Box 10: Characteristics of Successful Water Supply/Wastewater Treatment Projects
• Rapid urbanization created a strong demand for the output of the projects.
• There were positive impacts on intended beneficiaries, particularly women.
• There was an ability to learn from past lessons and incorporate the lessons in project design.
• Technical innovation and a positive impact on the environment occurred.
• Proper operation and maintenance helped ensure long-run sustainability.
• The projects typically (i) were run by financially self-sustaining water supply institutions, (ii) set up water user committees, and (iii) adopted the “user pays” principle.
• A participatory approach contributed to success. Successful projects were typically formulated through extensive consultations with local government staff and the local community, including NGOs, and civil society organizations. Beneficiary participation resulted in a stronger sense of ownership and willingness to accept some responsibility for operation and maintenance and to pay higher tariffs.
• Executing agencies were committed, highly involved in project implementation, supported by institutional strengthening and training activities, and provided with counterpart funds in a timely manner.
• Consultants and contractors performed well.
• Regular ADB review missions proactively helped to solve problems.
ADF-funded projects in social infrastructure and lines of credit have been less successful than those funded by OCR. Social infrastructure includes a diverse group of subsectors (urban development, water supply and wastewater treatment, sanitation, education, and health and population). In the 1990s, 67% of the ADF-funded social infrastructure projects were rated as successful, lower than the 82% success rate for OCR-funded projects. The difference in project outcomes by source of funding was evident in all subsectors. Among ADF-funded projects, urban development performed best (78% success rate in the 1990s), followed by education (70%), water supply and sanitation (69%), and health and population (50%).
The difficulties in achieving successful project outcomes in the social sectors were illustrated in the 2005 social sector evaluation in Pakistan. Relative to the performance of operations in most other sectors in the country, the social sector outcomes were poor. According to the evaluation, only 8% of 24 projects were rated as successful, 58% were partly successful, and 33% were unsuccessful. Although the performance of more recently approved projects was better, performance remains unsatisfactory, particularly in light of ADB’s commitment to managing for development results. Successful water supply/wastewater treatment and education projects are associated with several characteristics as listed in the boxes.
The ratings of projects in the finance sector reflect the performance of loans to government-owned development finance institutions. There are clear differences in the performance of ADF- and OCR-funded lines of credit. Only 26% of the ADF-funded lines were rated successful, while for OCR-funded lines (after excluding projects in graduated economies approved in the 1970s and 1980s) the success rate was 52%. The findings suggest that ADB should refrain from financing lines of credit in ADF countries. Generally, the strength of financial institutions, depth of the financial markets, and quality of regulation improve as countries develop. ADB’s current approach is to focus on finance sector reform rather than channeling funds through development finance institutions.
Box 11: Characteristics of Successful Education Projects
• The projects were consistent with the education strategies of DMCs.
• Borrowers made counterpart funds available as required and complied with loan covenants.
• Committed executing agencies were able to plan, manage, implement, and monitor the projects and benefited from capacity-building support. Institutional readiness is an important driver of project success.
• A series of projects and consistent ADB involvement over a long period contributed to successful outcomes, particularly when sector/subsector reforms were pursued.
• Participatory approaches were used for project design and implementation and to build alliances and shared ownership by engaging with a broad range of stakeholders.
• Basic and secondary education projects are generally not able to recover costs, so adequate budgetary support is essential for project sustainability; technical, vocational, and higher education projects recovered some costs and generated revenues.
• There was an emphasis on cross-cutting themes, especially poverty reduction and gender concerns.
• Project facilities were well utilized and maintained.
• Consultants and contractors performed well.
• ADB supervision missions resolved implementation issues.
In countries blending ADF and OCR funds, the success rate of OCR-funded projects (66% overall) has been higher than that of ADF-funded projects (52%). That held for projects approved in the 1970s, 1980s, and 1990s, with no evidence of a convergence in success rates. A significant difference in sector mix provides part of the explanation. Agriculture and the social sectors, which have had modest success rates, account for 79% of ADF projects in blend countries compared with 42% of OCR projects. In contrast, transport and energy, sectors with high success rates, account for 45% of OCR projects but only 18% of ADF projects.
The 2006 Annual Evaluation Review examined the characteristics of successful projects in five sectors: roads, power, water supply and sanitation, education, and irrigation and drainage. Naturally some of the characteristics noted are sector specific, but a number cut across several sectors. Some factors are dependent on the local situation, and some on the situation at ADB. Strong government ownership of a project is important. This translates into commitment and good performance of the executing agency, and provision of adequate counterpart funds for implementation and for operation and maintenance. The executing agency must be able to work together with the consultants, contractors, and ADB staff; must be familiar with ADB requirements; and must be able to learn from previous projects. For projects involving public works, the performance of supervision consultants and contractors is crucial. Continuity of ADB engagement in the country and sector, and of ADB staff involvement—ADB’s long-term commitment—is salient. Also on the ADB side, quality at entry is a recurrent theme, covering quality of project preparatory TA, participatory approaches to project design, a flexible design that allows a project to be adjusted during implementation, and the incorporation of lessons learned from previous projects. Regular supervision and project review missions from ADB were found to contribute to project success.
Program Lending. While project lending has constituted the majority of ADB’s assistance, program loans are also an important instrument and were used extensively in response to the 1997 financial and economic crisis. Program loans are disbursed relatively quickly to cover the adjustment costs of policy reforms. Program loans have been made to 31 countries, although most program lending is concentrated in a few. From 1978 to 2002, 133 program loans were approved for a combined ADF and OCR total of $18.1 billion. Of these, 92 have been evaluated: 48% were rated successful, 49% partly successful, and 3% unsuccessful. Most of the program loans approved after 2002 are still being implemented and have not been evaluated.
The trend in program ratings, by year of approval, is depicted in Figure 2. The success rates were unacceptably low
