Improving project monitoring and controllingcase of rural finance project funded by world bank

VIETNAM NATIONAL UNIVERSITY, HANOI SCHOOL OF BUSINESS Le Thi Thu Trang IMPROVING PROJECT MONITORING AND CONTROLLING: CASE OF RURAL FINANCE PROJECT FUNDED BY WORLD BANK Major: Business

VIETNAM NATIONAL UNIVERSITY, HANOI

SCHOOL OF BUSINESS

Le Thi Thu Trang

IMPROVING PROJECT MONITORING AND CONTROLLING: CASE OF RURAL FINANCE PROJECT FUNDED BY WORLD BANK

Major: Business Administration

Code: 60 34 05

Master of business administration thesis

Supervisor: Dr Ta Ngoc Cau

Hanoi – 2011

TABLE OF CONTENT

ACKNOWLEDGEMENT i

ABSTRACT ii

TÓM TẮT v

TABLE OF CONTENT viii

LIST OF TABLES x

LIST OF FIGURES xi

LIST OF ABBREVIATIONS xii

INTRODUCTION 1

1 The thesis necessity 1

2 Objectives of the thesis: 3

3 Scopes of the thesis: 4

4 Research methodology and approaches: 4

5 Data sources: 5

6 Significance: 6

7 Expected results: 6

8 The thesis structure 6

CHAPTER 1: LITERATURE REVIEW AND THEORETICAL FRAMEWORK 8

1.1 Literature review 8

1.2 Theoretical framework 13

1.2.1 The concept of project monitoring and controlling 14

1.2.2 Key parts and tasks of M&C system during the project cycle 20

1.2.3 Process M&C system: 21

1.2.4 Necessary conditions and capacities for M&C successs 28

CHAPTER 2: CASE STUDY AND FINDINGS 33

2.1 Case study 33

2.1.1 Overview of "Rural Finance Project" funded by WB and its performance 33 2.1.2 M&C system of RFPII: Real situation and Problems 47

2.1.3 M&C system of RFPII: Causes of M&C problems 67

2.2 Limitations 79

CHAPTER 3: CONCLUSIONS AND RECOMMENDATIONS 80

FOR M&C SYSTEM OF RURAL FINANCE PROJECT 80

3.1 Conclusions 80

3.2 Recommendations for developing necessary conditions and capacities M&C improvement of RFPIII 81

3.2.1 Building human capacity for M&C: 82

3.2.2 Introducing incentives for implementation of M&C 84

3.2.3 Revising a clear organizational structure 85

3.2.4 Adopting an integrated Project Management Information System 86

3.2.5 Allocating adequate budget for M&C 89

REFERENCES 90

APPENDIX 93

LIST OF TABLES

Tab 1.1 Monitoring and Controlling comparison 16

Tab 2.2 Credit lines to PFIs (As of 31st Dec., 2008) 40

Tab 2.3 Compliance of PFIs with accreditation criteria at Project Completion 41

Tab 2.4 Key Performance Indicators and Results of RDFI 43

Tab 2.5 Disbursement of RDF through PFIs 45

Tab 2.6: Key Performance Indicators and Baselines of RFPII 52

Tab 2.7: Main causes of M&C system's problems under RFPII 78

LIST OF FIGURES

Fig 1.1 Key M&C tasks 22

Fig 1 2: Process of M&C system 25

Fig 2.1: Participating partners under Rural Finance Project 37

Fig 2.2 for the implementation structure and stakeholders of RFPII 39

Fig 2.3 Cumulative Planned and actual disbursement progress 47

Fig 2.4: Cumulative disbursement lags in Vietnam, regional and global scale 47 Fig 2.5 M&C organization under RFPII (2003-Sep2009) 55

Fig 2.6: Fishbone diagram of possible causes leading to problems of project performance under RFPII 69

IAS International Accounting System

IDA International Development Association

IDP Institutional Development Plan

IT/IS Information Technology/Information System

JSCB Joint Stock Commercial Bank

M&C Monitoring and Controlling

MFIS Micro-finance Institutions

MIS Management Information System

MOF Ministry of Finance

MPI Ministry of Planning and Investment

NAB North Asia Joint Stock Commercial Bank

OECD Organization for Economic Cooperation and Development PFIs Participating Financial Institutions

PMIS Project Management Information System

PMU Project Management Unit

PhNB Southern Joint Stock Commercial Bank

RFP Rural Finance Project

SAR Staff Appraisal Report

SBV State Bank of Vienam

SDR Special Drawing Right

SIDA Swedish International Development Cooperation Agency SMEs Small and Medium Enterprises

SRV The Socialist Republic of Vietnam

TCIII Transaction Center III (BIDV)

UNDP United Nations Development Program

VAS Vietnam Accounting System

VIB Vietnam International Bank

WBO Wholesale Banking Operation

INTRODUCTION

1 The thesis necessity

In 2010, Vietnamese economy has continued to grow at an average rate of 6.7% although the global economy has been recovering more slowly The macroeconomic situation has improved especially public debt which, at about 56.7% of GDP, is at the safety level Facing with the demand of making use of different resources to boost socio-ecomomic development in whole country, Vietnam have broadened international relationship, focusing on attracting, receiving and managing well Official Development Assistance (ODA) projects funded by international financial organizations such as World Bank (WB), Asia Development Bank (ADB), Agence Française de Développement (AFD), International Fund for Agricultural Development (IFAD), European Investment Bank (EIB), Kreditanstalt für Wiederaufbau (KFW), etc., Actually, WB is the earliest donor; the World Bank‟s funded projects are by far the largest capital projects with high degree of influence and thus are most extensive in typical field of management of ODA projects in Vietnam

Thanks to many open and incentive policies by the Government recent time, this growing economy with steadily increasing GDP is acquiring a great amount of investment capital In response to this demand, besides capital accumulated

internally, an increasing flow of official development assistance capital (from US$ 1,810 million and US$ 410 million of committed and disbursed amount respectively

in 1993 to more than US$ 8,0 million and US$ 3,5 million in 2010) [19] (see the ODA capital in Vietnam in Appendix No.5) has been pumped into various aspects of

Vietnamese economy by international donors and non-governmental organizations through Development Agreements with the Government of Vietnam The Rural Finance Projects under Development Credit Agreements in 2003 and 2009 for

Credit No 3648-VN (US$ mil 200 equivalent) and 3884-VN (US$ mil 200 equivalent) respectively entered into the Government of Socialist Republic of

Vietnam (SRV) and International Development Association (IDA) with objective of

assisting Vietnam in its efforts to improve living conditions in the rural areas are three of the most biggest projects of the same kind in Vietnam

The two projects have been implemented in the form of wholesale banking operation (WBO) They have introduced the concept of WBO for the first time in Vietnam Because of this new nature, the project monitoring and controlling (M&C) have become a very essential factor to a successful project performance together with others factors ranging from objective to subjective ones It is project management unit (PMU) nominated by Bank for Investment and Development of Vietnam (BIDV) called Transaction Center III (TCIII) responsible for managing both Rural Finance Project II (RFPII) and Rural Finance Project III (RFPIII)

In general, M&C is a task, which is so crucial but “is not performed well in most organizations” and “is one of the most neglected areas of project management” [10, p359] M&C is necessary because it possesses method to analyze how well a completed task has been performed This can also be used to evaluate progress on unfinished work if one examines data for a specific period and makes estimates of work completed to date More over, M&C provides managers and other stakeholders with continuous feedback on implementation and identifies actual or potential successes and problems as early as possible to facilitate timely adjustment

to project operation Despite the essential role of M&C, there still are some mistakes commonly made such as: having some prejudice before monitoring and controlling, lack of updated and necessary information for M&C, evaluating unreasonably, unclear objectives, unreasonable criteria, unreasonable monitoring and controlling organizing

In addition, because RFPIII has been already become effective, one of the major tasks that implementing agency has had to undertake in performing its WBO as an apex bank is to implement this project successfully within agreed schedule

According to annual Consultative Group Meeting 18th for Vietnam (Dec., 2010), the project M&E as well as project controlling in Vietnam in general have been

concerned as one of the problem which needs to be improved in the coming time, especially for projects/program in agricultural and rural fields

In addition, there are many essays or rearches about ODA project management or project monitoring and evaluating in Vietnam recently, however there are no specific research mentions to monitoring and controlling WB‟s loan projects particular those have been carried out through commercial banks aiming at supporting for agriculture and rural development

For the above existing reasons, a research on M&C is very important to a successful performance of not only Rural Finance projects funded by World Bank but also for the alike, which have been getting increased in numbers recently

2 Objectives of the thesis:

This study aims at reviewing, analyzing M&C system of RFPII to find out its problems that have affected adversely to project performance and drawing lessons for improvement of the system contributing to better performance of RFPIII

These objectives will be achieved by performing the following tasks:

 Making clear the concept and fundamentals of M&C

 Analyzing M&C system of RFPII to find out its obstacles and problems in project implementation

 Proposing suggestions for improving M&C system in RFPIII

To achieve objectives of the study, those tasks need to be done to answer the following questions:

 What are the main tasks of project M&C?

 How can M&C contribute to project performance?

 How can a project be monitored and controlled?

 What does the M&C system of the RFPII undertake as planned and what are its main obstacles and problems?

 What should be done to improve M&C system to enhance project performance?

3 Scopes of the thesis:

This study focuses on examining M&C system of RFPII funded by WB mainly at project management unit (PMU) in terms of its component, process and function in project implementation stage to identify its problems

4 Research methodology and approaches:

Theoretical framework of M&C is discussed and then applied to analyze current status of M&C system and problems occurred during implementation of the Rural Financial Projects and after that, recommendations will be made upon findings Secondary data and primary data are used to conduct this study

Secondary data is gathered from external sources like libraries, textbooks, government documents and internal sources like progress reports, project documents helping researcher obtain an overview of theoretical framework of M&C

as well as status of M&C system of RFPII

Primary data is collected by conduct qualitative research The qualitative research objective is to obtain information on the obstacles of M&C system of RFPII and requirements for M&C of RFPIII from interviewing PMU‟s staff and managers as well as project officers of other PFIs The research method used is in-depth personnel interview by unstructured questionnaires Managers of PMU have been interviewed on how they used information from M&C system of RFPII for making decision in project implementation, how these information could respond to their needs; what obstacles that make the M&C system ineffective and inefficient were; what they can do to improve M&C system for better project performance of RFPIII Staff of PMU and PFIs have been asked how they got data, analyzed and reported; what problem they had with M&C system; how they are motivated to undertake M&C system and same questions on obstacles and improvement of the system

In addition, general observation has been also conducted to examine aptitude of staff and officers involving in M&C system for their tasks and accompanying significance

Sample has been selected from central, senior, middle and operating level of M&C system of RFPII or in other words from WB and PMU, PFIs‟s project management and PIFs‟ braches respectively

 At senior level, a manager from WB and an operation officer in charged of RFPII from WB were selected

 At senior level, 05 staffs were selected from respective departments of PMU

 At middle level, 02 relevant managers from Agribank and VIB that had biggest credit line proportion of 68.6% and 22% respectively [23] were selected out of 25 PFIs and

 At operating level, 03 staff from 03 branches out of 39 participating branches

of Agribank and 02 staff from 02 branches out of 24 participating branches

of other PFIs were selected Totally, 16 people were selected (Appendix No.9)

Qualitative data of interviewers‟ ideas and opinions are processed by using qualitative analysis method

5 Data sources:

The literature review and collection of secondary data has been performed by research of books, reports, newspapers and internet sources; by exchange information with WB staff and key employees from WBO, PMU in project PFIs And an extremely significant part of the research is my personal experience in PMU (BIDV) and now in Agribank, allowed a careful understanding of particular issues

in the areas

6 Significance:

By reviewing the issues on project M&C and understanding, findings the common problems through case study analysis, the thesis benefits implementing agency and PFIs in providing appropriate recommendations to improve project M&C system of RFPIII as well as applies in other cases in Vietnam

In addition, the special meaning of the study is the given case studies (RFPII) turned out to be the projects that the author involved as a project codinator; directly participated on project implementation and so on Thus, author spends much effort and enthusiasm for this research with the hope and belief that the study is not only meaningful in terms of literature, but also has great significane in reality The fact that, thank to the weakness found from RFPII‟s performance, author will propose practical solutions and recommendations to help improve the M&C system of the

RFPIII which is currently in the first stage of implementation

7 Expected results

The result of this thesis is to improve project monitoring and controlling for further development of BIDV and PFIs who involving in WB projects; to be expected

effectively applied in the case study of other projects funded by different donors

8 The thesis structure

The thesis started with the introduction part, following by three chapters and the conclusion part:

Chapter 1 will introduce general theoretical framework for M&C In this chapter,

definition, M&C comparison, significance of M&C system and key parts and tasks

of M&C were addressed to build the Concept of M&C within this study context Some principles of control, process of M&C as well as necessary conditions and capacities to make M&C system workable have been important parts of this chapter

Chapter 2 will examine M&C and its problems in case of Rural Finance Project II

(RFPII) funded by WB The overview of RFPII will provide information on ideas and objectives of RFPII, some key dates and elements, the way it operated and

finally, some general results and evaluations of project performance Basing on this overview, the theoretical framework of M&C will be applied to analyze M&C system under RFPII together with its respective necessary conditions and capacities

to find out M&C problems that adversely affect to the presented project performance

Chapter 3 will address some recommendations for M&C improvement aiming at

better project performance of RFPIII in particular and for other similar financial

projects

CHAPTER 1: LITERATURE REVIEW AND THEORETICAL

FRAMEWORK 1.1 Literature review

So far, project monitoring and controlling has been examined in several studies However, the issue is not addressed deeply and thoroughly in such studies because those have discussed not only monitoring and controlling but also other issues of project management either covering all stages of project life cycle or focusing only

on implementation stage Some of the most relevant studies from the company and

organization as wel1 as development agencies' point of views by Vietnamese and foreign authors were reviewed Incidentally, almost all these studies were on development and ODA projects The literature review leads to a conclusion that M&C issue has been really interesting and being discussed more and more since it

is one of the main issues that directly affect to project performance and a study focusing on M&C in particular should be needed to fill the loop of existing studies

In terms of theory, Trần Thiện Dũng (2000) discussed project management issue in

the whole project life cycle that is defined therein consisting of three periods namely formulating, implementing and closing Theoretical framework, findings, and recommendations are studied and developed in turns for each of these periods Project monitoring and controlling theory as well as obstacles in project implementation phase of Denmark particular case, therefore, was introduced and discussed However, due to the thesis' broad coverage to the whole project life with business management view approach, project monitoring and supervising and evaluating (not controlling) is addressed generally and limited to definition, purpose, steps, organization, some common accompanied problems and general description of existing system only [8] Details on tools and techniques, monitoring and controlling system in particular have not been discussed yet

Trần Quang Tiến (2000) defined controlling consisting of four steps: setting baseline, measuring progress and performance, comparing planned-actual, taking

action [7] Derek P (1997) addressed performance monitoring, performance measurement and performance management as a need for result oriented management [11] This concept is very close to project monitoring and controlling when stated that if there are performance measures that monitored systematically, then management can respond to the information that is obtained and in this way, the notion of performance management arises-management geared to setting targets reviewing achievements against those targets and taking any corrective action

Thus, M&C was discussed, theoretically, on definition, purpose, steps, organization, and some common accompanied problems Tools and their uses have not been applied in these studies

In terms of practice, Nguyễn Minh Phương (2000) shown that M&C of financial

foreign invested projects which is given priorities during project implementation were undertaken by both donors and receivers Credit finance in the form of project requires of receivers separate account keeping, document filling and archiving for donors‟ monitoring and controlling purposes At the same time, donors also require receiver's financial status and project regulation implementation process to be audited by independent auditor For economical and more effective use of borrowing funds, receivers need to enhance monitoring and controlling activity and give prominence to the role of internal auditing and controlling system at branches where projects are implemented More specifically, this study pointed out that reporting and information system in branches for project implementation progress is inadequate while there are too many report forms with prolix, repeated and overlap norms Furthermore, report generating is late with ambiguous and unclear defining

of responsibility [6]

Among studies reviewed, this study is most related to financial project case It reflected the current situation of project monitoring and controlling of financial foreign invested projects at operating level that is useful for more detailed study on project monitoring and controlling issue

Trần Quang Tiến (2000) stated that monitoring and controlling in specific case of study was undertaken at low extent and limited scope and was not strictly conformed to plan This study also pointed out some causes of such a situation as lack of resources and achievement-favored reporting tendency [7]

World Bank's document named Implementation Completion Report No 24926 and Findings and Recommendations on IDA Credit Portfolio, problems relating to M&C system are causes leading to project start up delay and implementation difficulties among other such as:

- Lack of readiness for implementation before credit approval

- Inadequate and untimely provision of counterpart funds

- Centralization of decision making authority

- Incompetent and inefficient M&C (and/or M&E) system [20] and [29]

Therefore, it is necessary to have a study on problems and shortcoming relating M&C system to improve project performance

Derek P (1997) depicted the whole picture of performance measurement at the Member States of the Organization for Economic Cooperation and Development (OECD) and reported some good lessons applied at donors and aid agencies level [11]:

- Managing for Results: Performance measurement is a common-sense

management activity practiced on a routine basis by many people in the private sector Meanwhile, in public sector, it is not introduced in OECD until early 1980s when there was much pressure by stakeholders and taxpayers on governments to demonstrate value for money in the provision of public services due to the weakness

in organization and procedures: poorly specified objectives, ill-defined responsibilities and too much emphasis on spending money rather than getting results However, experience of OECD countries in performance management and measurement has been widely documented, such has not been the case for that of

development assistance organization and aid agencies, which have been experimenting with techniques for gauging performance since the 1970s

- Development workers have long carried out monitoring and evaluation using key indicators, reports and impact studies but those system have rarely lived up to expectation There is likely a gap between how a system is supposed to work and how it operates in practice Despite a long-standing use of the log frame, internal reports often describe poorly structured project objectives and difficulties experienced by staff members in selecting and applying indicators With the advent

of public sector reforms, aid agencies have begun to revisit their monitoring and evaluation arrangement, looking for ways to develop effective learning systems and support their client countries

- One basis dilemma is that aid agencies are dependent on results from client countries Systemic performance management would need to be introduced by the client administrations

- OECD Country Experience: Setting objectives, choosing indicators and

reporting are core elements consistently applied among OECD Member States but the extent to which authority is devolved, managers are made accountable, or the process is made transparent differs among countries to a much greater extent A comparative material comes from Public Management Service notes that the content

of performance measurement systems differs from country to country depending on the philosophy of change and reflecting in part the State's culture New Zealand places emphasis on measure of out put, Australia and the US on outcomes, Denmark on client surveys for customer satisfaction, and others such as the UK on financial results

- Aid agency Experience: An examination of WB documents reveals three

interesting features: First, the focus of advice and procedures was supply-driven

Monitoring and evaluation handbooks emphasize-technical aspects of defining indicators and collecting data and say little about using data or borrower capacity

Second, until the most recent work, no formal methods were used to match

indicators to objectives That changed with the introduction of logical framework

Third, the focus was primarily on the needs of the Bank for supervision and

portfolio management rather than on the management interests of the borrower

Some striking similarities and interesting differences in the approaches taken by donors are also found out:

Similarities: First, commitment to an agency mission or goal as an over-arching

objective; second, adoption of the analytical structure of the log frame to help to structure programmers toward the goals; and third, the importance attached to the role of indicators and the need to establish regular reporting

Differences: relate to the ways in which agencies manage reporting, evaluation,

performance assessment and publication E.g the United Kingdom Overseas Development Administration (ODA) tries to assess project and program performance against goals derived from the agency's aims in its mission statement

WB looks at internally derived assessment of "quality at entry" (the soundness of analysis and design of a new project judged by rating systems during implementation and after project completion)

Eight techniques as good lessons have been selected from aid agency examples:

- The logical framework in order to structure objectives;

- Analysis of risks, especially between outputs and outcomes, help to manage accountability;

- Work on the specification of indicators by the USAID and the WB;

- Perfoffi1ance analysis through (a) structured supervision-monitoring by the WB and (b) assessment against policy aim, undertaken by ODA;

- Introduction by ODA of output-to purpose reviews;

- Departmental portfolio evaluation plans, adopted by the Australian Public Service; surveys of customer satisfaction, exemplified by the United Kingdom's Citizen's Charter; and

- Linking performance to resource allocation, as in the USAID Results Report and Resource Request

It has been 7 years since the completion of this research and the situation may have changed dramatically so far However, this research has brought insights on performance measurement and management and its techniques use status and situation in selected OECD Member and development agencies and especially the agency in question of this project, say WB It also highlights the fact that the use of indicators by WB focus primarily on its need for supervision and portfolio management rather than on the management interests of the borrower and that aid agencies are dependent on results from client countries Systemic performance management would need to be introduced by the client administrations

This knowledge is very helpful for a study, which is beyond scope of this research,

on the issue at micro level in client countries/borrowers

Nguyễn Hữu Bình (2002) and Nguyễn Văn Phú (2002) are also reviewed but not much relevant information are drawn from [3] and [4]

From these studies mentioned above, some useful secondary data have been drawn

on the issue of project monitoring and controlling However, all studies have approached the issue from result approach not process one In addition, there have not been many studies particularly focusing on project monitoring and controlling in financial field Thus a study on this particular issue is needed to improve project performance and narrow the gap between activities control level and milestone control level which is donors in general and the World Bank in this case

1.2 Theoretical framework

Let's move to an important part of Chapter 1 which is used as framework for Chapter 2 and Chapter 3 Firstly M&C concept is addressed and then process of M&C system is also discussed All these two parts of framework are applied to assess reports and M&C system of RFPII In order to make the M&C system

workable, necessary conditions and capacities for M&C should be made available

of each concept are similar to each other in content but different in wording In some books, there is no definition of monitoring but project control, in others, monitoring is always accompanied by evaluation However, there are still some books that address monitoring, control and evaluation separately Here are some of those:

Firstly, monitoring concept has been addressed Jack R M and Samuel J.M., JR in their work have defined "Monitoring is collecting, recording, and reporting information concerning any and all aspects of project performance that the project manager or others in the organization wish to know" and " monitoring, as an activity, should be kept distinct from controlling (which uses the data supplied by monitoring to bring actual performance into approximate congruence with planned performance), as well as from evaluation (through which judgments are made about the quality and effectiveness of project performance)" [17, p 441] This definition states specific tasks of monitoring very clearly but fails to mention input for monitoring which is agreed schedule or plan quoted in another definition:

"Monitoring is the continuous assessment of project implementation in relation to agreed schedules, and of the use of inputs, infrastructure, and services by project beneficiaries Monitoring provides managers and other stakeholders with continuous feedback on implementation and identifies actual or potential successes and problems as early as possible to facilitate timely adjustment to project operations" [5]

Secondly, Jack R M and Samuel J.M., JR have written "Reporting performance, comparing the differences between desired and actual performance levels, and accounting for why such difference exist are all parts of the control process In essence, control is the act of reducing the difference between plan and reality" [17,

p 508] It seems that there is an overlapping of reporting performance both stated in those authors' conceptions of controlling and monitoring addressed above

They also have given generalized comment that " control of projects is such a mixture of feeling and fact, of human and mechanism, of causation and random chance " [17, p 510] There has been another interesting definition of "Controlling

is the process whereby the project manager determines the degree to which the project plan - baseline is being met, and takes necessary action to ensure its successful completion" [14, p 76] while less profound and clear one has been also existed: "Project control is the product of Monitoring and Evaluation Project control is developed by continually reviewing and evaluating ongoing project results" [5]

Thus, in the context of this study, we can agree with Wil1iam R.D "Monitoring is the capture, analysis, and reporting of project performance, usually as compared to plan" [18, p165] and "Control is the process of comparing actual performance with planned performance, analyzing variances, evaluating possible alternatives, and taking appropriate corrective action as needed." [18,

p161]

Table 1.1 will help distinguishing the two concepts and understanding the

inter-reaction between monitoring and controlling

Although we come to the concept of project monitoring and controlling with separate definition of monitoring and controlling, they are actually interactive and should be seen as an integrated system of reflection and communication supporting project implementation and can be planned for and managed over the entire life of project [16] Despite the only focus on project monitoring and controlling in implementation phase of this study, it is useful to understand that monitoring and

controlling is necessary for the whole project life-cycle from conceptualization, planning, implementation to termination with respectively different purposes and is

integral component of planning-monitoring-controlling cycle The monitoring

system "is a direct connection between planning and control" and usually, as shown

in Tab.1.1, planning and monitoring provide input for controlling It is also

beneficial to perceive controlling process "as closed loop system with revised plans and schedules following corrective actions" [17, pp 445-446]

Tab 1.1 Monitoring and Controlling comparison

Similarities

Focus of attention - Individual tasks; resources

Periodicity - Daily, weekly, monthly, yearly

Level of Aggregation - Task; Individual Resource

Point of view - Work Breakdown Structure

Differences

Purpose - To gather and report data

To describe what has occurred and what the situation is

- Paperwork

- To act on the data

- To analyze the situation, decide what to do and do

it

- Management

- Work results of on-going activities

- Other project records

and techniques (Communication skills, Information retrieval systems, Information distribution systems)

- Change control system

- Configuration management

- Performance measurement

- Additional planning

- Project management nforn1ation system

- Change requests

- Schedule update

- Corrective action

- Lessons learned

Inter-reaction All reporting is in vain unless

project management have the ability to make decision based

on the reports they receive

- Control presupposes that a certain amount of

paperwork (reporting) be done

Source: Generated from Erling, S A., Kirstoffer V G and Tor H.(2004) Goal

Directed Project Management Second Edition Coopers & Lybrand, p 151 and William, R D (1996) A guide to project management body of knowledge Project Management Institute, pp 43-46; pp 104-110

1.2.1.2 Significance and Objectives of M&C

Planning is a fundamental component of project management A detailed plan covering the technological, budgetary, scheduling, organizational, and risk-related aspects is essential to facilitate coordination among the participants Unfortunately, even the best of plans can not guarantee success Uncertainty and changing environmental conditions are bound to intervene in unforeseen ways, sometime positively, sometimes negatively Plans are based on availability, labor efficiency, and cost, each of which may be subject to a high degree of variability In addition, needs and goals are dynamic, changing over time The original plans will be obsolete due to newly developed technology, corporate strategy rethinking, the replacement of key personnel and new market or legal circumstances Therefore monitoring actual progress and to update the original plans continually is evident and fundamentally needed M&C is aiming at the following objectives [5]:

- To find out what was going on and project implementation process to have more insight on project Frequently used method in this case is descriptive one Normally,

general description of project implementation process is undertaken and detail description is given only to important issues with significant meaning or differences between plan and reality In order to depict real project implementation status, some diagram, graph and chart systems are use reflecting each project aspect separately or representing coordinately some interrelated aspects and factors

- To disclose deviation between implementation and initial plan for corrective or necessarily actuated actions Basing on the above comparison and description,

deviations and their causes should be determined and their impact assessment to project in general (project successful possibility, risk level etc.) as well as project impact to stakeholders should be determined It is noticeable that even if the project

is implemented "exceeds plan", it is necessary to analyze, evaluate how it affects to

project implementation process

- To determine and highlight strengths and weaknesses exposed during project implementation Those should be depicted and identified clear enough for corrective

actions afterward [15] So, at the same time sources of strengths and weaknesses should be clarified so as to evaluate performance of individuals who participate in project implementation

- To re-judge evaluations in project development stage These judgments help

project development agency be capable discovering project development opportunities later or changing project plan in compliance with emerging environmental condition and context This is a dispensable activity since projects are always developed basing on assumptions that can only be forecasted at project formulation phase

- To work out recommendations on changes in comparison with project plan so as

to implement project effectively Those recommendations are always emanated

when deviations with initial plan are disclosed and they have simultaneous characteristic Those play role of availably initial information and source for later creative ideas

- To collect information and document project files This is usually final project

activity that is likely neglected or undertook improperly It is normally considered

as administrative and documented activity but indispensable one of controlling and monitoring Furthermore, it also set some certain requirements for designing, planning schedule and content of controlling and evaluating

1.2.1.3 Principles of control

The followings will be principles considered to be fundamental for monitoring and controlling [13]

- Good reporting: Exception reporting, which is based on the philosophy of

management by exception, is a much-used reporting principle It means that only variances (mainly negative ones) from the plan will be reported or in other expression, people can only communicate when there are problem and this is not particularly pleasant So, good reporting should be balanced in terms of bring out what is going according plan and negative variances and occurred problems to reduce the tediousness for people who receiving and reporting information The balance must be found between written reporting and conversation and group discussions that elaborate on matters raised in the report wherever necessary Reporting should not be so bureaucratic that takes time away from what should actually be done Reporting should be done by ones with enthusiasm and belief that

it will approve the work situation for oneself or for the project Reporting will be experienced as being useful and motivating once project members feel that control

is actually taking place through discussions and analysis and result in measures that improve the situation for the project

- Defining the criteria before work begins: Effective control requires in advance

which matters must be kept under special review during the project Matters to be reported on and discussed must have been identified when control measures are established Clearly defined control criteria should exist and be built in to the report form Not only should the report form focus on previously defined control criteria but also any supplementary conversation has the same focus Conversations must be directed towards discovering the causes of any deficiencies and identify action to put the project back on course

- Reporting on the plans: It is an important principle that reporting should occur

on a document that also shows the actual plan Each time a report is made, it must subsequently be compared with the plan This ensures that one keeps to the point Other reporting methods should not be permitted Reporting on the plan document

also has the advantage that we can see more easily that the right person receives reports and follows up It is important to send a report that shows a deviation from the plan to the person who has the authority to do something about the plan, or who can take steps to get on course again

- Reporting according to a predetermined pattern: All reporting should be done

according to a set pattern This often means that repots will be given at fixed intervals Discipline is necessary otherwise it is easy for reporting to be neglected

The frequency of reporting depends on the level Reports can be less frequent at the milestone level than at the detail level because of the longer time horizon It is more important that variances be detected quickly at detail level so that corrective measures can be introduced before these variances have gone on too long

In general, monthly reporting and control at the milestone plan level is recommended Alternatively, we can follow the principle that there should be a report each time a milestone scheduled to be reached At the activity level the frequency of reporting must be agreed upon internally within the project [13]

1.2.2 Key parts and tasks of M&C system during the project cycle

Key parts of M & C system: the M&C system consists of four interlinked parts

[16, section 4, p5]:

- Developing the M&C system: M&C system is set up by identifying information

needs to guide the project strategy, ensure effective operations and meet external reporting requirements How to gather and analyze this information and document a plan for the M&C system is decided at this stage

- Gathering and managing information: this means implementing this M&C

system Information comes from tracking of which output, outcomes and impact are being achieved and checking project operation (e.g., activity completion, financial management and resource use) After information gathering and management starts, problems needed solving or new ideas for improving initial M&C planed may occur

- Reflecting critically to improve action: Once information has been collected, it

needs to be analyzed and discussed by project holders

- Communicating, reporting result for proposing and taking corrective solutions:

the results of M&C need to be communicated to the people who need to use it Project progress and problems must be shared with project participants for identifying solutions together Reports to funding agencies need to be analytical and action-oriented Finally, appropriate solutions are selected and undertaken to bring negative project perfoffi1ance back to track

Key tasks of M&C system: Some key tasks of M&C system during project cycle

will be stated at Fig.1.1

1.2.3 Process M&C system:

M&C system can be designed and implemented according to following steps (Fig 1.2):

1.2.3.1 Defining objectives and scope of M&C system:

First step is to define objectives and requirements of monitoring, controlling A clear definition of objectives and scope of the intended M&C system facilitate decisions on issues such as budget levels, number of indicators to track, type of communication needed and so on Specifying the objective also helps to make clear what can be expected of the M&C system as it forces us to think about the nature of the project and the implications for information needed to manage it well When formulating the objectives at appraisal or revisiting it during start-up, the following question should be asked "What are the main reasons to set up and implement M&C for implementing partners, for primary stakeholders and for other key stakeholders?" For development projects, M&C system should meet stakeholders' demand for both impact related and physical progress related information or quantitative and qualitative information [16]

After the objectives are defined, scope of the M&C system should be clarified

"Scope" relates to the extent and degree of sophistication of the system that can be

highly sophisticated or very simple The sophistication of the M&C system that is appropriate for a specific situation will depend on M&C objectives, available resources and M&C expertise

Defining M&C scope by asking what level of funding is potentially available; what level of participation in M&C by primary stakeholders and partner organizations is desirable and feasible; how detailed does the M&C information have to be, either in terms of quantitative or qualitative data; what sort of baseline study is desirable and feasible; what are the current M&C capacities among stakeholders and how will this affect the desired level of M&C

Fig 1.1 Key M&C tasks

- Identify organizational arrangement for M&C

- Develop terms of reference for M&C staff

- Indicate the process for how M&C is to be established

- Document the above in the M&C framework

- Initiate baseline studies, as appropriate

- Prepare a project implementation manual with key staff

- Prepare for supervision missions

- Prepare for and facilitate the periodical progress reports

- Conduct focused studies on emerging questions

- Communicate results to stake holders

Mid-term

review  - Collate information for the mid-term review - Facilitate the internal review process to prepare

for the external one

- Adjust the M&C system, as necessary

Phasing out

and completion 

- Assess what the implementer can do to sustain impact and sustain M&C and implement these ideas

- Identify lessons learned for the next phase and/or other projects

Source: Irene, G and Jim, W (2002) Managing for Impact in Rural Development:

A guide for project M&E International Fund for Agricultural Development Section

4, p6

1.2.3.2 Setting criteria, goals and baselines for M&C system

Identifying the key factors in the project action plan to be monitored and devise

standards or baselines for them The factors should concern results, rather than

activities Clearly project manager wants to monitor performance, cost and time

but must define precisely which specific characteristics of performance, cost and time should be controlled and then establish exact boundaries within which control should be maintained There may also be other factors of importance worth noting,

at least at milestones or review point in the life of the project For example, the number of labor hours used, the level of customer satisfaction, and similar items may be worthy of not on individual projects

Given all this, performance criteria, standards or baselines, and data collection procedures must be established for each of the factors to be measured The criteria and data collection procedures are usually set up for the life of the project The standard themselves, however, may not be constant over the project's life The baseline is the original plan (for a project, a work package, or an activity), plus or minus approved changes

Baseline management is a necessary tool Base line management includes cost

elements and technical specifications and not just schedule It also incorporates the change management process, which consists of: configuration control and specification, schedule adjustments, personnel changes, documenting technical, schedule and cost changes [18]

1.2.3.3 Collecting data:

At this point in the construction of a monitoring system, it is necessary to define

precisely what pieces of information that may consist of accounting data, operating

data, engineering test data, customer reactions, specification change and the like

should be gathered and when Should cost data be gathered before or after some

specific event? Is it always mandatory to collect time and cost information exactly

at the exam point in the process? Data collected shall take one among different

forms like frequency counts, raw numbers" subjective numeric ratings, indirect

indicators and verbal measure Details will be found at Appendix No.1

Fig 1 2: Process of M&C system

Source: Nguyễn Văn Phúc (2001, 2008), Project management, Training

1.2.3.4 Measuring progress and performance

After data collection has been completed, progress and performance should be measured in order to generate reports on project performance Time (schedule) and budget (cost) are quantitative measures of performance that readily fit into the integrated information system Measurement of time performance is relatively easy and obvious That is to answer questions like: is the critical path early, on schedule,

or late; Is the slack of near-critical paths decreasing to cause new critical activities? Measuring performance against budget (e.g., money) is more difficult and is not simply a case of comparing actual versus budget A concept called "earned value" is necessary to get a realistic estimate of performance against a time-phase budget

In development project, objectives cannot be measured directly but through indirect indicators benchmarking with baselines to assess project perfoffi1ance

Reports on project performance include project status reports describing where the project now stands, what the project team has accomplished, time/cost reports, and variance reports, among others There are three distinct types of reports: routine, exception and special analysis Causes and effects should be identified and trends noted Plans, charts, and tables should be updated on a timely basis Where known,

"comparables" should be reported, as should statistical distributions of previous data

if available

To perform this, the following tools are often used:

- Performance reviews are meetings held to assess project status or progress They

are typically used in conjunction with one or more of the performance reporting techniques described below

- Variance analysis involves comparing actual project results to planned or

expected results Cost and schedule variances are the most frequently analyzed, but variances from plan in the areas of scope, quality, and risk are often of equal or

greater importance Trend analysis examining project results over time to determine

if performance is improving or deteriorating Some charts such as Gantt and control

charts are the typical tools used for communicating project schedule status Control chart is a tool used to monitor past project schedule performance and current performance and to estimate future schedule trends They are also frequently used to monitor progress toward milestones Control chart trends are very useful for giving warning of potential problems so appropriate action can be taken if necessary

Normally, progress report includes the following elements:

Progress: Percent Complete Work, Time, Resources, Cost

Schedule: Task Completed, Slack/Float (Tasks, Milestones), Baseline variance, Prior Period Variance, vs Time

Cost: Cost to this Period, Cost to Date, Cost to Complete, Prior Period Variance

Narrative Elements: Problems, Solution Approaches, Support required for Solution, Reasons for Variance

Three common project-reporting problems are too much detail, poor correspondence to the parent film's reporting system and a poor correspondence between the planning and monitoring system

There is still another type of report that is meeting besides written reports disseminated by hard copy or E-mail Guidelines for running meetings effectively

will be found at Appendix No.2

1.2.3.5 Comparing planned-actual or performance diagnosis

Because plans seldom materialized as expected, it becomes imperative to measure deviations from plan to determine if action is necessary In case the results are much better than expected, the positive deviations still need to be analyzed to see their impact to project progress as a whole Basing on performance reports and approved project plans, deviations and their causes will be determined Periodic monitoring and measuring the status of the project allow for comparisons of actual versus expected plans It is crucial that the timing of status reports be frequent enough to

allow early detection of variations from plan and early corrections of causes Usually status reports should take everyone four weeks to be useful and allow for proactive correction

Problem analysis is a brainstorming technique by which stakeholders identify the

causes and effects of problems detected from deviations A summary of the analysis can be visualized in a tree diagram or a fishbone diagram

1.2.3.6 Proposing corrective actions

With the problems identified, corrective actions will be proposed for selection and implementation to improve project performance

1.2.3.7 Taking actions

If deviations from plans are significant, corrective actions will be needed to bring the project back in line with the original or revised plan In some cases, condition or scope can change, which in turn, will require a change in the baseline plan to recognize new information

1.2.4 Necessary conditions and capacities for M&C successs

Getting the M&C system working means thinking of appropriate incentives, ensuring having the right and enough human capacity at hand, and thinking about ways of storing and sharing information The following conditions and capacities are necessary to make M&C system operational [16]:

1.2.4.1 Human capacity for M&C

An effective M&C system requires skilled people who can fulfill M&C functions and tasks In order to build human capacity for M&C the following activities should

be required:

- Acquire the right people by hiring already trained people, training staff

internally or via externally courses;

- Ensure capacity for good quality by removing disincentives, introducing

incentives for learning, keeping track of staff performance through regular

evaluations, striving for continuity of staff and finding a highly qualified person

to coordinate M&C;

- Build capacity for M&C by developing training plan for all stakeholders and

with them using a combination of external courses, internal courses and job training;

on-the-Working in teams is very common and important in projects Human resource with

good capacity for M&C thus should be organized in good teams Appendix No.3

will represent some common characteristics associated with high-performing team

1.2.4.2 Incentives for implementing M&C system

Incentives being paid attention to and put in place for M&C means offering stimuli that encourage project managers, M&C officers and primary stakeholders to perceive the usefulness of M&C, not as a bureaucratic task, but as an opportunity to discuss problems openly, reflect critically in order to learn which changes are needed to put project performance back in track Incentive systems should be equitable, applied in a timely manner, be compatible with the project's principles and strategies, and be recognized as part of a project's policy Incentives need to be context specific and aimed at supporting sustainability of efforts Good incentives for M&C are closely linked to general management efforts to improve overall project performance Common incentives include: clarity of M&C responsibility in job descriptions and work plans; appropriate salaries and other reward; support to carry out required project activity, such as making financial and other resources easily available; professional development for career advancement Incentives will change during the life of the project so it is necessary to keep high motivation by changing incentives

1.2.4.3 Organizational structures

Getting the basic structure for a project's M&C functions and responsibilities right can avoid major communication bottlenecks, conflicts of power and interest, forgotten or duplicated tasks and wasted efforts This saves resources and

headaches Organizing responsibilities means considering the most appropriate contribution for project staff, partner organization staff and primary stakeholders and the way to link these To ensure clarity of M&C functions and tasks, we should: define the M&C responsibilities of implementing partners and primary stakeholders; consider what staffing levels are appropriate for M&C tasks; allocate clear levels of authority to M&C - related staff; ensure overlap between project management and M&C; use detailed job descriptions for each staff member to coordinate inputs

1.2.4.4 Management information systems (MIS)

Information system is vital to project management in general and M&C in particular Usually, there are many projects that are large initiatives, in terms of numbers of primary stakeholders to be reached, geographic coverage, types of activities, budgets, time frame and sometimes number of staff Keeping track of relevant information means that memory and handwritten notes alone will never

be enough for those responsible for management or M&C Furthermore, several people/partners may wish to use the data at different moments for different aspects

of the work The quantity of Information that is collected and shared justifies some form of Information system that stores data and makes it accessible to others

Documentation provides the foundation for interactive communication, transparency, consensus building and continuity

PMIS consists of the tools and techniques used to gather, integrate, and disseminate the outputs of the other project management processes It is used to support all aspects of the project from initiating through closing and generally includes both manual and automated systems The following will be some main tools and techniques [18]:

- Communication skills: communication skills are used to exchange information

The sender is responsible for making the information clear, unambiguous, and complete so that the receiver can receive it correctly and for confirming that it is

properly understood The receiver is responsible for making sure that the information is received in its entirety and understood correctly Communicating has many dimensions: written and oral, listening and speaking; internal (within the project) and external (to the customer, the media, the public); formal (reports, briefings) and informal (memo, conversation); vertical (up and down the organization) and horizontal (with peers)

- Information retrieval systems: Information can be shared by team members

through a variety of methods including manual archiving systems, electronic text databases, project management software, and systems that allow access to technical documentation such as engineering drawings

- Information distribution systems: Project information may be distributed using a

variety of methods including project meetings, hard copy document distribution, and shared access to networked electronic databases, fax, electronic mail, voice mail, and video conferencing

- Computerized information system: The information system of a project will

consist of paper-based archives and computerized databases Computerized databases are usefully provided that they are not divorced from management information needs Incorporating computer systems as part of project M&C has both benefits and drawbacks Benefits are making it necessary to define M&C indicators and variables in highly precise terms, providing precise information with different levels of aggregation; reducing amount of time usually required to process data, so increasing time available for analysis; facilitating timely access to information by various groups and creating conditions necessary for improving those groups' analytical capacities Drawbacks are inflexibilities in changing indicators and unit of analysis, mechanical analysis etc

Some questions and requirements that should be paid attention to in designing a

MIS will be found at Appendix No.4

Organization-Management-Technology framework can be applied to describe management information system

CHAPTER 2: CASE STUDY AND FINDINGS

Chapter 2 provides an overview and performance of RFPII that is one of 27 active operations in Vietnam funded by WB in finance field and implemented by BIDV through project documents (further information about WB and its activities in

Vietnam will be found at Appendix No.5) Basing on this overview, framework

discussed in chapter 1 is applied to this specific case to find out obstacles of M&C system and their possible causes leading to the unsatisfactory project performance

2.1 Case study

2.1.1 Overview of "Rural Finance Project" funded by WB and its performance

2.1.1.1 Brief of ideas and objective of RFPII and RFPIII

Aiming at supporting key components of the IDA's Country Assistance Strategy (1995) of (i) assist transition to a market economy; (ii) strengthen the rural finance system through finance targeted to agriculture and small and medium enterprises in rural areas, accompanied by technical assistance; and (iii) reduction of poverty through promoting growth and enabling the poor to respond to opportunities to improve their welfare with premises that the financial sector of Vietnam is too underdeveloped and market conditions are still too imperfect to allow an adequate flow of credit to the rural sector, after RFPI in 1997, RFPII was designed and then came into effect in 2002 with two wholesale funds named Rural Development Fund (RDF) and Micro-finance Loan Fund (MLF) objecting to assist SRV in its efforts to improve living conditions in the rural areas through following goals which in line

with those of Government: (a) encouraging private sector investments especially farm household and private rural entrepreneurs; (b) strengthening the banking system 's capacity to finance private sector investments; and (c) increasing access

of the rural poor to financial services (24)

At completion of RFPII in 2009, the primary objective of the RFPII was assessed to

be and continue to be important and valid Although the banking system in general,