Public Disclosure Authorized Harmonizing STATE- AND EU-FUNDED PROJECTS in Regions | Final Synthesis Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Agreement for Harmonizing State- and EU-funded Final Investment Programs Romania Regional Development Program 2 Synthesis Dated November 26, 2015 Project co-financed from the European Regional Development Fund through the Operational Programme Technical Assistance (OPTA) 2007-2013 Agreement for Advisory Services on Assistance to the Romanian Ministry of Regional Development and Public Administration on Harmonizing State- and EU- funded Projects in Regions Final Synthesis November 26, 2015 Romania Regional Development Program 2 4 Table of Contents Table of Contents ....................................................................................................................................... i List of Figures ............................................................................................................................................ iii List of Tables ............................................................................................................................................. iv List of Boxes .............................................................................................................................................. iv List of Acronyms ........................................................................................................................................ v Sumary ......................................................................................................................................................... vi Context ........................................................................................................................................................ 1 What is this work about? .......................................................................................................... 3 DIAGNOSTIC: What are the main challenges? ............................................................. 5 1 There are major gaps in the coordination of public infrastructure investments in Romania, both across administrative levels and across sectors/jurisdictions ........................................................................... 6 2 State-budget-funded programs lack strategic focus, rigorous selection criteria, and effective monitoring and evaluation .................................................................................................................................... 9 3 The documentation of many projects financed by the MRDPA through the PNDL is of poor quality ..... 13 4 The designs currently deployed for public infrastructure projects are outdated and inefficient ............. 15 5 There are significant challenges facing Romania’s housing sector: exposure to risks, quality-related, and institutional ........................................................................................................................................ 17 RECOmmENDATIONS: What are the proposed strategies and action steps? ... 21 1a Build an enabling environment that supports coordination through improved trust, accountability, administrative capacity, and information systems that talk to each other ............................................ 22 1b Improve the quality of strategies by establishing and empowering a Strategy Unit in the Prime Minister’s Chancellery .......................................................................................................................... 22 1c Harmonize state-budget and EU-funded investment programs across the entire investment cycle ........ 23 1d Share good practices of project-level coordination and build the capacity of local authorities across the country ......................................................................................................................................... 26 2a Design and adopt objective and transparent selection criteria for state-budget-funded programs to maximize development impact ............................................................................................................. 26 2b Support the adoption of actual multi-year budgeting ...................................................................... 33 2c Assess, pilot, and scale up territorial contracts (TCs) ........................................................................ 36 3a Improve the technical documentation of investment projects financed through state-budget programs .... 37 3b Revise standard cost policies and the Eligible Expenditures Order ..................................................... 38 4 Enhance the design of public infrastructure projects in Romania ......................................................... 40 5 Develop and Adopt a National Housing Strategy ................................................................................ 40 i What next? ........................................................................................................................................ 53 Practical Prioritization of Projects ........................................................................................................ 53 Roadmap for Action ............................................................................................................................ 59 Recent Progress .................................................................................................................................. 61 Key Success Factors ............................................................................................................................ 62 ANNEX 1: Detailed Project Selection Grids and Criteria for PNDL Investments ............. 63 County Roads ...................................................................................................................................... 63 Communal Roads ................................................................................................................................ 65 Water and Wastewater Systems ......................................................................................................... 67 Social Infrastructure ........................................................................................................................... 70 ANNEX 2: Knowledge Exchange and Dissemination Workshops ................................................. 75 ii List of Figures Figure Description Page No. 1 Key quvestions and answers of this technical assistance program 2 2 Key players responsible for the coordination of public investments in Romania 6 3 The need for coordination depends on the value of a proposed investment 7 4 Snapshot of coordination challenges at the level of strategies, programs, and projects 8 5 The process of choosing investments for financing involves multiple steps 11 6 There is little coordination of ROP 2007-2013 and PNDL 2014 county road investments 13 7 Poorly targeted government programs address mainly middle-income households 20 8 There are 4 fundamental elements of an enabling environment for coordination 23 9 Examples of vertical and horizontal coordination mechanisms that could be applied to 23 investment programs in Romania 10 Proposed PNDL allocation by county based on proposed funding criteria 25 11 Two development impact indicators that can be tracked over time 26 12 Proposed PNDL M&E framework 27 13 Proposed framework for the triage and coordination of projects submitted for PNDL financing 30 14 Prioritization of investments in communal roads by locality 31 15 Prioritization of investments in health infrastructure by locality 32 16 Prioritization of investments in educational infrastructure by locality 32 17 Prioritization of investments in cultural infrastructure by locality 32 18 Prioritization of sports infrastructure by locality 33 19 Hypothetical example of how a RON 500 million multiannual appropriation could work in practice 35 20 Variation of road rehabilitation/ modernization price from sample of projects reviewed by the 39 Bank team 21 Functional housing market: Proposed roles of the public and private sectors 41 22 Current and proposed institutional structure for Housing Department at the central level 46 23 Snapshot of existing infrastructure in Covasna County 54 24 Prioritization of county roads in Covasna County 55 25 Prioritization of communal roads infrastructure in Covasna County 55 26 Prioritization of water system investments in Covasna County 56 27 Prioritization of sanitation system investments in Covasna County 56 28 Prioritization of educational infrastructure in Covasna County 57 29 Prioritization of health infrastructure in Covasna County 57 30 Prioritization of cultural infrastructure in Covasna County 58 31 Prioritization of sports infrastructure in Covasna County 58 iii List of Tables Table Description Page No. 1 Summary of current technical assistance 3 2 Synthesis of Romanian norms and regulations related to road engineering 16 3 Synthesis of Romanian standards related to water and wastewater engineering 16 4 Synthesis of Romanian regulations and standards related to earthquake protection 17 5 Proposed PNDL General Process Indicators 27 6 Comparison of PNDL allocations by sector 61 7 A breakdown of PNDL 2015 priority projects 61 8 Prioritization criteria for allocating funding between counties (for county roads) 63 9 Prioritization criteria for county road projects 64 10 Prioritization criteria for allocating funding between