Document of The World Bank

FOR OFFICIALUSE ONLY Public Disclosure Authorized

ReportNo: 20391

IMPLEMENTATIONCOMPLETION REPORT (CR-20440)

ONA Public Disclosure Authorized CREDIT

IN THE AMOUNTOF 8.8 SDR MILLION(US$ 11.4 MILLIONEQUIVALENT)

TO THE

KINGDOMOF NEPAL

FOR THE

ENGINEERINGEDUCATION PROJECT Public Disclosure Authorized

May 31, 2000

This documenthas a restricteddistribution and may be usedby recipientsonly in the performanceof their officialduties. Its contentsmay not otherwisebe disclosedwithout World Bank authorization. Public Disclosure Authorized CURRENCYEQUIVALENTS

(ExchangeRate EffectiveDecember 1999)

CurrencyUnit = NepaleseRupees (NRs.) NRs. 69.30 = US$ 1.00 US$ 1.00 = NRs. 0.0144

FISCAL YEAR July 16 - July 15

ABBREVIATIONSAND ACRONYMS

CIDA - CanadianInternational Development Agency CIMDU - Curriculumand InstructionalMaterials Development Unit CTEVT - Council for TechnicalEducation and VocationalTraining EEP - EngineeringEducation Project HMGN - His Majesty's Governmentof Nepal IOE - Institute of Engineering MDU - Manpower Development Unit MIS - ManagementInforn-ation System NPC - National Planning Commission PIU - Project Implementation Unit SAR - Staff Appraisal Report SDC - Swiss Agencyfor Developmentand Cooperation TU - Tribhuvan University

Vice President: Mieko Nishimizu CountryManager/Director: Hans M. Rothenbuhler Sector Manager/Director: EmmanuelY. Jimenez Task Team Leader/TaskManager: Grant Sinclair/BrajeshPanth FOR OFFICIL USE ONLY

CONTENTS

Page No. 1. ProjectData 1 2. PrincipalPerformance Ratings 1 3. Assessmentof DevelopmentObjective and Design,and of Qualityat Entry 2 4. Achievementof Objectiveand Outputs 3 5. MajorFactors AffectingImplementation and Outcome 10 6. Sustainability 11 7. Bank and BorrowerPerformance 13 8. LessonsLearned 15 9. Partner Comments 16 10. AdditionalInformation 19 Annex 1. Key PerformanceIndicators/Log Frame Matrix 20 Annex2. ProjectCosts and Financing 22 Annex3. EconomicCosts and Benefits 25 Annex4. Bank Inputs 26 Annex 5. Ratingsfor Achievementof Objectives/Outputsof Components 28 Annex 6. Ratingsof Bankand BorrowerPerformance 29 Annex 7. List of SupportingDocuments 30 Annex 8. Borrower'sICR 31 Annex 9. SDC'sComments 39 Annex 10.CIDA's Comments 41

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

Project ID: P010333 Project Name: ENGINEERING EDUC. Team Leader: Brajesh Panth TL Unit: SASED ICR Type: Core ICR Report Date: June 12, 2000

1. Project Data Name: ENGINEERING EDUC. L/C/TF Number: CR-20440 CountryIDepartment: NEPAL Region: South Asia Regional Office Sector/subsector: EV - Vocational Education & Training

KEY DATES Original Revised/Actual PCD: 01/29/86 Effective: 11/14/89 Appraisal: 09/06/88 MTR: Approval: 06/22/89 Closing: 12/31/97 12/31/99

Borrower/lmplementing Agency: GOVERNMENT OF NEPAL/INSTITUTE OF ENGINEERING; TRIBHUVAN UNIVERSITY Other Partners: Canadian International Development Agency (CIDA) and Swiss Agency for Development and Cooperation (SDC)

STAFF Current At Appraisal Vice President: Mieko Nishimizu Attila Karaosmanoglu Country Manager: Hans M. Rothenbuhler Shinji Asanuma Sector Manager: Emmanuel Y. Jimenez Martin Karcher Team Leader at ICR: Grant Sinclair Joseph Bredie ICR Primary Author: Brajesh Panth; Madhav Mainali

2. Principal Performance Ratings

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability: L Institutional Development Impact: SU Bank Performance: S Borrower Performance: S

QAG (if available) ICR Quality at Entry: S Project at Risk at Any Time: Yes 3. Assessment of Development Objective and Design, and of Qujalityat Entry 3.1 OriginalObjective: Nepal experienced a critical shortage of technical manpower in almost all its development endeavors. During the 1960s and the 1970s,a number of studies/reviews on the status of human resources in Nepal, including IDA's (McEvers, 1983), highlightedmianpower shortage in a number of skill areas, including engineering skills. As the development efforts expanded during the 1970s, the need to modernize engineering education was identified as one of the key priorities in Nepali education by HMGN. On account of its importance in Nepali development efforts, and as prioritized by HMGN, IDA provided support for two projects aimed at enabling the Institute of Engineering (IOE), Tribhuvan University (TU) to expand and modernize engineering education in Nepal, namely the Institute of Engineering Development Project (Cr. 772-NEP) and the Western Region Campus Project (Cr. 1198-NEP). These projects contributed to the expansion and consolidation of the technician training programs and helped the Institute of Engineering (IOE) initiate a degree program in civil engineering. Nepal, however, remained completely dependent on overseas training in electrical, electronics and mechanical engineering.

According to the National Planning Commission (NPC) the shortage of technical and professional manpower at the start of the Seventh 5-Year Plan (1985) had risen to 30 percent of available stock. The apparent shortage of engineers and technicians was a reflection of Nepal's past inability to develop an appropriate stock of technical personnel. The actual proportion of engineering personnel (0.9%) in the economicallyactive population was smaller than in other countries in the region (for example, 3.8% in Bangladesh).Nepal's development efforts required technical personnel in the four basic engineering disciplines-civil, mechanical, electrical, electronics- and in architecture and rural planning. Given the developments in power and communications, the demand for electrical and electronics engineering personnel was expected to rise significantly.

It was against this background that the Engineering Education Project (EEP), the third IDA-supported project in the series, was formulated. The development objective of EEP was to increase the production of engineering manpower in order to meet the national demand generated by the Government's investment in various sectors. The expectation was to meet 90 percent of the projected demand and to train engineers and technicians specifically iforNepal's development needs. The project assisted in: (a) expanding the enrollment capacity of the IOE to train technicians and engineers; (b) raising the quality of engineering education; and (c) improving the management of IOE. It was deemed important to remove the imbalancesin the supply of engineering manpower, reduce the shortages, and meet the demand generated by the Government's investment in water resources, hydropower, roads, bridges, telecommunications and industry.

Important lessons concerning deficiencies in project management, maintenance and implementationlearned from previous projects were taken into account in designing the project. Project objectives were clearly defined and directed towards building capacity for producing technical manpower in critical areas in Nepal. The objectives were very much in line with social priorities and long-term educational plans of the government, and also fitted well with IDA's country assistance strategy for Nepal.

- 2 - 3.2 Revised Objective: No changeswere made in the project'sdevelopment objectives during the implementationperiod.

3.3 Original Components: The project components were:

(a) expanding enrollment in the technician training programnsfrom 1,370 to about 1,700 students and in the engineering (degree) programs from 360 to 920 students through the introduction of new programs and construction, rehabilitation and maintenance of facilities;

(b) raising the quality of engineering education through training of staff, introducing new curricula, improving existing curricula, providing education materials and equipment, and improving admission and exarninationto international standard; and

(c) improving management through strengthening the Office of the Dean, developing a Management Information System (MIS), establishing a Manpower Development Unit (MDU), training managerial and administrative staff, and establishing maintenance capacity.

3.4 Revised Components: Projectcomponents were not restructuredduring project implementation.

3.5 Quality at Entry: The quality at entry is rated satisfactory in this ICR. As mentioned under Section 3.1 above, the project was designed to suit the technical manpower development needs of Nepal, and benefitted from lessons learned in two earlier projects.

4. Achievement of Objective and Outputs 4.1 Outcome/achievement of objective: The project not only achieved all its stated objectives satisfactorily,but also most of its actual achievements exceeded the targets. Now the IOE has greater autonomy, is self-reliantin many areas due to increased levels of cost recovery; it has well-trained manpower (administrative and academic), and has acquired significant experience in project management. Hence, IOE has been able to develop an efficient system for the delivery of both degree and diploma programs. Moreover, major policies have been adopted such as cost recovery and development research capabilities. The project benefited extensively from Canadian International Development Agency (CIDA) technical assistance and Swiss Agency for Development Cooperation (SDC) support.

As the project was able to complete all civil works, procure all equipment and enroll more students than targeted, the final project perfornance in achieving the capacity expansion objectives has been rated satisfactory.

Similarly, as the project was able to train more staff than targeted, develop and revise

-3 - curricula, develop instructional materials, procure books and reference materials, and improve admission and examination standards,the EEP outcome in achieving the quality improvement objective is rated satisfactory.

The management improvement objective of the project is also rated satisfactory, in view of the establishment of (i) a Management and Development Council and an Executive Committee to foster greater autonomy, (ii) a manpower development unit to provide training to staff and undertake tracer studies, and (iii) facilities management unit in each campus to institutionalize and sustain maintenance equipment and buildings.

Some unanticipated conditions (e.g., trade and transit dispute between India and Nepal, the transition to democratic government, conflict and delays in consultant selection, change in Government policy, procurement delays, etc.) adversely affected the project during initial implementation, including weak project management which led to implementation delays during the first half of the project period. When project implementation picked up towards the second half of the project as a result of greater focus and stronger leadership, the project exceeded most of its objectives. Nevertheless, a two-year extension of the project was needed to allow the IOE to achieve all the project objectives. It is also important to recognize that while it took almost ten years for the IOE to implement the project fully, the important institutional gains would have been unachievable in a shorter time span given the need for substantial social, attitudinal and managerial changes.

4.2 Outputsby components: A. Expanding the Capacity of IOE to Train More Technicians and Engineers

(i) Enrollment Capacity. The enrollment targets of the project have been fully achieved and in many cases exceeded the targets. With regard to degree programs, the EEP Staff Appraisal Report (SAR) projected a target of admitting 240 students as freshmen in five degree programs (Civil, Mechanical, Electrical, Electronic and Architecture) offered at Pulchowk (Central) Campus of IOE. By 1999/2000 IOE was able to admit 381 students in six degree programs (including computer engineering, not envisaged by EEP). This intake level will raise the total degree level enrollment to 1,572 students in its degree programs (SAR target 920), exceeding the project target by over 60 percent. This includes those who have enrolled in a number of full fee-paying programs, with full cost recovery.

Regarding diploma programs, the appraisal target of EEP was to enroll 1,700 students, for which around 624 freshmen were expected to be admitted in three campuses every year including margins for dropouts. The three diploma campuses have admitted a total of 768 freshmen in 1999/2000 for technician training programs thereby exceeding the project target by about 23 percent. This includes full fee-paying students whose number is expected to increase to over 30 percent of total enrollment in these campuses. These developments demonstrate first, the significant achievement made by EEP in expanding the capacity of technician training programs, and second, reveal the willingness of beneficiaries to pay for their training, which in the context of Nepal is important to note. However, while enrollment has continued to increase, low intemal efficiency in diploma programs warrants future targeted intervention.

-4- As a spin-off of the success of EEP, a number of private engineering colleges affiliated to TU/IOE have been established. The total enrollment capacity of degree programs of public and private engineering colleges has exceeded the target EEP enrollment capacity.

The last tracer studies of IOE graduates was conducted in 1993. Therefore there is no recent emperical evidence that all the IOE graduates are employeed in the country in the relevant fields. But based on the high demand for IOE seats and anectodal evidence that the country has been largely able to fulfill its demand for engineering manpower gives a basis to infer that the development objective of EEP has been largely met.

Since enrollments in degree and diploma programs exceeded the target and additional post-graduate programs were introduced in four areas, a significantly greater number of teachers and instructors have been recruited than was originally planned. This resulted in less than satisfactory faculty rationalization. The degree programs of IOE now have over 220 faculty for 1,104 students with a faculty - student ratio of 1: 5.1 against the SAR target of 1:10. This is expected to improve to 1:7 once these programs reach full enrollment of 1,572. The faculty- student ratio at the three diploma campuses is around 1:9, which is below the target of 1:10 because the TU has reduced the norn for teaching loads. Nevertheless, IOE is using the higher faculty strength to provide a number of short courses.

(ii) Female Enrollment. EEP projected a target of increasing female enrollment to at least 10 percent in both degree and technician training programs. Females were about 12.5 percent of enrollments (137 of 1,104) in 1999/00academic year, which exceeded the target. There was a significant increase in females enrollments at three of the four campuses under IOE with Pulchowk (degree) campus admitting 17 percent (59 of 336), Thapathali (diploma) 20 percent (29 of 144), and Paschimanchal (Western) campus 18 percent (70 of 384). All these campuses provided new girls' hostels with a combined capacity to accommodate 104 female students. At the only campus, the Purwanchal (Eastern) campus, which lacks girls hostel facility within its premises, female enrollment was only 6 percent (15 of 240) of the total. This campus was not included in EEP initially, but was included only later on. The initial delays in implementation and a subsequent reduction in SDC funding by about US$1.38 million led to a reduction in the scope of the project, which included dropping the plan for hostel construction in the Eastern campus.

(iii) New Programs. Exceeding by far the EEP targets, the IOE managed, with Norwegian assistance, to run post-graduate (Master's Degree) programs in three areas of specialization- Structural Engineering, EnvironmentalEngineering and Urban Planning. Later a Master's degree program in Water Resources Engineering was initiated without external support. The current enrollment capacity in the two-year Master's degree is 128. The IOE plans to offer several additional programs. The master's degree programs, which are self-sustaining, are demand driven. Moreover, the IOE now has two research students working toward a Ph.D. These are impressive achievements arising from enhanced IOE capacity. Under a mutually agreed separation arrangement, which was reached at a later stage of the project, the diploma programs of Pulchowk campus were transferred to three diploma campuses. The Pulchowk facilities are now exclusively used for degree programs allowing room for enrolling additional batches of full

-5 - fee-paying students, and for introducing post-graduate programs in a number of areas.

(iv) Construction. The construction of new facilities and the renovation of existing ones in Pulchowk Campus are all completed and are being used. With minor exceptions, the renovation and construction of facilities at the diploma campuses have also been completed satisfactorily. The laboratories and workshops, and the classrooms in all diploma campuses are utilized almost to the level targeted by the SAR (65% and 80%, respectively). The utilization of these facilities at the degree campus, however, is significantly less than the above targets (39% and 650/0, respectively). This is largely a result of the transfer of diploma programs from the degree campus, leaving IOE room to increase enrollment, including additional enrollment of full fee-paying students and running of short courses.

(v) Equipment. Most equipment for the degree programs was procured before project extension. Experts from the Consortium of Canadian Universitiesunder CIDA support provided technical assistance in commissioning laboratory equipment for degree programs. The Consortium comprised University of Calagary, University of Saskatchewan,University of British Columbia and University of Manitoba. However, the equipment for the technician training programs was procured late in the project extension period due to the decision to delay the procurement of diploma equipment until appropriate arrangementswere made for transfer of diploma programs to CTEVT. The consequences of the delayed procurement and the revision of the equipment lists are explained later.

B. Raising the Quality of Engineering Education

(i) Staff Development. The training of staff, both of degree and diploma programs, was carried out successfully. The fellowships were supported by CIDA and SDC. Against the targets of 173.5 staff-years of fellowships (including 15 Ph.D., 32 M.Sc./ME, 37 staff-years of technician training, and 21 staff-years of other training) some 193 staff-years of training was completed, which included 15 senior fellowships, 5 Ph.D., 38 M.Sc./ME fellowships, 67 staff-years of technician training, 15 administrative staff fellowships,and 90 short-term training. The training targets were surpassed significantly in terms of persons covered. Over 220 teaching staff and 120 junior/support staff (compared with the proposed target of 94 teaching staff and 25 support staff) received training. This was possible due to the cost saving efforts of project managers by organizing training in India instead of expensive overseas institutions. The Technician Teachers' Training Institute at Bhopal, India which provided short-term (mostly of three-month duration) training for the diploma staff was substantiallyeconomical cost-wise without any compromise to the quality of training. The Technical Instructors Training Institute, an SDC-supported training facility at Kathmandu, also provided some short-term training to diploma staff with similar results. Moreover, the training is looked upon as relevant for the Nepali need. Training for the faculty of the degree programs started at the early phase of the project and most of them benefited from overseas training. Unfortunately, a significant percentage of those trained abroad (9 of 23 trained for M.Sc./M.E.) at a high cost did not return to Nepal. This warrants the serious attention of IOE management.

(ii) Curriculum Development. Inpressive achievements were made in the areas of

- 6 - curriculum development. A total of 316 new courses were developed for the degree programs which greatly benefited from technical assistance provided by experts from the Consortium of Canadian Universities under CIDA funding. In addition to this, over 100 new courses were developed for the Master's in Engineering programs. Curriculum for technician programs in civil engineering and architecture were prepared by the IOE faculty. Curriculum for five courses for technician training programs were developed by the ILO experts and later revised by the IOE faculty. The revisions laid emphasis on augmenting the skill component in the curriculum. This experience of curriculum developmentand revision will obviously be useful for IOE to accomplish similar tasks in the future.

The EEP resources were utilized efficiently for the development and distribution of instructional materials. The Curriculum and Instructional Materials Development Unit (CIMDU) of IOE is preparing and publishing manuals for courses and laboratory manuals. It has published a total of 103 courses and laboratory manuals for degree programs and almost a similar quantity (101) for diploma programs.

(iii) Books and Reference Materials. EEP funds were used to purchase a total of 37,828 volumes of books, exceeding the target (23,300) substantially. IOE was much less successful in acquiring joumals. The libraries of all campuses now are in a better position to provide books, both text and reference, to students and teachers. Some relevant journals and reference materials are also available at the Pulchowk campus library for post-graduate courses and research. Given that significant funds were underutilizedunder this category and not enough journals could be procured, IOE engaged in installing a dedicated Intemet system to allow its faculty and students access to intemational resources. Being a technical institute of Tribhuvan University, IOE is also making preparations to provide Internet access to the larger university faculty.

(iv) Admission Standard and Quality of IOE Education. The quality of students entering the degree and technician programs was already quite good before the project due to a fair and effective student admission system. This quality was further enhanced through the implementationof single entrance system. Technicians and Proficiency Certificate holders in science are eligible for entry into degree programs by sitting in the same examination under the single entrance system. Due to high demand, there is keen competition to get admitted to IOE. Of the total applicants for degree programs, only the best 18 percent were admitted in 1999. Before the introduction of the full fee-paying scheme in 1997, the competition for entry into the IOE was greater. The smaller number of applicants competing for entry into the IOE after the introduction of the full fee-paying scheme is associated with the increased capacity of IOE owing to higher utilization of resources. At the same time, the pool of applicants from the proficiency level in science/diploma in engineering did not increase. Although the minimum entry requirements for full fee students are the same as that for regular students, the introduction of full fee-paying students have somewhat lowered the quality of students admitted into the degree programs owing to the following factors: (i) slackening of competition due to the increased number of places at the degree level; and (ii) limited competition for full fee-paying seats. Therefore, it is highly desirable to supplement the full fee-payingscheme by a financial assistance scheme for financially weak students.

-7 - Among the total applicants for diploma programs, only the top 17 percent of the applicants were admitted in 1999. Although students are admitted after a rigorous selection process, a majority of them fail in the first year examinations.This results in serious demoralization of students and leads to campus disturbances. However, diploma students with good academic standing have been fairly successful in joining the degree programs in spite of the introduction of a single entrance system.

The IOE degree graduates are competing intemationally for admissions into good institutions and are admitted for further studies to well-known institutions abroad and have performed well. The Asian Institute of Technology has ranked IOE/TU as one of the ten best institutions based on the performance of students admitted from different academic institutions.

(v) Complementary Strength. With the capacity and facilities developed, the IOE has initiated research programs, consultancy services and continuing education programs. For promotion of research and other services, autonomous organizations such as the Center for Applied Research and Development, the Center for Energy Studies and the Center for Information Technology have been established. Continuing education programs are being successfully conducted through the Continuing Education Division. The Institute of Engineering Consultancy Services, Departmental Research Consultancy and Training Units, Campus Level Training and Consultancy Units provide consultancy and training services. Through these activities the IOE provides a variety of specialist services to the country and has markedly improved the image of IOE. These are achievements beyond the expectations of the project.

C. Improving Management Capacity

(i) Strengthening the Office of the Dean. The management improvement objectives of the project have been largely achieved, although some targets require additional efforts to fully realize. The IOE became successful in assuring the participation of stakeholders in its management through the formation of an ad hoc Advisory Council. The success of this experiment laid the foundation for adoption of Decentralization Rules 1998, which paved the way for more decentralized management of Tribhuvan University. The IOE was the first institute to implement TU Decentralization Rules in 1998. The implementationof these rules have further strengthened the IOE's stakeholder participation in management. The Decentralization Rules have transferred some of the important central authorities (managerial and financial) from the TU central office to IOE. The provision in the rules for transferningactivities from central office/IOE to campuses remains yet to be implemented.

(ii) Complementary Institutional Development Efforts. The Manpower Development Unit (MDU) has been established. It has been delivering short-term training and has organized consultative seminars and training workshops for IOE staff. MDU is expected to conduct tracer studies periodically which are now critical to trace the employment status of IOE graduates. The Management Information System of IOE has become operational only recently on the Pulchowk campus and needs to be extended to diploma programs using the equipment provided by the project for this purpose. Facilities Management Units have been established in all campuses but they require sustained support for a few more years to fully institutionalizethem. The IOE has

- 8 - also established an Industrial Advisory Board and has formed Industrial Linkage Units in each campus. These important entities are not yet effective to the level expected, in spite of the importance of their function to make engineeringtraining relevant and successful.

The Unanticipated Project Results

The achievements of the project that have exceeded the projected targets are summed up below:

* Exceeding the SAR target, IOE built the capacity to admit 60% and 23% more students in degree and diploma programs, respectively. * Beyond the target of the project, IOE now runs degree program in computer engineering, has introduced Post-Graduate programs in four areas of specialization and initiated a Ph.D. program. * IOE has generated revenue from sources such as student fees, research and consultancy services, which amounts to the equivalent of 50% of recurrent expenditure. * IOE has developed formal linkages with well-known institutions in India, Canada, Norway, USA, Japan, Thailand and Indonesia for research and exchange. * IOE has initiated a 20-year strategic planning exercise to develop a long-term vision for the Institute to develop into a premier institution and a partner in national development with focus on sustainability,research and academic excellence. _ IOE was able to install a dedicated Internet system, thereby giving its faculty and students instant access to international resources.

4.3 Net Present Value/Economic rate of return: n.a.

4.4 Financial rate of return: n.a.

4 5 Institutional development impact: The institutional development impact has been rated as substantial. The initial delays in project implementation had to do with several factors, some of which were beyond the control of IOE. Although IOE senior management came with experience from two earlier IDA-supported projects and provided stability, project management suffered from turnover of key staff (coordinators and several deputy coordinators) and inadequate staffing. This was largely true during the first half of the project. It was also felt that degree programs received more attention than diploma programs.

The situation turned around during the second half of the project leading to several improvements. Disbursement increased from less than 10 percent in 1995 to over 50 percent in two years. IOE managementmade efforts to have very modest teaching loads of key PIU staff, put in more staff to look after critical areas that were lagging behind, improved project monitoring using benchmarks and implementation schedules, and adopted a more strategic approach to address implementation bottlenecks.

With greater autonomy from TU achieved, the IOE management established an Executive

- 9- Committee and Management and Development Council to improve internal management and decision making structure. This helped to decentralize management functions to the department level. This was further reinforced by successful cost recovery which led to wider support of faculty members and department heads who saw potential for increased remuneration and increased access to resources. IOE has made provision for institutional improvements and resources to ensure regular repair and maintenance physical facilities, established manpower development unit for staff development and conducting tracer studies, and identified industrial liaison officers in each campus for industrial linkages to increase exposure of students to industry. In order to sustain these gains, there is an urgent need to promote strategies to raise staff morale and motivation, retain good staff and strengthen the recruitment process to ensure intake of highly qualified and competent staff.

TU has identified IOE as one of the institutes to receive block grants from FY2000/01 to allow further autonomy to IOE.

5. Major Factors Affecting Implementation and Outcome 5.1 Factors outside the control of government or implementing agency: EEP implementation began in a period when India and Nepal were having problems on trade and transit issues which lingered for about a year. Furtherrnore, there was a major political change in 1990 which ushered in a democratic system with an interim Government in place. This was followed by a very important general elections in 1991 and the formation of a new Government which began to formulate new policies and directions for development. These were major changes that affected all aspects of life in Nepal and made worse by a period of intense student activism and resistance.

5.2 Factors generally subject to government control: Following the political changes in 1990, the Government established an Education Comrnission to advise on educational reforms. The Commission's recommendations led the Government to make a policy decision to transfer diploma programs of IOE to the Council for Technical Education and Vocational Training (CTEVT) without carefully analyzing institutional implications. The decision did not materialize for over three years due to a lack of preparedness of CTEVT to bring IOE diploma programs under its umbrella. After this prolonged dilemma did not produce any positive outcome, the Government agreed to continue with the original project design and allowed diploma campuses to remain under IOE. In the process, valuable time was lost and project implementationof the diploma component suffered from delays in civil works and equipment procurement, staff recruitment and deployment, etc.

5.3 Factors generally subject to implementing agency control: While the Project Implementation Unit (PIU) experienced a shortage of staff during the early years of project implementation, it witnessed turnover of key staff throughout the project period. In the absence of serious efforts to resolve conflicts, a prolonged disagreement between IOE and IDA over the selection of design consultant for civil works caused initial implementation delays by about two years.

The process of equipment selection and procurement consumed much more time than originally planned and, as a result, the project paid a higher cost, particularly for the diploma

- 10 - equipment. For the degree programs, the initial list prepared by Canadian experts was revised and finalized by IOE faculty, many of whom were insufficientlyfamiliar with the laboratoryprograms to carry out the task promptly. The procurement of diploma equipment was seriously delayed due to uncertainities about the ownership of diplomaprograms. The cost escalation due to such delays led to some reduction in the scope of diploma equipment. Diploma equipment lists prepared by IOE staff and reviewed by a Swiss consultant very late into the project were approved by head of departments with inputs from concerned faculty members of different campuses. Given insufficient familiarity of IOE staff with preparing equipment specificationand ICB procurement documents, the project contracted out the task to a foreign specialist firm. However, this arrangement ended up consuming more time than expected for coordination and approvals. Substantial time might have been saved if IOE staff and/or national consultants had been able to perform the job; this would have possibly helped IOE to develop procurement expertise within its own system. When given an opportunity to expedite diploma equipment procurement, the PIU did successfully manage the ICB procurement of one of the diploma packages demonstrating its capability and potential.

During the last four years of the project, the IOE made a series of positive decisions, which strengthened the PIU by providing adequate staff and injected commitment and motivation for speedy project implementation. Delegating the Bank's project management responsibilities to the Nepal Country Office also helped to expedite project activities through closer Bank/client contacts.

5.4 Costs andfinancing: The project was supported by three funding agencies - the Canadian International Development Agency (CIDA) with US$3.95 million, the Swiss Agency for Developmentand Cooperation (SDC) with US$7.15 million (scaled down from the original amount of US$8.53 million), IDA with US$11.4 million and HMGN with US$2.11 million. The CIDA-flmded portion of the project was successfully completed in March 1997 and covered technical assistance and fellowships. The SDC portion of the fund was administeredby IDA for a share of the costs of civil works, fellowhips, equipment and technical assistance. Due to project delays and constraints in SDC fimding, the SDC portion of the financing had to be scaled down by about US$1.38 million (about 16 percent of SDC funding). Reallocation of credit proceeds was required to increase funding for equipment. In the light of substantialimprovements in project implementation at a later stage of the project and to support the diploma component that was lagging behind, the project was provided two extensions of one year each based on the borrower's demonstrated commitrnent to project objectives.

6. Sustainability 6.1 Rationale for sustainability rating: The project sustainability has been rated likely. The IOE has reached a stage where it enjoys a national status as a premium engineering institution.Its status and strength in (i) establishing a credible admission and examinationprocess, (ii) retaining qualified faculty members, and (iii) possessing high quality physical facilities and well-equipped laboratories,which are superior to those owned by other institutions at the national level and in many cases at the regional level, contribute to the sustainability of IOE programs. Furthermore, a range of

- 11 - post-graduate programs and the beginning of a doctoral program in lOE help to reinforce its programs, and its expanding international linkages bring additional advantages.

A remarkable achievement of IOE has been in the generation of significant internal resources in a difficult environment and in a rather short period. Through sustained efforts and patient negotiations, the active IOE leadership persuaded students to accept an increase in fees for regular students by a modest percentage (15% per year) with an understanding to continue this practice for several years. It has also introduced a number of full fee-paying programs, which recover full recurrent costs of training. By offering continuing education programs, consultancy services, and leasing campus facilities, IOE generates revenue of equivalent to 50 percent of recurrent expenditure, which in 1995 was less than 5 percent. This proportion is expected to rise further. This helps to insure the sustainability of IOE programs at a time when public resources to tertiary education are constrained and there is a critical need to reorient subsidies that currently benefit the better off students. This is supported by IOE's own study on student affordability.

However, despite impressive achievements in revenue generation, a major lacuna in IOE is continuing low faculty morale and motivation and serious difficulties in recruiting and retaining high quality professionals due to its inability to establish an attractive incentive structure. Most of the existing faculty members devote only a small percentage of their time to campus related activities. With some exceptions, all hold another job to augment their income. They seem to be less motivated to find adequate time to help students. These indeed are crucial issues warranting urgent treatment to sustain the gains made thus far. It is equally important to do away with the negative effects of the politicized atmosphere particularly in diploma campuses and students' tendency to rely on strikes for unfair demands. These could underminepositive initiatives and the large investments made to improve the quality of teaching and learning.

Facilities management units were established on all four campuses. Most of the maintenance works through these units during the project period were funded from the project and special Government grant tied to the project. In the context of low priority being accorded to maintenance in Nepal, it would be crucial to supplement the TU regular allocations for maintenance with the revenues from internal resources. The policy of IOE to allocate 40% of the revenues from full-fee programs for equipment maintenance and upgrading is likely to enable IOE to reasonably maintain its physical facilities. It is to be noted that the annual cost of maintenance of IOE facilities are estimated at Rs. 10 millions whereas the annual revenues from intemal resources exceeds Rs. 30 millions.

Compared to the diploma programs, the prospects for sustainability of degree programs are strong so far. In spite of the IOE's official position of supporting and strengthening the diploma programs within the IOE umbrella, an argument still exists that delivering technician training should not be the responsibility of the university. If this sentiment prevails and gathers momentum, diploma programs may be gradually replaced by new degree programs.

Although there is increasing recognition that most of the training delivered by IOE should remain relevant to the production process carried out in the industries and businesses, IOE has not yet been able to develop many functional linkages with industries.

- 12- Judging from the success of IOE in mobilizing intemal resources its financial sustainability has been fully assured in the short-term. The long-term financial sustainabilityof IOE, however, will be contingent upon its capability to continue to attract full fee students by maintaining the quality of its programs at a level higher than those of competing private institutions. In order to maintain the quality of its programs, IOE will have to develop means for addressingthe issue of low faculty morale and commitment. This will entail serious reforms in the way the IOE is being managed. The huge internal resources presently at the disposal of IOE need to be mobilized for success of such reforms.

6.2 Transition arrangement to regular operations: IOE is part of a huge university system (TU) which provides enrollment to about 97 percent of all students enrolled in tertiary education in Nepal. In a highly centralizeduniversity system, it is difficult to bring about management and financial reforms in only one institute when it is also part of the same system. However, the progress of IOE demonstrates that it is possible to trigger far reaching reforms when there is good leadership and willingness to initiate reforms. As a result of these reforms, the IOE should be able to become a sustainable system for the following reasons:

* First, the IOE was able to increase substantial cost recovery through sustained efforts and patient negotiations with students and with support from politicians and university officials. Increased resources (from less than five percent of recurrent expenditure to about 50 percent) now allow IOE to increase remuneration of faculty members, improve repair and maintenance, and improve expenditure on instructional materials and consumables.

- Second, the IOE has been the first institution within the TU system to receive much greater autonomy. This came at a time when it was able to improve cost recovery resulting in wider support from the faculty members and department heads whose remuneration are likely to improve and who now have greater access to resources. TU is now making necessary arrangements to provide block grant financing to IOE (among other institutions and campuses) to provide further autonomy.

* Third, the IOE has been able to establish some important institutional arrangements (manpower development unit, facilities managementunit, industrial liaison officers, etc.) to strengthen its management capacity.

* Finally, the IOE also has developed a 20-year strategic plan with priorities and strategies to develop into a sustainable and strong teaching and research institution.

7. Bank and Borrower Performance Bank 7.] Lending: Although the Bank was generally effective in project preparation, the Banks assessment of the level of preparedness of the project prior to Negotiations was overly optimistic, and as a result project start-up was much slower than anticipated. However, when IOE was able to substantially

- 13- improve project implementation towards the second half, it took only a short time to realize that some of the early delays were largely an outcome of external and internal contingencies,which were difficult to anticipate and assess prior to its occurrence.

7.2 Supervision: During the early period of sluggish project implementation, technical support from the Bank became somehow minimal. Had the Bank been able to provide targeted support in conflict resolution and procurement during the early stages, the disagreement over the issue of selecting the design consultant could have been resolved with less delays. The Bank personnel responsible for supervision changed in short intervals, which also may have had some effect on the project.

The then centralized decision-makingof IDA in project management (first half of the project) led to a longer processing time for procurement and disbursement-related issues thereby contributing to implementation delays. Subsequent decentralized decision-makingpolicies adopted by the Bank midway through the project greatly helped to accelerate implementation in later years.

7.3 Overall Bankperformance. The earlier delays were a combination of several factors. Project implementationbegan to pick up well midway into the project. The Bank was able to maintain a very good relationship with the Borrower and donors (co-financiers), which helped to expedite project implementation in different formns.Since the Bank made it a point to carry out supervision every six months and the project provided comprehensive reporting, including progress on benchmarks during each mission, it was possible to identify all bottlenecks on tine and was possible to resolve any outstanding issuesjointly. This helped to expedite implementationsignificantly. Finally, the Bank's decision to grant two extensions of one year each came at a most crucial time without which the project would probably have been declared unsuccessful.

Borrower 7.4 Preparation: Project preparation was lengthy but the IOE presented its Ten-Year Development Plan. Negotiations had to be carried out to arrive at a cost-effective design that would meet Government needs. The IOE, with help from CIDA, developed an economical alternative with focus on more efficient use and expansion of existing capacity. This was followed by preparation of a feasibility study which was also scaled down to arrive at a more affordable and economical design. Thus, through several iterations, the borrower was able to negotiate a good design.

7.5 Government implementation performance: The Government was generally very supportive of the project. Midway into the project, the Ministry of Finance increased its budgetary allocation to IOE maintenance from around NRs. 150,000 annually to around NRs. 1.5 mnillion.The MOF was also instrumental in resolving problems relating to funds flow and currency adjustments pertaining to payments. But the Government policy regarding the transfer of diploma programs midway through the project and the delay in articulating the policy, created considerable uncertainty for a long period of time (around three years) and led to considerable delays in the implementationof diploma component.

- 14 - 7.6 Implementing Agency: The integration of the PIU with the IOE had many benefits in terms of ensuring linkages between project activities and inputs and the IOE's operations. But this relationship also had disadvantages in that initially there was difficulty in attracting and retaining good staff to the PIU from the IOE. Most PIU staff were not full time (as most retained some teaching responsibilities), and this prevented the PIU from consideringmore effective implementationstrategies that were inconsistent or considered inappropriate by the IOE. Project monitoring remained less than satisfactory throughout the project. However, as it became clear that the project was in serious danger of not being completed, changes in PIU staffing and strong leadership resulted in considerable improvement in project management and speed of implementatiorL

The overall financial managementof the project was not entirely satisfactory. The project had a very weak monitoring system with respect to financial transactions. Due to inadequate contract monitoring, payments to the parties were often delayed. Accounts team often were unable to submit withdrawal applicationsin a timely manner due to delayed submission of supporting documents by the technical team to the accounts unit. The accounts unit was also not proactive to alert the management about the need to improve the financial management. During the last year of the project, IDA supervision missions helped improve the accounting system. The project recruited a qualified accounting consultant to project's accounting system. On average, audit reports were submitted 10 to 12 months' after the end of the fiscal year. The audit report for FY1998/99 has not yet been received.

7.7 Overall Borrower performance: The project benefited from continuity in the IOE senior management in terms of their familiarity and support for the project design and objectives. Though there were five different Deans of the IOE from project preparationthrough completion, all of them had been directly involved in the early planning stages of the project and all maintained strong commitment and support for the project objectives and activities. Despite serious implementationdelays during the first half of the project, some of which were beyond the control of the borrower, the borrower was not only able to improve implementationsignificantly but exceeded achievements in some areas. In the final analysis, the borrower demonstrated satisfactoryperformance in bringing this project to a successful closure.

8. Lessons Learned 8.1 The EEP benefited from proper coordination among the co-financiers. The IDA Credit combined with CIDA and SDC grants furnished a greater probability of achieving targets of the project due to the availability of wider support, financial flexibilityand extemal technical assistance. This reinforces the need for combining credit with grant assistance, and demonstrates the value of good donor coordination.

8.2 The decision to alter the project design, consistent with the recommendations of the National Education Commission 2049 (1991), without an in-depth analysis of the implications after three years into implementation caused serious delays in project implementation. It was, therefore, critical to carry out in-depth institutional analyses before making what was a major policy shift in the middle of a project.

- 15- 8.3 Stability in the leadership of the recipient organization and in the staffing of the PIU had crucial implications on project implementation. The project was delayed partly due to untimely changes in key project staff. The EEP implementationalso suffered due to an insufficient attempt to improve and coordinate procurement and particularly financial management. Although there were improvements in later years, much valuable time was lost and the project would not have been able to accomplish all its objectives without a two year extension. To improve the financial and procurement management of future projects it is suggested that systematic training is provided to all relevant staff of projects, and an effective coordination mechanism be established between technical and finance teams to ensure good monitoring of accounting transactions.

Significant delays were experienced in the flow of funds from the Government to the University and from the University to IOE. In order to avoid these delays, the Ministry of Finance should directly allocate the budget to the Project as it does with other projects. This will reduce one layer of bureaucracy and will have a positive impact on timely consolidation and reconciliation of accounts, and timely completion of audit reports.

8.4 The supervision skills in procurement and conflict resolution specified at the project design stage were inadequate, requiring additional expertise and resources. Without such targeted inputs, implementation delays could have persisted even longer.

8.5 With the decentralized supervision policy adopted by IDA, expeditious support in procurement and disbursement, and rigorous technical support to expedite implementation became possible. Such support is critical for a project like EEP, which required deeper understanding of the political economy of implementation.

8.6 Substantial cost recovery amidst a difficult environment demonstratesthat such reform is possible when there is strong leadership, willingness to engage in serious negotiations with key stakeholders (in this case mostly students and politicians) and good support from the Government and TU management. This experience could greatly benefit other institutes and faculties of TU in terms of reorienting subsidies,mobilizing more resources and improving organization and management critical for improving the quality of education.

8.7 The achievements of EEP have been possible due to sustained borrower and donor efforts over a long period. This indicates that building an institution of a large magnitude, often under difficult circumstances, consumes time and requires a long-term perspective and involvement. It took over two decades, and a continuous investment of efforts and resources under three IDA projects to evolve IOE to a stage where it stands now giving much greater confidence that achievement made thus far is likely to be sustained.

9. Partner Comments (a) Borrower/implementing agency: The Borrower,after reviewing the ImplementationCompletion Report (ICR), had minorcomments. These conmmentswere incorporatedin this ICR and the full text of thosecomments are includedas part of the Borrower'sICR, which is presentedin Annex8.

- 16- (b) Cofinanciers: SDC's comments:

These refer to the last 4 years of collaboration (1996-1999).

SDC agrees with the performnancerating of the project. In general, the results of the project are promising, demonstrating that they can lead to a sustainable insitution with the understanding that: * there is stability in the leadership; * the promised block grants are transfered to IOE; * the financial management improves; and * the motivation, the commitment and the accountabilityof the faculty members are raised.

Until there is full conmmitmentby teachers, instructors and faculty members, it will be difficult to make the IOE a sustainable institution. Despite these promising results, it has to be underlined that the (high) satisfactory performance is mainly due to the two-year extension of the project. Two issues regarding sustainability are always critical: (i) maintenance that has been carried out with project funds; and (ii) establishment of functional linkages with industry.

Collaboration WB-SDC SDC has appreciated the good working relationship with the WB Task Manager and the members of the different review missions. SDC was always informed and included in the missions taking place. Informal discussions with the WB Task Manager took place when needed. Nevertheless, the influence of SDC in the steering of the project was rather small, even though people with the required qualification were available in SDC's Coordination Office.

* A bilateral donor in a co-financed project has little influence for steering the project.

Swiss Funds flow The procedures regarding the Swiss funds flow were rather complicated (Project Implementation Unit PIU - World Bank Nepal - World Bank Washington - PIU). Changes made in Washington were not always shared with the PIU, especially when the amount reimbursed was less than asked; clear indications and justifications were often missing. The PIU then came to SDC asking for explanations.

* Improve and strengthen the information flow from WB-HQ back to the project.

- 17 - Reduction of SDC's commitment SDC's portion of the financing had to be scaled down when an extension of two years was agreed. The extension became necessary due to the unsatisfactory progress of the project during the early years of implementation. SDC was facing severe budget constraints due to the difficult situation of the Swiss federal budget and therefore had to adjust its financial planning. As no funds were planned for 1998/99for this project, it was not possible for SDC to support the new request in a better way.

* Be more realistic regarding the time frame while planning such huge projects. There will always be factors either outside or subject to the control of the government and implementingagency - that will affect the implementationand control of a project.

Transfer Diploma Programme SDC played a role in the anticipated transfer of the diploma courses to CTEVT. At that time, CTEVT was a very young institution that was not able to fulfil all the expectations and tasks demanded of it. Knowing CTEVT and its organisational and managerial qualities, it was certainly the wrong moment to push the Government for such a policy decision without carrying out an independent analysis of the implications. We (SDC) are still convinced that the university should not deliver technician level training. And if it is likely that degree programmes may squeeze the diploma programmes, the issue has to be re-discussed.

* Once the objectives are set for a phase, the parties should stick to them before entering into discussions regarding institutional changes. _ Avoid losing valuable time and delaying the implementationprocess.

The full text of SDC's comments is presented in Annex 9.

CIDA's Comments:

Delays in project implementationin Nepal, usually caused by political developmentsand by administrative problems internal to IOE and Tribhuvan University prevented certain assistance to be completed as originally planned. Project implementationplans were reviewed and revised in consultation with the parties concerned on a regular basis. New initiatives were introduced where needed. Thus three special training programs were implemented and two workshops were conducted that were not included in the original Project Management Plan. All five degree programs are now in operation at IOE's Pulchowk campus.

Cooperation and active support from IOE, the Consortium, World Bank and SDC have enabled the CIDA funded NEEP to meet its principal objectives.

The full text of CIDA's comments is presented in Annex 10. (c) Otherpartners (NGOs/privatesector):

- 18 - 10. Additional Information

- 19- Annex 1. Key Performance Indicators/Log Frame Matrix

Outcome / Impact Indicators:

1. Enhancedcapacity to substantiallymeet Yes 1. Actualachievement: the demandsfor techniciansand engineers * from 1370 to 1968(will reach2304 in Nepal: whenfull enrollmentin two years)students * to increaseenrollment of technicians enrolledin diplomaprograms (enrollfrom 1370 to 1700 * from 360to 1109 (will reach1632 when * to increaseenrollment of engineering full enrollmentin threeyears) students studentsfrom 320to 920 enrolledin degreeprograms • to enroll 10%female students ^ 12.5%female students enrolled * to introducefour new degreeprograms * five new degree,four new Mastersand in engineering Ph.D.programs started * of the totalenrollment, 345 are full fee- payingstudents.

2. Sustainabtilityof facilites andtheir optimal SAR projection 2. Actualachievement: use: * facilitiesmaintenance units established * establishfacilities maintenance units in all campuses lab utilizabonin degreeprograms to * lab utilizationin degreearound 40% and 65%and in diplomaprograms to 80% in diplomaprogram to 64% * classroomutilization in degreeprograms * classroomutilization in degreeprograms to 80%and in diplomato 80% to 61% and in diplomato 79% * faculty- studentratio increasedto 1:10 * faculty- studentratio stands at 1:5.1in from 1:5.6 withteaching loads of 14 degreeprograms but expected to reach1:7 hrs/weekfor lecturersand above and 18 oncefull enrollmentis reachedand 1:9in hrs/weekfor instructors diplomaprograms. The averageteaching load has beenbrought down to 12 hrs/week for all facultymembers as appliedacross the universitysystem. . goingbeyond, cost recoverylevel increasedto 50 percentof recurrent expenditurefrom lessthan 5 percent, dedicatedfunding to maintenance established,more funds allocatedto maintenancefrom HMGN,utilization of inputsand facilitiesimproved.

3. Improvedquality of technicianand SAR projection 3. Actualachievement: engineeringprograms: * introducesingle entrancetest * singleentrance test introducedwhich improveand strengthenexamination has raisedadmission standard: about 18% providestaff training applicantsare admittedto degreeand 17% developnew curriculafor new degree applicantsto diplomaprograms programsand revisediploma curricula * physicalcapacity enhanced and result * enhancephysical leaming environment announcedwithin fixed schedule by providingand equipping new classrooms, * 97 teachingstaff and 7 adminsitrative laboratories,libraries and resourcecenter staff trainedunder CIDAfellowship, 222 teachingstaff and 19 adminstrativestaff trainedunder SDC fellowship * all diplomacurricula revised, new curriculafor five new degreeprograms developedand implemented;curriculum for civil engineeringrevised * all laboratoryequipment for degreeand diplomaprograms procured; textbooks and referencematerials procured; 205 course andlab manualsdeveloped; computers and instructionalequipment procured MIOEITU is rankedas one of the top universitiesof the regionby AIT, Bangkok

- 20 - 4. Increasedinstitutional capacity and Yes 4. * ExecutiveCommittee and Management improvedmanagement with improvedand and DevelopmentCouncil formed, and moreefficient decision making/planning at by-lawsprepared to strengthenmanagement IOE: capacityas part of greaterautonomy * appointthree associate deans for providedto IOE by TU centralmanagement degree,diploma and administration * two assistantdeans appointed for t establishmanpower development unit diplomaand academic administration * establishMIS * ManpowerDevelopment Unit establishedand stafftraining initiated * MISestablished and dedicated intemet accessestablished * IndustrialCooperation Board formed * institutionallinkages with various intemationalinstitutions established.

This projectwas retrofittedaround 1996/97with outcomeindicators using logframe.

Output Indicators: Inidbato - . - .Pjh Pl_d*nWiPSR ~mI*t...... -t-Esb*-.- Constructclassrooms, resource centers, SAR projection Over80% construction completed due to labs,hostels for degreeand diploma adjustmentsmade during early partof the programsand renovatefacilities projectdue to diplomatransfer from Pulchowkcampus and renovationahieved beyondthe target. Procureequipment worth US$7.0 million Yes Equipmentworth over US$11.0 million procured. Provide173.5 staff-years of fellowship Yes 193 staff-yearsof fellowshipprovided and manymore staff received training. About 12,000books procured for degreeand Yes About24,728 books procured for degreeand 11,300for diplomaprograms 13,100books for diplomaprograms.

Endof project

-21 - Annex 2. Project Costs and Financing

ProjectCosts by Coponent(US$million)

Appraisal estimate (US$M) Actual (US$M) Components Local Foreign Total Local Foreign Total A. FACILITIES DEVELOPMENT 1. Degree, Pulchowk 3.1 5.4 8.4 4.1 7.1 11.2 2. Certificate, Pulchowk 0.4 1.0 1.4 0.5 1.3 1.8 3. Certificate, Thapathali 0.7 1.3 2.0 0.9 1.7 2.6 4. Certificate, Pokhara 0.9 1.1 2.0 1.2 1.4 2.6 Sub-total 5.1 8.7 13.8 6.7 11.6 18.3 B. STAFF AND CURRICULUM DEVELOPMENT 1. Degree, Pulchowk 0.5 4.1 4.5 0.6 5.0 5.5 2. Certificate, Pulchowk 0.4 0.9 1.3 0.5 1.1 1.6 3. Certificate, Thapathali 0.1 0.2 0.4 0.1 0.3 0.4 4. Certificate, Pokhara 0.3 0.4 0.7 0.4 0.5 0.9 Sub-total 1.2 5.6 6.9 1.5 6.9 8.5 C. MANAGEMENT DEVELOPMENT 1. Degree, Pulchowk 0.4 0.4 0.8 0.2 0.3 0.5 2 Certificate, Thapathali 0.0 0.0 0.1 0.0 0.0 0.0 3. Certificate, Pokhara 0.0 0.1 0.1 0.0 0.0 0.0 Sub-total 0.4 0.5 0.9 0.2 0.3 0.5

Baseline cost 6.7 14.8 21.5 8.5 18.8 27.3

Contingencies: Physical 0.6 1.2 1.8 - - - Price increase 0.9 1.7 2.7 - - - Sub-total 1.5 3.0 4.5 0.0 0.0 0.0

TOTAL PROJECT COSTS 8.2 17.8 26.0 8,5 18.8 27.3

Source: Engineering Education Project, Staff Appraisal Report (May 26, 1989); Institute of Engineering (IOE). Difference between actual and SAR estimate partly due to currency fluctuations. Note: Differences between SAR estimates and actual due in large measure to currency fluctuations over time (SDR vis-a-vis the US dollar and the Nepali Rupee).

- 22 - ProjectCosts by Procurement Arrangements(Appraisal Estimate) (US$ millionequivalent)

1. Works 4.21 2.80 0.00 0.00 7.01 (0.00) (0.00) (0.00) (0.00) (0.00) 2. Goods 8.70 1.63 0.00 0.00 10.33 (8.70) (1.35) (0.00) (0.00) (10.05) 3. Services 0.00 0.35 4.24 0.00 4.59 (0.00) (0.00) (1.03) (0.00) (1.03) 4. Miscellaneous 0.00 0.00 3.31 0.00 3.31 (Fellowship) (0.00) (0.00) (0.00) (20.00 (0.00) 5. Miscellaneous 0.00 0.00 0.00 0.74 0.74 (0.00) (0.00) (0.00) (0.32) (0.32) 6. Miscellaneous 0.00 0.00 0.00 0.00 0.00

_(0.00) (0.00) (0.00) (0.00) (0.00) Total 12.91 4.78 7.55 0.74 25.98 (8.70) (1.35) (1.03) (0.32) (11.40)

ProjectCosts by ProcurementArrangements (Actual/Latest Estimate) (US$ million equivalent)

1. Works 3.25 2.33 0.05 0.00 5.63 (0.00) (0.00) (0.00) (0.00) (0.00) 2. Goods 10.88 2.01 0.00 0.00 12.89 (9.94) (1.43) (0.00) 0.00 (11.37) 3. Services 0.00 0.00 1.81 0.00 1.81 (0.00) (0.00) (0.1 1) (0.00) (0.1 1 4. Miscellaneous 0.00 0.00 5.76 0.00 5.76 (Fellowship) (0.00) (0.00) (0.00) (0.00) 5. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) 6. Miscellaneous 0.00 0.00 0.00 1.22 1.22 (0.00) (0.00) (0.00) (0.42) (0.42) Total 14.13 4.34 7.62 1.22 27.31 (9.94) (1.43) (0.11) (0.42) (11.90)

" Figures in parenthesis are the amounts to be financed by the IDA Credit. All costs include contingencies. 21Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local govemment units.

- 23- Project Financing(US$ million) Appraisal estimate Actual /a Local Foreign Local Foreign Source Costs Costs Total Costs Costs Total IDA Furniture 0.6 0.4 1.0 0.2 0.0 0.2 Local Training 0.8 - 0.8 0.0 - 0.0 Equipment 0.8 6.8 7.6 1.1 9.5 10.6 Books 0.1 1.3 1.4 0.1 0.4 0.5 Technical Assistance Local Specialists 0.2 - 0.2 0.1 - 0.1 Sub-total 0.2 0.0 0.2 0.1 0.0 0.1 Consumable Materials 0.1 0.0 0.1 0.1 0.0 0.1 Incremental Expenditure 0.3 - 0.3 0.4 - 0.4 Subtotal IDA 2.9 8.5 11.4 2.0 9.9 11.9 SDC Civil works 3.4 2.2 5.6 2.3 1.9 4.2 Professional Fees 0.5 - 0.5 0.1 0.2 0.2 International Fellowships - 0.2 0.2 - 0.0 0.0 Regional Fellowships - 1.1 1.1 - 2.5 2.5 Foreign Specialists - 1.1 1.1 0.3 0.3 Equipment 0.0 0.0 0.0 0.1 0.9 1.1 Subtotal SDC 3.9 4.7 8.5 2.5 5.9 8.3

CIDA (excl. overhead and admin costs) International Fellowships - 2.0 2.0 - 3.2 3.2 Foreign Specialists - 2.0 2.0 - 1.4 1.4 Subtotal CIDA 0.0 4.0 4.0 _ 0.0 4.6 4.6

HMG Nepal Civil Works 0.8 0.5 1.3 1.2 0.0 1.2 Furniture 0.0 0.0 0.1 0.1 0.0 0.1 Equipment 0.0 0.2 0.2 0.3 0.0 0.3 Consumable materials 0.1 0.0 0.1 0.0 0.0 0.0 Incremental Expenditure 0.4 - 0.4 0.8 0.0 0.8 Subtotal HMGN 1.3 0.7 2.1 2.5 0.0 2.5

Total project financing 8.1 17.8 26.0 6.9 20.4 27.3

Source: Engineering Education Project, Staff Appraisal Report (May 26, 1989); IOE. Notes: (a) Average Exchange rate for each year is used to translate expenditures of each year. (b) Provisional expenditure of FY1999/00. (c) CIDA financing is reported as per University of Calgary Grantees statement of Expenditure No 31. (d) Difference in total cost for SAR estimates and actual partly due to exchange rate fluctuations.

- 24 - Annex 3: Economic Costs and Benefits Not applicable.

- 25 - Annex 4. Bank Inputs (a)Missions: Stageof ProjectCycle No.,of Personsand specialty Performane L (e:. 2Econfomist$s I: FMS, etc.) lmpliementatin Development Month/Year Count Specialty Progress ^ bjective Identification/Preparation 05/1987 5 Educator,Economist, Architect, ManagementSpecialist

Appraisal/Negotiation 9/1988 5 Educator,Economist, Architect 05/1989 3 Educator,Legal Counsel, DisbursementOfficer

Supervision 06/1990 1 Tech.Edu. Specialist HS HS 02/1991 1 Tech. Edu. Specialist S HS 06/1991 1 Sr. InformaticSpecialist S HS 10/1991 1 Tech. Edu. Specialist S HS 04/1992 1 Educator U S 12/1992 2 Educator,Architect U S 05/1993 2 Educator,Architect U S 11/1993 2 Educator,Architect S S 05/1994 2 Educator,Architect S S 02/1995 3 Educators,Architect S S 11/1995 2 Educator,Architect U U 04/1996 2 Educator,Architect U U 11/1996 2 Educator,Architect S S 06/1997 4 Educator,Fin. Mgt. Analyst, S S Procur.Specialist and Architect 11/1997 3 Educators,Architect S S 05/1998 5 Educators,Procur. Specialist, S S Architectand Consultant 012/1998 7 Educators, Architect,Procr. S S Specialist,Disb. Officer and Consultant 07/1999 5 Educators,Procurement S S Specialist,Fin. Mgt. Analystand Consultant

ICR 12/1999 4 Educators,Architect and S S Consultant

-26 - (b) Staff:

Stageof ProjectCycle Actual/LatestEstimate No. Staffweeks US$ (,000) Identification/Preparation 36.0 99.0 Appraisal/Negotiation 62.0 170.5 Supervision 218.6 550.2 ICR T-15.0 48.0 Total 331.6 867.7 US$ amounts for earlier years (FY88-90) are estimates.

-27 - Annex 5. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial,M=Modest, N=Negligible, NA=Not Applicable) Rating N Macro policies O H OSUOM O N * NA O Sector Policies OH *SUOM ON O NA N Physical O H *SUOM O N O NA N Financial * H OSUOM O N O NA • Institutional Development O H * SU O M O N 0 NA N Environmental O H OSUOM O N * NA

Social O Poverty Reduction O H OSUOM O N * NA O Gender O H *SUOM O N O NA E Other (Please specify) O Private sector development 0 H O SU O M 0 N 0 NA N Public sector management 0 H O SU O M 0 N 0 NA O Other (Please specify)

- 28 - Annex 6. Ratings of Bank and Borrower Performance (HS=HighlySatisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)

6.1 Bank performance Rating

[ Lending OHS *S OU OHU N Supervision OHS OS OU OHU Z Overall OHS OS O U O HU

6.2 Borrowerperformance Rating

X Preparation O HS * S O u O HU 2 Government implementation performance 0 HS 0 S 0 U 0 HU Z Implementation agency performance O HS s O U O HU N Overall OHS OS O U O HU

-29 - Annex 7. List of Supporting Documents Engineering Education Project. Progress Reports prepared for various supervision missions: 1995 - 1999.

Institute of Engineering. Strategic Implementation Plan and Working Papers. March 2000

Institute of Engineering. Ten Year Development Plan for Institute of Engineering, 1983.

Kulshrestha, O.P. Sector Overview of Diploma Level Education at the Institute ofEngineering. May 1994

Institute of Engineering. Diploma Program Transfer Plan.1995.

Institute of Engingeering. Proceedings of Workshop on Achieving Excellence in Management and Operation of Institute of Engineering, 1996.

Institute of Engingeering. Academic and Financial Profile of Students.1996.

Institute of Engingeering. Proceeding of Workshop on Sponsored Courses. 1996.

Joshi, Rajendra Dhoj. Technical Education and Vocational Training. Working Paper prepared for the World Bank Education Sector Work. March 2000.

Joshi, Rajendra Dhoj. Tertiary Education. Working Paper prepared for the World Bank Education Sector Work. March 2000.

Kulshrestha et. al. Technician Training Under the Institute of Engineering. 1993.

Mainali, Madhav P. Supplementary Mission Reports: 1998 - 1999.

McEvers, Norman. Manpower Implications of Education and Training Development in the Kingdom of Nepal. The International Development Association. 1983.

Ministry of Education. Report of the National Education Commission. 1992 and 1998.

National Planning Commission. The Ninth Plan. 1997 - 2002.

Berg, Gunnar J., Final Narrative Report for the Nepal Engineering Education Project, Canadian International Development Project # 676/15050, The University of Calgary, June 1997.

Shrestha, Uttarn Narayan. Management Plan for Institute of Engineering. 1989.

World Bank. Reports of various Supervision Missions: 1989 - 1999.

World Bank. Staff Appraisal Report for the Engineering Education Project. 1989.

- 30 - Annex8. Borrower'sICR

A. Project Objective

1. Project Background

The Engineering Education Project (EEP) is the third IDA supported project for the development and capacity expansion of engineering education in Nepal. Apart from IDA credit, the grant contribution from Swiss and Canadian governments and matching contribution from the His Majesty's Government of Nepal were the major sources of financing the EEP.

The EEP was effective from August 1989 and with two years of extension, the project closing date was 31 December 1999.

2. Project Objectives

The primary objective of the EEP was to increasethe supply of engineers and technicians in the country. This primary objective was to be achieved through:

- expansion of the enrollment capacity of the technician training ( diploma courses) from about 1370 to 1700, and that of bachelor's courses from about 360 to 920 through construction, rehabilitation and maintenance of the facilities at three campuses of the IOE; - enhancement of the quality of the education by providing training to the faculty and staff, improved curricula and educational materials: and - strengthening the management capabilities of the IOE by creating positions of 3 associate deans, training of staff, implementingMIS and establishingManpower Development Unit.

B. Achievement of the Project Objectives

BI Capacity Expansion

3. The achievement with regards to the capacity expansions of techniciantraining (diploma programs) exceeded the target set in the DCA by about 13 percent. The present enrollment figure stands at 1920 as against the DCA target of 1700. The steady state enrollment at the diploma programs will reach 2304 within next two years, thus exceeding the target by 35.5%.

4. The enrollment in the six degree programs (five programs as targeted in SAR and the sixth in computer engineering introduced during the project implementationperiod) at present is 1109 against the target of 920. The achievement is over 20 percent of the target. The steady state enrollment figure will be around 1632 within the next three years. The achievement in the steady state will exceed the target by 77%.

5. With some initial support from Norwegian Government, the IOE introduced post - graduate programs in three areas: Urban Planning, Structural Engineering, and Environmental

- 31 - Engineering. The post-graduate program in Water Resources was introduced without any external support. The total enrollment in post- graduate programs is 128. Doctoral programs leading to Ph.D. have also been introduced with IOE's own effort.

B2 Female Enrollment

6. The SAR target of female enrollment to exceed 10 percent was grossly met by enrolling about 12.5 percent of the female students at the IOE programs. However, the percentage of female students admitted in the current intake at Purwanchal campus is only about six percent. One of the possible reasons for low percentage of female student enrollment in Purwanchal Campus could be lack of female dormitory in the campus.

B3 Infrastructure Development

7. Construction of new facilities and renovation/rehabilitationof existing infrastructure in all the campuses are completed. An achievement of 97.5 percent was made in the new construction front. The achievements in renovation front are very impressive and exceed the 200 percent line.

B4 Equipment Procurement

8. Laboratory equipment for degree programs are installed in respective departments and are operational to the extent required by the curricula. Procurement of diploma laboratory equipment is completed and the installation of the equipment is almost completed. The IOE average achievement in equipment procurement is about 141 % as compared to SAR target.

9. The Pulchowk campus is now linked to Internet via its own VSAT. IOE plans to provide Internet connectivity to all of its campuses in near future. The required technical facilities for Internet connectivity in the diploma campuses have been set-up.

B5 Class room and Laboratory Utilization

10. The class room utilization level in all campuses has been improved and in some cases exceeded the target set in SAR. The laboratory facility utilization level in Pulchowk campus remains marginally below the SAR target of 65%. However this level in other diploma campuses is well in line with the SAR target.

B6 Quality of Education

11. The achievements with regards to enhancement of quality of education are also in line with the targets set in SAR. A total of 154.1 staff years of international and regional fellowship programs have been completed. The accomplished fellowship programs included 5 Ph.D., 38 M.. Sc., 15 senior fellows, 67 staff-yearsof technician training, 15 administrative staff training and 90 short-term training. The target for the fellowship was 173.5 study-years. A total of 334 teaching faculty and support staff from the four campuses benefited from the fellowship programs. Out of these total beneficiaries of fellowship program, 325 are with IOE.

- 32 - 12. The curricula for the degree programs were developed jointly by the expatriates from Consortium of Canadian Universities and the IOE faculty. A total of 316 new courses were developed by the joint team. Moreover, beyond the scope of the project, the IOE faculty developed over 100 new courses for Master level programs offered by the IOE.

13. The diploma level curricula were developed (except for Civil and Architecture) by the experts from the ILO and were reviewed and finalized by the respective subject committees of the IOE. The IOE faculty, following inability of the ILO to recruit the concerned subject specialists at intemational level, developed the curricula for Civil and Architecture programs. All the curricula developed so far have been effected.

14. Since the enrollment capacity at the various programs of the IOE has increased considerably, new faculties have been recruited to cater to the increased class loads. With additional recruitment, the IOE average teacher/student ratio now stands at 1:7.6. Though this ratio, at present, is below the targeted value of 1:10 imnprovementcan be expected once the student number increases as the prograrns approach the steady state.

15. The libraries of the campuses are now adequately equipped with new text and reference books. A total of 37,828 bound volumes of text/reference books costing about 22 million rupees has been procured for libraries of the campuses. Moreover, the Curriculum and Instructional Material Development Unit (CIMDU) of the IOE, with financial support from the EEP has produced 104 and 101 course and laboratory manuals for degree and diploma programs respectively.

B7 Research, Development and Consultancy Works

16. With the facilities developed under the EEP, various centers like Continuing Education Division (CED), Center for Energy Studies (CES), Center for Information Technology Studies (CITS), Manpower Development Unit (MDU) have been established and functional at IOE. The Institute of Engineering Consultancy Services (IECS), a separate entity of the IOE, which was made defunct due to its inability to win the design works package of the EEP, is now rejuvenated and actively undertaking consultancy works. Similarly research and development activities have been started at departmental levels of the IOE.

B8 Reputation of the IOE Programs

17. Despite the fact that new universities and private engineering colleges are being established in Nepal, the Institute of Engineering under the Tribhuvan University remains the leading and reputable institution in the country. This is supported by the fact that only about 18% of the aspirant are admitted in the degree programs of the IOE. The admitted percent of the total applicants in diploma programs is only about 17. The single admission test administered by the IOE has earned the reputation to be fair and objective. The quality of delivery in diploma programs is improving. This is indicated by the increasing number of diploma graduates passing the tough entrance test and admitted to the degree level. Similarly, the degree graduates of the

- 33 - IOE are admitted in the post graduate programs of well-known universities abroad and have done well. In fact the performance of the IOE graduates admitted at the Asian Institute of Technology was instrumental to rank the Tribhuvan University in fifth position among the top ten universities of the region.

B9 Compliance to the DCA Covenants

18. All the DCA covenants including the two pertaining to single admission test and passing of prerequisite examinations before continuation into the follow-up courses have been complied.

B10 Improvement of Management Capabilities of the IOE

19. The objective to improve the management capabilities of the IOE have also been achieved to the extent targeted in the SAR. The office of the Dean have been strengthened by appointing two additional assistant Dean to look after the diploma programs (Assistant Dean- Diploma programs) and the general academic administration of the IOE (Assistant Dean- Academic administration and Planning). With these additional appointrnents, the total number of assistant Deans now is four. The Manpower Development Unit (MDU) established within the Dean's office is now operational and headed by the senior faculty. The MDU has organized several training programs for the administrative staff of the IOE in the field of general administration practices and computer education.

20. In accordance with the Tribhuvan University Decentralization Rules, 1998, the IOE now exercises greater degree of autonomy, both in academic and administrative matters. The Institute of Engineering Management and Development Council have been formed to formulate plans and policies of the IOE. A five member Implementation Committee, chaired by the Dean, has been constituted to implement the plans and policies of the IOE. The by-laws outlining the organizational structure of the IOE and defining the roles and responsibilities of its members have been prepared and enacted.

21. The Management Information System (MIS) has been developed and is being implemented. The positive effect of MIS in improving management capabilities is yet to be assessed.

22. The Industrial Advisory Board and Industrial Linkage Units have been established and functional in each of the IOE campuses.

23. Maintenance of the facilities provided by the project was the major challenge for the IOE for sustainability of the programs offered. To address the maintenance problems, Maintenance Units (MU) have been set-up and functional in each of the IOE campuses. Adequate budgetary provision has been made for the maintenance from the proceeds generated through internal resource mobilization efforts.

- 34 - Bll Unanticipated Project Achievements

24. The implementation of the project has produced some unanticipated positive results that were not foreseen at the project appraisal. These unanticipated results are: * The enrollment capacity of the IOE has exceeded the SAR target significantly thus offering more Nepalese a chance to get higher engineering education at affordable cost within Nepal. * To prepare the nation for the emerging information technology age, the IOE introduced new degree program in Computer Engineering. * The IOE started offering degree program in civil engineering at Paschimanchal Campus. IOE plans to offer new degree program in Agriculture Engineering at Purwanchal Campus and Geomatics Engineering at Pulchowk Campus. * Beyond the scope of the project, IOE has introduced post-graduate programs in four areas of specialization and is preparing to offer in other areas like Renewable Energy Engineering, Electrical Engineering, Electronics Engineering, Soil Mechanics etc. Plans are underway to construct a Zero Energy House and Energy Park at the IOE. * The IOE has initiated serious plans to generate revenue for sustainable development of the programs initiated through the project. By introducing cost recovery fee scheme, campus development fund, campus maintenance fund, hostel maintenance fund and expanding research and consultancy activities at various levels, IOE was able to generate about 50% of the total operating budget granted by the university. Major bulk of the revenue generated internally would go to the maintenance of the existing facilities and procurement of new equipment/books. A part of the proceeds is also being used to provide additional incentives for the key position holders, faculty and staff. IOE has developed formal linkages with well known institutions in India, Bangladesh, USA, Canada, Japan, Norway, Thailand and Indonesia. TThe 20-years strategic planning exercise to develop the vision for the future and to formulate strategic plan of action is in final stage.

C. Major Factors Affecting Project Implementation

25 The implementation of the project could not be completed within the originally agreed time period of eight years and subsequently the implementation period was extended for two years.

26 The initial implementation schedule envisaged start of all new degree programs by mid of 1992. By this time all the construction works, laboratory set-ups and curriculum development were supposed to be completed. Unfortunately nothing significant (except placement of few candidates in higher studies in Canadian Universities and preliminary works on degree curriculum) could happen till the targeted date of start of all new degree programs. Almost all of these four years were spent on resolving the disagreement between the PIU and the IDA on selection of design consultant. During this critical stage of project implementation, none of the parties, the PIU and the IDA, were serious to resolve the prolonged disagreement. Subsequently the implementation suffered substantially. Finally in October 1992, the agreement with the design consultant could be signed. Notwithstanding the unforeseen delays in implementation, the IOE

- 35 - with strong support and encouragement from the campus management and the departments, especially from the then Heads of Departmentsof Electronics and Electrical Engineering started degree programs in Electronics and Electrical Engineering in September 1994. The degree programs in Mechanical Engineering and Architecture were started in 1995.

27 Another delay encountered in implementingthe project was the jeopardy created during and after the popular democratic movement of 1990. For about a total of six months during and after the movement, the activities of the PIU were slacked down due to organizational uncertainties in the decision making level. If the design consultant were appointed as scheduled, the effect of this movement in project implementationwould have been negligible.

28 The major delay in implementingthe diploma component of the project was the result of the dilemma created by the uncertainties regarding the future umbrella of the diploma programs offered by the IOE. In mid 1992, the National Education Commissionrecommended to phase-out, by 2000 AD, the 10+2(3)levels of education from Tribhuvan University.Following this recommendation, all the development activities related to the diploma programs were slacked down until the policy decision was made regarding the future umbrella of the diploma programs offered by IOE.

29 Among others, frequent change of personnel directly responsible for project implementation (project coordinator of the PIU and the IDA task manager) is also, to some extent, responsible for delays in implementation.

D. Project Sustainability

30 The Institute of Engineering has established itself as a premier institution of the nation with credible admission and examinationprocess; high quality physical facilities and well equipped laboratories comparable to the reputed institution of the region or elsewhere. With these set-up there is a high probability that the achievements of the project will be sustained. Furthermore being the only engineering institution developed from the state support, it is unlikely that the government will let it go down.

31 Sustainabilityof any undertaking largely depends upon the resources available to maintain it. The IOE has taken serious measures to mobilize its internal resources to augment the grant fund available from the government. In the current FY, the amount generated by the IOE by mobilizing its internal resources amounts to about 50% of the recurrent expenses provided by the government. Initiatives are being taken to increase this percentage to 70%.

32 Among the four campuses of the IOE, the Pulchowk campus, being the central campus offering graduate and post-graduate level courses, is in better position in terms of internal revenue generation. This is because the major source of internal revenue in Pulchowk campus is the fees from the students enrolled under cost-recovery fee scheme.

33 Measures to increase revenue in diploma campuses are being taken. The Paschimanchal campus now offer degree courses in civil engineering, and have introduced cost recovery fee

- 36 - structures in civil and electrical diploma programs. Similarly plan is underway to introduce Agriculture engineering degree program at Purwanchal campus where cost recovery fee structure have already been introduced in civil and electrical engineering diploma courses.

34 Faculty commitment and motivation are another critical factors that have to be related to the sustainability of the educational institution. One of the major weaknesses within the IOE is low level of motivation and commitment of the faculty and staff and continuing staff attrition. The low level of motivation and commitment is primarily a result of poor salary structure and lack of prospects of research and professional works from within the institute. The IOB management has to take this issue seriously and do needful to retain the qualified faculty and recruit capable ones.

E. Bank Performance

35 In early periods of project implementation,when the disagreement between IDA and PIU in the selection of design consultants was at the peak, the bank did not alert the concerned authorities about the consequences of the delay. Though the overall delay in project implementationwas primarily due to inability of the PIU to appoint the design consultant within the prescribed period, the bank decided to down rate the project as a problem project only in 1992 when the major activities were underway. Were such measures taken in early days, the delays could have been minimized.

36 At the periods of the implementationwhen the project was monitored directly through the bank's headquarters, obtaining no-objections and approvals was somewhat time-consuming process. Much slower became the process when the monitoring responsibility was transferred to its office in New Delhi. At a later stage when the Kathmandu office started taking responsibilities, the decision making process became quite fast.

37 With regards to the statements of accounts, the PIU had difficult times in getting disbursement statements from the bank, specially with regards to the Swiss contribution.

38 The guidance and support rendered by the bank staff during the final years of the project implementationwas praiseworthy. During this period the PIU and the bank were in unison and highly dedicated towards the successful completion of the project.

F. Borrower Performance

39. The PIU could not gain required momentum in the initial stage of the project implementation,basically due to inadequate staffing and unfavorable working environment created by prolonged disagreement in selection of design consultant and uncertainties evolved during popular political movement.

40. During the second half of the project implementation,the PIU was adequately staffed and received ample support from the bank, Tribhuvan University management and the govermnent. With these supports from all entities, the PIU could gain momentum to achieve the project objectives.

- 37 - 41. With respect to the CIDA assisted component of the project, the PIU was able to accomplish most of the targeted objectives within the two years extended project period (the initial completion year of 1995 was extended to 1997)without any major complications.

G. Lesson Learned

42. The nation greatly benefited from the project by establishing a premier institution in the field of engineering education in the country. The achievement could not have been realized without proper coordination among the co-financiers: IDA, SDC and CIDA. The Institute of Engineering wishes to express its sincere gratitude to these agencies and the government of Nepal for their support and guidance in implementing the project.

43. Successful completion of a project of this scale has raised the confidence and morale of the faculty and staff of the IOE. The IOE is now fully capable of undertaking future projects of similar or larger scale.

44. Proper monitoring and evaluation arrangement is vital for the projects of this scale. The EEP lacked adequate monitoring and evaluation mechanism as such. Although the project document envisaged setting up of appropriate Project Monitoring and Evaluation (PME) scheme, neither the bank, nor the borrower took this issue seriously. As a result many planned activities could not be accomplished in time. However at later stage of project implementationPIU in consultation with IDA developed a set of simple benchmarks / indicators by objective and timeline to monitor progress during each supervision mission.

45. Substantial portion of the project funds was invested on foreign expatriates for the assignments that could have been accomplished by the Nepalese professionals at the same standard or even better. Examples are the curriculum for civil and architecture engineering diploma program developed by the Nepalese professionals at a rather small compensation package. Whereas the project paid relatively handsome amount for the similar assigments for developing diploma curricula for other engineering disciplines. Similarly about half a million dollars of precious project fund (the credit) was spent on the services of intemational procurement consultant though the EEP staff could have done the procurement job independently as they have done for some ICB package of diploma equipment and Internet, Audio-visual, telephone exchange and MIS equipment. It is therefore advisable that in-house capabilities first be assessed thoroughly before finalizing the project documents.

46. The project implementationwas delayed, time and again, due to delays in obtaining budget allocations from the government, primarily because of multi-tier control over the budget release. For the development projects like this one, the budget release procedure should be made easier and less time consuming.

- 38 - Annex9. SDC'sComments

SDC agrees with the performance rating of the project. In general, the results of the project are promising, demonstrating that they can lead to a sustainable institution with the understanding that:

§ there is stability in the leadership; § the promised block grants are transferred to IOE; § the financial management improves; and § the motivation, the commitment and the accountability of the faculty members is raised.

Until there is full commitment by teachers, instructors and faculty members, it will be difficult to make the IOE a sustainable institution.

Despite these promising results, it has to be underlined that the (high) satisfactory performance is mainly due to the two-year extension of the project. Two issues regarding sustainability are always critical, (i) maintenance that has been carried out with project funds, and (ii) establishment of functional linkages with industry.

Detailed questions and remarks: p.5 (ii) Female Enrolment: The reduction in SDC funding was about US$ 1.38 million and not US$ 1.5 million (See also p.10). p.6 (v) Equipment: It would be worthwhile to re-mention the factors that led to the late procurement. p.7 (iv) Admission Standards and Quality of lOE Education: Where is the link between the percentage of admitted students and full-fee paying students? It seems the entry requirements for full-fee paying students are not the same as for other applicants? If this is the case, how can IOE maintain the quality level of its programmes in the long run? p. 15/16 Partner Comments, SDC: To relate SDC's lessons learnt to the World Bank (WB) presentation, we suggest the following modifications in our text:

9.1 SDC has appreciated the good working relationship with the Task Manager of the WB and the members of the different review missions. SDC was always informed and included in the missions taking place. Informal discussions with the WB Task Manager took place when needed. Nevertheless, the influence of SDC in the steering of the project was rather small, even though people with the required qualification were available in SDC's Co-ordination Office.

9.2 The procedures regarding the Swiss funds flow were rather complicated (Project Implementation Unit PIU - World Bank Nepal - World Bank Washington - PII). Changes made in Washington were not always shared with the PIU, especially when the amount reimbursed was less then asked; clear indications and justifications were often missing. The PIU then came to SDC asking for explanations. We would suggest improvement and strengthening of the information flow from World Bank Headquarters

- 39 - to the project.

9.3 SDC's portion of the financing had to be scaled down when an extension of two years was agreed. The extension became necessary due to the unsatisfactory progress of the project during the early years of implementation. SDC itsell was facing severe budget constraints due to the difficult situation of the Swiss federal budget and therefore had to adjust its financial planning. As no funds were planned for :1998199for this project, it was not possible for SDC to support the new request in a better way. Organisations should be more realistic regarding the time frame while planning such a huge project. There will always be factors either outside or subject to the control of the government and implementing agency that will affect the implementationand control of a project.

9.4 SDC played a role in the anticipated transfer of the diploma courses to CTEVT. At that time, CTEVT was a very young institution that was not able to fulfil all the expectations and tasks demanded of it. Knowing CTEVT and its organisational and manageral qualities, it was certainly the wrong moment to push the govermmentfor such a policy decision, without carrying out an independent analysis of the implications. We are still convinced that the university should not delivery technician level training. And if it is likely that degree programmes may squeeze the diploma programmes, the issues has to be re-discussed. But once the objectives are set for a phase, the parties should stick to them before entering into discussions regarding institutional changes. Avoid loosing valuable time and delaying the implementationprocess.

-40 - Annex 10. CIDA's Comments

The Canadian International Development Agency (CIDA) administered Canada's grant to Nepal Engineering Education Project (NEEP). Implementation of the Canadian component was contracted to the University of Calgary through the Division of Intemational Development. The University of Calgary in turn formed a Consortium with University of British Columbia, University of Saskatchewan and University of Manitoba engineering faculties.

Three categories of assistance were included within the CIDA contribution: (i) staff training, (ii) laboratory, curriculum and teaching assistance and (iii) IOE administration, management and accreditation.

1. Staff Training included: § senior fellowships - 12 fellowship were provided; § graduate fellowships; MSc: 21 fellowships and PhD: 4 fellowships were provided; § technician fellowships: a total of 27 fellowships were provided; § librarian fellowships: 2 fellowships were provided; § administration fellowships: 5 fellowships were provided; § new staff training initiatives: Non-degree: 27 training initiatives were completed; Short courses - Nepal: 15 short courses were completed; Management: more than 25 visits to Canada

2. Develop Curricula and Lab Facilities and Assist in Teaching included: § curriculum development and laboratory equipment provision. § three Canadian instructors were provided to assist in teaching.

3. IOE Administration, Management and Accreditation: § 5 Canadian instructors provided assistance in class scheduling § Canadian support provided for IOE Management and Administration and Accreditation.

Delays in project implementation in Nepal, usually caused by political developments and by administrative problems internal to IOE and Tribhuvan University prevented certain assistance to be completed as originally planned. Project implementation plans were reviewed and revised in consultation with the parties concerned on a regular basis. New initiatives were introduced were needed. Thus three special training programs were implemented and two workshops were conducted that were not included in the original Project Management Plan. All five degree programs are now in operation at IOEs Pulchowk Campus.

Cooperation and active support from IOE, the Consortium, World Bank and SNC have enabled the CIDA funded NEEP to meet its principal objectives.

- 41 -