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IFI governance

Background

The World Bank’s project cycle explained

26 July 2004

The World Bank’s public-lending institutions (IDA and IBRD) lend about US$ 15-20 billion annually to 100 countries to Projects ranging from infrastructure, education, health and government financial management. Bank financed projects are conceived and supervised according to a project cycle. Documents produced as part of the project cycle can be valuable sources of information for those interested in monitoring the Bank’s work.

Projects are managed through sector or regional departments and combine financing and advice. Below is an outline of the eight steps of the project cycle, the documents that are produced as part of the process, and how to access them.

1. Overall development strategy

The Bank’s Country Assistance Strategy (CAS) forms the blueprint for its assistance to a country. For low-income countries, the CAS is based on the priorities identified in the Poverty Reduction Strategy Paper. The CAS is supposed to be produced in co-operation with the government and interested stakeholders. It draws heavily on Bank analytical work.

2. Project identification

The borrower and Bank analyse development strategies (e.g. PRSP and CAS) and generate project ideas. The Bank’s economic and sector research is influential at this stage.

After project identification, the Bank country team creates a Project Concept Note (PCN), an internal document of four to five pages. It outlines the project’s basic elements, its proposed objective, likely risks, alternative scenarios to conducting the project, and a likely timetable for the project approval process. The PCN is not available to the public. The Project Information Document (PID) is prepared after an internal Bank review of the PCN and is released to the public. It contains information on the project’s objectives, a brief description and the name of the World Bank Task Manager who is supervising the project.

The Bank prepares the Integrated Safeguards Data Sheet (ISDS) after the project’s first formal review and makes this available publicly. This identifies key issues under the World Bank’s safeguard policies for environmental and social issues, and provides information about how they will be addressed during project preparation.

3. Preparation

This phase is supposed to be country driven. “Technical, institutional, economic, environmental and financial issues facing the project” are studied. If relevant, environmental assessments, indigenous peoples development plans and environmental action plans should be made available to the public. Bank understanding suggests that Poverty and Social Impact Assessments would be conducted at this stage, while civil society observers argue that PSIA should occur in steps 1 and 2.

4. Appraisal

The Bank is solely responsible for project appraisal. Bank staff review the work done during identification and preparation, often spending three to four weeks in the client country. They prepare either Project Appraisal Documents (investment projects) or Program Documents (for adjustment operations) for Bank management and the financial management team assesses the financial aspects of the project. The PID is updated during this phase. These documents are released to the public only after the project is approved.

5. Negotiation and approval

After project appraisal, negotiations between the Bank and the borrower country enter the final phase. Both sides come to an agreement on the terms and conditions of the loan. The documents setting out the Bank’s assessment of the feasibility and justification for the program along with the memorandum of the president and legal documents are then submitted to the Bank’s board for approval. Submission of relevant documents for final clearance by the borrowing government is done at this stage and may involve ratification by a council of ministers or a country’s legislature. Following approval by both parties, the loan agreement is formally signed though it can only be disbursed after any required conditions have been met. The agreement is then made available to the public.

6. Implementation and supervision

Project implementation is the responsibility of the borrowing country, while the Bank is responsible for supervision. After loan approval, the borrowing government, with technical assistance from the Bank, prepares the specifications and evaluates bids for the procurement of project goods and services. The Bank reviews this to ensure compliance with procurement guidelines, following which funds are disbursed. The Bank’s Financial Management Team maintains project financial oversight.

7. Completion

At the end of the loan disbursement period, a completion report (staff self-evaluations) identifying accomplishments, problems, and lessons learned is submitted to the Bank board for information purposes. This document is now available to the public.

8. Evaluation

The Operations Evaluation Department (OED) conducts an audit to measure project outcomes against the original objectives. The audit reviews the project completion report and a separate report is produced. Both reports are submitted to the executive directors and the borrower. These are not released to the public.

Project performance assessment reports – produced by OED staff and involve country visits
Impact evaluation reports – conducted 5-8 years after loan disbursement
Inspection panel reports – review claims by parties affected/likely to be affected by Bank projects occasioned by flouting of Bank procedures and policies

The Infoshop provides information via the web and Public Information Centres (PICs), maintained at various World Bank country offices. At these centres information on Bank operations and related documents can be accessed. They offer country-specific project documents and a library of recent Bank publications. They may also offer Internet access in order to browse through the World Bank’s online resources. There is a charge for project documents; however NGOs receive a discount. Project documents are free for nationals of the country to which the project pertains.