Completion Report

Project Number: 31317 Loan Number: 1830 February 2010

Bhutan: Basic Skills Development Project

CURRENCY EQUIVALENTS

Currency Unit – ngultrum (Nu)

At Appraisal At Project Completion May 2001 March 2008

Nu1.00 = $0.021 $0.025 $1.00 = Nu45.00 Nu39.00

ABBREVIATIONS

AAS – alumni administration system ADB – Asian Development Bank ATP – apprentice training program BAS – budget and accounting system BME – benefit monitoring and evaluation BVQA – Bhutan Vocational Qualification Authority BVQF – Bhutan Vocational Qualification Framework CAU – community access unit CBT – competency-based training CSC – Construction Service Center DANIDA – Danish International Development Agency DHR – Department of Human Resources DOE – Department of Employment DOS – Department of Occupational Standards ESC – employment service center HRD – human resource development ILPU – Industry Liaison and Publicity Unit ITC – industrial training committee JICA – Japan International Cooperation Agency JPO – job placement office LMIS – labor market information system MOF – Ministry of Finance MOLHR – Ministry of Labor and Human Resources NEB – National Employment Board NTTA – National Technical Training Authority PIU – project implementation unit PSC – project steering committee RAA – Royal Audit Authority RTI – Royal Technical Institute RCSC – Royal Civil Service Commission SBVC – school-based vocational club STRU – Skills Training and Resource Unit TA – technical assistance TAC – technical advisory committee TIAE – Thimphu Institute of Automobile Engineering TIZC – Trashi Yangtse Institute of Zorig Chusum TPSD – Training and Professional Service Division TVET – technical and vocational education and training VET – vocational education and training

VSDP – Village Skills Development Program VTI – vocational training institute VTIS – vocational training information system

NOTE

(i) The fiscal year (FY) of the government ends on 30 June. "FY" before a calendar year denotes the year in which the fiscal year ends, e.g., FY2008 ends on 30 June 2008.

(ii) In this report, "$" refers to US dollars. Vice-President X. Zhao, Operations 1 Director General S. H. Rahman, South Asia Department (SARD) Director T. Matsuo, Director, Agriculture, Natural Resources and Social

Services Division, SARD Team leader M. Watanabe, Rural Development Specialist, SARD Team member V. Mariano, Project Implementation Officer, SARD In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

CONTENTS Page

BASIC DATA i

MAP vi

I. PROJECT DESCRIPTION 1

II. EVALUATION OF DESIGN AND IMPLEMENTATION 1

A. Relevance of Design and Formulation 1 B. Project Outputs 2 C. Project Costs 7 D. Disbursements 8 E. Project Schedule 8 F. Implementation Arrangements 8 G. Conditions and Covenants 9 H. Consultant Recruitment and Procurement 9 I. Performance of Consultants, Contractors, and Suppliers 10 J. Performance of the Borrower and the Executing Agency 10 K. Performance of the Asian Development Bank 10

III. EVALUATION OF PERFORMANCE 11

A. Relevance 11 B. Effectiveness in Achieving Outcome 11 C. Efficiency in Achieving Outcome and Outputs 12 D. Preliminary Assessment of Sustainability 12 E. Impact 12

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS 13

A. Overall Assessment 13 B. Lessons 13 C. Recommendations 14

APPENDIXES 1. Design and Monitoring Framework: Summary of Project Achievements 16 2. Summary of Achievements of the GTZ Component (Component 3) 20 3. Staff Development Plan 23 4. Comparative Table of Vocational Training Institutes and Enrollment Capacity 24 5. Staffing Pattern of Vocational Training Institutes 25 6. Graduates of Village Skills Development Program 27 7. Number of Job Seekers Registered and Placed 28 8. List of Occupational Profiles Developed 29 9. List of Occupational Profiles Endorsed by the Technical Advisory Committees 31 10. Project Costs and Financial Plan 32 11. Breakdown of Annual Disbursement 35 12. Project Implementation Schedule 36 13. Status of Compliance with Loan Covenants 39 14. Consulting Services 45 15. Selected Internal Efficiency Indicators, 2008 46 16. Ministry of Labor and Human Resources Organogram 47 17. Assessment of Project Performance 48

BASIC DATA A. Loan Identification 1. Country 2. Loan Number 3. Project Title 4. Borrower 5. Executing Agency 6. Amount of Loan 7. Project Completion Report Number

Bhutan Loan 1830-BHU (SF) Basic Skills Development Project Kingdom of Bhutan Department of Human Resources, Ministry of Labor and Human Resources (originally the National Technical Training Authority) SDR5,556,000 PCR:BHU 0002

B. Loan Data 1. Appraisal – Date Started – Date Completed 2. Loan Negotiations – Date Started – Date Completed 3. Date of Board Approval 4. Date of Loan Agreement 5. Date of Loan Effectiveness – In Loan Agreement – Actual – Number of Extensions 6. Closing Date – In Loan Agreement – Actual – Number of Extensions 7. Terms of Loan – Interest Rate – Maturity (number of years) – Grace Period (number of years)

22 March 2001 2 April 2001 17 May 2001 18 May 2001 21 June 2001 20 August 2001 18 November 2001 16 November 2001 0 31 March 2007 31 March 2008 1 1.0% per annum during grace period; 1.5% thereafter 32 8

8. Disbursements a. Dates Initial Disbursement

24 December 2001

Final Disbursement

27 August 2008

Time Interval

80.16 months

Effective Date

16 November 2001

Original Closing Date

31 March 2007

Time Interval

64.47 months

ii

b. Amount ($ million)

Last Net Undisbursed Category Original Revised Amount Amount Amount Loan

Description Allocation Allocation Cancelled Available Disbursed Balance

Civil works 2.82 4.87 0.29 4.58 4.58 0 Furniture and

equipment 1.81 2.17 0.31 1.86 1.86 0

Training/fellowships 0.15 0.28 0.03 0.26 0.26 0 Consulting services 0.83 0.46 0.03 0.43 0.43 0 Interest charge 0.26 0.31 0.14 0.17 0.17 0 Unallocated 1.13 0.07 0.07 0.00 0.00 0 Total 7.00 8.17 0.87 7.30 7.30 0 c. Amount (SDR million) Last Net Undisbursed

Category Original Revised Amount Amount Amount Loan Description Allocation Allocation Cancelled Available Disbursed Balance

Civil works 2.24 3.30 0.19 3.11 3.11 0 Furniture and

equipment 1.44 1.47 0.20 1.27 1.27 0

Training/fellowships 0.12 0.20 0.02 0.19 0.19 0 Consulting services 0.66 0.33 0.02 0.31 0.31 0 Interest charge 0.21 0.21 0.09 0.11 0.11 0 Unallocated 0.90 0.05 0.05 0.00 0.00 0 Total 5.56 5.56 0.57 4.99 4.99 0 9. Local Costs (Financed) Appraisal Estimate Actual - Amount ($ million) 2.66 2.70 - Percent of local costs 46.7% 54.8% - Percent of total cost 21.6% 21.6% C. Project Data

1. Project Cost ($ million) Cost Appraisal Estimate Actual

Foreign Exchange Cost 6.8 7.6 Local Currency Cost 5.7 4.9 Total 12.5 12.5

2. Financing Plan ($ million)

Cost Appraisal Estimate Actual Borrower-financed 3.0 2.2a Asian Development Bank–financed 7.0 7.3 Government of Germany 2.5 3.0 Total 12.5 12.5

iii

3. Cost Breakdown by Component ($ million)

Component Appraisal Estimate Actual A. Base Costs 1. Strengthening management 1.83 1.63 2. Increasing access to basic skills and employment

5.79

7.72

3. Improving quality of basic skills training 2.98 2.99 4. Taxes and duties 0.81 0.00b Subtotal A 11.12 12.34 B. Contingencies 1. Physical contingencies 0.50 0 2. Price contingencies 0.63 0 Subtotal B 1.14 0 Total A+B 12.25 12.34 C. Interest charges 0.26 0.17 Total 12.51 12.51 a Preliminary figures, as audit of fiscal year 2007 financial accounts is not yet finalized. b Incorporated in the actual costs borne by the government.

4. Cost Breakdown by Expenditure Accounts ($ million) Appraisal Estimate Actual Expenditure Category Foreign Local Total Foreign Local Total Base Costs Civil works 0.81 2.68 3.49 2.04 4.17 6.21 Furniture and equipment 1.69 0.05 1.75 1.72 0.20 1.92 Consulting services 0.74 0.09 0.83 0.41 0.02 0.43 Training and workshops 0.15 0.03 0.18 0.26 0.00 0.26 Skill training operation 0.00 1.03 1.03 0.00 0.11 0.11 Project implementation 0.07 0.47 0.54 0.00 0.43 0.43 Taxes and duties 0.00 0.81 0.81 0.00 0.00 0.00 a

Subtotal (Base Costs) 3.46 5.17 8.63 4.43 4.93 9.36 Contingencies

Physical 0.31 0.19 0.50 0.00 0.00 0.00 Price 0.31 0.32 0.63 0.00 0.00 0.00 Subtotal

(Contingencies)

0.62

0.51

1.13

0.00

0.00

0.00 Interest Charges

0.26

0.00

0.26

0.17

0.00

0.17

Government of Germany 2.49 0.00 2.49 2.98 0.00 2.98 Total 6.82 5.68 12.51 7.58 4.93 12.51

a Incorporated in the actual costs borne by the government.

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5. Project Schedule Item Appraisal Estimate Actual Consulting services GTZ-financed Q1 2002 Oct 2001 ADB-financed Q1 2002 Aug 2002 Civil works Start Q4 2002 Sep 2002 Completion Q2 2004 Feb 2008 Equipment and furniture First procurement (training institutes) Q3 2002 Jun 2002 Last procurement (training institutes) Q2 2004 Jan 2008 Staff development Start Q2 2002 Jun 2002 End Q4 2005 Dec 2006 Reallocation of loan proceeds First reallocation Sep 2004 Second reallocation May 2007

ADB = Asian Development Bank. 6. Project Performance Report Ratings

Implementation Period

Ratings Development

Objectives Implementation

Progress 1 January–31 December 2001 S S 1 January–31 December 2002 S S 1 January–31 December 2003 S S 1 January–31 December 2004 S S 1 January–31 December 2005 S S 1 January–31 December 2006 S S 1 January–31 December 2007 S S 1 January–31 December 2008 S S S = satisfactory. D. Data on Asian Development Bank Missions Name of Mission

Date

No. of Persons

No. of Person-Days

Specialization of Members

Loan fact-finding 8–19 Jan 2001 3 36 a, b, c Appraisal 22 Mar–2 Apr 2001 6 114 a, b, d, e, f, g Inception 25 Nov–3 Dec 2001 2 14 b, h Loan review 1 8–17 Apr 2002a 1 7 b Loan review 2 18–25 Sep 2002 1 8 b Loan review 3 17–26 Mar 2003 1 10 i Loan review 4 29 Jul–7 Aug 2003 1 10 I Midterm review 21–30 Apr 2004 2 20 j, h Loan review 5 29 Nov–2 Dec 2005 1 4 j Loan review 6 13–17 Mar 2006 1 5 j Loan review 7 11–16 Dec 2006 2 10 k, l Special project review 12–20 Feb 2008b 2 6 m, n Project completion review 29 Oct–6 Nov 2009 3 24 o, n, p Skills Development Project. Manila (JFPR Grant 9103-BHU). a = project specialist, b = senior project specialist, c = economist, d = social development specialist, e = counsel, f = programs officer, g = management and institutional development specialist (staff consultant), h = assistant project analyst, i = principal education specialist, j = project economist, k = urban economist, l = senior social sector specialist, m = social sector economist, n = project implementation officer, o = technical and vocational education and training specialist (staff consultant). a In conjunction with the country program mission.

v

b In conjunction with the review of ADB. 2006. Proposed Grant Assistance to the Kingdom of Bhutan for the Rural

CTC

RTI

ARTC (New TIAE)

NDTI (SVTI)

TIZC

RTI East Extension (RVTI)

RTI West (KVTI)

Paro

Ha

Samtse

Chhukha

Punakha

Damphu

Daga

Gelephu

Lhuentse

Samdrup Jongkhar

Pemagatshel

Zhemgang

Wangdue-phodrang

Trongsa

Trashigang

Mongar

Jakar

THIMPHU

DorokhaDungna

KharbandiPagli

Tala

Mirchim

Raidak

Ho Mathola

Kalikhola

Phibsoo

DagapelaLamidanga

Sarpang Lalai

Gomphu

Panbang

Nganglam

Tingtibi

Phongme

Bartsham

Tashiyangphu

TshelingoreKhodakpo

Thrimshing

Bhangtar

Dalim

DiafamSamrang

ChazamRiju

Trashi-Yangtse

Yang'nyer

Drametse

Lingmithang

Chaskar

Tang

Tangmachhu

Kurjey

Mukhangkhar

Changkhada

DuksumSimtokha

Samtengang

Pubjikha

Nobding

Damthang

Chhuzom

Begana

Tangco Chari

Lobesa

Thinlegang

Tashithang

Gasa

She'ngana

Drugyel Dzong

Phuen-tsholing

Pasakha

Sipsu

Tendru

GASA

PUNAKHA

H A

THIMPHU

PARO

SAMTSE

CHHUKHA

DAGANA

SARPANG

LHUENTSE

TRASHIGANG

TRASHI-YANGTSEBUMTHANG

MONGAR

SAMDRUP JONGKHAR

ZHEMGANG

PEMAGATSHEL

WANGDUE-PHODRANG

TRONGSA

TSIRANG

National Capital

District Capital

City/Town

Project Institute for Refurbishment

Project Institute for New Construction

National Road

River

District Boundary

International Boundary

Boundaries are not necessarily authoritative.

Auto Repair Training Center

Construction Training Center

National Drivers Training Institute

Royal Technical Institute

Transhiyangtse Institute for Zorig Chusum

ARTC =

CTC =

NDTI =

RTI =

TIZC =

BHUTAN

BASIC SKILLS DEVELOPMENT PROJECT(as completed)

Kilometers

0 10 20 30 40

N

09

-40

80

HR

27 00'No 27 00'No

89 30'Eo

89 30'Eo

91 00'Eo

91 00'Eo

I. PROJECT DESCRIPTION

1. During the late 1980s and 1990s, Bhutan experienced robust economic growth averaging 6.3% per annum and resulting in a steady structural transformation from traditional subsistence to a more modern market economy. The share of agriculture in the gross domestic product declined from 53% in 1981 to 37% in 1998, while the share of industry increased from 17% to 35% during the same period, led by manufacturing, electricity, and construction.1 The buoyant growth of industry brought about increased demand for skilled and semiskilled workers. However, the education system, and specifically the technical and vocational education and training (TVET) system, could not meet labor demand despite the increasing number of educated youths that entered the labor market, as most of them lacked the necessary skills. Industry thus had to rely on foreign workers from neighboring countries to fill the skills gap, causing worsening unemployment, especially among urban youths. This not only hindered Bhutan’s efforts to utilize its national human resources toward national development but also exacerbated the risk of social instability. 2. The Basic Skills Development Project aimed to improve the quality and relevance of the TVET system to enable it to provide training in employment-oriented basic skills to new school graduates, unemployed youths, domestic laborers, and people in rural areas, particularly women and the poor. To achieve this, the project aimed to (i) strengthen institutional capacity for policy making, planning, and coordination in the TVET system, as well as for delivering basic skills training relevant to the market needs and commensurate with the capacity of beneficiaries; (ii) increase access to basic skills training by expanding the TVET system to include community-based programs, rehabilitating existing facilities, and establishing new ones; (iii) improve the quality of basic skills training by strengthening links with the private sector; and (iv) promote the effective use of basic skills by developing employment guidance and placement services. The project was approved on 21 June 2001 for a loan of $7.0 million equivalent and made effective on 16 November 2001. It was cofinanced by German development cooperation through GTZ with a grant of DM5 million ($2.5 million equivalent at appraisal) on a parallel basis. The project cost was $12.5 million equivalent including counterpart funding.

II. EVALUATION OF DESIGN AND IMPLEMENTATION

A. Relevance of Design and Formulation

3. The project design was highly relevant to Bhutan’s development priorities. Its focus on reforming and strengthening TVET was consistent with the goals of Bhutan 2020: A Vision for Peace, Prosperity and Happiness 2 and the recommendations of the Human Resource Development (HRD) Master Plan, 1997–2002, which included (i) developing short-term technical, vocational, and professional courses; (ii) strengthening HRD institutions including the TVET institutions in conjunction with employment counseling services; and (iii) encouraging private sector participation. These directions were elaborated in the 9th Five Year Plan, 2003–2007. The project is likely to remain relevant beyond completion, as TVET reform continues to be prioritized under the 10th Five Year Plan, 2008–2013, which particularly emphasizes addressing worsening unemployment, particularly among urban youths, through capacity expansion and TVET quality improvement.

1 ADB. 2001. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the

Kingdom of Bhutan for the Basic Skills Development Project. Manila (para. 17). 2 Royal Government of Bhutan. 1999. Bhutan 2020: A Vision for Peace, Prosperity and Happiness. Thimphu.

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4. The project design was consistent with the Asian Development Bank (ADB) country operational strategy,3 which focused on poverty reduction by promoting economic growth and social inclusiveness through interventions in physical and social infrastructure, private sector development, employment creation, and improved economic management. ADB’s strategy for Bhutan's education sector included support for skills development, both pre-employment and workforce skills upgrading, by (i) developing the government's capacity to coordinate skills training and to establish and monitor skills standards and (ii) encouraging private sector provision of training by helping the government to establish a conducive policy environment and incentives. During project formulation, the project preparatory technical assistance (TA) team consulted extensively with stakeholders, including government agencies, industry, civil society, and the development partners. Consultations engendered a sense of ownership in stakeholders and ensured coordination among development partners' TVET projects. Lessons from previous projects in the sector and other countries were considered during design. The project remains relevant vis-à-vis ADB's country strategy and program, 2006–2010, whose overarching goal is economic growth to generate employment. 5. A close look at the project reveals gaps in design. The design and monitoring framework did not have quantifiable indicators at the “purpose” level, making it difficult to gauge project effectiveness. Targets such as the percentage increase in enrollment capacity after completion and the employment rate of graduates, whether wage- or self-employed, could have been set. Regarding quality improvement, the project would have benefited by developing a mechanism to prioritize occupations and set targets for the number of skills standards and the number of competency-based training (CBT) courses to be developed. Provision for training competency assessors, targets for the number of graduates and workers to be tested and certified, and a mechanism to institutionalize industry engagement would have been helpful. Nonetheless, the project addressed weaknesses in the TVET system, laying a foundation for continuing reform and development. It provided a unifying policy framework to ensure coherent and coordinated strategies, plans and programs; its strong emphasis on access and equity made TVET an effective instrument for inclusive growth; and its core activities were built into the administrative structure of the government, thereby ensuring sustainability beyond project completion. B. Project Outputs

6. This section presents project achievements relative to output targets by component and subcomponent. A summary of the design and monitoring framework is in Appendix 1. A summary of achievements under the grant from the Government of Germany is in Appendix 2.

1. Institutional Capacity Building

7. Policy development. A draft TVET policy framework was prepared by the National Technical Training Authority (NTTA), which was the executing agency at appraisal but was reorganized in 2002, with the help of the project, as the Ministry of Labor and Human Resources (MOLHR). Government restructuring in 2003 necessitated further work on the draft. The Planning and Policy Division established under the MOLHR in February 2004 led in finalizing the policy framework, which the cabinet approved in April 2006. The TVET policy framework4 encompasses national vocational qualifications and promotes equitable access and private sector partnership.5 3 ADB. 2000. Country Operational Strategy for Bhutan 2000–2002. Manila. 4 Ministry of Labor and Human Resources. 2006. Vocational Education and Training Policy. Thimphu. 5 The TVET policy framework aims to achieve the following key objectives: (i) all Bhutanese will have access to

quality TVET, enabling them to embark on and remain in gainful economic activity with pride; (ii) every employer in

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8. A policy on cost sharing has not been developed. The MOLHR has, however, considered two cost-sharing measures: (i) student tuition and (ii) industry cost-sharing or service charges. The former was dropped because all vocational training institute (VTI) students are from low-income households and the already low number of applications to VTIs (primarily due to social bias against blue-collar jobs) meant imposing tuition could be counterproductive. The latter has been implemented through two activities under the project, the apprentice training program (ATP) and the dual training system at VTIs. The ATP is offered to students who have completed class X 6or above and provides 1–2 years of training. Costs are shared almost equally between the MOLHR and industries. The ATP has proven successful, with industries absorbing many apprentices upon completion of their training (para. 16). In the dual training system, second year students are attached to private workshops for a year, with costs shared between VTIs and industries. This system has proven effective in sharing costs and in providing market-oriented skills, which is difficult at VTIs for lack of sufficient modern training equipment. Additionally, GTZ has developed a draft public–private partnership strategy, which the MOLHR is currently updating. 9. Industry liaison and publicity. Established in 2001 under the NTTA, the Industry Liaison and Publicity Unit (ILPU) was responsible for facilitating linkage between TVET and private enterprises and for publicity. The performance of the ILPU in fulfilling its responsibilities was severely constrained, however, by limited resources and capacity. Despite these limitations, the ILPU was able to produce and disseminate promotional materials, publish several articles in national newspapers, organize skills competitions, and participate in job fairs. It fell short, however, in the number of visits to private enterprises, achieving only 40% of target for lack of staff and vehicles. During government organizational restructuring in 2003, the functions of the ILPU were distributed among the Department of Human Resources (DHR), Department of Occupational Standards (DOS), and Department of Employment (DOE). This enabled more effective implementation of the ILPU's responsibilities as the departments had greater capacity. 10. Management strengthening. In 2002, the Ministry of Finance (MOF) developed a budget and accounting system (BAS) and required all government agencies to follow it. All accounting transactions are done using the BAS, which provides adequate disbursement transparency by requiring multiple signatories to payments. The MOF issued rules and regulations for managing inventories, with supporting documents to be furnished to the Royal Audit Authority (RAA) annually. The MOLHR had to comply with and implement all the rules and regulations issued by the MOF, as well as with the new personnel performance evaluation system prescribed by the Royal Civil Service Commission (RCSC). Consequently, the management control system to be developed under the project was no longer necessary. However, project accounting was not included in the BAS but treated separately, which contributed to financial irregularities (para. 34). The benefit monitoring and evaluation (BME) system was partly developed and made operational in the DHR in early 2004. A baseline survey was conducted in October 2002, and the BME system produced a midterm BME report in March

Bhutan shall be able to find and attract competent, confident, and competitive Bhutanese workers to boost productivity and profitability; and (iii) every TVET provider in Bhutan will be able to obtain the ministry’s support for designing and marketing training courses geared to raise the employability of citizens.

6 Formal education structure in Bhutan starts with 11 years of free basic education from classes pre-primary (PP) to X. The 11 years are divided into 7 years of primary education (PP – class VI) which starts at the age of 6, and 4 years of Secondary Education (class VII – X). Upon completion of class X, those who pass the national board examination called Bhutan Certificate for Secondary Education continue their general education in classes XI and XII in Higher Secondary Schools and those who don't either opt for private high schools or enroll in vocational training institutes.

4

2004. The BME system produces quarterly progress reports and holds quarterly meetings at the minister level for review and coordination, as well as annual institute meetings for review and updates. 11. Fellowships and a variety of training programs, including public administration, industrial relations, financial management, database management, human resource management, and technical training in selected trades, were provided. A total of 30 person-months of international fellowships (two masters programs) and 21 person-months of short-term external training have been availed of by the executing agency and the DOE (Appendix 3). Except for two staffers that joined politics after completing international fellowships, all trainees continue to work in their respective offices and apply what they learned from the training. 12. Alumni administration system. The project aimed to establish an alumni administration system (AAS) to help track graduates' employment and develop a feedback system to improve TVET. However, the project implementation unit (PIU) deemed it premature to establish an AAS, as VTI operations effectively started in 2005 and the first batch of trainees graduated only in June 2007. Subsequently, the DHR delegated responsibility for AAS establishment to the VTIs. In September 2009, the DHR developed a vocational training information system (VTIS) using government funds. The VTIS is a centrally administered computerized system for collecting, storing, and analyzing various data on TVET, including an alumni database where VTIs can update data on their graduates. In October 2009, the government conducted a tracer study on all VTI graduates, and the data were inputted into the VTIS and analyzed. The results provided initial input to the VTIs for establishing their AASs.

2. Increasing Access to Basic Skills Training and Employment 13. Training institutes. Originally, seven institutes were to be expanded or constructed. The number was reduced to six in February 2003, as the government decided to hand over the Royal Technical Institute (RTI) main campus to Royal Bhutan Polytechnic, and RTI main campus was shifted to the RTI east and north extensions. Further, the names and locations of some target institutes were changed in 2003 (Appendix 4).7 The construction of new VTIs under the project increased TVI enrollment capacity from 400 at appraisal to 1,193 at completion (Appendix 4). However, the utilization rate of the VTIs is quite low. As of 2009, actual enrollment was only 47% of capacity, despite free tuition, board, and lodging,8 as well as a monthly stipend provided to all students. Several factors seem to adversely affect enrollment: (i) the low status of blue-collar work; (ii) training courses that do not match potential students' demands;9 (iii) the lack of bridging courses to enable VTI graduates to pursue diploma courses and bachelor degrees upon graduation; (iv) the perceived lack of relevance and low training quality at VTIs; (v) the lack of a national skills certificate recognized by industry, which hampers employment; (vi) poor working conditions in the private sector; and (vii) lack of knowledge about VTIs and their graduates’ success. Female enrollment has averaged 21.8% since 2003. Additional instructors and support staff have been hired to cope with the increased enrollment. A detailed comparison of staffing patterns at appraisal and completion is in Appendix 5. 14. There was little progress in introducing modular CBT courses, which was the responsibility of GTZ. CBT courses enhance training quality and relevance, as their contents are 7 This report uses the new names throughout the rest of the report in line with government policy. 8 Five of the six VTIs have hostels and offer free lodging. Only the Thimphu Institute of Automobile Engineering does

not have a hostel due to land limitations. 9 Through stakeholder interviews, it became evident that Class X graduates do not wish to enroll in technical courses

such as carpentry or masonry but would rather learn nontechnical courses such as hospitality or computer skills.

5

based on market needs and their delivery focuses on the acquisition of desired competencies rather than on completing training within a given a timeframe. Yet, before running out of time, GTZ developed only occupational profiles that did not elaborate on occupational skills standards, on the bases of which CBT course curricula were to be designed and learning materials developed. Moreover, CBT courses entail new training for instructors, as they require a different mindset and teaching methodology, but there was little provision for that from the project. The government has consequently sought assistance from the Danish International Development Agency (DANIDA) 10 and the Japan International Cooperation Agency (JICA) 11 to develop occupational skills standards and CBT course curricula for four main trades: masonry, plumbing, carpentry, and automobile engineering. CBT is expected to be introduced in August 2010. 15. In the course of project implementation, the government and ADB agreed to support the establishment of five school-based vocational clubs (SBVCs) and the procurement of basic tools for 29 schools using funds saved by reducing the number of VTIs.12 The facilities are fully utilized. Vocational club members, who are lower and middle secondary school students, carry out minor building maintenance as part of the practical component of the training program. SBVC member satisfaction is high. There are plans to expand SBVCs to 400 schools from the current 53, and about 127 graduates from VTIs will be recruited to teach in SBVCs. 16. Private sector partnership. The ATP was strengthened under the project (para. 8). Since its inception in 2001, 1,021 apprentices have participated in the program. As of 2009, the ATP had over 110 partner companies and enjoyed high demand from industry. The DHR arranged apprenticeships for 332 school leavers with private companies across the country in 2008, of which 178 were immediately employed upon completion. This compares well with the target of 100 apprenticeships per year. The project has outsourced some customized in-house training programs to private information technology companies and business processing centers in the fields of commercial accounting, information technology diplomas, call center training, medical transcription, and sales management. Training was outsourced to nine private institutes, and training has been provided to over 500 trainees since 2003. Trainees provided training in turn to a larger group of colleagues, and many companies institutionalized the training courses. 17. Community access unit. The community access unit, through its Village Skills Development Program (VSDP),13 aimed to provide basic skills training to young school leavers and rural villagers to provide income-earning opportunities in idle farm seasons. Under the project, the unit increased the number of target villages and diversified the training program to encourage the participation of rural women. In collaboration with other agencies, the VSDP has trained 1,242 villagers in 19 of Bhutan’s 20 districts. Trades include masonry, carpentry, plumbing, house wiring, furniture making, bamboo products, weaving, souvenir production, and hairdressing (Appendix 6). Female VSDP graduates accounted for 26% of the total, somewhat short of the target of 30%. The output also fell short of the target of 250 villagers per year, or 10 DANIDA is providing DKr15 million ($3 million equivalent) to the MOLHR in 2008–2013 for vocational education

and training. The project provides technical assistance for developing occupational skills standards, skills-assessment tools, an accreditation system, a CBT curriculum, and the training of trainers.

11 JICA is providing technical assistance worth $400,000 in 2009–2013 for assessing training needs assessment, developing occupational skills standards, and developing a CBT curriculum in electrical engineering at Khurutang VTI. This is part of the government's effort to start specializing each VTI in a specific industry. Khurutang VTI will specialize in electrical engineering, as it is located close to many hydropower stations.

12 The NTTA had originally implemented school-based vocational training as a part of the school curriculum. With government restructuring in 2003, responsibility was transferred to the Department of Youth, Culture, and Sports under the Ministry of Education. The department expanded this training into SBVCs, making membership optional.

13 The VSDP was initiated by the government in 1997 with the assistance of the United Nations Educational, Scientific and Cultural Organization.

6

2,000 villagers in 2002–2008. Nonetheless, the component was successful in significantly increasing people's incomes. The government is committed to the sustainability of this program. For fiscal year (FY) 2009, the government has allocated to the program Nu1.1 million to expand it to an additional 100 villages. This component has been augmented by the Rural Skills Development Project, which is funded by the Japan Fund for Poverty Reduction and was approved in 2006 with a budget of $1.99 million. That project aims to increase the net income of rural communities by providing basic training in construction skills.14 18. Job placement office. The National Employment Board, under which job placement offices (JPOs) were to be established, was subsumed under the MOLHR, and its functions are now carried out by the Department of Employment (DOE). The job placement offices have been renamed employment service centers (ESCs). The DOE has established two regional offices in Phuentsholing (2007) and Gelephu (2008) in addition to the main center in Thimphu (2003). Two more regional offices will soon be established in Samdrup Jongkhar and Trashigang, for which personnel have already been recruited and trained. This will balance the distribution of job placement services throughout the country. Since 2005, among the 3,997 people registered at an ESC, 2,218, or 55%, have been successfully placed (Appendix 7). 15 Job-matching services have also been provided online since 2008. 19. Complementing ESC services is the Construction Service Center (CSC), which aims to provide a maximum of 2 years of pre-employment training to VTI graduates who cannot find jobs after graduation. It became operational in August 2008 with 160 trainees who graduated from construction VTIs. The CSC provides on-the-job training through private contracts granted to it. Trainees receive a stipend of Nu2,500 per month. In addition, they earn on average Nu5,000 per month from the projects they work on, giving them a better income than some of their peers who are wage-employed. With about 10 projects contracted annually by the CSC, the trainees' work has been continuous. To avoid crowding out the private sector, the CSC limits the contract value of its projects to Nu5 million or less. The CSC currently has 79 trainees. Many have already found regular jobs. About 60% are female.

3. Improving Quality of Basic Skills Training 20. Labor market information system. GTZ was responsible for this subcomponent. 16 In 2003, responsibility for coordinating and managing the labor market information system (LMIS) was taken over by the Labor Market Information Division under the DOE. A server and a hard disk procured with an ADB loan were handed over to this division. Officials were trained by GTZ consultants. The database was established in October 2005. However, the low capacity of the contractor meant the LMIS never became functional. For a few months in 2008, a JICA volunteer funded by the United Nations Development Programme restructured the LMIS. Data entry and report production are to begin in 2010. At present, the DOE publishes the labor force survey, industry establishment survey, and labor market information bulletin annually by collecting data with the help of the National Statistics Bureau.17 Once the LMIS is operational, these data will be transferred and reports will be published using it.

14 ADB. 2006. Proposed Grant Assistance to the Kingdom of Bhutan for the Rural Skills Development Project. Manila. 15 Ministry of Labor and Human Resources. 2008. Labour Market Information Bulletin 2008. Thimphu. 16 Component 3 was financed and supported by GTZ. ADB was to be consulted by the government should there be

any major changes in project scope. 17 Career information includes information on careers, job vacancies, education and training, résumés and interviews,

and people and places to turn to for help. Labor market reports include population growth and projections, labor force, employment, unemployment, demand and supply of labor, remuneration, establishments, and the corporate sector.

7

21. Industry training committees. Seven industry training committees, now renamed technical advisory committees (TACs), have been formed in the fields of construction, information and communication technology, hospitality and tourism, power, manufacturing, automobile services, and traditional arts and crafts. A TAC has a minimum of eight experts from industry, government agencies, VTIs, and nongovernment organizations tasked with assisting in the development and validation of skills standards, CBT curricula, and assessment tools, as well as the conduct of skills testing and certification. After the restructuring of the Bhutan Vocational Qualification Authority (BVQA), the DOS has been delegated to plan, coordinate, and implement TAC-related activities. The DOS has developed 55 occupational profiles (Appendix 8), of which 30 have been endorsed by TACs (Appendix 9). Curricula for six occupational profiles have so far been developed, including construction carpentry, plumbing, electrical house wiring, auto mechanics, general electrics, and masonry. Since 2008, the DOS has moved to develop, with the assistance of DANIDA, occupational skills standards with specific competencies defined for each level. By October 2009, four sets of standards had been validated by TACs, and new curricula based on them will be introduced in August 2010. An additional seven sets of standards are to be prepared by June 2010. The rather slow development of standards has delayed the introduction of modular CBT courses, as well as the conduct of skills testing and certification, which are key to reforming TVET. 22. Skills training resource unit. The Skills Training Resource Unit was established in March 2003 under the DHR to develop, implement, and update training packages including curriculum, training materials, and trainer training. The unit was upgraded and renamed the Training and Professional Services Division in July 2004. It has developed eight curricula based on occupational profiles and four new curricula based on occupational skills standards, as well as conducted 463 person-sessions of pedagogical training for teachers from VTIs and the Institute of Zorig Chusums. Additionally, the cabinet recently endorsed the establishment of a technical teacher training and resource center to improve the quality of TVET teachers. C. Project Costs 23. At appraisal, the project cost was estimated at $12.5 million, of which $6.8 million (55%) was in foreign exchange and $5.7 million (45%) in local currency. ADB provided $7.0 million, for which a loan of SDR5.5 million was provided. GTZ provided DM5 million (about $2.5 million equivalent at appraisal) and the government $3.0 million. The actual cost at completion was $12.5 million, the same as the appraisal estimate. Of this amount, ADB financed $7.3 million (due to SDR appreciation against the US dollar) for civil works, equipment, advisory services, and training, and GTZ contributed €2.61 (or $2.99 million) for consulting services, counterpart training, equipment, workshops and seminars, and operational and GTZ headquarters backstopping costs. The government financed $2.2 million,18 as VTIs' delayed completion and operations reduced the government's recurrent expenditures. During project implementation, the cost of civil works, equipment, and furniture increased, necessitating the reallocation of funds to these cost categories from unallocated and other categories where savings were identified. The most significant increase in costs over the appraisal estimate was in the civil works category because of increase in the cost of establishing the Rangjung VTI due to the reconstruction of buildings that were damaged by flooding in 2004 and additional building for the MOLHR, which was not in the original project scope. Additional funds available from the ADB

18 The total government expenditure may change upon concluding the ongoing audit of the project account for

FY2007.

8

loan helped finance the costs without compromising the funds allocated for actual skills training (Appendix 10). D. Disbursements

24. A total of $7.3 million was disbursed under the loan, or 89% of the loan amount of $8.2 million equivalent at project completion. The loan account was closed in August 2008, and the unutilized amount of $0.87 million was cancelled. The government established an imprest account in October 2001, for which ADB approved an initial advance of $0.25 million, increased in 2003 to $0.50 million. In December 2006, ADB's financing percentage for civil works was revised following an analysis that the foreign exchange financing percentage for civil works was underestimated. The withdrawal percentage for civil works (category 1) was revised from 21% foreign exchange and 53% local currency to 70% and 4% respectively. The change did not affect the total withdrawal percentage of 74% for this category. The annual utilization of the loan proceeds from 2001 to 2008 showed slow utilization in the first year of project implementation (Appendix 11). Disbursements gained momentum in 2003 but dipped in 2005 following the suspension of Rangjung VTI construction due to floods. E. Project Schedule

25. The project was to be implemented from 16 November 2001 to 31 March 2007 but was later extended to 31 March 2008.19 While the project started as scheduled, problems were encountered in acquiring land for Thimphu Institute of Automobile Engineering (TIAE) and Chumey VTI. Land compensation payment and the government's land replacement procedures took longer than anticipated. Chumey VTI construction began in 2005 and was completed in 2006. TIAE construction began only in 2006 and was completed in September 2007. The expansion of Trashi Yangtse Institute of Zorig Chusum (TIZC) was hampered by the poor quality of the contractor and delayed by almost 3 years. TIZC's expansion work began in March 2003 and was completed only in September 2006. Another factor that contributed to slippage in the implementation schedule was the reconstruction of some buildings in Rangjung VTI that were damaged by floods in 2004. Construction was on hold for several months following the flood while the government explored the possibility of relocating the VTI. It ultimately decided to continue construction at the original site but adding substantive river protection works. Rangjung VTI was completed in September 2007, and site development works were completed in February 2008. Delays in construction inevitably affected the procurement of equipment and the delivery of training programs, which were completed by March 2008. The implementation schedule showing planned versus actual achievement is in Appendix 12. F. Implementation Arrangements

26. The implementation arrangements of the project were adequate. A project steering committee (PSC) with broad representation was constituted to provide policy guidance and oversight. It was chaired by the director of the DHR, and members included representatives from the Planning Commission, Ministry of Trade and Industry, Ministry of Higher Education, Bhutan Chamber of Commerce and Industry, National Women's Association of Bhutan, RCSC, MOF, National Employment Board, RTI, and industry training committees. The PSC met a minimum of twice a year in accordance with the major implementation milestones as indicated in the project implementation schedule. The chairperson invited other stakeholders to PSC meetings when necessary. The DHR served as the committee secretariat.

19 ADB. 2006. Aide Memoire of Loan Review Mission (13–17 March 2006). Manila.

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27. The director of the NTTA (later the director of the DHR) was appointed project director. The PIU was established under the DHR to implement the ADB-financed part of the project.20 The PIU was staffed by a project manager, disbursement officer, planning and administration assistant, and procurement officer, all full-time. They were supported by local consultants and regular staff such as an architect, civil engineers, an office assistant, a procurement officer, secretaries, drivers, and others as needed. The change of executing agency from the NTTA to the DHR, among others changes, resulted in the appointment of a new project director and manager. This initially constrained implementation, especially financial supervision (para. 34), but stabilized over time. G. Conditions and Covenants

28. The government generally complied with major loan covenants. Of the 24 key covenants, 16 were complied with, 5 were complied with but delayed, and 3 were partly complied with. The three covenants that were only partly met related to the (i) submission of audited accounts and audit report for FY2007 due to financial irregularities (para. 29); (ii) submission of the final project completion review report (the draft has yet to be finalized, as financial statements cannot be concluded before the completion of the audit report for FY2007; and (iii) submission of the final BME report (Appendix 13). 29. In September 2009, the RAA pointed out 24 irregularities involving the misappropriation of project funds. 21 The primary reason for irregularities was insufficient supervision caused by high turnover in the project management team (para. 34). The MOLHR has subsequently addressed 11 of them. As of November 2009, there are 13 cases outstanding, among which eight have been forwarded to court, one is being investigated by the Anti-Corruption Commission, and four are likely to be dropped. The minister of the MOLHR and the MOF have made assurances that the government will address all the cases raised by the RAA. Subject to the conclusion of all investigations, the government will submit to ADB the final audit report for FY2007 and a remedial action plan. H. Consultant Recruitment and Procurement

30. Consultants. The planned and actual use of consulting services are summarized in Appendix 14. Reduced inputs form the chief implementation expert and management expert meant lower international consultancy inputs. The former's inputs were reduced at project inception. The management expert's inputs were reduced during implementation in light of the BAS introduction, which obviated developing a financial management system. The national site supervisor's inputs were reduced due to underperformance. GTZ funded 72 person-months of international consultant services. Loan-financed consultants completed their assignments by May 2004, and GTZ-financed consultants completed theirs in March 2006. Loan-financed consultants were recruited in accordance with ADB's Guidelines on the Use of Consultants (2007, as amended from time to time). No significant problem was encountered in consultant recruitment, though the unavailability of the selected consultants delayed their deployment. 31. Civil works. Several civil works contracts under the project totaled $3.49 million. They were awarded in accordance with the government's standard bidding procedures, which were

20 The GTZ-financed component 3 was administered by the Policy and Planning Department under the MOLHR. 21 Royal Audit Authority. 2009. Audit Report on the Accounts and Operation of Asian Development Bank Funded

Basic Skills Development Project (1 July 2007–30 June 2008). Thimphu.

10

acceptable to ADB. National site supervisors (one funded by ADB and three by the government) monitored the civil works activities in their areas until construction was completed. Civil works were procured mostly in line with agreed national competitive bidding procedures. During project implementation, ADB approved the use of force account procedures, whereby trainees from Chumey VTI were used in the construction of the MOLHR building. This was deemed appropriate as it showcased trainees’ competency. The quality of construction under the project was inspected and approved by the MOLHR's internal auditor and Infrastructure Development Unit under the DHR in October 2009. 32. Furniture and equipment. All goods were procured centrally through the PIU, with equipment procurement mainly following national competitive bidding and shopping procedures in accordance with ADB's Procurement Guidelines (2007, as amended from time to time). There were some delays caused primarily by local suppliers' lack of technical knowledge and capacity. Due to suppliers’ unfamiliarity with specialized training equipment, some equipment had to be rejected by the VTIs and procured again. Some equipment such as computers and training equipment were found unusable at some VTIs, as frequent power fluctuations caused them to break down and the lack of repair services and spare parts left them unused. I. Performance of Consultants, Contractors, and Suppliers

33. ADB-funded consultants' performance was satisfactory, excepting that of the national site supervisor, whose input was ultimately reduced. GTZ consultants had room to do more to ensure that all the project activities such as the LMIS, CBT, and BME had been undertaken satisfactorily. GTZ provided only international consultants, most of them short term. This led to piecemeal recommendations that were either unsuitable for local contexts or contradicted other consultants' recommendations. As GTZ consultants were accountable to a different division in the MOLHR, the PIU had no control over their performance. The government had to obtain additional support from JICA and DANIDA to make up for GTZ's unfinished work, costing them a few years' delay. Some contractors and suppliers' performance was unsatisfactory, delaying construction and the delivery of equipment. J. Performance of the Borrower and the Executing Agency

34. The executing agency for the project was initially the NTTA. With government restructuring in June 2003, the functions of the NTTA were subsumed by the MOLHR, which became the executing agency. The DHR under the MOLHR became the new PIU. The project manager changed in 2005 and the project director changed in 2007. This high staff turnover undermined internal financial supervision, leading to the alleged misappropriation of some project funds. Moreover, that project accounting was not included in the MOLHR's overall accounting system but operated separately by the PIU contributed to weak financial oversight (para. 10). The initial lack of project staff posed a challenge to expanding and accelerating activities to meet the project objectives in a timely manner. The staff shortage continued until May 2004, more than 2.5 years after project inception. Problems notwithstanding, the executing agency demonstrated strong ownership and accommodated suggestions and recommendations from both ADB and GTZ. Most of the project targets were achieved, albeit in a longer timeframe. Overall, the performance of the executing agency is considered satisfactory. K. Performance of the Asian Development Bank

35. ADB performed satisfactorily in providing overall guidance and support. The project was designed with sufficient inputs from key stakeholders including the government and the

11

private sector. ADB provided advisory TA prior to loan effectiveness to assist the government in incorporating the investment plan in the 9th plan and in preparing TVET policies and strategies. During implementation, ADB fielded eight missions spaced regularly throughout the project period and gave timely advice and clarifications on issues raised by the executing agency. Replenishment, approval of procurement, training requests and other decisions were acted upon promptly, except changes in project officers causing delays. Delays in processing withdrawal applications affected progress to some extent. The government appreciated ADB's flexibility in accommodating changes in scope and budget allocations called for by such developments as changes in the number and locations of VTIs and the reallocation for additional civil works for the MOLHR's office buildings.

III. EVALUATION OF PERFORMANCE

A. Relevance

36. The project was highly relevant at appraisal and remained highly relevant at completion. At appraisal, a key issue for the government was rising unemployment, particularly in the urban areas, despite the increasing number of educated youths. The project assisted the government in addressing this issue at both the policy and the operational level. The focus of the project was consistent with ADB’s country operational strategy. The mismatch between labor supply and demand and, therefore, rising unemployment remained major concerns at completion. TVET reform is seen as one of the key driving forces to address unemployment under the 10th plan, and the project provided to the government a timely and relevant foundation to build upon. From the employers' standpoint, however, the relevance of the project was lower. While strengthening linkage with industry was among the key objectives of the project, industry’s involvement during actual implementation was limited, causing the perception that course contents and the quality of graduates were not fully responsive to their needs. This area is being given particular emphasis by the government in the continuing reform of the system, as articulated in the TVET policy framework. B. Effectiveness in Achieving Outcome

37. The project was effective in achieving its desired outcome, which was to improve the capacity and employment orientation of TVET system in Bhutan. With the expansion of physical facilities, the enrollment capacity of the TVET system increased threefold from 400 places at appraisal to 1,193 at completion. The increased number of VTIs improved access to TVET for beneficiaries across the country. TVET outreach was further enhanced through mobile training delivery under the VSDP, bringing training to remote villages. The number of VSDP beneficiaries was 1,242 in 2002–2008. The expanded range of courses offered at VTIs and under the VSDP has provided beneficiaries more options to choose from and has better addressed the varied skills needs of industries. In making the TVET system more employment-oriented, the project provided the initial impetus, though much more needs to be done. This is primarily because the outputs of the GTZ-assisted component were incomplete. With the approval of the Bhutan Vocational Qualification Framework, the various elements needed to make the TVET system demand-driven and quality-assured are being put in place, including the development of occupational skills standards and CBT curricula based on them; the training of instructors on CBT delivery and of competency assessors; and the development of assessment tools, skills testing, and a certification system. A critical factor for the success of these tasks is a mechanism for engaging industries on an institutionalized basis. Such a mechanism is likewise being put in place.

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C. Efficiency in Achieving Outcome and Outputs

38. The project was partly efficient in achieving its outcome and outputs. A major concern is the low utilization rate of the VTIs, which was only 47% in 2009 (para. 13). Other internal efficiency indicators, however, are positive (Appendix 15). The average teacher–student ratio increased from 1:8 to 1:16, reducing the average cost per student by 32%, from $978 at appraisal to $628 at completion.22 The average dropout rate is minimal except in the VTI without a hostel, where it is 28%. And the share of female VTI graduates was 28%, slightly lower than the target of 30%. In focus group discussions with students and teachers, a consensus emerged that, while the theory component of the curriculum is adequately covered and learned, the practical aspect is deficient because teachers lack practical skills and equipment and training materials are inadequate. Many computers and other equipment are not operational for lack of spare parts and maintenance. D. Preliminary Assessment of Sustainability

39. The project is sustainable. Its major components, including the development of occupational skills standards, assessment and certification, curriculum and learning materials development, labor market information, and job placement services, have been integrated as functional units in the organizational structure of the MOLHR (Appendix 16). They have been included as line items in the regular government budget, ensuring sustainability. The government’s target of creating 95,000 jobs (50,000 of them through TVET) under the 10th plan has placed TVET among its highest priorities. The government's political will can be evidenced by the special allocation of Nu40 million recently approved by the cabinet for equipment and program implementation. The government intends to establish two more new VTIs, along with a technical teachers' institute, by 2013 to improve the capacity and quality of TVET. With youth unemployment increasing and employment opportunities in the civil service and public corporations diminishing, the social demand for TVET courses is expected to increase, as youths will be pressured to acquire skills that make them employable in the private sector. Industry associations have expressed willingness to cooperate with the government in strengthening the TVET system. Increased private sector participation is one of the key focal areas for the government, and further cost sharing will be explored. E. Impact

40. The impact of the project is significant. On institutional capacity development, the project assisted the government in mapping out the long-term direction of the TVET system through the development of TVET policy, contributing to reorienting Bhutan's TVET into a more market-based system, and in developing staff competency in key functional areas including planning, public administration, finance and accounting, HRD, TVET management, and information and communication technology. Most trainees now hold key positions in the MOLHR and the VTIs. The project assisted the MOLHR in developing and installing management systems such as the personnel performance evaluation system of the RCSC and the monitoring and evaluation system, all of which are now in place. While the number of VTI graduates is still insufficient to affect the national unemployment rate, the economic impact on the graduates and their families is significant. A tracer study of VTI graduates conducted in 2009 indicated that 90% of respondents were employed at the time of the study, with monthly income ranging from

22 The cost per student is calculated by dividing the annual budget for each VTI, including both investment and

recurrent costs, by the number of students at each VTI.

13

Nu2,000 to Nu15,000 and an average monthly income of Nu7,884.23 Considering that most of the VTI graduates are the children of farmers where the gross domestic product per capita is about Nu6,800 (or Nu566 per month),24 such increased income is significant.

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS

A. Overall Assessment

41. Overall, the project is rated successful (Appendix 17). The design was fully aligned with Bhutan’s development priorities and consistent with ADB’s country operational strategy. The project strengthened institutional capacity in the MOLHR for policy making, planning, and management at the national and the institutional level. It enhanced access and equity in training opportunities by expanding physical facilities, which were completed without cost overruns despite the 1 year delay. The new facilities, teacher training, and updated curriculum improved the quality of training. Further quality improvement is currently being undertaken by the government with the introduction of CBT and closer links with industry. About 90% of graduates were gainfully employed when surveyed, earning sufficient incomes. The TVET policy framework developed under the project provides a road map for the MOLHR’s continuing development of the TVET system. While much remains to be done to fully restructure TVET into a more market-oriented system, the project laid a foundation for the government to build upon. B. Lessons

42. Proper sequencing of activities. The project aimed to provide both software and hardware assistance as a comprehensive package. As GTZ was primarily in charge of the former, while ADB was in charge of the latter, and as different departments in the MOLHR managed the GTZ and ADB components, the sequencing of activities suffered. For example, equipment was selected ahead of the revision of curricula, and some equipment was inappropriate for the courses being offered. To ensure proper sequencing and smooth coordination between components, the PIU should have been responsible for all the project components. 43. Complete package of assistance. In some of the VTIs, such as the TIAE and Chumey VTI, a building was constructed or renovated but only minimal equipment was provided. Moreover, in some cases, only a limited number of VTI teachers were involved in listing the equipment to be procured under the project. This resulted in a mismatch between the procured equipment and training needs, hindering the delivery of quality training. A complete package of assistance should be provided, taking into consideration existing resources, even if it means reducing the number of VTIs assisted. 44. Institutional leadership. The top leadership in a VTI is of paramount importance. Given the same bureaucratic or external constraints, differences in performance of the VTIs can be attributed largely to differences in the quality of leadership. The project team should pay particular attention to selecting the top leadership of assisted institutions to the extent possible and build in mechanisms to evaluate the performance of VTIs and award good performance to provide incentives.

23 Digital Shangri-La. 2009. Tracer Study (Graduates of VTIs, IZCs, and ATP). Thimphu. The tracer study,

commissioned by the government and completed in October 2009, sampled 617 randomly selected graduates from the total of 2,450, as well as interviewed 32 employers.

24 Economist Intelligence Unit. 2008. Bhutan Country Profile 2008. Brussels.

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45. Continuity of project management staff. Frequent changes of project staff in the government undermined institutional memory and financial management and delayed project progress. Change in the ADB project officers also caused some delays. While this is difficult to control, adequate transition measures should be taken to minimize any losses. C. Recommendations

46. The following recommendations should be acted upon before 2013 to achieve the employment goals set out under the 10th plan.

1. Project Related

47. Course diversification. Courses offered at VTIs should be diversified to improve VTI facility utilization and increase the employability of the students.

(i) Short modular courses. Offering only the regular 2-year course would leave VTI facilities underutilized. VTIs should offer short modular courses to provide basic skills and skills upgrading even to those already employed to maximize utilization. The conversion of existing curricula to CBT will facilitate this move. Industry experts may also be invited as part-time instructors.

(ii) Entrepreneurship module in curriculum. To provide more options to VTI graduates, an entrepreneurship module that includes business skills such as computer operation, English, and accounting should be added to the curriculum, so that those who have the aptitude may opt for starting their own business.

48. Opportunity to pursue diploma courses. All interviewed VTI students expressed their desire to proceed to a diploma course in the polytechnic, which was allowed before. The government disallowed it because of the major gap between the educational attainment of VTI graduates and the minimum entry requirements to diploma courses. As the draft education policy has a provision for certificate holders to pursue higher education, the government should expedite the development of a bridging course that supplements theoretical studies for the VTI graduates. This will provide incentives for VTI students and increase enrollment. 49. Career guidance and counseling services. Students need mentoring throughout their studies to cope with stresses associated with personal, interpersonal, and academic problems; to map out their future career; and most importantly to find a job after graduation. VTIs currently lack support in this regard. Each VTI should provide these services by establishing a career guidance and counseling unit. 50. Strengthening of technical skills training. VTIs need to strengthen their technical skills training. Currently this is hampered by inadequate equipment and teachers' lack of practical skills. Technical skills training can be strengthened for both teachers and students through longer industry attachment and introducing dual training systems in all VTIs. 51. Operations and maintenance. The lack of spare parts and training materials is a recurring problem, hindering the effective delivery of training. As most of the items come from India, it takes months to procure them. VTIs should have the required inventory at the beginning of each semester. Further, to ensure the proper maintenance of the equipment and facilities provided under the project, each VTI should prepare an annual maintenance program, including the training of maintenance staff, with a corresponding budget.

15

52. Follow-up on audit issues. As noted in para. 29, several issues raised by the RAA on the alleged misappropriation of project funds are still under judicial investigation. The government must update ADB on the progress of these investigations and the follow-up actions taken. With the conclusion of all investigations, the government must submit to ADB the final audit report for FY2007 and a remedial action plan.

2. General 53. Partnership mechanism with industry. Linkage with industry is the single most important factor to ensure the effectiveness and relevance of TVET. A partnership mechanism that institutionalizes industry engagement should be established. Various modes of cooperation are possible, including representation in a national policy board (if established), contracting industry associations for developing skills standards and assessment tools, training and certifying competency assessors, public–private partnership in VTI management or training courses, and industry attachment of teachers and students. 54. TVET instructors' qualification framework. The qualifications of instructors vary widely from one VTI to another. To standardize the quality of instructors, a framework should be developed that establishes minimal competencies in TVET instructors at each level or rank linked to the salary scale. Such a framework would provide the basis for developing a continuing staff development program and attract capable candidates. 55. Labor market information analysis and tracer study. These studies are essential to guide the direction of TVET and provide feedback to improve the quality of the training. The MOLHR should carry out these studies regularly. In so doing, the Labor Market Information Division under the DOE should explore the possibility of focusing its efforts on labor market information analysis rather than conducting national surveys such as the annual labor force survey, which is better left with the national statistics bureau. 56. Targeted training program for urban youths. There is an urgent need to address high unemployment among urban youths (aged 15–24), estimated at 33% in 2007.25 Based on the assessment of future skills requirements, the government should tender the provision of short training courses such providers as private VTIs, industry, and nongovernment organizations.26 A quick-response training fund may be established specifically for this purpose. 57. Integrated social marketing for TVET. There is a serious need to change the public perception toward TVET and blue-collar jobs. The ongoing TVET reforms to enhance the relevance and quality of training, government policies to improve working conditions in the private sector, the prospects for employment, the stories of successful graduates, etc., should be effectively communicated to the public through television, radio, and print. There should be a concerted effort nationally and institutionally. A social marketing plan is necessary to ensure an integrated program and efficient implementation. A message from the King of Bhutan stressing the importance of TVET and extolling the dignity of blue-collar occupations would give a big boost to the campaign.

25 Ministry of Labor and Human Resources. 2008. Labor Market Information Bulletin. Thimphu. 26 The terms of reference should include targeted beneficiaries, skills standards to be attained, testing and

certification of graduates, maximum budget per batch, timetables, and selection criteria.

16 Appendix 1

DESIGN AND MONITORING FRAMEWORK: SUMMARY OF PROJECT ACHIEVEMENTS

Design Summary

Indicators

Achievements/Status Goal Skilled human resources to contribute to economic growth and improved quality of life “Vision 2020” 8th plan

Urban unemployment rate of 25 year olds and above remaining at current level

As of 2007, urban unemployment of 25 year olds and above was 6.6% (LMI Bulletin, 2008). No data was available on the unemployment rate of this age group in the urban area at appraisal.

Urban unemployment rate of 15–24 year olds reduced to the average national unemployment rate plus 2%

As of 2007, urban unemployment of 15–24 year olds was 33.0%, in contrast with the rural unemployment rate of the same age group at 6.2%. The average national unemployment rate in the same year for all age groups was 3.7%.1

Purpose Improved capacity and employment orientation of the technical and vocational education and training (TVET) system

Employment-oriented system institutionalized

Excluding the Royal and Technical Institute (RTI) main campus, which the government handed over to Royal Bhutan Polytechnic in February 2003, the enrollment capacity of the project VTIs increased by 298%, from 400 places at appraisal to 1,193 at completion.

Employment rate of graduates of vocational training institutes (VTIs) based on tracer study was about 90%.

Outputs 1. Government

coordination of the TVET system strengthened

Within the first 12 months of the project, national vocational qualification policy, equitable access promotion policy, cost-sharing policy, and private sector partnership policy adopted by the government

The Bhutan Vocational Qualification Authority (BVQA) was established as a regulatory departmental office, which later became the Department of Occupational Standards (DOS), responsible for the implementation of the Bhutan Vocational Qualifications Framework (BVQF). Equitable access promotion policy, cost-sharing policy, and private sector partnership policy are broadly covered in the TVET policy framework. The TVET Strategy for Public–Private Sector Partnership was developed and approved by the Ministry of Labor and Human Resources (MOLHR) on 26 January 2006.

Within the first 12 months of the project, National Technical Training Authority (NTTA) recommendations for an inter-ministerial policy framework to support the national TVET system will be formulated.

Draft of the TVET policy framework was submitted in 2002, reviewed and revised in 2003, approved by the cabinet in April 2006, and circulated in May 2006.

Within the first 6 months of the project, the Industry Liaison and Publicity Unit (ILPU) will be

The ILPU was established in 2001 under the NTTA, later under the Department of Human Resources (DHR). It actively participated in organizing skills

1 Ministry of Labor and Human Resources. 2008. Labour Market Information Bulletin 2008. Thimphu.

Appendix 1 17

Design Summary

Indicators

Achievements/Status

established in the NTTA. competitions and job fairs, produced promotional materials, and published articles in national newspapers. ILPU activities are now being devolved to the VTIs.

By the end of year 1, a management control system is implemented in the NTTA and its training institutes followed by annual reviews and updates.

The MOLHR, including the DHR and the DOS, has fully adopted and implemented the budget and accounting system issued by the Ministry of Finance and the personnel evaluation system issued by the Royal Civil Service Commission. A benefit monitoring and evaluation (BME) system is in place. It conducted a baseline survey in October 2002 and produced a midterm BME report in March 2004. The BME system produces quarterly progress reports and holds quarterly meetings at the ministerial level for review and coordination and annual institute meetings for review and updates.

2. Access to basic skills

training and employment for women and the youths enhanced

By 2nd quarter of year 3, all project institutes made operational by completing civil works, equipment installation, staffing, development of curriculum, and teaching and learning materials

As of February 2008, all civil works for the target VTIs, vocational clubs, and the executing agency’s office were completed.

All procurement was completed as of March 2008 and equipment installed, though some is not operational for lack of maintenance or not used because it is inappropriate to the course curriculum. At completion, there were 84 instructors (a 646% increase from 13 at appraisal) and 51 administrative and support staff (a 464% increase from 11 at appraisal) in the VTIs (excluding RTI main campus). Curricula for eight new courses based on occupational profiles and four based on occupational skills standards were developed by the Training and Professional Service Division (TPSD), formerly the Skills Training and Resources Unit (STRU), and will be implemented by the VTIs starting in August 2010. 463 person-sessions were conducted by the TPSD since its establishment in July 2004 for the instructors of VTIs and the Trashi Yangtse Institute of Zorig Chusums.

By the 1st quarter of year 2, informal community outreach program developed by the STRU

Training materials were developed through the initiative of the community access unit (CAU) with the assistance of RTI instructors and the village craftsmen and/or craftswomen.

840 villagers participating in outreach training activities by the CAU

From 2002 to 2009, 1,242 villagers from 19 districts were trained (6–8 weeks) under the Village Skills Development Program (VSDP) in various trades including carpentry, furniture making, house wiring, masonry, mud wall construction, plumbing, rural water supply, hairdressing, handloom weaving, and tailoring . Entrepreneurship training (7 days) and potato and cabbage cultivation training (3 days) were also conducted for the villagers.

18 Appendix 1

Design Summary

Indicators

Achievements/Status

By the end of the project, aggregate female enrollment ratio in skills training program under the NTTA up to 30%

The share of female VTI graduates was 28%. Among the 1,242 villagers trained under the VSDP in 2002– 2009, the average female ratio was 26%.

In the 1st quarter of year 1, job placement offices (JPOs) established under the National Employment Board (NEB)

JPOs now under the Department of Employment (DOE) and renamed employment service centers (ESCs). In addition to the main ESC in Thimphu, two regional ESCs were established in Phuentsholing in 2007 and Gelephu in 2008. Two more regional offices are being established in Samdrup Jongkhar and Trashigang. From January 2005 to July 2008, 3,997 jobseekers registered with the ESCs, of which 2,218 were placed, for a placement rate of 55%. Job-matching activities have been accessible online since 2008.

3. Employment

orientation of the TVET system strengthened

Within the 1st 18 months of the project, industry training committees (ITCs) established by the NTTA

Seven ITCs, now called technical advisory committees (TACs) have been established in the fields of construction, information and communication technology, hospitality and tourism, power, manufacturing, automobile services, and traditional arts and crafts.

By the end of year 2, national qualification framework including the competency-based skills standards and skills testing and certification system established

Draft BVQF has been developed and submitted to the MOLHR but is still being reviewed and refined to make it more relevant.

55 occupational profiles have been developed, of which 30 were endorsed by the TACs.

Translation of the occupational profiles into skills standards is ongoing for six occupations: construction carpentry, plumbing, electrical house wiring, auto mechanics, general electrics, and masonry. Draft policies and procedures of the skills testing and certification system are likewise still being reviewed and refined.

Within the 1st 6 months of the project, STRU established in the RTI by NTTA

The STRU was established at the RTI in 2004 but later shifted to the Department of Human Resources as the TPSD. With three officers and two support staff, the TPSD has so far developed eight curricula based on occupational profiles and four curricula based on occupational skills standards.

By the 2nd quarter of year 3, training packages for each module developed by the STRU following establishment of skills standards for corresponding modules

CBT curricula of four trades (masonry, carpentry, plumbing, and auto mechanics) were developed by the staff of TPSD.

Appendix 1 19

Design Summary

Indicators

Achievements/Status

By the end of year 1, labor market information system (LMIS) established in NEB

Responsibility for the LMIS was transferred from GTZ to the Labor Market Information Division of the DOE in 2003. A consulting firm was hired under the Bhutan-German project to design the LMIS. However, the low capacity of the contractor meant the LMIS never became operational. A JICA volunteer was subsequently hired in 2008 and funded by the United Nations Development Programme to restructure the LMIS. Data entry and report production is expected in 2010.

BME = benefit monitoring and evaluation, BVQA = Bhutan Vocational Qualification Authority, BVQF = Bhutan Vocational Qualifications Framework, CAU = community access unit, DHR = Department of Human Resources, DOE = Department of Employment, DOS = Department of Occupational Standards, ESC = employment service center, ILPU = Industry Liaison and Publicity Unit, ITC = industry training committee, JICA = Japan International Cooperation Agency, JPO = job placement office, LMIS = labor market information system, MOLHR = Ministry of Labor and Human Resources, NEB = National Employment Board, NTTA = National Technical Training Authority, RTI = Royal Technical Institute, STRU = Skills Training and Resources Unit, TAC = technical advisory committee, TPSD = Training and Professional Service Division, TVET = technical and vocational education and training, VSDP = Village Skills Development Program, VTI = Vocational Training Institute. Sources: Ministry of Labor and Human Resources. 2008. Labour Market Information Bulletin 2008. Thimphu.

Ministry of Labor and Human Resources. 2009. Draft Project Completion Report. Thimphu.

20 Appendix 2

SUMMARY OF ACHIEVEMENTS OF THE GTZ COMPONENT (Component 3)

Planned Results Indicators Achievement at Completion R1: The vocational education and training system is developed and promoted

By December 2002, the structure of the national qualification framework will have been approved.

The management and staff of the Ministry of Labor and Human Resources (MOLHR) have been enabled to define and operate policy components of the vocational education and training (VET) system including VET policy, legislation, public–private partnership strategy to promote VET, and impact monitoring with involvement of the private and corporate sector.

VET policy paper has been submitted to the MOLHR and approved by the minister. It was approved by the Cabinet of Ministers in April 2006.

Regulation for Bhutan Vocational Qualification Framework (BVQF) final draft has been prepared; related schedules have been drafted but are still being reviewed.

Regulations for accreditation of training providers has been drafted; the Department of Occupational Standards (DOS), however, is now going for the accreditation of programs rather than of institutes as was recommended.

As part of the advocacy to promote blue-collar jobs, posters and supplements in the national newspaper "Kuensel" have been developed and exposed.

Strategy paper for public–private partnership to support the VET system has been submitted to the minister of MOLHR and the vice-chairman of the Bhutan Chamber of Commerce and was approved on 26 January 2006.

Concept of monitoring the impact of training provision has been developed. On this basis, indicators and related questionnaires for monitoring the impact of training provision have been finalized.

R2: Quality assurance in accordance with the BVQF is taking place

By December 2004, standards for curriculum development and trade testing will have been developed and approved.

The management and staff of the DOS (the former Bhutan Vocational Qualification Authority) have been enabled to build and operate the BVQF of the VET system in close collaboration with the private and corporate sector to ensure the quality of training.

The BVQF, with the necessary components of standards and quality assurance, has been developed and submitted to the MOLHR but is still being reviewed.

By the end of 2004, the implementation of a minimum of four occupation profiles, developed according to the national standards, will have been carried out.

Levels of competency in the VET system (levels 1, 2, and 3) have been described and agreed by the ministry (with linkage to higher education).

Officials responsible for curriculum development have been trained and occupational profiles have been developed with experts from the private sector.

Draft criteria and standards for accreditation of training providers and training programs have been developed; however, the DOS is going for the accreditation of programs rather than of institutes as was recommended.

70 test item developers have been trained to develop tests of theory and practice.

14 assessors have been trained to manage summative

Appendix 2 21

Planned Results Indicators Achievement at Completion assessment.

By December 2002, standards and guidelines for information management will have been developed, approved, and partly introduced.

The management and staff of the Department of Employment have been enabled to build and manage the labor market information system (LMIS).

An LMIS with the required sources of data and key information for clients has been defined, and an LMIS e-database was developed in October 2005 to be applied by the labor market information division.

R3: Training programs are developed, reviewed, introduced, and evaluated

Training programs revised based on the market demand indicated by the labor market survey and tracer studies.

The management and staff of the Department of Human Resources (DHR) have been enabled to plan and implement the apprenticeship training program (ATP) in close cooperation with the private and corporate sector.

A concept for ATP (practical training in a company, theory in an institute) has been developed and its application has been approved by the ministry.

Specific tools for promoting ATP, like leaflets, guidelines and a four-step method for the skilled supervisor, logbook for the apprentice, ATP contract, and module for training skilled supervisors, have been developed and applied.

ATP is being implemented with trainees in a number of companies.

Modular training programs developed for the formal and informal sectors on the basis of the skills required in the workplace.

The Village Skills Development Program (VSDP) has been reviewed with the United Nations Educational, Scientific and Cultural Organization, and follow-up measures have been proposed to the MOLHR; in December 2004, the DHR advised that further support from the project is not required.

14 staff members from the DHR and vocational training institutes (VTIs) have been enabled to develop curricula based on Occupational Profiles and curriculum guidelines.

Instructional material from Central Institute for Media Instruction, India has been provided to the VTIs.

Curricula for auto mechanics and electricians for the Auto Repair Training Center have been developed for future application.

Curricula in four occupations in the construction sector have been developed and are available for application.

R4: Planning, development, and implementation capabilities of NTTA/DHR, Royal Technical Institute (RTI) and other parties are strengthened

By December 2004, the RTI will be in a position to meet 25%–30% of the cost of training materials from receipts earned by the institute.

The management and staff of the DHR have been enabled to enhance measures of training provision and ensure that market-oriented training is offered.

The management competency of principals and/or managers of public and private training institutes have been improved, applying tools of entrepreneurial management in VET.

A proposal to apply entrepreneurial management in VET in public VTIs has been prepared and submitted to the MOLHR and the Ministry of Finance for approval. The proposal is still being reviewed.

12 business trainers from the public and private sector

22 Appendix 2

Planned Results Indicators Achievement at Completion have been enabled to improve their methods of training by applying the "competent economy through formation of enterprises" concept in training potential entrepreneurs.

3 staff members from the Trashi Yangtse Institute of Zorig Chusum (TIZC) have been enabled to improve the design, quality, and production of traditional boots.

1 staff member from the TIZC has been enabled to improve the design, quality and production of traditional swords.

By December 2004, 70% of the graduates will be satisfied with the performance of the teachers and trainees.

The vice-principal of TIZC visited training institutes for arts and crafts in Bangkok to elaborate possibilities for cooperation and exchange of know-how.

Cooperation agreement with the Training Institute for Technical Instruction in Nepal has been concluded.

Competency of six master trainers from VTIs and the DHR enhanced in the fields of skills, knowledge, visualization, and evaluation; the six completed the training and were awarded master trainer certificates.

Competency of instructors from VTIs enhanced in the fields of skills, knowledge, visualization, and evaluation.

Four instructors have been trained in Chiang Rai, Thailand, in developing instructional materials for vocational training.

GTZ grant (up to $65,000 to finance training equipment) provided to the training center of the DHR to enhance training for management and staff of training provider.

BVQF = Bhutan Vocational Qualifications Framework, DHR = Department of Human Resources, DOS = Department of Occupational Standards, LMIS = labor market information system, MOLHR = Ministry of Labor and Human Resources, NTTA = National Technical Training Authority, RTI = Royal Technical Institute, TIZC = Trashi Yangtse Institute of Zorig Chusum, VET = vocational education and training, VSDP = Village Skills Development Program, VTI = Vocational Training Institute. Sources: GTZ Completion Presentation, Bhutan–German Project: Promotion of the Vocational Education and Training System, March 2006 and updated for current status; entries under the column on indicators were taken from the Government of Bhutan’s draft project completion report.

Appendix 3 23

STAFF DEVELOPMENT PLAN

No. Subject Duration

(person-months) Beneficiary A. International and/or Regional

1 Masters in public administration 12.0 Executing agency/DHR

2 Masters in industrial and employment relations 18.0 Executing agency/DEL

Subtotal 30.0

B. Short Term

1 Financial management 3.3 Executing agency/DHR

2 VET management 3.0 Principal of VTIs

3 Study visit 1.0 Executing agency/DOS

4 Community access development 0.5 Executing agency/DHR

5 Strategic management with computer application 2.0 Executing agency/DHR

6 Database management 1.0 Executing agency/DHR

7 Workshop on Korean TVET system 0.3 Executing agency/DHR

8 Attachment cum study visit 1.0 Executing agency/DHR

9 Program for development managers 1.0 Executing agency/DHR

10 HRD management 1.0 Executing agency/DHR

11 Skills competition 0.3 Executing agency/DOS

12 Central heating system 1.0 Executing agency/VTI

13 VET management 2.5 Executing agency/VTIs

14 Construction trades 3.5 Executing agency/DHR

15 Furniture design and fabrication 0.5 Executing agency/VTI

16 Mineral pigmentation preparation 0.2 Executing agency/TIZC

Subtotal 21.4

C. Local

1 Project management 0.5 Executing agency/DHR

DEL = Department of Employment and Labor, DHR = Department of Human Resources, DOS = Department of Occupational Standards, HRD = human resource development, TIZC = Trashi Yangtse Institute of Zorig Chusum, TVET = technical and vocational education and training, VET = vocational education and training, VTI = Vocational Training Institute. Source: Ministry of Labor and Human Resources. 2009. Draft Project Completion Report. Thimphu.

24 Appendix 4

COMPARATIVE TABLE OF VOCATIONAL TRAINING INSTITUTES AND ENROLLMENT CAPACITY

No Name of Institute

at Appraisal Name of Institute

at Completion Completion

Date

Training Capacity

At Appraisal At

Completion 1 RTI main campus Shifted to Rangjung

and Khurutang VTI N.A. 313 -

2 RTI east extension Rangjung VTI September 2007 - 384

3 RTI north extension Khurutang VTI February 2005 - 288

4 Building Construction

Training Center

Chumey VTI September 2006 - 288

5 National Drivers Training Institute

Samthang VTI December 2003 50 116

6 Trashi Yangtse Institute of Zorig

Chusum

Trashi Yangtse Institute of Zorig Chusum

September 2006 37 92

7 Auto Repair Training Center

Thimphu Institute of Automobile Engineering

September 2007 - 25

Total 400 1,193

8 MOLHR office December 2005 4 departments under MOLHR

9 Vocational clubs December 2006 -

MLHR = Ministry of Labor and Human Resources, RTI = Royal Technical Institute, VTI = Vocational Training Institute. Source(s): Ministry of Labor and Human Resources. 2009. Draft Project Completion Report. Thimphu.

ADB. 2001. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the Kingdom of Bhutan for the Basic Skills Development Project. Manila

Appendix 5 25

STAFFING PATTERN OF VOCATIONAL TRAINING INSTITUTES

No. Organizational Unit/ Program At Appraisal

(Baseline, 2001) At Completion

(2008) Remarks A Vocational Training Institutes 1 Royal Technical Institute East Now Rangjung VTI

Instructors 0 14 Administrative/support 0 7

2 Royal Technical Institute North Now Khuruthang VTI Instructors 0 14 Administrative/support 0 9

3 National Driver Training Institute Now Samthang VTI Instructors 0 15 Administrative/support 0 6

4 Construction Training Center Now Chumey VTI Instructors 0 13 Administrative/support 0 7

5 Auto Repair Training Center Now Thimphu Institute of Automobile Engineering

Instructors 0 12 Administrative/support 0 10

6 Trashi Yangtse Institute of Zorig Chusum

Same name

Instructors 4 19 Administrative/support 6 16

Total VTIs Instructors 4 87 Administrative/support 6 55

B Central Offices / Programs 1

Industry liaison and publicity unit Functions delegated to departments and VTIs

Regular 1 … Support 0 …

2

Alumni association system … Functions delegated to VTIs Regular 0 … Support 0 …

3 Phuentsholing JPO (southwest) Responsibility with DOE Regular 0 5 Support 0 3

4 Gelephu JPO (south central) Responsibility with DOE Regular 0 4 Support 0 2

5 Trashigang JPO (east) Responsibility with DOE Regular 0 2

26 Appendix 5

No. Organizational Unit/ Program At Appraisal

(Baseline, 2001) At Completion

(2008) Remarks Support 0 …

6 Samdrup Jongkhar JPO (southeast)

Responsibility with DOE

Regular 0 2 Support 0 0

7 Community access unit Responsibility with Village Skills Development Program, DHR. Trainers are recruited on contract as needed

Regular 0 1 Support 0 3

8 National qualification unit Responsibility with the Department of Occupational Standards

Regular 0 … Support 0 …

9 Skills training resource unit Now Training and Professional Services Division, DHR

Regular 0 3 Support 0 2

10 Labor market information system Responsibility with the DOE Regular 0 4 Support 0 3 Survey enumerators are

recruited as needed

Total Central Offices/Programs

Regular 1 21 Support 0 13

DHR = Department of Human Resources, DOE = Department of Employment, JPO = job placement office, VTI = vocational training institute. Source: Ministry of Labor and Human Resources. 2009. Draft Project Completion Report. Thimphu.

ADB. 2001. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the Kingdom of Bhutan for the Basic Skills Development Project. Manila

Appendix 6 27

GRADUATES OF VILLAGE SKILLS DEVELOPMENT PROGRAM

No. Districts Number of

Trades Offered Graduates

Total Male Female % Female 1 Trashigang 2 54 35 19 35.2

2 Tashiyangtse 2 63 59 4 6.3

3 Lhuntse 2 44 37 7 15.9

4 Mongar 3 70 67 3 4.3

5 Pemagatshel 2 75 72 3 4.0

6 Samdrup Jonkhar 2 41 33 8 19.5

7 Zhemgang 11 140 49 91 65.0

8 Bumthang 7 111 53 58 52.3

9 Trongsa 3 48 42 6 12.5

10 Wandgue 8 132 66 66 50.0

11 Chhukha 2 20 20 0 0.0

12 Punakha 2 16 11 5 31.3

13 Haa 2 36 29 7 19.4

14 Paro 1 8 7 1 12.5

15 Thimphu 4 35 14 21 60.0

16 Samtse 5 113 105 8 7.1

17 Sarbang 3 100 96 4 4.0

18 Tsirang 2 63 54 9 14.3

19 Dagana 2 73 70 3 4.1

Total 1,242 919 323 26.0 Notes: 1. Trade courses (6–8 weeks) with predominantly male participation included carpentry, furniture making, house

wiring, masonry, mud wall construction, plumbing, and rural water supply. 2. Trade courses (6–8 weeks) with predominantly female participation included hairdressing, handloom weaving,

and tailoring. 3. Entrepreneurship development (7 days) had more female participants. 4. Potato cultivation and management training and cabbage cultivation and management training (both for 3 days)

had more female participants. Source: Ministry of Labor and Human Resources. 2009. Draft Project Completion Report. Thimphu.

28 Appendix 7

NUMBER OF JOB SEEKERS REGISTERED AND PLACED

Year Qualification Number Registered Number Placeda 2005 Graduates 209 212

Class XII and diploma 411 142

Class X and certificate 629 228

Class IX and below 195 87

2005 Subtotal 1,444 669

2006 Graduates 119 137

Class XII and diploma 261 117

Class X and certificate 375 262

Class IX and below 32 50

2006 Subtotal 787 566

2007 Graduates 205 177

Class XII and Ddiploma 113 157

Class X and certificate 334 305

Class IX and below 41 23

2007 Subtotal 693 662

2008b Graduates 192 66

Class XII and diploma 407 97

Class X and certificate 465 128

Class IX and below 9 30

2008 Subtotal 1,073 321

Total 3,997 2,218 a Includes applicants registered during the previous year(s). b From January to July. Source: Ministry of Labor and Human Resources, Department of Employment, Labor Market Information Bulletin, 2008.

Appendix 8 29

LIST OF OCCUPATIONAL PROFILES DEVELOPED

No. Occupation Level Date Developed Verified? Test Item? TAC Sector 1 2 3 4 5 6 7 8

House Wiring electrician Mason Plumber Carpenter Bar bender Furniture maker Excavator operator LGSF

1 and 2

1 and 2 1 and 2 1 and 2

2 2

15–17 Jun 2004

8–10 Mar 2004 8–10 Mar 2004

17–19 Jun 2004 30–31 Aug 2006 26–27 May 2005 13–15 Sep 2004

4–6 Jan 2005

Yes

Yes Yes Yes No Yes Yes Yes

Yes

Yes Yes Yes No No No No

Construction

9 10 11 12 13 14 15 16 17

Cultural tour guide Tour operator Trekking guide R. supervisor Trekking cook Waiter or waitress House keeper Hotel manager Hotel receptionist

2 2 2 2 2 2 2

21–22 Jan 2006 1–2 Feb 2006 5–6 Feb 2006

16–17 Aug 2006 25–26 Jan 2006 11–13 Mar 2004 20–21 Nov 2007

7–8 Jan 2009 11–12 Jun 2008

Yes Yes Yes Yes Yes Yes Yes No Yes

No No No No No No No No No

Tourism and hospitality

18 19 20 21

Auto mechanic Auto electrician Auto painter Panel beater

2 2 2 2

11–13 Mar 2004 14–16 Jun 2004 20–21 Aug 2006 22–23 Aug 2006

Yes Yes Yes Yes

Yes Yes No No

Automobile service

22 23 24

Computer technician Network technician Network administrator

2 29–30 Nov 2006 14–15 Aug 2006 18–19 Aug 2006

Yes Yes No

Yes Yes No

ICT service

25 26 27 28 29 30

Mechanic (H.P.P.) Operator (H.P.P.) Electrician (H.P. P.) S. board operator Lineman (LV) Lineman (HV)

2 2 2 2 2 2

29–30 Nov 2006 3–4 Dec 2006 1–2 Dec 2006

25–26 May 2006 27–28 May 2007

Yes Yes Yes No Yes Yes

Yes Yes Yes No No Yes

Power

31 32 33 34 35 36 37

General mechanic Industrial electrician Welder General electrician Boiler operator Arc welder Gas welder

3 2 2 2 2 2 2

20–22 Oct 2004 17–18 Mar 2006

19 Aug 2006 19–20 May 2005

6–7 May 2005 16–18 Jun 2004 14–15 Jun 2005

Yes Yes Yes Yes No No No

No No No No No No No

Manufacturing

38 39 40 41 42 43

Tshemdrup Patra (Wood carving) Trezo Tailor Traditional carpenter Traditional building painter

2 2 2 2 2 2

23–25 Nov 2004 10–11 Dec 2006 12–13 Dec 2006 21–22 Nov 2006

4–5 Jan 2008 25–26 Apr 2008

Yes Yes Yes Yes Yes Yes

No No No No No No

Zorig Chusum

44 Farm M. mechanic 2 17–19 Jan 2005 Yes No Agriculture 45 46

Lecturer VTI instructor

2

17–18 May 2005 13–15 Oct 2005

Yes Yes

No No

Education

47 48 49 50

GNM Beautician Traffic police Domestic Helper

3

27–28 Jun 2005 11–12 Mar 2006 26–28 Feb 2005

5–6 Nov 2006

Yes Yes Yes No

No Yes No No

Health and social service

30 Appendix 8

No. Occupation Level Date Developed Verified? Test Item? TAC Sector 51 52

Graphic designer Service technician

2 2

2–3 Nov 2006 16–17 Jun 2007

Yes Yes

No No

Printing

53 54 55

Commercial Accountant Office assistant Office secretary

2 2

25–26 Nov 2006 3–5 Mar 2004

18–19 Nov 2006

Yes Yes Yes

No No No

Not yet decided

GNM = General Nursing and Midwifery, H.P.P. = Hydropower plant, HV = high voltage, LGSF = light guage steel framework, LV = low voltage, TAC = technical advisory committee, VTI = vocational training institute. Source: Ministry of Labor and Human Resources. 2009. Draft Project Completion Report. Thimphu.

Appendix 9 31

LIST OF OCCUPATIONAL PROFILES ENDORSED BY THE TECHNICAL ADVISORY COMMITTEES

No. Occupational Title TAC Sector Frequency

of TAC Date

Endorsed Location 1 2 3 4

Construction carpenter Plumber Mason House wiring electrician

Construction 1st TAC 12 Jul 05 Thimphu

5 6

Bar bender Furniture maker Construction 2nd TAC 25 Apr 07 Thimphu

7 8 9

Cultural tour guide Tour operator Trekking guide

Tourism and hospitality 1st TAC 11 Apr 06 Thimphu

10 11 12

Restaurant supervisor Waiter or waitress Trekking cook

Tourism and hospitality 2nd TAC 22 May 07 Thimphu

13 14

Auto mechanic Auto electrician Automobile service 1st TAC 19 May 06 Thimphu

15 16

Auto painter Panel beater Automobile service 2nd TAC 18 Oct 07 Thimphu

17 Personal Computer technician ICT 1st TAC 13 Jun 07 Thimphu

18 19

Network technician Network administrator ICT 2nd TAC 3 Oct 07 Thimphu

20 21 22

Mechanic (H. P.P.) Operator (H.P.P.) Electrician (H.P.P.)

Power 1st TAC 2 Mar 07 Thimphu

23 24 25

General mechanic Industrial electrician Welder

Manufacturing 1st TAC 9 Jul 07 Phuentsholing

26 27 28

Traditional carpenter Tshemdrup Traditional house painter

Zorig Chusum 1st TAC 14 May 08 Thimphu

29 30

Lineman (high voltage) Lineman (distribution system) Power 2nd TAC 22 May 08 Thimphu

H.P.P.= Hydropower plant, ICT = Information and Communications Technology, TAC = technical advisory committee, Source: Ministry of Labor and Human Resources. 2009. Draft Project Completion Report. Thimphu.

32 Appendix 10

PROJECT COSTS AND FINANCIAL PLAN

Foreign Local Total Foreign Local TotalExpenditure Category Exchange Currency Cost Exchange Currency Cost

A. Base Costs1. Civil Works 807 2,681 3,488 2,043 4,165 6,208 2. Furniture and Equipment 1,693 54 1,747 1,720 202 1,922 3. Consulting Services 739 87 826 406 19 425 4. Training and Workshops 149 34 183 258 2 260 5. Skill Training Operation - 1,029 1,029 - 112 112 6. Project Implementation 68 470 538 - 429 429 7. Tax and Duties - 813 813 - a

Subtotal 3,457 5,169 8,625 4,427 4,929 9,356 -

B. Contingencies - 1. Physical contingencies 310 193 503 - 2. Price contingencies 310 322 632 -

Subtotal 619 514 1,133 - -

C. Interest Charges 258 - 258 167 - 167 -

D. Government of Germany 2,490 - 2,490 2,490 - 2,490 -

Total 6,824 5,683 12,507 7,084 4,929 12,013

a Incorporated in the actual costs borne by the government.

At Appraisal Actual($'000) ($'000)

Table A10.1: Project Costs By Category

Source: Ministry of Labor and Human Resources. 2009. Draft Project Completion Report. Thimphu.

Appendix 10 33

Foreign Local Total Foreign Local TotalExpenditure Category Exchange Currency Cost Exchange Currency Cost

A. Base Costs1. Component 1 1,160 668 1,828 667 962 1,630 2. Component 2 2,297 3,495 5,792 3,760 3,964 7,724 3. Component 3 2,490 192 2,682 2,490 3 2,493

Tax and duties - 813 813 - - - a

Subtotal 5,947 5,168 11,115 6,917 4,929 11,846

B. Contingencies1. Physical contingencies 310 193 502 2. Price contingencies 310 322 631

Subtotal 619 515 1,134

Total 6,566 5,683 12,249

C. Interest Charges 258 - 258 167 - 167

Total Project Cost 6,824 5,683 12,507 7,084 4,929 12,014

a Incorporated in the actual costs borne by the government.

At Appraisal Actual

Table A10.2: Project Costs By Component($'000)

Source: Ministry of Labor and Human Resources. 2009. Draft Project Completion Report. Thimphu.

34 Appendix 10

Gov't of Gov't of Gov't of Gov't ofBhutan Germany Bhutan Germany

Foreign Local Total Local Foreign Total Foreign Local Total Local Foreign TotalExpenditure Category Exchange Currency Cost Currency Exchange Cost Exchange Currency Cost Currency Exchange Cost

A. Base Costs1. Civil Works 808 2,009 2,817 672 3,489 2,043 2,538 4,581 1,627 - 6,208 2. Furniture and Equipment 1,693 54 1,747 - 1,747 1,720 144 1,864 58 - 1,921 3. Consulting Services 739 87 826 - 826 406 19 425 - - 425 4. Training and Workshops 149 - 149 34 183 259 - 259 2 - 260 5. Skill Training Operation - - - 1,029 1,029 - - - 112 - 112 6. Project Implementation 68 - 68 470 538 - - - 429 - 429 7. Tax and Duties - - - 813 813 - - - - a - -

Subtotal 3,457 2,150 5,607 3,019 2,490 11,115 4,427 2,701 7,129 2,228 2,490 11,846

B. Contingencies1. Physical contingencies 310 193 502 502 - - - - - - 2. Price contingencies 310 322 631 631 - - - - - -

Subtotal 619 514 1,134 1,134 - - - - - -

C. Interest Charges 258 - 258 258 167 - 167 - - 167 -

Total 4,334 2,664 6,999 3,019 2,490 12,507 4,594 2,701 7,296 2,228 b 2,490 12,014

a Incorporated in the actual costs borne by the government.b Preliminary figures as audit of FY2007-08 financial accounts is not yet completed.

ADB ADB

Appraisal Estimates Actual

Table A 10.3: Project Costs By Category by Financiers ($'000)

Source: Ministry of Labor and Human Resources. 2009. Draft Project Completion Report. Thimphu.

Appendix 11 35

BREAKDOWN OF ANNUAL DISBURSEMENT

No. Description 2001 2002 2003 2004 2005 2006 2007 2008 Total

01 Civil Works - 65,800 977,237 992,479 601,827 808,033 651,945 483,869 4,581,190 - - -

02 Furniture and Equipment - 255,656 51,891 160,304 368,696 385,609 301,439 339,930 1,863,525 - - -

03 Training/Fellowships - 36,287 121,171 28,465 69,907 2,688 - - 258,518 - - -

04 Consulting Services - 139,908 248,016 37,349 - - - - 425,273 - - -

05 Interest Charge - 1,924 8,289 20,861 31,241 44,872 60,053 - 167,240 - - -

06 Unallocated - - - - - - - - - - - -

99 Imprest Account 250,000 (250,000) - - - - - - - - -

Total 250,000 249,575 1,406,604 1,239,458 1,071,671 1,241,202 1,013,437 823,799 7,295,746

( ) = negative.

Category

(In $)

Source: Ministry of Labor and Human Resources. 2009. Draft Project Completion Report. Thimphu.

36 Appendix 12

PROJECT IMPLEMENTATION SCHEDULE (2001)

Activity III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III I II III

ADB Loan declared effective

Fielding of ADB-financed Consultants [figures in ( ) indicates person-months)

Chief Implementation Expert (15) (2)(5) (6) (3)

Industry Liaison and Publicity Expert (4)(4)

Management Expert (4) (4) (2) (2)(10)

Job Placement Expert (2) (1)(3)

Computer and Network Expert (24)(12)

Construction Site Supervisors (12x2)(15x1)

1. Strengthening Management of Basic Skills Training (ADB)In-country coordination activities for policy development andimplementation

Publishing TVET basic policies and updates

Coordinating TVET promotion policy agenda

Regional study tours and training

Industry liaison and publicitySetting up the industry liaison and publicity system

Skills competitions

Industry visits

Year 7 (2008)Year 5 (2006)IV

Year 6 (2007)IV

Year 1 (2002) Year 2 (2003) Year 3 (2004) Year 4 (2005)

Appendix 12 37

(2001)Activity III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III I II III

Management strengtheningSubregional staff training

Overseas staff training

Developing and reviewing management control system

Annual activity evaluation by NTTA

Alumni administration system (AAS)Developing, operating and updating AAS

2. Increasing Access to Basic Skills Training and Employment (ADB)Promoting equitable access policy

In-country equitable access workshops

Achievement evaluation and follow-up activities

Increasing access by expanding NTTA training institutesConstruction design and civil work contract awards

Building construction

Procurement (planning and contract awards)

Procurement (delivery and installation)

Procurement (inspection and acceptance test)

Training operations in new facilities

Year 5 (2006) Year 6 (2007) Year 7 (2008)IV IV

Year 1 (2002) Year 2 (2003) Year 3 (2004) Year 4 (2005)

38 Appendix 12

AAS = alumni administration system, ADB = Asian Development Bank, JPO = job placement office, NTTA = National Technical Training Authority, TVET = technical and vocational education and training. Source: Ministry of Labor and Human Resources. 2009. Draft Project Completion Report. Thimphu.

(2001)Activity III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III I II III

Increasing access by utilizing private sector resourcesImplementation of apprenticeship training

Implementation of training by consignment

On-demand short course and other activities

Increasing access by outreaching rural communitiesSubregional staff training

In-country community access workshops

Developing community access programs

Mobile team operations

Increasing access to private sector employmentSetting up job placement office (JPO)

JPO annual operations

3. Improving Quality of Basic Skills Training (GTZ)Labor market information system

Developing skills standards and operational framework

Developing and revising training programs

Teacher training

Legend: = Appraisal = Actual

Year 5 (2006) Year 6 (2007) Year 7 (2008)IV IV

Year 1 (2002) Year 2 (2003) Year 3 (2004) Year 4 (2005)

Appendix 13 39

STATUS OF COMPLIANCE WITH LOAN COVENANTS

Covenant

Reference in Loan

Agreement

Status of Compliance Particular Covenants

The Borrower shall maintain, or cause to be maintained, records and accounts adequate to identify the goods and services and other items of expenditure financed out of the proceeds of the Loan, to disclose the use thereof in the Project, to record the progress of the Project (including the cost thereof) and to reflect, in accordance with consistently maintained sound accounting principles, the operations and financial condition of the agencies of the Borrower responsible for the carrying out of the Project and operation of the Project facilities, or any part thereof.

Article IV, Setion 4.06 (a)

Complied with.

The Borrower shall (i) maintain, or cause to be maintained, separate accounts for the Project; (ii) have such accounts and related financial statements audited annually, in accordance with appropriate auditing standards consistently applied, by independent auditors whose qualifications, experience and terms of reference are acceptable to the Asian Development Bank (ADB); (iii) furnish to ADB as soon as available but in any event not later than 12 months after the end of each related fiscal year, certified copies of such audited accounts and financial statements and the report of the auditors relating thereto (including the auditors’ opinion on the use of the Loan proceeds and compliance with the covenants of the Loan Agreement as well as on the use of the procedures for imprest account/statement of expenditures), all in the English language; and (iv) furnish to ADB such other information concerning such accounts and financial statements and the audit thereof as ADB shall from time to time reasonable request.

Article IV, Section 4.06 (b)

Partly complied with. Project accounts and financial statements were submitted to ADB, except for the last 2 fiscal years (2007 and 2008). A copy of the audit report for FY2006, which was completed in July 2008, was provided to the project completion review mission. However, audit of the accounts for FY2007 is still ongoing.

The Borrower shall furnish, or cause to be furnished, to ADB quarterly reports on the carrying out of the Project and on the operation and management of the Project facilities.

Article IV, Section 4.07 (b)

Complied with.

Promptly after physical completion of the Project, but in any event not later than 3 months thereafter or such later date as may be agreed between the Borrower and ADB for this purpose, the Borrower shall prepare and furnish to ADB a report in such form and in such detail as ADB shall reasonably request, on the execution and initial operation of the Project, including its cost, the performance of the Borrower of its obligations under the Loan Agreement, and the accomplishment of the purposes of the Loan.

Article IV, Section 4.07 (c)

Partly complied with. The executing agency's draft project completion report was submitted in May 2008 and the final draft in June 2009. But the final draft has not been finalized yes since it is pending the audit report for FY2007.

40 Appendix 13

Covenant

Reference in Loan

Agreement

Status of Compliance Structural arrangements and responsibilities for project management and project implementation

A. Project Steering Committee (PSC)

Within 2 months of the effective date, the Borrower shall establish a Project Steering Committee (PSC). The PSC shall be chaired by the Director, National Technical Training Authority (NTTA) and shall comprise representatives of the Planning Commission, Royal Civil Service Commission (RCSC), Ministry of Finance (MOF), National Employment Board (NEB), Royal Technical Institute (RTI), Industry Training Committees (ITCs), Ministry of Trade and Industry, Ministry of Health and Education, Bhutan Chamber of Commerce and Industry and National Women’s Association of Bhutan. NTTA shall serve as the secretariat to the Committee.

Schedule 6, para. 1

Complied with. The PSC's first meeting was held in April 2002, and met regularly during project implementation.

The PSC shall provide overall guidance to and monitoring of the project implementation. In particular, it will be responsible for (a) liaising with relevant ministries, agencies and other projects to further technical and vocational education and training (TVET).

Schedule 6, para. 2

Complied with.

B. Project Implementation Unit (PIU)

The NTTA shall be the Executing Agency for the Project. Other than the Project Director, who shall be the Director NTTA, the key PIU staff shall comprise of Project manager, a disbursement officer (qualified accountant), a procurement officer, and a planning and administration assistant, all on a full time basis. Other staff necessary for project implementation shall be engaged on a contractual basis as needed. The PIU shall be located in NTTA headquarters.

Schedule 6, para. 3

Complied with. Following the government's restructuring in 2003, NTTA was dissolved and its functions were subsumed under the Department of Human Resources (DHR) and the Bhutan Vocational Quality Authority of the newly established Ministry of Labor and Human Resources. The project was placed under the responsibility of DHR.

The Project Director shall be responsible for the overall planning and implementation of the Project. He/she will appoint project staff, approve all procurement activities and approve submissions of withdrawal application to the Department of Aid and Debt Management of MOF. The Project manager, who shall report directly to the Project Director, shall be responsible for the day-to-day planning, implementation and monitoring of project activities.

Schedule 6, para. 4

Complied with.

Appendix 13 41

Covenant

Reference in Loan

Agreement

Status of Compliance Project Implementation

A. Staffing and Financing Issues

Within 6 months of the effective date, the Borrower shall allocate all necessary staff to the key project units including one staff to the Industry Liaison and Publicity Unit; one coordinator, three regular staff and one support staff to the Skills Training Resource Unit; and one regular staff and one support staff to the Labour Market Information System unit in NEB.

Schedule 6, para. 5

Complied with during project implementation.

The Borrower shall take all appropriate and necessary measures to allocate sufficient resources to cover the entire recurrent cost of all project activities.

Schedule 6, para. 6

Complied with.

B. Institutional Capacity Building

Within 12 months of the effective date, NTTA shall prepare and approve the following basic policies aimed at institutionalizing the new TVET system: (a) a national vocational qualifications policy; (b) an equitable access promotion policy; (c) a private sector partnership policy; and (d) a cost-sharing policy. These policies shall be prepared taking into account the recommendations made by the interministerial taskforce established in connection with the Advisory Technical Assistance No. 3525 on Institutional Development of NTTA (hereinafter called the ADTA).

Schedule 6, para. 7

Complied with delay. The VET policy was approved by the Minister for Labor and Human Resources in the 3rd quarter of 2005. The VET policy incorporates (i) a national vocational qualifications policy, (ii) an equitable access promotion policy, (iii) a private sector partnership policy, and (iv) a cost-sharing policy.

Within 12 months of the effective date, NTTA shall formulate recommendations for an interministerial policy framework to support its own TVET policies as identified in para. 7 above. NTTA shall distribute and discuss such recommendations with relevant ministries and agencies and shall, where appropriate, make specific suggestions on how to implement such policies. These policy suggestions will be prepared taking into account the recommendations made by the interministerial taskforce established in connection with the ADTA and shall include at least the following: (a) recommendations to NEB on an overall labor administration policy, including inputs for an Employment Act and implementing regulations regarding secure working conditions in the private sector; (b) recommendations to MOF on (i) a skills utilization policy including the introduction of skills utilization promotion budgets attached to NTTA and NEB, and (ii) measures to encourage employers to recruit from training institutes and to promote consigning arrangement of training programs and skills testing; (c) recommendations to MOHE on the promotion of linkages between schools and

Schedule 6, para. 8

Complied with delay. The VET policy was approved by the council of cabinet ministers in April 2006.

42 Appendix 13

Covenant

Reference in Loan

Agreement

Status of Compliance industries; and (d) recommendations to MTI and the Planning Commission on the rationale, purposes and ways to include TVET in an overall industrial policy as well as recommendations on the incorporation of the national vocational qualifications system in the business licensing system. After having distributed its recommendations, NTTA shall include any follow-up activities and results in the quarterly progress reports.

Within 6 months of the effective date, the Borrower shall confirm all nominations of industry sectors for organizing ITCs as well as the effective appointment of members for at least four ITCs. Within 18 months of the effective date, the Borrower shall confirm the appointment of the members of the remaining ITCs.

Schedule 6, para. 9

Complied with delay. Seven ITCs have been established (for construction, information and communication technologies, hospitality and tourism, power, manufacturing, automobile services, traditional arts and crafts). The ITCs have accomplished the intended outputs.

NTTA shall undertake annual reviews and updates of the management systems of NTTA itself, its training institutes and key units. The diagnostic analysis and proposed actions for improvement shall be included in the succeeding quarterly progress report.

Schedule 6, para. 10

Complied with.

C. Increasing Access to Basic Skills Training and Employment

The Borrower shall take all appropriate and necessary measures to ensure an overall female enrollment ratio in its skills training programs of at least 30%. For training under the community access program, the target ratio will be 40% rural women, in particular women from the poor households, as defined by the community. To reach this target, the Borrower shall ensure the following measures: (a) a diversification of its training program into female friendly trades; (b) publicity activities to encourage women to participate in outreach activities by the Community Access Unit (CAU) as well as in skills training, testing and competitions; (c) conduct of gender awareness workshops for community representatives as well as for the trainers of the CAU; and (d) the institutionalization of a planning and administration process to ensure the gender balance in the TVET system.

Schedule 6, para. 11

Complied with. The ratio of female enrollment has increased to 41% compared with the appraisal target of 30%.

D. Construction and Maintenance of Facilities

Within 12 months of the effective date, the Borrower shall notify ADB of its final approval of the sites where two RTI extensions, the National Drivers’ Training Institute, the Building Construction Training Center, and the Auto Repair Training Center (ARTC) are to be located.

Schedule 6, para. 12

Complied with delay. The site for the ARTC has undergone numerous considerations, and was finally decided in 2005. Delays in construction inevitably affected the procurement of

Appendix 13 43

Covenant

Reference in Loan

Agreement

Status of Compliance equipment and the delivery of training programs. However, now that the activities are fully operational, the impact of the project was not compromised.

Within 18 months of the effective date, the Borrower shall complete the land acquisition or lease arrangements for two RTI extensions, the National Drivers’ Training Institute, the Building Construction Training Center, and the Auto Repair Training Center and shall hand the titles over to NTTA. The Borrower shall submit to ADB a site clearance report prepared by an autonomous agency, agreed upon by ADB, for each of the project sites. The site clearance report shall certify that (a) no resettlement of people, including squatters, shall be involved, (b) there are no substantive issues, including any potential adverse impact on vulnerable groups, and (c) siting, design, construction, rehabilitation and operations of the training institutes shall follow the Borrower’s environmental requirements, ADB’s Environmental Guidelines for Selected Infrastructure Development Projects and other relevant guidelines. An authenticated copy of the transfer of the title, translated into English, shall be attached to the site clearance report. No construction under the Project shall commence prior to the approval by ADB of the site clearance report and its attachment.

Schedule 6, para. 13

Complied with. No construction was started under the project without the requisite clearances.

The Borrower shall ensure that for all new training facilities to be constructed, a staffing plan shall be approved by the RCSC prior to the commencement of construction of the facility.

Schedule 6, para. 14

Complied with.

The Borrower shall prepare a maintenance plan for all facilities constructed or extended under the Project. The maintenance plan shall be completed before the completion of the construction or extension. The Borrower shall make budgets available to fund the maintenance plan.

Schedule 6, para. 15

Complied with.

The Borrower shall ensure that the training facilities to be constructed or extended under the Project shall have appropriate facilities to accommodate women’s needs such as the provision of women’s dormitories and women’s bathrooms.

Schedule 6, para. 16

Complied with.

E. Environmental Concerns

The Borrower shall ensure that siting, design, construction, rehabilitation and operations of training institutes under the Project shall follow the Borrower’s environmental requirements, ADB’s environmental guidelines for Selected Infrastructure Development

Schedule 6, para. 17

Complied with.

44 Appendix 13

Covenant

Reference in Loan

Agreement

Status of Compliance Projects, and other relevant ADB guidelines on environment.

F. Project Midterm Review

The Borrower and ADB shall jointly undertake a midterm review (MTR) of the Project during the third year of project implementation. The MTR shall assess the progress and achievements of the Project against its objectives as set out in the Logical Framework, identify problems being encountered and recommend remedial action where needed.

Schedule 6, para. 18

Complied with.

G. Benefit Monitoring and Evaluation (BME)

Within 3 months of the effective date, NTTA shall prepare and submit to ADB detailed baseline data for the evaluation of the Project’s achievements. NTTA shall introduce a management cycle for its key units and training institutes that will link project targets to performance indicators through the establishment of quantifiable targets coupled with budget requirements.

Schedule 6, para. 19

Complied with delay. Survey was conducted by the then NTTA in September 2002, and the report was submitted to ADB in October 2002.

NTTA shall yearly disseminate information on project activities and achievement versus target figures. At least 45 days prior to the fielding of the project midterm and completion review mission, NTTA shall prepare and submit to ADB a midterm and final BME report.

Schedule 6, para. 20

Partly complied with. Baseline survey was conducted in October 2002 and the midterm BME report was submitted to ADB in March 2004. The final BME report was due for submission in March 2009, but has remained outstanding to date. Lack of the final BME report has been partly compensated by the tracer study conducted by the government.

ADB = Asian Development Bank; ARTC = auto repair training center; BME = benefit monitoring and evaluation; CAU = community access unit; DHR = Department of Human Resources; ITC = industry training committee; MOF = Ministry of Finance; MTR = midterm review; NEB = National Employment Board; NTTA = National Technical Training Authority; PIU = project implementation unit; PSC = project steering committee; RCSC = Royal Civil Service Commission; RTI = Royal Technical Institute; TVET = technical and vocational education and training; VTI = vocational training institute. Source: Ministry of Labor and Human Resources. 2009. Draft Project Completion Report. Thimphu.

Appendix 14 45

CONSULTING SERVICES (person-months)

As Per Expertise Appraisal Actual A. International

1 ADB Financed i Chief implementation expert 17 14 ii Industry liaison and publicity expert 4 4 iii Management expert 12 10 iv. Job placement expert 3 3

Subtotal 36 31

2 GTZ Financed i Chief technical advisor 40 46 ii Vocational qualification and skills standard expert 12 6 iii Instructional design expert 2 2 iv Apprenticeship, accreditation, and consigning system expert 3 3 v Community skills training expert 4 4 vi Curriculum, training, and testing expert 18 6 vii Labor market information system expert 6 3 viii Short-term expert on Industrial Training Committees 2

Subtotal 85 72 B. National

1 ADB Financed i Computer and network expert 12 12 ii Construction site supervisor 24 15

Subtotal 36 27 Total

i International 121 103 ii National 36 27

ADB = Asian Development Bank, Source: Ministry of Labor and Human Resources. 2009. Draft Project Completion Report. Thimphu.

46 Appendix 15

SELECTED INTERNAL EFFICIENCY INDICATORS, 2008

Institute

Enrollment Capacity

Utilization Rate (%)

Teacher–Student Ratio

Female Graduates

(%)

Average Cost Per Student

($) Rangjung VTI 45.6 1:17 26.7 560 Khuruthang VTI 41.7 1:20 22.9 558 Samthang VTI 64.7 1:8 4.3 907 Chumey VTI 34.7 1:20 42.6 530 TIAE 60.0 1:15 0 1,000 TIZC 86.9 1:20 16.7 675

Average 47.4 1:16 28.0 628 TIAE = Thimphu Institute of Automobile Engineering, TIZC = Trashi Yangtse Institute of Zorig Chusum, VTI = vocational training institute. Source: Ministry of Labor and Human Resources. 2009. Draft Project Completion Report. Thimphu.

Appendix 16 47 MINISTRY OF LABOR AND HUMAN RESOURCES ORGANOGRAM

ICT = Information and Communication Technologies, LMI = Labor Market Information Source: Ministry of Labor and Human Resources. 2009. Draft Project Completion Report. Thimphu.

Minister

Minister’s Personal Staff

Secretary’s Personal Staff ICT Unit

Admin and Finance Division

Department of Labour

Department of Occupational

Standards

Department of Human

Resources

Department of Employment

Foreign Worker Division

Trashigang Regional Office

Phuentsholing Regional Office

Gelephu Regional Office Samdrup Jongkhar Regional Office

Secretary

Policy and Planning Division

Human Resources Division

Labour and Employment Advisory Committee

Labour Inspection and Relation Division

Skill Training Resources Division

Vocational Training and Skill Development

Standard and Qualification Division

Assessment and Certification Division

Employment Service Division

LMI and Research Division

48 Appendix 17

ASSESSMENT OF PROJECT PERFORMANCE

Criterion Weight

(%) Definition Rating

Description Rating Value

Weighted Rating

1. Relevance 0.2 The consistency of the project in its goal, purpose, and outputs with the development strategy of the Government of Bhutan, the Asian Development Bank (ADB) country strategy, and ADB's strategic objectives at the time of approval and evaluation

Highly Relevant

3.0 0.6

2. Effectiveness 0.3 The achievement of purpose as specified in the policy goals and the physical, financial, and institutional objectives adopted at project approval, or as formally modified during implementation

Effective 1.8 0.5

3. Efficiency 0.3 Comparison of the achievement of project purpose with its use of inputs, based on implementation performance with consideration of the cost effectiveness of the investment

Partly Efficient

1.6 0.5

4. Sustainability 0.2 Likelihood that human, institutional, and financial resources are sufficient to support achievement of results and benefits over the economic life of the project

Likely 2.6 0.5

Overall Assessment

The overall weighted average of the four criteria (if one of the criteria has a score of 0, the rating to be downgraded to partly successful)

Successful 2.1

Rating Value Relevance Effectiveness Efficiency Sustainability 3 Highly relevant Highly effective Highly efficient Most likely 2 Relevant Effective Efficient Likely 1 Partly relevant Less effective Less efficient Less likely 0 Irrelevant Ineffective Inefficient Unlikely

Rating: Greater than 2.7 = Highly successful From 1.6 to less than 2.7 = Successful From 0.8 to less than 1.6 = Partly successful Less than 0.8 = Unsuccessful Source: ADB. 2006. Guidelines for Preparing Performance Evaluation Reports for Public Sector Operations. Manila.