Governance Rating Low

Description: Risk Management:

Implementing agency is fully committed to the project. The Department ofEducation took the initiative to organize study visits to Singapore and to theGuangdong Project to learn good practices in TVET and in project management. Date:

Ownership and commitment of the Implementing agency may be low.

Design Rating Moderate

Description: Risk Management:

The same design is also used in the previous TVET projects including Guangdong, A Provincial Expert Team will be established to help with coordination and provideLiaoning and Shandong. Yunnand [Ts Department of Education has technical guidance. Project will support the Inter-departmental TVET Coordinationdemonstrated exceptional leadership and capacity so far. Committee.

The PPMO which is part of the Department of Education may not have full The Project design also includes the establishment of an Inter-Departmental TVETmandate or technical capacity to coordinate the policy and operational affairs in Coordination Committeethe 9 project schools that have different administrative bodies such as Departmentof Human Resources and Social Security, Department of Transport, Department of Date:Tourism.

Social and Environmental Rating Low

Description: Risk Management:

This is a category C project. PPMO is familiar with implementing simple Develop project specific Environmental Management Guidelines and disclose theconstruction projects including following the NCB procedures and Environmental guidelines in locally and in the World Bank Infoshop and supervise the projectManagement Guidelines. according to such guidelines.The project will benefit the minority students enrolled in TVET programs through Project designed to benefit rural poor and minorities. Social impact assessment will bebetter quality training programs. conducted during implementation.

Construction of new buildings in existing school sites may not adhere fully to the Resp: Both Stage: Implementation Due Status: In Progressenvironmental management guidelines. Date:

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Some project interventions may adversely affect ethnic minorities.

Program and Donor Rating

Description: Risk Management:

The World Bank is the only donor in TVET in Yunnan. This is a free standing N/Ainvestment operation. Resp: Stage: Due Status:

Date:

Delivery Monitoring and Sustainability Rating Low

Description: Risk Management:

Schools are keenly aware of the importance of collaboration with industry to The project will establish institutional mechanisms to sustain continued school industryimprove the relevance of training. collaboration even after the project ends. The project will provide continuous training.Schools have established project implementation units with qualified staff. Resp: Both Stage: Implementation Due Status: i Progress

Date:Schools may not continue with the practice of engaging enterprises in developing Dcurriculum after the project period.Schools may not have the capacity to implement the project.

Preparation Risk Rating: Moderate Implementation Risk Rating: Moderate

Description: Description:

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Annex 5: Implementation Support Plan

CHINA: Yunnan Technical and Vocational Education and Training Project

146. The project implementation plan has been developed based on the risk ratings for theproject as detailed in the ORAF. The Bank will support the implementation of the Project byusing a variety of strategies including policy dialogues, regular supervision missions, designingand implementing capacity building in procurement, financial management, monitoring andevaluation, and safeguards. Further, the Bank will bring in technical consultants as needed on thedevelopment of competency based training programs and the development of new pedagogy.

* Procurement. During the project implementation period, the Bank team will ensure thatprocurement is conducted in accordance to Bank guidelines and procedures by: (a)providing training to procurement staff in the PMO and school PIUs as needed; (b)reviewing procurement documents and providing timely feedback on procurement issues,(c) providing detailed guidance on the Bank's procurement guidelines; and (d)monitoring progress against the procurement plan

* Financial Management. The supervision strategy for this project is based on its FM riskrating, which will be evaluated on regular basis by the financial management staff. Thefinancial management staff uses periodic site visits, desk reviews, and correspondencewith borrowers to provide technical support to and work closely with borrowers toresolve problems as they arise, and to monitor the continuing adequacy of the FMarrangements including accounting, auditing, budgeting, financial reporting, internalcontrol and funds flow. FM staff also follows up on action plans agreed during projectappraisal and 's, as well as on observations derived from reviews of audit reports,management letters and Unaudited Interim Financial Reports (IFRs).

* Monitoring and evaluation. The Bank team will organize training of the provincialdepartments, PMO, and school PIUs on monitoring and evaluation as needed. Further,through regular interaction with project entities, the Bank team will emphasize projectreport and annual plans to be done in accordance with the results framework.

* Environmental and social safeguards. The Bank team will supervise theimplementation of the agreed Environmental Codes of Practice on a regular basis.

* Technical support during implementation. Key areas of technical support for theproject include but not limited to development of competency based standards andcurriculum, implementation and evaluation of the new curriculum, outreach to potentialtraining providers for teachers and school managers, review of technical specificationsfor the procurement of equipment, development and institutionalization of graduate tracerstudy and employer surveys in schools. The Bank team will organize training of theseareas at strategic time of project implementation

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I. The main focus of implementation support is summarized belowTime Focus Skills Needed Resource Estimate

First 12 months Procurement training, Procurement 2 staff weeks

Financial management, Financial 2 staff weeksmanagement,

Monitoring and Monitoring 1 staff weekevaluation, and evaluation

Development of Curriculum 2 staff weeksstandards and developmentcurriculum

12-48 months architect,environmentalspecialistsocial specialistEquipment specialistsDevelopment ofstandards, curriculum,and evaluation

Other

II. Skills Mix RequiredSkills Needed Number of Staff Weeks Number of Trips Comments

Procurement 4 Once a yearFinancial 2 Once a yearmanagement

Curriculum 4 variousdevelopmentspecialistMonitoring and 2 Once a yearevaluationArchitect 2 Twice during the

projectEquipment specialists 2 Twice during the

projectSocial assessment 1 Twice during the

projectEnvironmental 1 Twice during thespecialist project

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