What is a Capacity Building Assessment?
Capacity Assessment and Capacity Building are components of EBRD’s fiduciary responsibility geared to assist Clients in improving procurement performance and implementation, by carrying out a procurement capacity assessment in partnership with the Client.Sound capacity in procurement for the Bank’s Clients is imperative for successful project implementation, for the attainment of the Banks’ objectives and for sustainability of such objectives. The Bank is thereby interested in strengthening the overall capacity of its Clients to administer procurement effectively and transparently and to implement efficiently Bank financed projects. The next flow chart points at the integration of the capacity assessment within the project cycle.
The capacity assessment consists of a toolkit with 62 items in the form of a questionnaire. Depending upon the answer of the Client to standards questions posed by a qualified assessor, each item and category under review is given a score. The total points accrued by a Client will determine the risk category in procurement. If the risk is low or moderately low, the Bank’s selective review (see “Linking Capacity Assessment and Selective Review”) of individual procurement processes will be minimal.
How to implement a capacity assessment
Based on short conversation, a qualified assessor would be able to rate the performance of the Client in each item and category; with the aggregate score, the assessor will determine if the Client operates on a low or high risk environment through built-in formulae within the toolkit. The toolkit is available in excel tables or in a web application accessible to Bank’s staff. A Guidance Note is available for first-time users.
The underlying framework of the toolkit is fiduciary risk mitigation. Risk Analysis provides a solid platform for BPS and OL to work with the Client, to design Client’s Procurement Capacity Building/Development Programs and Action Plans. With the tool kit application, the Bank will be able to understand where procurement risk is allocated and what mitigating measures in addition to Selective Review, may be adopted in order to ensure adequate project implementation. The “gap analysis” is a useful tool in such a determination. The next chart presents a real case of application of the capacity assessment to a Bank Client and the resulting gap analysis. Risk is identified in the areas where the Client capacity presents the large openings between the compliance standards and the assessed capacity. The compliance standards are harmonised with the best practices developed by the OECD indicators for public procurement.
Linking capacity assessment and selective review
The Bank’s lending portfolio in the Public Sector, involves applying EBRD’s Procurement Policies and Rules (PP&R) during project implementation. Public procurement practices can be subject to wrong doing and possess a risk to the Bank, hence the Bank’s need to apply monitoring of the procurement process.
The Bank has a fiduciary responsibility to ensure that resources are used with economy, efficiency, quality of results, contractual protection and timely completion. Such a fiduciary responsibility can only be delivered if the Bank is able to identify risks to the successful delivery of each lending operation and find ways to mitigate those risks.
Based on the level of risk, the Bank will adopt/propose a number of measures to mitigate identified risk.
Such measures may consist of an Action Plan including training, consultancy support and organisation set up to improve procurement performance, as well as, to determine the intensity of selective review by PD as part of Bank’s internal supervision.
The Bank’s procurement Supervision Plan clearly needs to reflect the Client’s level of risk. Therefore, Clients with lower risk would be able to carry out procurement implementation with little supervision. While, in an effort to reduce risks and avoid exposure of the Bank, Clients with higher risk will even have to go through PD’s ex-ante review (Selective Review) for most - if not all - critical steps of the procurement process, before Banking Department no objection.
The Bank’s strategy combines project capacity assessment, risk determination and selective review into an integrated model that would allow the Bank to allocate scarce supervision resources in an effective manner.