GLOBAL LESSONS: DESIGNING CDD OPERATIONS

1. GLOBAL LESSONS: DESIGNING CDD OPERATIONS Samantha de Silva HDNSP April 2005

2. OVERVIEW Direct Financing of Community Sub-Projects FUNDING AGENCY (Central Government Agency, Social Fund, NGO, Local Government, etc) Other Characteristics: Community Contribution (Labor, Materials, Cash) Community Participation (throughout project cycle) Financing Agreement (Contract) Disbursement Procurement Materials Contractors Skilled Labor Technical Assistance COMMUNITY GROUP (Project Management Committee) Materials Services

3. Subproject Cycle • Preparation • Funding Agency: • Informs stakeholders • Facilitates communities • Assesses capacity of communities • Develops simple technical designs • Appraises subproject (Desk/Field) • Community: • Elects Project Management Committee • Prepares/submits subproject application and budget • Approval and Launch Funding Agency: • Trains community • Prepares financing agreement • Hands over first check at launch • Community: • Mobilizes community contribution • Plans launch ceremony • Signs Financial Agreement • Completion • Funding Agency: • Conducts completion assessment • Provides completion certificate • Community: • Takes over operation and maintenance of asset Implementation Funding Agency: • Provides technical support • Oversees implementation/financial management Community: • Procures materials and services • Supervises construction • Manages labor contribution • Prepares progress reports • Manages funds • Monitoring and Evaluation • Funding Agency: • Releases funds • Conducts participatory technical/financial audits • Beneficiary assessments • Community: • Develops own indicators/M&E plan • Provides day-to-day oversight • Conducts audits

4. Key Design Elements • Base arrangements on past community experience • Info campaign to inform all stakeholders of “rules of the game” • Develop targeting strategy consistent with PDO • Develop simple, standard designs with input from communities/sectoral agencies • Design simple training packages for communities

5. OM PAD DCA Key Documents • Development Credit Agreement (DCA) • Project Appraisal Document (PAD) • Operational Manual (OM) • Community Manual • Financing Agreement (FA and Community) Ensure consistency across documents.

6. Community Contributions • Community must establish who should contribute, when, how and where the contribution will be given. • FA must help community value contributions accurately. • Community must track contributions.

7. Disbursement Arrangements How should Funding Agency disburse to communities? • Output or Lump-sum method for financing based on physical progress • Ensure that adequate funds flow smoothly to communities • Disburse to communities in tranches • Cost savings accrue to community • Facilitate community’s access to formal banking system

8. Procurement Arrangements • Develop/update Unit Cost Database • Encourage communities to use Local Shopping (3 Quotations) but use Direct Purchase as long as items are within rates in Unit Cost Database • Use Local Competitive Bidding or Direct Contracting for hiring of contractors. • Establish wage rates for hiring skilled labor • Provide active support to communities on prices and quality • Build incentives for efficiency of procure-ment

9. Monitoring and Evaluation • Conduct systematic post review • Set up MIS early in the project (track process, input, output and outcome indicators) • Conduct financial audits together with technical and social audits. • Keep in mind the PAD as well as the ICR!

10. Operation and Maintenance • Address issues to do with maintenance and recurrent costs early on, verify during appraisal • Include plan to cover maintenance and recurrent costs • Provide training on technical aspects as well as fundraising techniques • Conduct post completion visits/training

11. Completion • Emphasize completion of subprojects on a timely basis • Account for all subproject related funds • Submit final completion report • Issue Completion Certificate