Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Project co-financed from the European Regional development Fund through the OPTA 2007-2013 Advisory Services Agreement on Harmonizing State and EU Funded Projects in Regions Final Report on Evaluation of the Portfolio of Regional Development Investment Projects August 26, 2015 This report corresponds to the deliverable “Final Report on Evaluation of the Portfolio of Regional Development Investment Projects” under component 2 “Advisory services related to the existing portfolio of investment projects in MRDPA” of the Advisory Services Agreement on ”Harmonizing State and EU Funded Projects in Regions” between the Ministry of Regional Development and Public Administration and the International Bank for Reconstruction and Development, signed on May 27, 2014. This report was prepared by a team comprised of Radoslaw Czapski, Antonio Nunez, Marcel Ionescu-Heroiu, Sebastian Burduja, Alina Burlacu, Florian Gaman, Oana Luca, Andrei Stănescu, Alina Armașu, Cristian Postolache, Aurel Rizescu, Catalin Floarea and Madalin Iliescu. The report benefited from thoughtful comments by peer reviewers: Elena Lungu, Adrian Burlacu and Andrei Stancu. The team would like to thank Juan Gaviria, Baher El-Hifnawi and Jean-Francois Marteau for the advice, support, and guidance provided throughout the elaboration of this report. The team would also like to thank the counterparts in the Ministry of Regional Development and Public Administration for the timely feedback, the support offered in the elaboration of this study, and the excellent collaboration throughout. The findings, interpretations, and conclusions expressed in this report do not necessarily reflect the views and position of the Executive Directors of the World Bank, the European Union, or the Government of Romania. 2 i Table of Contents List of Figures.................................................................................................................iv List of Tables..................................................................................................................iv List of Acronyms............................................................................................................. v Executive Summary ........................................................................................................vi Chapter I: Introduction ................................................................................................... 1 Objective and Scope .................................................................................................... 3 Audience.................................................................................................................... 5 Report Structure ......................................................................................................... 6 Chapter II: PNDL Background and Portfolio Assessment ...................................................... 7 The PNDL Program Cycle .............................................................................................. 8 Allocation of PNDL Funds to Counties ........................................................................10 Preparation of Project Proposals and County-Level Prioritization ...................................12 Project Selection, Prioritization, and Contracting by the MRDPA ....................................14 Implementation......................................................................................................15 Post-Implementation ..............................................................................................17 PNDL 2014 Portfolio Assessment ..................................................................................18 By Size ..................................................................................................................19 By Sector ...............................................................................................................20 By Implementation Status (Ongoing vs. New Investments)............................................22 By Geographic Location ...........................................................................................25 Chapter III: Main Challenges related to the Quality of PNDL Projects ...................................27 Overall Project Quality Issues in Romania ......................................................................27 Program Design and Management Deficiencies ...........................................................27 Project Design Challenges ........................................................................................28 Public Procurement Challenges.................................................................................28 Project Implementation Challenges ...........................................................................29 Assessment of PNDL Applications .................................................................................30 Step 1: Should the Project Be Considered for Financing? ..............................................31 Step 2: Is the Project Eligible for EU Financing? ...........................................................32 Step 3: Could the Project Be Financed from the PNDL? .................................................32 Step 4: Is the Project a Priority that Should Be Financed from the PNDL? ........................33 Key Findings from the Screening of a Sample of PNDL Project Proposals.............................33 Cost Analysis of the Assessed PNDL Project Proposals......................................................36 Main Issues Identified During the Assessment Process .....................................................45 Issue #1: Lack of Supporting Documents/Technical Studies ...........................................45 Issue #2: Inadequate/Insufficient Technical Documentation..........................................46 Issue #3: Incorrect Project Budget (Cost Breakdown) ...................................................47 ii Issue #4: Insufficient Cost Breakdown for Main Works .................................................47 Issue #5: Lack of Main Drawings................................................................................48 Issue #6: Noncompliance with Standard Costs.............................................................48 Issue #7: Lack of Documents for Property/ Assets ........................................................49 Issue #8: Missing/Expired/Incomplete Urban Certificate (UC) ........................................49 Issue #9: Local Council Decision Requiring Amendments...............................................49 Chapter IV: Observations and Recommendations for Policy Measures .................................51 1) Refocus PNDL’s Scope and Avoid Overlaps with Other Programs...................................51 2) Improve projects’ technical documentation ................................................................51 3) Build capacity for effectiveness.................................................................................52 4) Design and Roll Out Awareness-Raising Campaigns for Beneficiaries ..............................53 5) Enhance the Project Selection Model.........................................................................53 6) Create a Standard Application System .......................................................................55 7) Introduce Tendering for Technical Documentation with Suspension Clauses ...................55 8) Revise Standard Cost Policies and the Eligible Expenditures Order .................................56 9) Introduce Project Implementation Monitoring ............................................................57 10) Introduce Post-Implementation Monitoring ..............................................................58 Annex 1: Letter of interest..............................................................................................60 Annex 2: Number of projects and allocations by county .....................................................64 Annex 3: Triage Grid for Existent Technical Documentation without a Financing Agreement ..66 Annex 4: Conformity Checklist for Technical Projects .........................................................71 Annex 5: Recommendations for an improved PNDL conformity checklist .............................76 Annex 6: List of screened projects for 2014-2020...............................................................78 Annex 7: Triage results (separate file) ............................................................................ 100 iii List of Figures Figure 1. Proposed scheme for the triage of projects submitted for PNDL financing ..................4 Figure 2. Typical timeline for a new PNDL project .............................................................. 16 Figure 3. PNDL 2014 - distribution of projects by 2014 budgetary allocation .......................... 20 Figure 4. PNDL 2014 allocations have focused mostly on roads and water/wastewater ........... 21 Figure 5. Average PNDL budgetary allocation by sector, 2014 .............................................. 22 Figure 6. The PNDL has continued to fund numerous new projects across most sectors (number of projects, 2014).......................................................................................................... 24 Figure 7. PNDL 2014 – total number of projects by county .................................................