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Prioritisation and selection of public investment projects - Laurence CARTER, World Bank

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This presentation was made by Laurence CARTER, World Bank, at the 11th Annual Meeting of the OECD Network of Senior PPP and Infrastructure Officials held at the OECD, Paris, on 27 March 2018

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Prioritisation and selection of public investment projects - Laurence CARTER, World Bank

  1. 1. PRIORITIZING INFRASTRUCTURE INVESTMENTS THE WORLD BANK 26 MARCH 2018 1
  2. 2. INFRASTRUCTURE PRIORITIZATION CHALLENGE • Investment needs in all sectors • Limited public resources, fiscal restrictions • Decentralized infrastructure planning • How to optimize public resources? • How to compare different investment options?  Need objective way to prioritize infrastructure investments 2
  3. 3. METHOLDOLOGICAL/PRACTICAL CHALLENGES • Limited project data availability & quality • Limited technical and institutional capacity • Reversion to political selection • High costs/time to run SCBA appraisal for large sets of projects • Some policy goals difficult to monetize via CBA: –Social cohesion –Culture –Climate resilience –Wealth redistribution 3
  4. 4. • Quantitative, practical decision tool for infrastructure project prioritization • Combines social-environmental and financial-economic data into two composite indices to compare proposed projects within a sector • Displays project information in a simple visual interface INFRASTRUCTURE PRIORITIZATION FRAMEWORK (IPF) 4
  5. 5. THE IPF PROCESS I. Criteria Consensus between decision makers, experts, and key stakeholders II. Data III. Calculate Composite Indicators IV. IPF Matrix V. Project Selection Source project data Combine criteria into two composite indicators Combine SEI, FEI, and budget constraint to visualize relative project performance Based on informed deliberation Feedback 5
  6. 6. Social-Environmental Indicator (SEI) (example) • Beneficiaries* • Affected population* • Environmental effects* • Poverty levels* Financial-Economic Indicator (FEI) (example) • Benefit-cost ratio* • Multiplier effects* • Externalities* • Implementation risks* Fundable projects given the budget constraint Fundable projects given the budget constraint TWO-DIMENSIONAL STRUCTURE 6
  7. 7. A B C D E F G H IJ K L M N O P Q R S T U V W X YZ 0 10 20 30 40 50 60 70 80 90 100 0 10 20 30 40 50 60 70 80 90 100 A B C D E F G H IJ K L M N O P Q R S T U V W X YZ 0 10 20 30 40 50 60 70 80 90 100 0 10 20 30 40 50 60 70 80 90 100 Lower Priority Projects High Priority Projects Fundable projects given budget constraint Financial- Economic Priority Projects Social-Environmental Priority Projects SEI FEI Fundable projects given budget constraint IPF OUTPUT: PROJECT PRIORITIZATION MATRIX 7
  8. 8. IPF Pilot Year Sector Stakeholders involved Pilot 1 2013- 2014 – Transport – Irrigation – Urban – Ministry for Planning and Investment Pilot 2 2014- 2014 – Water Supply and Sanitation – Transport – Ministry of Economics and Finance Pilot 3 2015- 2017 – Irrigation – Ministry of Public Works and Housing – FAO Pilot 4 2016- 2017 – Water Supply/Drainage – National Planning Department – National Water Supply and Drainage Board Pilot 5 2015- 2017 – Interurban Roads, – Small Water Reservoirs – Ministry of Social Development – Ministry of Finance OVERVIEW OF THE PILOTS 8
  9. 9. 1. IPF can help improve project data availability and comparability 2. Methods and safeguards must be considered to manage potential bias 3. Effective IPF implementation requires building capacity 4. IPF works best if integrated in the infrastructure planning process • Significant improvement in quality of data can be achieved with little effort • Criteria discussion as catalyst to improve information levels • Standards and guidelines for feasibility studies • Inherent bias • Methodological manipulation • Safeguards (transparency requirements and independent auditing) • Sufficient technical knowledge to specify and calculate variables, weights and composite indices • Policy knowledge and political authority • Training on CBA basics • Familiarizing with MCA methodology • Potential sequencing conflicts • Role of central government to oversee and provide guidance • Integration with country infra planning KEY LESSONS 9
  10. 10. Expanding the scope • Including climate and disaster resilience dimension • Index summarizing resilience • To be piloted in 3 countries for Energy, Water and Transport this year NEXT STEPS 10
  11. 11. Improving the model • Coordination with PPP identification tools • PPP Screening Tool being tested in Rwanda, Uganda, Kenya, Pakistan, others… • Linking IPF and PPP Screening Tool NEXT STEPS 11
  12. 12. Making it more accessible • Add-in to run IPF in excel • Run fully in Excel, to enable.... • …improved access NEXT STEPS 12

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