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close this bookContribution of People's Participation: Evidence from 121 Rural Water Supply Projects (World Bank, 1995)
View the document(introduction...)
View the documentEnvironmentally sustainable development series
View the documentForeword
View the documentAcknowledgments
View the documentExecutive summary
View the documentChapter 1 - Introduction
View the documentChapter 2 - The concept of participation
View the documentChapter 3 - Research methodology and project descriptions
View the documentChapter 4 - Role of beneficiary participation in project effectiveness
View the documentChapter 5 - Factors affecting beneficiary participation
View the documentChapter 6 - Translating lessons into design features
View the documentChapter 7 - Conclusions and recommendations
Open this folder and view contentsAppendixes
View the documentNotes
View the documentBibliography

Chapter 6 - Translating lessons into design features

The lessons derived from the study and analysis of 121 rural water supply projects are clear. The challenge is to apply these lessons to the design of large-scale projects within a supportive policy framework.

Two overriding messages emerge from the study: (1) beneficiary participation is critical for achieving project effectiveness and building local capacity; and (2) rural water projects have to be fundamentally redesigned to incorporate participation.

When participation is merely one project activity among many, it fails to transpire. When agencies do not offer a menu of options, but instead supply one standard technology package irrespective of community demand, problems arise. When local people do not feel ownership of a project or water points, projects falter and facilities fall into disrepair. Even when agencies have the best of intentions and highly trained staff, participation will not become institutionalized unless user demand is the guiding principle permeating the design of projects.

The obvious conclusion is that participation is stymied unless the desire for "full community participation in all phases of a project" is supported by changes in key design features. Efforts must go beyond manuals that detail the standard application of "twenty-two steps to achieving participation." Redesign is essential for ensuring effective participation.

The first question to ask of any project design feature is does it respond to community demand? By asking this question, several rural water supply projects in the World Bank's portfolio have transcended how-to manuals. Although the projects are at various stages of preparation or implementation, each has innovated ideas to ensure that participatory projects to reach the poor are demand-responsive. They highlight workable strategies and offer evidence that lessons can be put into practice within the framework of the Bank project cycle.

The projects, and results from this study, show seven design features to be particularly important for developing demand-responsive participatory projects:

· Selection criteria
· Demand assessment
· Institutional framework
· Funds and financial flow
· Choice of technology and service level
· Planning approach: master plan versus learning process
· Monitoring and evaluation.

This chapter examines these design features within the context of Bank projects.30

Selection Criteria

The most common criteria for selection of districts, subdistricts, and communities are water scarcity, poor water quality, presence of water-related diseases, difficult hydrogeological conditions, and poverty. Typically, the villages selected for projects are culled from a master list, in accordance with these criteria or some variant of them.

As projects move toward a clearer demand orientation, two criteria become paramount: demand and poverty. When the implementing agency cannot accommodate all of the villages on the master list, other criteria are used to stratify the sample and to help rank the priority of villages. However, if community demand is not given primacy and if selection criteria are not transparent and supportive of decisionmaking at the local level, the scope for political selection of villages increases dramatically regardless of community demand, as experience bears out.

The Sri Lanka Rural Water Supply Project focuses on community-based planning, using a series of selection criteria as the centerpiece of its subproject review process. To ensure a demand orientation, communities have to apply to the project and request inclusion. Hence, the project does not prepare lists of villages, nor are the villages in which the project will be implemented predetermined.

At the outset, the project prepared only a limited number of engineering designs to provide guidance on what costs might be under different circumstances. Community-submitted projects are appraised on a case-by-case basis. The level at which the project is approved depends on the total cost of the project. All project proposals have to demonstrate that certain planning tasks have been carried out and that the project is technically sound and ready for implementation.

The criteria applied in a five-step project approval process are described in box 6.1. The preparation process for subprojects will be further simplified based on an examination of the first year's experience.

Although some countries still select communities according to externally determined criteria that indicate the severity of the problem (distance to a water source is one), several Bank projects have adopted a kind of scoring system, whereby an initial list of villages is compiled and final selection is based on community interest and demand.

Box 6.1. Sri Lanka: guidelines on community preparation and community commitment

In the Sri Lanka rural water supply project, the following guidelines are used by communities to prepare sub-projects and by the agency to judge community commitment and technical appropriateness of the project proposal.

Stage 1: technical criteria

· Establish that water supply improvements are necessary
· Select and accept CBO (community-based organization) for project management
· Acquire necessary land
· Resolve any water use conflicts (water rights)
· Determine project to be technically sound
· Coordinate village scheme with other villages
· Complete project proposal form.

If the proposal is not found satisfactory, it is returned for revision and resubmission.

Stage 2: sustainability criteria

To plan early for long-term maintenance of technologies chosen, four factors are given attention:

· Level of organization of community determined
· Willingness to pay adequately illustrated
· Environmental sustainability ensured
· Reliability of future supply from the source ensured.

Stage 3: cost analyses

The scheme should be cost-effective. The cost of the scheme to the program will be calculated on a per household basis. There is a built-in bias towards communities paying a higher proportion of costs for higher service levels.

If the proposal is still unacceptable by standard criteria, at this stage it is passed to the national level for more detailed assessment.

Stage 4: cost-benefit analyses

When the costs are higher than normal because of unusual features-hydrogeological or due to remoteness-costs have to be justified in terms of time savings.

Stage 5: extreme need appeal

If costs cannot be justified on time savings, acute need has to be established based on:

· Quality of existing water supplies
· Quantity provided by existing water supplies
· Reliability of existing water supplies
· Community poverty.

Source: World Bank (1992).

Thus, in the Indonesian rural water supply project, the government goes through a three step process. Step one calls for drawing up a "long" list of villages - 1,300 of them in the current project-based on water scarcity, poverty, remoteness, water quality, and existence of other ongoing projects; a short list is produced after screening for poverty (step two). The final selection of villages (step three) will be based on the Village Action Plans (VAPs) submitted by communities, which must demonstrate the village's willingness to take full management and financial responsibility for O&M.

Demand Assessment

There is clearly a need to assess community demand in a way that confirms the commitment of a group or community. Increasingly, communities are required to establish their interest in and capacity for undertaking a water project by hurdling a series of tasks specified in the project.

Three tools commonly used to assess demand are willingness-to-pay studies, participatory needs assessment, and beneficiary assessment. Willingness-to-pay studies estimate the value people place on an improved water supply by determining how much people are willing to spend for such improvements. Participatory needs assessment involves communities themselves in assessing their own needs and in determining whether water supply improvement is a priority around which the community can-and wants to-organize. For a beneficiary assessment, outsiders speak to, interview, and observe potential participants to find out whether water is perceived as a problem and, if so, what the community is willing to do to solve the problem. The three techniques complement one another and can be used separately or together. Only participatory needs assessment, however, sets the stage for community initiated planning and action.

But even when such assessments are undertaken, projects will not be demand-based unless the studies are used to determine project strategies. Hence, rather than narrowly equating demand with willingness to pay, many projects are developing strategies for community self selection into a project; willingness to pay is an important consideration, of course, but it is not the sole consideration. Self-selection into a project is a solid indicator of the community's collective demand and its willingness to make hard choices. thus, in the Sri Lanka project, communities (together with a local, nongovernmental implementing agency, if needed) have to fill out very detailed project proposals, submit evidence of consultation with different segments of the community, prove that land and water right conflicts have been resolved, and agree to pay the full cost of O&M and 20 percent of capital costs. As the service level rises, the community share of capital costs increases.

In the Pakistan rural water supply project, communities must sign a legal document, a "memorandum of understanding," which stipulates the mutual responsibilities of the different parties. In Azad Jammu Kashmir province, communities make cash and material contributions before the local government enters into an agreement with communities to improve the water situation. The process itself, which has been used for the last twenty years, is kept simple and nonbureaucratic.

SENASA, the water and sanitation agency in Paraguay, recognizes that community participation is essential for sustainability. After conducting willingness-to-pay and affordability studies, SENASA enters into a contractual agreement with the junta (a community's water and sanitation committee), but only after the community has fulfilled several specified tasks that establish its interest in the project.

Institutional Framework

The lead agency in most countries is usually the public works or water engineering department. Most of these agencies are neither trained nor interested in working with communities. The inefficiency and leakage from these large, central public work agencies have led to a search for alternative institutional arrangements and innovations. Another problem stems from the fragmentation of responsibilities among agencies and the need-most frequently unmet-to coordinate across departments. It is interesting to note that in countries where large-scale success has been achieved, the key implementing agencies have often been other than public engineering departments. Thus, in Malawi, the rural water supply program is led by the country's Department of Community Development; in Colombia, by the National Institute of Public Health; and in Togo, by the Ministry of Social Affairs, Public Health and Status of Women.

Different countries are trying out different strategies, including decentralization (for example, fiscal decentralization and strengthening of a central ministry's field branches), greater involvement of the private sector (including NGOs), and creation of new units or departments that are better equipped than existing ones to reach out to communities and support community action. Although all Bank-supported projects include "institutional strengthening" components, the ones that aim at radical restructuring of the sector and policy reform include institutional reform as a specific objective, and they invest substantial resources in capacity building and training for agencies.

The key agencies for rural areas in Sri Lanka are the National Water and Sanitation Drainage Board (NWSDB), whose main focus is urban; the Ministry of Health, for sanitation; and 257 local authorities. The Government of Sri Lanka relied primarily on bilateral assistance for investment in rural areas, and lack of comprehensive policy or plans led to the introduction of over fifteen different handpumps in the country during the 1980s. As a result of a review of sector policy, the government adopted the District Development Plan (DDP), which employs a planning-by-district approach. The sector analyses also revealed inefficiencies in the sector; the government concluded that sustainability of rural water supply systems depended on communities and the private sector, including NGOs. The government role was redefined as regulator and promoter.

The Sri Lanka rural water supply project, which is supported by the International Development Association, will be implemented in three districts. The aim is to develop a community-based strategy that can be applied nationally. Project objectives include the following: (1) develop systems and institutions for community-based planning, implementation, operation, and maintenance of cost-effective and sustainable water supply, sanitation, and hygiene education; (2) implement community-based schemes in some of the rural areas and small towns of Badulla, Matara, and Ratnapura districts; and (3) prepare a follow-up project, applying the community-based approach developed and tested in this project, to complete coverage in the districts cited above and in other districts for which DDPs have been completed.

Since no single agency is responsible for rural water supply, the government will create a Community Water Supply and Sanitation Program Unit (CWSSPU) based in the Ministry of Housing and Construction. A national steering committee will advise the CWSSPU, but the new unit will have full financial control and autonomy to apply project review criteria, approve projects, and disburse funds. The CWSSPU will not directly implement projects itself; it will stead contract with other, intermediary implementation agencies (IAs) for that work. The National Steering Committee, which will be the policymaking body, will include members of the CWSSPU and representatives of NGOs and community-based organizations. Hence, experience from the project will inform policymaking and produce legislative changes needed to support the community-based approach on a national scale.

The NWSDB together with other specialized agencies will provide support to the CWSSPU to build the capacity of the intermediary implementation agencies. The NWSDB will assist with drilling; under contract, large NGOs and professional organizations will provide training for other technical tasks and help the implementation agencies devise community development strategies.

Any agency, either an NGO or one in the private sector, or the Pradeshya Sabha (the lowest level elected authority) can apply to be an implementation agency for a project. An IA has to submit proof of its capacity to undertake the project, its past achievements, and the willingness of community-based organizations to work with it in implementing projects. Thus, all project activities will be managed by the IA, working in close collaboration with a community-based organization or a community group at the village level. Community-based organizations can also apply directly for grants.

These institutional arrangements mark a radical departure from the past, when public sector engineering departments had the responsibility for working with communities. The project review process described earlier, which enables any group with credentials to qualify as an IA, introduces competition in service delivery. At the same time, large, more experienced agencies are tapped to train, support, and build the capacity of the smaller IAs that work directly with the communities.

Similarly, in Nepal a rural water and sanitation project now being prepared bypasses the Ministry of Public Works. With support from the Ministry of Finance and the National Planning Commission, the project will create a "Fund" outside the Ministry of Public Works. The Fund, which will be established by an act of parliament, will be managed by a board composed of representatives from the private and public sectors and NGOs. The Fund will develop a set of transparent criteria for disbursing grants to any agency whether from the community, the private sector, an NGO, or the Department of Public Works itself-to provide water supply services for the rural poor. The details of Fund operations are currently being worked out.

In Indonesia, the institutional framework for the rural water supply and sanitation program for low-income communities is based on devolving power, authority, and responsibility to the provinces and, further, to the districts in six provinces. The institutions involved are the Ministry of Public Works, for physical development of water sources; the Ministry of Health, for water quality and health education; and the Ministry of Home Affairs, for institutional development and community participation. Decision making powers for selecting communities and allocating resources are delegated to either the district or the subdistrict, depending on the complexity of the technology.

These projects involve NGOs and the private sector in a major way. Sri Lanka and Nepal conduct large publicity campaigns, disseminating information about the project and the Fund, to encourage any type of agency to participate in a project. Côte d'Ivoire involves the private sector in management and implementation that goes beyond just contracting for civil works, by stressing the importance of the regulatory and incentive structure as well as the different approaches needed for rural and urban sectors (Triche 1990).

Société de Distribution d'Eau de Côte d'Ivoire (SODECI), a joint foreign and local, private-stock holding company, was established in 1960 to manage the water supply for Abidjan. In 1978 the Ivorian government granted a lease contract to SODECI to operate and maintain all urban and rural water supply outside Abidjan. Construction performance was impressive. A total of 158 cities and towns and 90 villages were equipped with piped systems. In more than 8,000 villages, 13,500 water points had been constructed and equipped with handpumps. Financial performance for the urban areas was also good: collection rates were at 98 percent, and unaccounted-for water was at a low level.

Yet, as striking as these figures seem, performance in the rural areas was poor. A majority of rural water points were broken down. A centralized maintenance system resulted in costly and delayed repairs; communities were not organized; and villager participation was found to be weak. In general, rural systems were over designed and expensive. Since SODECI did not assume any commercial risk for poor financial performance and since shortfalls were covered by sector funds, there was little incentive to keep rural costs low or to monitor performance.

The water sector was reorganized. The government renegotiated its contract with SODECI for more favorable terms, with SODECI assuming more risk for proper operation in the urban areas. In March 1988 the strategy for the rural areas changed, with local contractors and artisans becoming involved. Responsibility for maintenance was gradually turned over to villages, and local people were trained in maintenance and repairs. The latest survey shows that, despite intensive technical training in repairs and distribution of spare parts through local automotive dealers, one-third of all pumps remain broken. Difficulty in coordination, and lack of demand and incentives at the village level to keep pumps functioning, were two problems identified as causes for this outcome.

Funds and Financial Flow

Institutional issues cannot be fully separated from financial and fund channeling issues. The key in managing demand-responsive approaches is availability of funds at the community level, funds that can be disbursed when needed, through simple mechanisms, with transparency and accountability. In a review of funding mechanisms across sectors, Alexandre Marc (1992) found five features to be especially conducive to beneficiary participation:

· Flexibility in the use of funds is important since it is impossible to predict at the outset of a five-year project what will need to be funded, when it will be funded, and how much will be needed.

· Mechanisms for accessing and managing funds at the local level need to be simple since many local communities (and sometimes NGOs and local governments) are not yet accomplished at management.

· Mechanisms need to permit small disbursements of funds, given the limited capacity of small communities to absorb large disbursements.

· Mechanisms must be transparent to foster trust.

· Funding mechanisms need to be sustainable to support long-term capacity building at the local level.

Changing the way finances are managed and how money is allocated in the sector is a fundamental feature of institutional reform. Both the fund delivery mechanism (from donor to government to intermediary) and the receiving mechanisms (at the community levels, and at the agency level in recovering costs from the community) need to be addressed.

All projects that depart from direct provision of services by the public sector employ massive publicity campaigns at the outset to encourage wide-based participation and to prevent distortion of the fund's use. Transparency is the best guarantee against abuse. In Sri Lanka all financial investment decisions will be made by the CWSSPU and its field offices, not by the drainage board. Using implementation agencies and intermediaries will cut down on the total number of individual requests, but when the project reaches its peak, 400 requests will most likely be processed and implemented each year.

The third Paraguay rural water supply and sanitation project is the only one that specifically targets sector financing as its primary policy objective. The project states that its first objective is to organize "a sector financing system based on greater reliance on water users self-financing capability." This project also provides an interesting example of the importance of having incentives at the agency level for making the receiving mechanism work.

SENASA, which was set up as a decentralized unit of the Ministry of Health in 1971, initially had responsibility for a range of activities in water and environmental sanitation. In mid-1991 SENASA was restructured to streamline operations and to clarify responsibilities, and three autonomous directorates were created: one for water and sanitation, one for environmental health, and the other for administration.

Although the general approach to community participation and the mechanism for delivering finances to the community were developed in earlier projects, the third Paraguay project focuses on correcting the high level of arrears in debt service on loans that SENASA makes to communities. Discussions revealed that SENASA has had little incentive to press the juntas to service their debts, since these repayments were required to be deposited at the Central Bank of Paraguay in a non-earning account, and the approval process for withdrawing even small amounts of money for project use was cumbersome and lengthy.

As a result of negotiations with the government, SENASA is now permitted to manage its own financial resources, including recuperation of past loans. The agency was also allowed to establish an interest-bearing account to operate a revolving fund-under regulations and procedures promulgated by SENASA itself-to expand water services to other rural communities.

None of the projects lends directly to NGOs or to the private sector. In Bangladesh, however, the Grameen Bank makes loans to the poor for investment in wells and latrines. The approach has been successful; consequently, the United Nations Capital Development Fund turned over its large tubewell construction program to the Grameen Bank.

Channeling funds to communities for responsible use is the key to stimulating large-scale community initiatives, without controlling the form and extent of direct participation at the community level. Fiscal decentralization and establishment of funds for direct community access may be new phenomena for the rural water supply sector, but the Bank has considerable relevant experience with social funds and municipal investment funds. What is required for the water sector is that the ex-ante control mechanisms currently used for disbursement of funds, as well as Bank procurement and auditing procedures, be simplified and adapted to give control and power to communities themselves.

For the Bolivia Social Investment Fund, the Bank approved the use of a unit-price costing system supporting direct contracting instead of open bidding. In Indonesia, where NGOs are not recognized by the central government and therefore are not allowed to compete in local bidding, the Bank encouraged management firms to enter into joint-venture arrangements with NGOs to compete in local bidding (Bhatnagar and Williams 1992).

A related issue concerns the legal status of community groups. Unless these groups have legal status, it is often difficult to channel resources or transfer ownership of assets to them. Many water projects have already addressed this problem. Projects that depend on community groups to be key actors-for example, the Nepal Community Hill Forestry Project, the India Integrated Watershed Development Plains Project, and the Nepal Bhairawa-Lumbini Groundwater Irrigation III Project-include specific programs to legalize groups.

Technology and Choice of Service Level

As long as technology and service level are predetermined and inflexible, community demand cannot be met, even if such demand has been assessed and aggregated. Studies done during preparation of Bank projects show that all clients-even the poor-want high service levels, and they are willing to pay substantial amounts for reliable service. Although many projects prohibit or limit the number of house or yard connections and insist instead on providing minimal service levels to the largest number, a few World Bank projects do offer service beyond the minimum, provided that users pay the additional costs.

Thus, in Sri Lanka, rather than drawing up detailed engineering designs for each village in a project area, the intermediary institutions spend time-after a community has expressed interest-explaining and working out the short and long-term costs of different options; the community then chooses the technology and service level. A similar approach is planned in Indonesia; the government will allocate a fixed amount for capital costs and communities will make up the difference if higher service levels are desired.

Approaches to Planning: Master Plan or Learning Process?

The conventional master plan approach which focuses on "optimizing" technology for priority investment areas, is most common in the water sector. Extensive village-by-village surveys, focusing on population statistics, water availability, health, and socioeconomic and hydrogeological conditions, typically are the basis for the master plan. When the surveys are completed, preengineering designs are made; long before implementation, "blueprints" are developed for the communities, including detailed engineering designs with established costs. Contracts have often already been awarded by this stage. The several volumes of data and engineering drawings that exist for any one district or province encourage development of how-to manuals for project execution well before any implementation begins.

The master plan (or blueprint) approach calls for very little consultation with local people; there is no need to establish local partnerships. A master plan approach is therefore appropriate for centrally managed and controlled systems and for large construction projects. It is inherently antagonistic to a demand-based approach, however, which depends on responding to what communities want.

The alternative to the master plan is an approach that emphasizes learning by doing; the learning-process approach presumes that not everything can be known prior to implementation. NGOs have long used this approach, but it has only recently been applied to Bank projects.

In essence, a learning-process approach is a systematic way of learning by doing and of building in flexibility in the planning process (Korten 1980). It is a way to manage uncertainty when the doer does not know what will and what will not work in a particular context. It is a way to manage risk, and to minimize the risk of failure by not being forced to define one correct way of doing business before the evidence is in. The emphasis is on trying different institutional and technological options that appear feasible in a particular context. Because no two communities are the same, standardization of details of implementation strategies is not only irrelevant but counterproductive and wasteful of resources.

The process does not assume that there is one right answer; it seeks to identify, through monitoring and evaluation, the key principles that can guide implementation and inform policy. The most important learning takes place at the local level; central to the concept, therefore, is involvement of all relevant stakeholders in the process. That involvement is critical for building local capacity, promoting local ownership, and inducing policy change.

When it is assumed that all the answers are not known but multimillion-dollar projects are still being planned, it is important that learning be effective and efficient: hence, the special importance of internal and external monitoring and evaluation procedures to guide project decision making. The acceptance of the learning approach to planning has profound implications for the project-preparation process and for implementation strategies. Success in this approach is conditional on clarity of objectives and indicators of success, openness to learning, experimentation with different strategies, ceding of agency control, and tolerance of ambiguity.

The current water project in Indonesia is based on a "structured-learning" approach to community management. Even preparation for the project differed from that for conventional rural water supply projects. Since community management of rural water supply through government had never been successfully achieved in Indonesia, the World Bank team, the staff of the UNDP-World Bank water and sanitation program in Jakarta, and the Indonesian government became partners in collective problem solving. Project preparation for the six provinces was decentralized to the provinces, assisted by teams of government and local consultants from NGOs (CARE staff became consultants to the government).

As objectives, principles, and strategies emerged, it became obvious to all that what was being proposed was a radical departure from the past and that extensive data gathering for the entire project area would not be useful. What was needed instead was to try out the strategies that were being developed throughout the preparation process. Sixty-two villages (or starter areas) were selected in the six provinces to start implementation. Intensive and participatory data gathering was limited to these starter areas. Data were gathered by facilitators from the kecamatan and kabupaten levels through village self-assessment. Findings regarding willingness to pay and other data were used to develop the village action plan (VAP), which is a detailed document completed at the end of the village consultation process; the village and its water committee are signatories to the VAP.

Because the government wanted to use a learning approach to make the project design responsive to community demand, and because the project was decentralized, the preappraisal process could be participatory. In the capital of one of the provinces, the process included project preparation teams from the provinces and senior officials from the center and the provinces. The first two days were spent developing a common understanding of a learning-process approach through a series of hands-on activities involving sixty participants. The workshop was managed by the UNDP-World Bank Water and Sanitation Program.

The workshop started with officials drawing their vision of community management. Other activities included card-sorting exercises that prioritized the behavioral attributes needed at the community and agency levels to make community management work and that identified the critical decisions in the community-management process and the appropriate government levels at which decisions should be made. thus, the workshop clarified key concepts through an intensive participatory process and set the stage for evaluating provincial proposals based on common criteria identified by the participants.

A limited number of engineering designs were developed to establish cost parameters; procurement procedures were simplified to involve local contractors. Much time was spent in clarifying and simplifying the flow of funds to ensure that expenditures would be responsive to demand and that decisions for simple systems would be made as close as possible to the community level. The project includes a detailed training strategy to orient and train staff to support community-management strategies; 20 percent of the budget is earmarked for capacity building at the agency and community levels.

Given the importance of monitoring and evaluation (M&E) for internal and external planning, one of the first project workshops will focus on developing the M&E framework, that is, the indicators and processes to be monitored at different levels. The capacity for monitoring process and outcome will be strengthened at the kabupaten level. Thus, rather than extensive data gathering prior to implementation, data gathering throughout the project cycle will become key to adjusting and refining plans during implementation. Planning will be undertaken for one year periods, with resource allocation for the following year dependent on the performance of the previous year. This "rolling conditionality" ensures that the data gathering is put to use in decisionmaking. The budget is indicative only, with the expectation that after the first couple of years of implementation, better estimation will be possible.

One constraint to the World Bank's involvement in the rural water supply sector is that there are few large-scale successes in the countries where assistance is needed. It is also clear that successes depend on radical institutional reform, coupled with intensive community level outreach activities. hence, success depends on new learning. The interval between a project's identification and the effective data of a credit or loan is often long, and that time could be used to implement the new strategies and options proposed by the project. That experience, in turn, could help refine the principles and strategies of the project once the loan became effective, thus, minimizing risks during large scale implementation.

An increasing number of Bank projects therefore begin pilot activities during project preparation. This has been done in Indonesia, Karnataka (India), and Nepal. The Nepal rural water supply project (with involvement from the UNDP-World Bank program) includes a pilot project financed by the Japanese Grant Fund. The $1.5 million pilot phase will be implemented for twenty months before the effective date of the loan. It will test different service delivery options, document results, and test the working of the Fund approach proposed for the main project (see box 6.2).

Monitoring and Evaluation

Of course, managers worry about potential loss of control and accountability when decisions are made by hundreds of communities rather than by a central authority. Nevertheless, flexibility and accountability can coexist, if there is also a monitoring and evaluation system that can simply and effectively indicate what is going on at different levels.

In both the Sri Lankan and Indonesian rural water supply projects, monitoring and evaluation activities are important. Both projects seek to ensure that project agencies do not dominate the community decisionmaking process, and both emphasize community self-assessment activities. Selected information gathered at the community level flows upward through the system to keep the process simple, yet still ensure responsiveness to communities.

Box 6.2. Nepal: a new funding mechanism

In 1992 preparations began for the proposed US$18.1 million national Rural Water Supply and Sanitation (RWSS) Program in Nepal. The program is designed to include an autonomous RWSS-FUND, which will support demandled, community-based water and sanitation initiatives. In March 1993, as part of project preparation, an innovative twenty-month field-testing program was initiated to test and refine proposed strategies, including the funding mechanism. The pilot program is funded by a Bank executed Japanese grant (approximately US$1.5 million) and managed by the UNDP/World Bank Water and Sanitation program (TWUWU).

The RWSS-FUND will be managed by a board with representatives from both the government and the private sector (NGOs). The board will be autonomous, and fully responsible for the Fund's management. Funding will come from the Ministry of Finance through a simplified procedure consisting of the release of block grants once the Fund budgets have been approved by the Fund Board and Parliament.

The Fund mechanism, which is being tested in the pilot program, is largely similar to the final mechanism. For example, the pilot Fund's advisory committee is similar in composition to the proposed Board of the RWSS-FUND. However, the pilot Fund is managed by project staff and funded through a grant. So far, the mechanism appears to be working well.

Fourteen implementing agencies (support organizations/SOs) from the private sector (mostly NGOs) have qualified for funds, and 84 communities representing about 31,000 beneficiaries are participating. In addition, a pipeline of sub-projects is being identified for implementation when the main project is underway. The four phases of the sub-project cycle and the responsibilities of each group of participants are outlined below:

1. Pre-development phase. Selection of SO and sub-project according to a set of transparent eligibility criteria (felt need, sustainability, technical, economic, and environmental soundness). SO completes a pre feasibility study of a sub-project which forms the basis of a contract with the fund for the development phase.

2. Development phase. The water users' committee, with SO assistance, prepares a feasibility study of its own water supply and sanitation system. This feasibility study forms the basis for a contractual agreement among the Fund, the beneficiary community, and the SO for the next two phases (for example, implementation and post implementation).

3. Implementation phase. SO provides hygiene and sanitation education, and trains the water users' committee and village maintenance workers. The beneficiaries construct the sub-project with support from the SO as needed.

4. Post-implementation phase. The continuation of hygiene and sanitation education, and latrine promotion by the SO, with operation and maintenance of the water system by the beneficiaries.

Preliminary findings indicate that district-based NGOs, localized NGOs, and CBOs are effective service providers, especially in many aspects of software. Large SOs have proven extremely useful as well, especially in their research and technical capabilities. Effective consortia agreements are being forged between the SOs.

With the support of SOs, most communities have successfully formed water users' committees, the majority of which are representative in terms of gender and ethnicity. Water users' committees in almost all areas have made advances in planning and construction. Although the development phase process (phase 2 above) is sometimes seen as time-consuming, some SOs have reported that the process results in much stronger water users' committees, as well as fewer post-construction problems.

Source: Legrain (1994); Pfohl (1993); World Bank.