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Strana 1 (celkem 109)

Final Report on Project

001/05 Evaluation of the mid‐term implementation progress of Operational Programme Industry and Enterprise

Prague, 18 April 2006

Final Report on Project 001/05 Evaluation of the Mid‐term Implementation Progress of Operational Programme Industry and Enterprise


CONTENTS

LIST OF ABBREVIATIONS 3

1. INTRODUCTION 5

2. PROJECT PREPARATION METHODOLOGY 6

3. SUMMARY OF THEMATIC REPORTS 10

3.1 TO1 – IMPLEMENTATION 10 3.2 TO2 - TECHNICAL ASSISTANCE 15 3.3 TO3 – MONITORING SYSTEM 19 3.3.1 MONITORING SYSTEM 19 3.3.2 INDICATORS 25 3.4 TO4 – FINANCIAL PROGRESS 31 3.5 TO5 – PHYSICAL PROGRESS 42

4. ANSWERS TO EVALUATION QUESTIONS 58

4.1 IMPLEMENTATION SYSTEM AND MONITORING 58 4.2 EVALUATION OF PHYSICAL BENEFITS OF THE OPIE INCL. ITS FINANCIAL IMPLEMENTATION

PROGRESS 65 4.2.1 FINANCIAL IMPLEMENTATION PROGRESS 65 4.2.2 PHYSICAL IMPLEMENRATION PROGRESS 68 4.3 SUMMARY AND RECOMMENDATIONS 82

5. RECOMMENDATIONS 91

6. CONCLUSION 106

ANNEX NO. 1 – LIST OF RELEVANT DOCUMENTS 107

ANNEX NO. 2 – OPIE IMPLEMENTATION STRUCTURE 109



LIST OF ABBREVIATIONS Agency Implementing Agency (CEA, CI, CT) BDD Business Development Division BEDD Business Environment Development Department BRED Business Real Estate Department CAP Communication Action Plan CEA Czech Energy Agency CI CzechInvest, agency supporting business and investment CI RO CzechInvest regional office CMRZB Czech and Moravian Guarantee and Development Bank CR Czech Republic CSF Community Support Framework CSO Czech Statistical Office CT CzechTrade DG Directorate General of European Commission DMD Domestic Marketing Department DPMD Development Programme Management Department DPSD Development Programme Support Department EC European Commission EE External Evaluator EIA Environmental Impact Assessment Env. Environment ERDF European Regional Development Fund EU European Union FB Final Beneficiary FMCD Financial Management and Control Department FR Final Recipient GDP Gross Domestic Product HP Horizontal priority HPM Horizontal Priority Manual IB Intermediate Body ICT Information and communication technology

IM OPIE Implementation Manual for Operational Programme Industry and Enterprise

IS Information system ISOP++ Information system of the Operational Programme IT Information technology MA Managing Authority MC Monitoring Committee MIT Ministry of Industry and Trade MoA Ministry of Agriculture MoF Ministry of Finance MoT Ministry of Transport



MRD Ministry for Regional Development MSSF SF Monitoring System OPIE Operational Programme Industry and Enterprise PA Paying Authority PAA Payment Authorisation Analyst PAM Payment Authorisation Manager PC Programme Complement PM Project Manager PU Payment Unit RCD Regional Cooperation Division RPM Regional Project Manager SF Structural Funds SFD Structural Fund Department SME Small and Medium‐sized Enterprise SOP Sectoral Operational Programme TA Technical Assistance



1. Introduction The Final Report on Project “001/05 Evaluation of the Mid‐term Implementation Progress of Operational Programme Industry and Enterprise“ (hereinafter the Project) prepared by the Contractor’s team issues from the Mid‐term Project Report of 30 January 2006. Chapter 2 in the first part of the Final Report describes the methodological approach of the whole evaluation Project. Chapter 3 in its second part summarises thematic reports elaborated in detail in the Project Mid‐term Report. Chapter 4 in the third part of the Final Report answers evaluation questions issuing from the Project ToR. Recommendations on the OPIE are formulated in Chap. 5. Experts responsible for individual parts of the Final Report are: Ing. Luděk Hanáček – Chapters 1, 2, 3.1, 3.2 and answer to Evaluation Question 1; Ing. Věra Vondráčková, Chapter 3.3.1 and answer to Evaluation Question 2; Ing. Jan Přib, CSc. – Chapter 3.3.2 and answer to Evaluation Question 2; PhDr. Veronika Nürnbergerová, Ph.D. – Chapter 3.4 and answers to Questions 4, 5, 8 and 10; Ing. Libor Witassek – Chapter 3.5 and answers to Evaluation Questions 3, 4, 6, 7 and 9. Chapter 5 – Recommendations was prepared jointly by the whole Project implementation team. The above experts are grateful to all the Managing Authority’s and Intermediate Bodies’ staff for their helpful and positive approach to the evaluation of the OPIE. Based on the results of a public tender for the Contractor, the Project “001/05 Evaluation of the Mid‐term Implementation Progress of Operational Programme Industry and Enterprise“ is implemented by ELBONA a.s. and the Economic Chamber of the Czech Republic. The Employer is the Ministry of Industry and Trade of the Czech Republic.



2. Project preparation methodology The methodology of research executed within the Project has issued from classical methods of establishing the actual state in the sphere of programme implementation and monitoring, its declared absorption capacity and contribution to fulfilling the Programme objectives through meeting its established indicators. The values of the established indicators were monitored and evaluated both vertically in individual measures and horizontally with respect to their fulfilment within all the four horizontal themes. During the Project implementation, methods for statistical processing of data and information were applied.

Based on the ToR and evaluation experience of its team members, the Contractor applied two complementary approaches to research methodology:

1. System‐oriented implementation methodology; 2. Time‐oriented implementation methodology.

The system‐oriented methodology approached the Project with a view to its various thematic areas (programme implementation, Technical Assistance, monitoring system, financial and technical aspects of programme implementation) which were subject to evaluation. The second methodology followed a three‐stage project implementation approach compliant with the ToR. The classification of thematic areas issued from the ToR and research was therefore sub‐divided into 5 main areas: Thematic area 1 – Programme administration and implementation Thematic area 2 – Monitoring system, the evaluation of indicators Thematic area 3 – Technical Assistance Thematic area 4 – Financial evaluation Thematic area 5 – Technical evaluation

The evaluation findings, targeted at providing answers to evaluation questions, were structured into 5 thematic reports included in the Project Mid‐term Report:

Thematic Report 1 ‐ Programme administration and implementation Thematic Report 2 ‐ Monitoring system, the evaluation of indicators Thematic Report 3 ‐ Technical Assistance Thematic Report 4 ‐ Financial evaluation Thematic Report 5 ‐ Technical evaluation

With respect of time, the Project was split into three phases copying basic stages of any analytical process, i.e. the acquisition of the required information and available data, work with the data and interpretation of the results gained.



• Phase I – Preparation for the evaluation and partial analyses • Phase II – Data collection and the mapping of Measures • Phase III – Data analysis, evaluation and draft recommendations

Within each of those phases, there was a continuous communication with representatives of the institutions involved where the implemented activities, including their results, were discussed and interpretations of the established facts suggested. Arguments and opinions discussed at workshops were included in reports completing the respective stages. At the end of each phase, a workshop was organised for the Employer – the Project Expert Group and the OPIE Evaluation Working Group ‐ where the implemented activities including their results were discussed and interpretation of the established facts suggested. Outputs of seminars were utilised as inputs for further Project activities and taken into account during the formulation of conclusions and recommendations. Project Phase I was launched by a working meeting with the Employer’s Project coordinator on 18 July 2005 and was in progress until 16 September 2005. The phase was targeted at the preparation of a methodology and a detailed evaluation plan, at gaining insight into the structure and quality of data in ISOP and MSSF Central, and the collection of secondary data for partial analyses. On 24 August 2005, the inception presentation of the Evaluator’ team was delivered in the Employer’s premises where the team was presented to the Employer’s representatives and the basic Contractor’s approach to Project implementation introduced. This phase was completed on 16 September 2005 by a workshop organised for the Project Expert Group and the OPIE Evaluation Working Group where the proposed methodology was presented, together with procedures for the preparation of partial reports, and a plan of further activities for the following phase suggested. Project Phase II was launched on 19 September 2005 and targeted at data collection, secondary data analysis, acquisition of data from ISOP and MSSF Central, mapping of measures, acquisition of further data and information needed for questionnaire surveys, structured interviews and also individual interviews. The Contractor founded its efforts on relevant documents provided by the Project Employer or gained from publicly accessible information sources. The documents used are listed in Annex 1. Four focus groups were organised at the Employer’s premises earmarked for the verification of information gained from the available resources, and for a precise identification of strengths and weaknesses within the OPIE. The first focus group was established for the theme “Information system and process analysis“ and convened for 1 November 2005. Six civil servants involved in OPIE implementation participated in this focus group.



The second focus group for the theme “OPIE implementation“ met on 22 November 2005 and, in total, 12 civil servants involved in OPIE implementation participated in its discussions. The third focus group took place on 13 December 2005 and worked on the theme “OPIE Indicators“ and there were 5 civil servants implementing the OPIE. The fourth focus group organised discussed the theme “Technical Assistance within the OPIE“. It was convened for 19 December 2005 and included 4 civil servants involved in OPIE implementation. Apart from the above focus groups, individual interviews were carried out with relevant civil servants, especially at the SFD and CzechInvest. Over 30 civil servants directly involved in OPIE implementation participated in the evaluation project. The second phase included also questionnaire surveys among businesses and entrepreneurs. Three groups of businesses (entrepreneurs) were addressed: successful applicants for OPIE subsidies, rejected applicants and entrepreneurs who have not yet applied for a subsidy. The results of questionnaire surveys were used to formulate conclusions in the respective thematic areas. In 2nd phase, the Employer of the CSF mid‐term evaluation established that the reference date for data collection from ISOP and MSSF Central should be 15 December 2005. As reporting is executed half‐yearly or annually (which is also linked to the availability of accounting data), this reference date for physical evaluation was postponed till 31 December 2005. On 9 January 2006, a workshop was organised for the Project Expert Group and the OPIE Evaluation Working Group to mark the end of 2nd stage. At the workshop, preliminary findings were presented and a plan of further activities for the final stage suggested. The output of Phase II was an interim report including:

• Description of the implemented activities; • Partial thematic reports; • Evaluation of the results of questionnaire surveys.

Project Phase III was aimed at working with the data and information acquired, their in‐depth analysis and interpretation (through quantitative and qualitative analyses and further methods). At the end of this phase, recommendations were formulated directed at improving the current programming period and the programming period of 2007‐2013. In order to complete this phase, a workshop was organised on 10 February 2006 for the Project Expert Group and the OPIE Evaluation Working Group where the implementation progress of the whole Project, incl. draft recommendations and answers to evaluation questions, were presented.



Draft Final Project Report was the output of Phase III. This Report was finalised based on comments and opinions of both working groups and submitted as the final version of the Final Report in Czech and English. At the same time, a short summary report was prepared in both language versions.



3. Summary of thematic reports

3.1 TO1 – Implementation In its Programme Complement and Implementation Manual, the OPIE defines programme implementation activities for all entities involved in implementation structures. The chart of OPIE implementation structure is attached in Annex 2. Table No. 1 shows the involvement of relevant entities in OPIE implementation structures with a view to programmes included in the OPIE. Table No. 1 – Involvement of relevant entities in OPIE implementation structure

Prog

rammes:

Prospe

rity, T

raining

Centres, R

eal E

states,

Clusters, Develop

ment

Prog

rammes: Start,

Credit, Inno

vatio

ns

Prog

rammes:

Energy Savings,

Renewable Sou

rces

Prog

ramme: M

arketin

g

Technical A

ssistance

MA – MIT CR, SFD X X X X X IB ‐ CzechInvest X X X X X IB ‐ CzechTrade X X IB ‐ CEA X X IB ‐ CMRZB X X Among all OPIE Intermediate Bodies, CzechInvest is the most important Implementing Agency because it ensures the implementation of the largest number of programmes covering the largest volumes of funds. The programmes are as follows:

• Prosperity; • Real Estates; • Training Centres; • Clusters; • Development; • Innovations.

The CzechInvest’s administrative structure includes regional offices that accept all project applications for subsidies (excl. loan applications) and also subsidy payment claims for OPIE programmes. The above information makes it clear that the quality of CzechInvest’s activities is of crucial importance for the implementation of the whole OPIE. In the past, CzechInvest implemented



Phare and has now used the experience and knowledge gained of its implementation also for the OPIE implementation. CMRZB implements two programmes within the OPIE, namely Start and Credit. It also shares with CzechInvest the implementation of the Innovations (combined) programme. The number of applications submitted under Start and Credit and the volume of funds in those programmes ranks CMRZB as the second most important Implementing Agency. CMRZB avails of extensive previous experience of providing loans to SMEs which has very positive impacts on its activities. CzechTrade implements one programme within the OPIE, namely Marketing. In the past, this agency used to implement a more or less equal programme and can thus use its experience and knowledge of implementation also for the OPIE. The Czech Energy Agency (CEA) implements two programmes within OPIE ‐ Energy Savings and Renewable Energy Sources. With a view to measures included in the OPIE, this Programme is implemented using one implementation scheme (implementation of each Measure through its individual programmes ‐ excl. Measure 1.4) shown in Annex No. 3, which is a pre‐requisite for flexible and efficient management and implementation of the whole Programme. We can therefore state that, during the preparation of implementation structures, such entities were involved in the implementation system that availed of knowledge and experience of pre‐accession or national aid programmes and that their experience has been expediently utilised during the implementation of the first OPIE. The Managing Authority and CzechInvest have executed their own partial evaluation studies in the sphere of OPIE implementation, namely:

• Evaluation of the OPIE 1st implementation phase (May 2005, VŠE Prague–Employer MIT);

• Simplification of the SF system for entrepreneurs (October 2005, INNO – Employer CI).

The first partial study ordered by the Managing Authority was aimed especially at methods for administering project applications, at the preparedness of the Intermediate Bodies for programme implementation, and also at the assessment of the technical content of projects with respect to various programmes, their regional location and the classification of branches of economic activities. The second study ordered by CzechInvest is targeted at analysing bottlenecks in the project application administration system at CzechInvest with the aim of suggesting improvements and simplifications of the system and proposing the necessary staffing capacities for various activities. Based on detailed process analyses, the whole administration system is being mapped. The decision to implement this kind of project adopted by the Managing Authority and CzechInvest is a basic pre‐requisite for defining an efficient implementation method for the whole OPIE. The project results can improve the implementation system of the required



partial procedures in the administration of applications and address the issues of staffing capacity in the respective Implementing Agency. Applicants submit their applications for subsidies to CzechInvest regional offices both within programmes, where support is awarded in the form of direct subsidies (all programmes excluding loan programmes Start and Credit), and also within the combined Innovations programme. These offices check the applications for administrative compliance, control the eligibility of projects and applicants and check the Applicant’s financial health. Applications are then forwarded to CzechInvest headquarters in Prague (Applications under the Marketing programme are sent to CzechTrade, combined applications for Innovations programmes to CMRZB and applications within Renewable Energy Sources and Energy Savings programmes are forwarded to CEA), where the respective Project Manager is responsible for the technical evaluation of each application and forwarding it to the evaluation committee. The Project Manager, using usually external expert opinions and internal procedures, prepares background documents for the evaluation committee which recommends projects for funding to the Managing Authority (MIT CR ‐ Structural Funds Department). The SFD decides on granting subsidies. These procedures influence the speed of allocating funds to projects and are of crucial importance in 2006 when new applications are still submitted. Applications for soft loans are accepted by CMRZB and its regional branches. The accepting office or CMRZB headquarters checks all formal aspects and the eligibility of applications. CMRZB assesses loan applications and, while applying internal procedures usual in the banking sector, decides on the award of soft loans. The period for processing an application for a subsidy as stated in the OPIE Implementation Manual is ca 90 calendar days. This period starts as of the date of the delivery of application and ends as of the day when draft terms of agreement are sent to the applicant for signature. In the initial stages of the preparation of the OPIE Implementation Manual, these deadlines were specified in an indicative way and did not consider real capacity of Intermediate Bodies. Based on the experience of OPIE implementation, the deadlines have been adjusted considering human resources available and the number of applications submitted within the OPIE. ISOP++ information system is used for the administration of applications by the Managing Authority, CzechInvest, CEA and CzechTrade. CMRZB uses for these purposes information system IDOK from which data is transferred into ISOP++ after the approval of applications. Following questionnaire surveys we can state that over a half of the Final Recipients evaluate the willingness of staff of the whole OPIE implementation structure in a very positive way and consider their cooperation with the Implementing Agency as excellent. Payment claims, incl. all the required annexes, must be submitted by Final Recipients within 30 days of completing the implementation their whole project or its stage. Procedures for the acceptance and control of payment claims influence the speed of disbursing funds allocated for the individual projects. These procedures are crucial regarding the n+2 rule.



The current period laid down in the Implementation Manual for transferring payment claims to the Payment Unit is 90 calendar days. The period starts as of the day of registering the payment claim and ends on the day when the SFD forwards the payment claim to the Payment Unit. Payment claims are accepted by CzechInvest regional offices that control their administrative compliance. Payment claims are then handed over to the CI headquarters where they are authorised (cost eligibility, completeness of accounting documents etc. – foll. the OPIE Implementation Manual procedures). When authorising a payment claim, CzechInvest always carries out a site control (i.e. a control of physical project implementation). When all payment authorisation procedures have been carried out in the CI agency, the payment claim is forwarded to the SFD which authorises it and forwards it to the Payment Unit. In loan programmes, credits are being withdrawn based on the submitted invoices or other receipts of tax‐deductible expenditures which the loan recipients submit to the relevant CMRZB branch. As several entities are involved in the implementing structure, it is necessary to ensure a continuous high‐quality transfer of information among them in order to achieve efficient and correct implementation of the OPIE. For internal communication within the Managing Authority, a joint server database administered and continuously updated by the SFD is used. CzechInvest has also installed the “Board” intranet application administered following internal operational guidelines. There are no special requirements for internal communication in Intermediate Bodies (CzechTrade and CEA) because only 3 employees of CzechTrade and further 3 employees of the CEA (2 project managers + 1 publicity officer) are involved in OPIE administration. Entities involved in the implementation organise regular operative meetings and internal staff trainings. Working groups have been established for individual specific areas in the implementation system (e.g. a TA Working Group, OPIE Evaluation Working Group, Internal Audit Working Group, Publicity Working Group, etc.). These Working Groups include representatives of the Managing Authority and Intermediate Bodies, or other nominated members. Operative communication among entities involved in implementation has personal, electronic and telephone forms. Respondents participating in OPIE evaluation stated that internal communication within implementation structures was efficient, and did not express any serious reservations. External communication is implemented through publicity measures at the level of Managing Authority, Intermediate Bodies but also at the level of Final Recipients of aid. Main aims of promotion and publicity:

• Raise the awareness of the OPIE in relevant target groups;



• Inform the target groups on OPIE objectives, rules and terms of aid schemes, and procedures for the preparation and submission of applications;

• Inform social partners on OPIE objectives and the terms of its sub‐programmes with the aim of achieving a broadest possible dissemination of information and increasing the preparedness of social partners for cooperation with potential beneficiaries of assistance during project preparation.

In order to coordinate promotional and publicity measures within the implementation structures, the Publicity Working Group has been established managed and administered by the SFD. This working group prepares and approves publicity measures, including the required budget, always for of one year ‐ it is the OPIE Annual Communication Plan. This group is responsible for a continuous control of meeting the Annual Communication Plan and for adopting extraordinary measures which are based on previous developments and increase the publicity of OPIE aid programmes. The Publicity WG usually meets once in a fortnight. The OPIE Annual Communication Plan for 2005 describes responsibilities of various implementation entities issuing from the OPIE Implementation Manual and linked to the provision of publicity and information measures. It also specifies the implementation level, communication strategy objectives, target groups, budget and the monitoring of these publicity instruments for OPIE aid. Entities involved in OPIE implementation structures use the following communication instruments:

• Internet; • Green line; • Seminars, conferences; • Printed documents/ materials; • Information in mass media (incl. TV); • Advertisements; • Direct marketing (mailing to potential selected aid beneficiaries).

If considering result indicators of the communication plan, we can state that the implementation of the OPIE Annual Communication Plan for 2005 shows high efficiency at all levels of informing on, and promoting the OPIE in all target groups. Questionnaire surveys have proved that applicants get information mostly through the Internet. Web pages www.mpo.cz include information on the OPIE; they form an information basis and offer sound information on the OPIE together with crucial legislative documents. Web pages www.czechinvest.cz publish on‐line statistics of OPIE subsidies withdrawn, information on the implemented programmes and other information relevant for applicants. The questionnaire surveys executed have also confirmed that the implementation of the Annual Communication Plan has hit its publicity targets. Especially the quality, clear structure, practical applicability, accessibility and comprehensibility of the information extended are of key importance. Over 80 % of the responding applicants stated that the information required was easily accessible. Over 80 % of the responding applicants



gave a positive answer to the question whether the information provided was easy to understand. As the SFD bears an overall responsibility for correct utilisation of the provided funds compliant with the EU eligibility rules, a control system at all management levels has been established. The internal control system consists of the following types of controls:

• Management control foll. Regulation EC No. 438/2001, Art. 4 (incl. project control); • Process control; • Internal audit; • Control foll. Regulation EC No. 438/2001, Art. 10‐12 (control of sample operations).

3.2 TO2 ‐ Technical Assistance Technical Assistance includes all supporting activities executed at the level of the Managing Authority and Intermediate Bodies with the aim of supporting the efficiency of the aid delivered, improving the quality of interventions applied and increasing the efficiency of utilising Community funds, i.e. of contributing to efficient management of the operational programme incl. its projects, their promotion and evaluation. The utilisation of Technical Assistance is conditional on the approval of a TA Plan, the adherence to the EU and national legislation as well as MIT standards, especially:

• Compliance with Regulation EC No. 448/2004, Rule 11, and Regulation EC No. 1260/1999 during the whole TA implementation process;

• Observation of Act No. 40/2004 Coll., on public tenders; • Compliance with Decree No. 240/2004, on the public procurement information

system and methods for evaluating offers following their economic expediency; • Compliance with Rules for Budgetary Funds Management of MIT within public

procurement procedures, evaluation of offers and execution of payments. OPIE Programme Complement approved by the Monitoring Committee on 19 May 2005 lays down allocations for 2004 – 2006; the TA allocation for the whole period was CZK 424.597.720 (rate CZK/EUR = 30,520). In order to be able to support the management of all entities, the TA allocations were further increased in the TA Plan for 2004 – 2006 (2007) within the OPIE version submitted on 30 April 2004 to the Monitoring Committee and approved by the SFD director. The TA Plan has specified indicative allocations until 2007 as listed in Table No. 2 in CZK.



Table No. 2 – Plan of Technical Assistance for 2004 ‐ 2007 Programme Complement

Allocations (CZK) TA Plan (CZK)

2004 98 963 114 77 850 2022005 141 746 661 158 738 6712006 183 887 945 137 836 9882007 0 50 171 859Total 424 597 720 424 597 720 For the coordination of Technical Assistance, including e.g. planning, methodological advice etc., a TA Working Group has been established. Priority 3 – Technical Assistance is subdivided into two Measures: 3.1 Technical Assistance for the management and implementation of the Programme and 3.2 Other Technical Assistance. Technical Assistance for OPIE management and implementation Technical Assistance provided within Measure 3.1 to the Managing Authority and Intermediate Bodies is aimed at OPIE management and implementation and includes activities linked to the process of selection, implementation and monitoring of projects, incl. expert consultations. The measure is further earmarked for coordination activities during the OPIE implementation, its audits and controls, or also for the remuneration of staff. The Measure objectives are:

• To achieve a responsible and effective OPIE management and administration, maximise the Programme quality and its implementation efficiency;

• Control progress of and ensure regular reporting on the OPIE implementation. Final Beneficiaries include the Managing Authority and Intermediate Bodies CzechInvest, CzechTrade and CEA. Funds allocated for Measure 3.1 have been further split by the Managing Authority into the following monitored indicative allocations: 411 – 1 Operational costs of the administration of the Evaluation Committees; 411 – 2 Operational costs of the administration of the Monitoring Committee; 411 – 3 Costs of external consultancy; 411 – 5 Costs of audits; 411 – 6 Other costs linked to the preparation, selection, evaluation and monitoring of assistance.



Table No. 3 illustrates the disbursements of indicative amounts in Measure 3.1 as of 31 October 2005 by entity Entity 411‐1 411‐2 411‐3 411‐5 411‐6 Total MIT 0 1 348 251 0 0 2 404 715 3 752 966CI 313734 0 3 615 687 0 2 759 120 6 688 541CT 0 0 1 830 340 2 427 488 542 989 4 800 816CEA 0 0 0 0 704 601 704 601Total 313 734 1 348 251 5 446 027 2 427 488 6 411 425 15 946 925Disbursement planned for 2004+2005

3 278 799 3 538 911 42 476 504 14 556 620

55 670 659 119 521 493

Disbursement rate

9,57 % 38,10 % 12,82 % 16,68 % 11,52 % 13,34 %

The largest amounts were withdrawn in the indicative item 411 – 6 (Other costs linked to the preparation, selection, appraisal and monitoring of assistance). Those were costs of the establishment of the Green Line (800 800 777), its operation and the purchase and operation of office and computer equipment. Costs were also incurred linked to foreign travel earmarked for consultations, gaining experience, qualification growth and information needed to prepare for the next programming period. The indicative item with the second largest disbursements is 411 – 3 (Cost of external consultancy) were costs were expended for the remuneration of external assessors and the rating of applications. Other Technical Assistance Within Measure 3.2, Technical Assistance is provided for the sphere of publicity, awareness of the OPIE and exchange of experience but also for the sphere of OPIE monitoring, preparation of evaluations, studies, analyses or strategies and methods used in the OPIE. This Measure is also earmarked for the preparation of an operational programme for the new programming period and the linked preparation and implementation of pilot projects. The objectives of this Measure are:

• Provision of effective and efficient TA for all relevant actors in the OPIE process; • A sound targeting of the Programme following topical needs and objectives

of the OPIE, regarding also the preparation of an operational programme for the next programming period.

Final Beneficiaries include the Managing Authority and Intermediate Bodies CzechInvest, CzechTrade and CEA. Table No. 4 illustrates the disbursements of indicative amounts as of 31 October 2005 by entities involved in Measure 3.2. The Measure includes the following indicative items: 411 – 4 Costs of the Measure and operation of facilities; 412 – 1 Costs of the preparation of evaluations foll. Art. 40 Regulation EC No. 1260/1999;



412 – 2 Costs of acquiring databases, statistical documents, background documents for annual and final reports etc.;

413 – 1 Costs of the preparation for the next programming period; 413 – 2 Execution of impact analyses for individual actions; 414 – 1 Costs of pilot projects; 415 – 1 Implementation costs of the Community Action Plan. Table No. 4 – Disbursements of indicative allocations by entities in Measure 3.2 as of 31 October 2005 by entity Entity 411‐4 412‐1 412‐2 413‐1 413‐2 414‐1 415‐1 Total MIT 1 457 801 1 946 250 0 900 000 878 640 0 8 522 552 13 705 242 CI 4 608 249 0 0 0 0 0 7 082 230 11 690 497 CT 1 276 396 0 256 000 0 0 1 600 000 3 636 475 6 768 871 CEA 0 0 0 0 0 0 197 918 197 918 Total 7 342 446 1 946 250 256 000 900 000 878 640 1 600 000 19 439 175 32 362 510 Disbursement planned for 2004+2005

20 580 030 12 215 213 1 290 749

18 792 635

18 792 635 12 528 423 34 280 434 118 480 119

Disbursement rate

35,68 % 15,93 % 19,83 % 4,79 % 4,68 % 12,77 % 56,71 % 27,31 %

The largest amounts were withdrawn in the indicative item 415 – 1 (Implementation costs of the Communication Action Plan) linked to printing the Guidelines for Applicants for the OPIE assistance and the Vademecum for Entrepreneurs in English, the production of promotional objects, marketing actions, seminars and advertisements. The indicative item with the second largest disbursements is 411‐4 (Costs of the Measure and operation of facilities) from which the ISOP++ information is funded, the acquisition of servers and further information technology. The indicative items 413‐1 (Costs of the preparation for the next programming period) and 414‐1 (Costs of pilot projects) appear as unwithdrawn items because they are earmarked for studies which are still within their implementation stages. The above Tables No. 3 and 4 illustrate that CzechInvest has withdrawn the most and CEA the least in both TA Measures. The reason is the significant role of CzechInvest in the implementation system and its issuing specific tasks, e.g. of the Employer within the tender for ISOP++ etc., which other agencies need not meet. MIT, CzechInvest, CzechTrade or CEA can be Employers within Technical Assistance tenders which shall follow Act No. 40/2004 Coll. on public tenders. Each tender to be funded from the TA must always be approved by the SFD. The Employer must first submit the draft tender dossier to the SFD for approval. If an opponent, evaluation or selection committee is established, the SFD decides on its members. After the tender is launched, the Employer stores project data in the ISOP++ information system.



After the project completion, the Employer forwards its payment claim, together with a certificate on the executed work, to the SFD which controls its content and form following a checklist. When controlling the payment claim, the SFD can execute a public‐administration control. The payment claim is then forwarded to the Payment Unit which controls it using its own control procedures. The authorised amounts are not transferred to the accounts of the relevant Agencies because the TA funds have already been included in their budgets for the respective year.

3.3 TO3 – Monitoring System

3.3.1 Monitoring System When analysing the monitoring system, apart from indicators (see Chapter 3.3.2), the following spheres were analysed:

• Obligation to establish a monitoring information system; • Three levels of the monitoring information system in the CR; • Data transfer between various levels; • ISOP++; • Entities involved in OPIE monitoring and their staffing aspects; • Responsibilities of entities within OPIE monitoring; • Monitoring reports; • Processes within OPIE monitoring.

When analysing these areas, the Evaluator arrived at the following findings. Obligation to establish a monitoring information system The Structural Funds monitoring system was established following Council Regulation (EC) 1260/1999 of 21 June 1999 where Art. 34 Par. 1a) specifies the requirement on the existence of a monitoring system. Council Regulation (EC) No. 438 includes specific rules for the implementation of the above Regulation. Compliant with these Council regulations, a Resolution of the Government of the CR No. 148 was adopted on 14 February 2001 charging the Ministry for Regional Development with the establishment of a monitoring system. Currently, the Structural Funds Monitoring System is used at all Structural Funds implementation levels – i.e. it is used by the Managing Authorities of operational programmes and programming documents, Intermediate Bodies and Final Beneficiaries. Three levels of the monitoring information system in the CR In the current programming period, the following three levels of the information system are crucial for the SF monitoring: MSSF‐CENTRAL (basic information instrument for CSF and MAs), ISs of the Intermediate Bodies (for OPIE it is ISOP++) and the lowest information system level serves the applicants (for OPIE it is the electronic Application Form).

With a view to the implementation of the OPIE, basic links were identified among various parts of the information system and illustrated in a chart (see Chart No. 1 below). This chart shows also links which are not yet fully operational.



Chart 1: Basic links between the OPIE monitoring information system and other information systems

IS SFC

AFIS

MSSF-CENTRAL

Elektronická žádost o udělení podpory (vč. vyplněného

formuláře ISPROFIN)

ISPROFIN

UIR - ADRISOP + +

IS CEDRO

NLI

NE

ISU – modul veřejná podpora

IS VIOLA

Nefunguje, v řešení je však dávkový

přenos

Spojení je, ale nevyužívá se

ARES

Online (problémy, není přesný)

Rating (MELOUN, Sinte)

Newton

IDOK Online

Online

Data transfers between various levels We can state that data transfers from individual project applications into ISOP++ are more or less without problems but there are certain shortcomings in the data transfer between ISOP++ and MSSF‐CENTRAL which must be addressed:

‐ When there are problems in data transfers between ISOP++ and MSSF‐CENTRAL and in cases of potential lack of compatibility between those systems, the MA tries to ensure that the ISOP++ system is adjusted to the requirements of MSSF‐CENTRAL. That means that the MA OPIE agrees on the changes and adjustments with the ISOP++ Contractor, ASD Software, s.r.o. company (This has been done e.g. to address problems with the rounding of decimal numbers – when data were copied from ISOP++ into SSF, the rounded values were not always transferred. The MA therefore had to change its requirements concerning ISOP++: SFD initially requested that ISOP++



distinguished decimal points but recently it has abandoned its initial approach due to the above reason.)

‐ For regular reporting for the purposes of the Community Support Framework, information stored in MSSF‐CENTRAL which is accessible for the CSFD should theoretically suffice. The problem is that information in MSSF‐CENTRAL is not quite topical due to various reasons and reports required in MSSF‐CENTRAL cannot be generated at all or are difficult to generate. This has lead to increased loads on the OPIE monitoring staff capacities because the CSFD staff must contact each MA separately and the MAs must generate the required report in their information system and send it through e‐mail.

‐ There were frequent changes in the interfaces of MSSF‐CENTRAL. ASD Software, s.r.o. should definitely have been notified of those changes beforehand so that it availed of sufficient time for preparing ISOP++ for the required change. This was unfortunately often not the case and ASD Software, s.r.o. had to address, together with MA OPIE, the problems only when arising which was, in its final effect, more time‐consuming than a timely change.

‐ After the data has been transferred into MSSF‐CENTRAL, a check must be executed to verify that all the data transferred are in order. Nevertheless, the data is not often corrupted during the transfer – more often it happens that the MA does not simply need to monitor certain data through ISOP++ and MSSF‐CENTRAL requires that. The data, although transferred correctly, is thus incomplete from the MSSF‐CENTRAL perspective.

The Evaluator has stated in its mid‐term report that the data and information in ISOP++ and MSSF‐CENTRAL are in practice duplicate. The data recorded in ISOP++ are collected and recorded in a similar extent at the level of MSSF‐CENTRAL although at the MSSF‐CENTRAL level it would suffice to record integrated data from all operational programmes with a lower level of detail.

The Contractor has therefore considered, during the Project preparation, the recommendation of Evaluation Project 1/04 suggesting that the number the SF monitoring information system levels should be limited to 2 levels (the medium level would be cancelled, i.e. the ISOP++ level in case of OPIE ). In practice it would mean linking the Applicants’ SW instrument directly to the central level serving both to the MA and CSF. After a detailed analysis, the Contractor has decided to disregard this recommendation based on the following reasons:

‐ The preparation of such an extensive information system would require rather a comprehensive tender;

‐ The SW solution would be very difficult to prepare and time‐consuming; ‐ A unified user software including the specificities of all operational programmes

(and causing also a higher error rate in input data) would have a more complicated structure and would be less user friendly;

‐ The relevant staff using ISOP++ for monitoring (in all MAs) would have to be re‐trained to use a different software; the required training would be time‐consuming and costly.



A three‐level information system should therefore be considered again for the next programming period.

The focus group members repeatedly confirmed that the largest delays in the data transfer were between MSSF‐CENTRAL and IS VIOLA 2. Input batches into IS VIOLA 2 include data of all operational programmes and if there is an error in the data of one OP, the processing of the whole batch stops and is passed only after the error has been corrected.

ISOP++ We can state that the ISOP++ information system is operational, functional and provides financial and statistical data on project implementation within OPIE in the structure and quantity required for the needs of OPIE monitoring.

It is clear that large efforts have been devoted to reaching a higher efficiency in the provision of data and maximising the user friendliness of ISOP++. The system has been continuously developed mainly thanks to the efforts of a specific working group established to provide consultations on outstanding issues and improvements of ISOP++. The working group has recently been working on: ‐ The functionality of references within mutual links between various ISOP++ modules; ‐ Increasing the speed of processing the required changes by ASD Software,

the Contractor for ISOP++, (deadlines have been established but, due to the large thematic range of reservations and suggestions for improvements, they are sometimes exceeded);

‐ Increasing the efficiency of aggregating and interpreting data in the information system (which is often rather difficult when the content of application forms changes and different conditions are applied to some data);

‐ Higher speed of ISOP++ (lower speed is caused by communication lines and hardware).

For the next programming period, the ISOP++ information system must be modified or totally upgraded so that it is adequate for the expected growth in funds and project applications. Entities involved in OPIE monitoring and their staffing aspects The HR capacities in the monitoring of all relevant entities (MA, CI, CMRZB, CEA, CzechTrade) are sufficient for the current programming period. The fact that there is a rather high turnover of labour in the MA and some Implementation Agencies caused by various reasons (e.g. financial remuneration, motivation aspects etc.) can in the future become a threat. In the long‐term, the highest turnover of labour has been witnessed in CzechInvest. The authorities are well aware of the risk potential of this aspect and are searching for solutions minimising the risk.

For the next programming period, this risk potential must be decreased or quite eliminated because, although the number of employees is sufficient now, it will have to be adequately increased for the next programming period due to the expected increase in funds and projects (not proportionally, though, because lots of activities burden the monitoring staff quite unnecessarily and some activities are expected to be fully automatic in the future thanks to an improved information system). CzechInvest, for example, plans to increase the



number of staff in the sphere of monitoring for the next programming period by ca 2‐3 people.

Only the CMRZB believes that its number of employees dealing with the OPIE monitoring is sufficient even for the next programming period and does not plan further recruitment for monitoring. It will only increase the percentage of time spent on monitoring in job descriptions of the staff.

The number of trained staff should also meet the requirement of substitutability (in case of illness, accident etc.), which most of the entities have currently clearly not fully considered. Whenever a relevant entity hires a new employee who should deal with the OPIE monitoring, the first documents to study are the Operational Manual (hereafter OM), Operational Programme and Programme Complement. The new employee is further provided the updates of these documents, Methodological guidelines, letters including methodological instructions and other relevant documents. The staff involved in monitoring also participate in regular trainings. We can therefore state that the qualification of the monitoring staff is sufficient for the execution of their work. Responsibilities of entities involved in OPIE monitoring Responsibilities of entities within OPIE monitoring are fully compliant with the OP working documents (OPIE, PC to OPIE and OM). These responsibilities are also specified in the draft Methodology for the Monitoring of SFs (Objective 1).

In practice, no responsibilities of entities have been identified not compliant with specifications in programme documentation. Monitoring reports The Programme implementation documentation specifies what monitoring reports should be prepared during the OPIE implementation. Based on their careful analysis and a check of the preparation of reports in practice, the Employer has arrived at the following conclusions:

There are certain inaccuracies or ambiguities in the designations of reports stated in the OPIE OM compared to the usual titles used by relevant entities (interim regular report, interim extraordinary report etc.). The designations applied also fail to reflect the fact that they are often used not for whole reports but only for background documents for the preparation of those reports. These findings have already been reflected in the new update of the OPIE OM which will be issued at the end of February‐ beginning of March 2006. Chapter 19 of the OPIE OM does not clearly specify the obligation to prepare records and reports for the purposes of monitoring which are prepared on a routine basis. Examples: ‐ The OPIE OM does not clearly specify that also monitoring reports for TA projects

must be prepared. ‐ The relevant entities are always responsible for the preparation of specific ad hoc

reports and information, except reports specified in the OPIE OM and monthly computer reports.



Processes within the OPIE monitoring The Evaluator has analysed the sequence of processes within the OPIE monitoring and has attached specific responsibilities to these processes. The outputs of this analysis can be summed up, in a simplified way, in the following two tables.

Reporting in the sphere of OPIE monitoring

MC MA OPIE ‐ SFD

CMRZB CEA CT CI RO CI

FB

1. Interim reports, final project report and monitoring report after the completion of project implementation

X

2. Acceptance and processing of monitoring reports on FBs

X X X X X

3. Background documents for half‐yearly, annual and final monitoring report

X X X X X X

4. Report on the OPIE implementation progress and prospects + monthly computer reports for the OPIE (each month)

X

5. Background documents for quarterly, half‐yearly and annual monitoring reports for the CSF

X

6. Approval of the half‐yearly, annual and final report on the implementation of assistance

X



Strategy in the sphere of OPIE monitoring

MC MA OPIE – SFD

CMRZB CEA CT CI RO CI

FB

1. Monitoring of OPIE implementation

X X X

2. Analysis of the results of OPIE implementation

X (Approves results)

X (Submits results)

X

3. Proposal of changes or review of OPIE implementation

X X X X X X

4. Programme review (ad hoc evaluation)

X X

5. Approval of reallocation or other change in implementation

X (Within priorities)

X (Within single

measures)

3.3.2 Indicators When searching for an answer to the Evaluation Question No. 2, the Evaluator executed a thorough analysis of the OPIE monitoring indicator system. It considered especially the following aspects:

• Links among objectives established for various OPIE levels; • Links among monitoring indicators for various OPIE levels; • Links between the monitoring indicators and objectives of OPIE measures; • Unambiguousness of definitions and interpretations of monitoring indicators; • Sources of data for controlling the monitoring indicators; • Monitoring the objectives of horizontal priorities within the OPIE.

Based on the analysis executed, the Evaluator has arrived at the following conclusions and recommendations: Links among objectives established for various OPIE levels Operational Programme Industry and Enterprise corresponds, by its content, to the target purpose of the first priority axis of the of the Community Support Framework. The global objective of the OPIE is in compliance with the strategy for the orientation of economy ‐ at the national and EC levels ‐ at the achievement of balanced (sustainable) economic growth respecting the relevant social and environmental links. The targeting of the content of priorities and measures within the OPIE is suitable and can become a basis for an analogous operational programme for the next programming period. Operational objectives within the measures of the respective priorities are sufficiently



specified by objectives established in concrete aid programmes used to implement these measures (hereinafter „implementation aid programmes“). In the definition of objectives of the implementation aid programmes, formal and methodological differences in their approach and formulation are apparent, which apparently copy the implementation structure. The Evaluator therefore recommends to unify the approach to the definition of these programme objectives for the next programming period so that they express links to the form (type) of support and links between the implementation aid programme objective and specific weaknesses addressed in business environment. Links among monitoring indicators for various OPIE levels In all cases where a target value has been established for the respective indicator which can be applied to a specific OPIE measure, the principle of mutual links of monitoring indicators among different levels has been respected. The analysis of links among various groups of monitoring indicators has revealed some partial inaccuracies and the Contractor recommends to remove them during the current programming period. As for indicators specifying the economic performance of the supported businesses, it is recommended to remove the inconsistency between the definitions of indicators targeted at monitoring the growth in the turnover of the supported companies (PU 06 and SU 27). While in the OPIE these indicators are called “increase in turnover (sales) of supported companies“, the Programme Complement in its description of links between the measure and operational objectives uses the designation “increase in net turnover (sales) of supported companies“ and there is a discrepancy concerning the application of indicators measuring the growth of added value from production created by the supported companies (PU 05 and SU 26). While the PU 05 indicator relates to Priority 1 in the OPIE for 2004 – 2006, the identical indicator for the measure level (SU 26), as stated in the effective OPIE Programme Complement, relates to measures or programmes earmarked for meeting the objectives of the OPIE Priority 2. This can be rectified through updating the OPIE Programme Complement for the current programming period. Considering the developments in employment, we can state that in case of the key monitoring indicator specifying the number of gross jobs created for which a target value has been specified, links between its monitoring at various levels have been established. The respective indicators PU 04 and SU 22 are related to all measures and aid implementation programmes, which is a prerequisite for an easy aggregation of data. For the next programming period, we recommend to unify terminology in a consistent way and work at all levels with “gross jobs created”. The establishment of quantified objectives specifying the numbers of gross jobs created in the next programming period should be considered. This suggestion is based on the fact that the number of jobs created must be taken for a consequence of the implementation of specific projects with the priority objective of increasing the competitiveness of businesses, among others through increasing their productivity of labour.



As for technical indicators specifying the development and utilisation of capacities, in all cases where target values have been specified, interconnections between or links to the related monitoring indicators have been established up to the level of the measure. In order to disperse potential doubts on links between relevant indicators specifying the capacity of the constructed buildings we recommend to precise their specification so that it links more directly to the quantified target value and reflects their classification in business premises and new and renewed buildings. Considering indicators specifying the scope of aid provided, we can state that in all cases where target values have been specified, interconnections or links of the related monitoring indicators have been established up to the level of the measure. Relevant indicators indicating the number of supported businesses, number of supported SMEs and number of supported programmes have been related to all measures and aid implementation programmes, which is a prerequisite for an easy aggregation of data. Beyond the framework of indicators for which targets are specified in the OPIE programme documentation, the indicator “number of projects approved within individual OPIE priorities and measures“ (SU 34) has also been monitored for all measures and aid implementation programmes. In this indicator group, it would be suitable to precise ‐ already in the current programming period ‐ some indicators classifying the types of supported businesses, particularly the ʺnumber of SME start‐ups in technologically advanced sectorsʺ, ʺthe number of existing SMEs developing and doing business in the sphere of information technologiesʺ and the ʺnumber of businesses that have become new exporters; or exporting to new marketsʺ so that already their specification (designation) clearly shows whether they include the supported SMEs or SMEs in total. Links between the monitoring indicators and objectives of OPIE measures The selection and utilisation of monitoring indicators for operational objectives 1 (increasing the intensity of innovation activities and cooperation with scientific, research and university institutions), 2 (regeneration, construction and development in the sphere of business real estates, brownfield remediation), 3 (improving training infrastructure for the utilisation of human resources for the competitiveness of businesses) and 4 (increasing the quality of consultancy systems for entrepreneurs, permanent cultivation of infrastructure providing services to enterprise) are sufficient for the evaluation of their achievement within the implementation of Measures 1.1, 1.2, 1.3 and 1.4 within the OPIE Priority 1. In the system of monitoring indicators, we recommend to specify more precisely some indicators concerning the capacity of buildings constructed (PU 02 and SU 10). In the closest update of the OPIE Programme Complement, it is also advisable directly to reflect the fact that the indicator “growth of added value from production created by the supported companies” (PU 05 and further SU 26) will be monitored also for monitoring objectives 1‐4, specifically Measure 1.1, 1.2, 1.3 and 1.4 of the OPIE Priority 1. The selection and utilisation of monitoring indicators for operational objective 5 (direct investment support with high growth impacts, improving conditions for small and medium‐sized enterprise), for operational objective 6 (support of innovations, transfer of technologies)



and for operational objective 7 (decrease in energy intensity of production, energy transformation and transmission) enables a sufficient evaluation of their achievement within the implementation of Measures 2.1, 2.2 and 2.3 within the OPIE Priority 2. We recommend to specify more precisely some indicators concerning the development of turnover in the supported companies (PU 06 and SU 27). At the same time, it is suitable unambiguously to define indicators specifying the growth of the added value and of the productivity of labour in the supported businesses, or reformulate their designation so that it is quite clear from which absolute values these indicators, comparative by nature, issue. The basic programming documentation (the OPIE text) includes a sufficiently broad list of monitoring indicators which has not been fully used for practical monitoring of the OPIE implementation progress. It is clear that some of the indicators would not be purposeful for the next programming period either and their deletion can be considered. The reduction of indicators for monitoring the progress of OPIE implementation should not affect indicators specifying economic efficiency of the supported businesses or projects. Unambiguousness of definitions and interpretations of monitoring indicators Apart from the suggested precision of definitions and interpretation of monitoring indicators, it is recommended to consider the precision of some further indicators, incl. the context, or CSF level indicators, especially: - Data specifying the growth of economy, especially the growth of GDP, should be

monitored also for Objective 1 regions, i.e. cohesion regions excluding the Capital of Prague. The suggested step should enable an easier comparison of developments monitored in various regions within the objectives of horizontal priority “Balanced development of regions“.

- The indicator “Gross added value“ should be defined so precisely that its comparability

with other similar indicators can be assessed, e.g. with the “accounting added value“ used for statistical monitoring of long‐term developments in the SME sector.

- The unemployment rate should be monitored for the whole CR and for the aggregate

of Objective 1 regions. With a view to the availability and relevance of input data for this indicator, it is advisable to use the “registered unemployment rate“, an indicator monitored by MoLSA in the long‐term.

- The indicator “research and development as % of GDP“ should be précised and defined

as a “% share of costs for research and development in GDP“. We believe that it would also be worthwhile to monitor the aggregates of all funding sources for research and development and separately costs funded from public budgets and private sources. Statistics prepared by CSO could be used as input data.

- The specific context indicator for the CSF level “employment in science and technology

per 1000 inhabitants should be defined only as an indicator monitoring the number



of employees in research and development per 1000 inhabitants or per 1000 workers in national economy. The indicator should be monitored using statistical data administered by CSO.

There are deviations and apparently also partial inaccuracies in the definition of indicators earmarked for the monitoring of OPIE objectives which can raise doubts about their compatibility if monitored for projects within various measures. We therefore recommend to precise and unify the definitions of the indicators monitored and use at all levels of programme documentation identical designation for identical indicators (titles and codes). In order to distinguish the monitored period of time we suggest using the definition of the relevant indicators for the respective accounting period. Sources of data for controlling the monitoring of indicators Data required for controlling the monitoring indicator values is collected in ISOP++. The principle of comprehensiveness of the ISOP++ database is monitored and adhered to in practice. Various procedures are used to acquire data for ISOP++ linked to the nature of the measure, the implemented projects it includes, and dependent on the specificities of sources of information. The input of relevant data into ISOP++ directly from the project level can be considered the most important, including especially data from • Applications for aid; • Decisions on the award of aid; • Monitoring reports on project implementation progress prepared by the supported

entities (regular reports submitted half‐yearly, extraordinary and final reports). This method of acquiring the relevant data applies also to their updates, executed e.g. following amendment procedures and reviews of the respective project indicators. To ensure links between monitoring indicators and the possibility of their more or less automatic generation in ISOP++, the implementation documentation specifies ‐ for individual inputs documenting the progress in project implementation ‐ a range of mandatory monitoring indicators and also of mandatory indicators immediately linked to project monitoring. The structure of monitoring indicators in the respective source documents at project level copies the structure of monitoring indicators established for individual measures based on the definition of operational objectives of the respective OPIE priorities. Direct input of data relevant for monitoring into ISOP++ from the project level is typical for projects where CzechInvest, CzechTrade and CEA play the role of an Intermediate Body/Implementing Agency. The input of data, including monitoring data for regular monitoring or reporting, for projects administered by the CMRZB is ensured within the transfers of data concerning the relevant aid implementation programme (START, CREDIT, INNOVATIONS ‐ loans) in half‐yearly cycles, so that data can be withdrawn from ISOP++ for the preparation of the annual, half‐yearly and final reports on OPIE implementation.



On the same grounds, monitoring indicators relevant for the OPIE evaluation from information sources administered by the empowered institutions and national authorities, especially by CSO, MoLSA, MoEnv, are also put into the IS. The method of acquiring and processing data crucial for the assessment of the implementation progress within the OPIE with a view to reaching its target values expressed as values of the respective monitoring indicators is operational and meets the requirement for reliable monitoring of the course of OPIE implementation. Monitoring the objectives of horizontal priorities within the OPIE Within the OPIE, specific objectives and indicators have not been specified linked to the Community Support Framework indicator “Supported projects with positive environmental impacts“. Nevertheless, OPIE monitoring uses project classification expressing their relation to “the environment” (projects neutral in relation to the environment, projects with positive impacts on the environment and projects aimed mainly at the environment). It will be suitable to precise the definition of this classification using criteria for the assessment of environment‐friendly technologies and products and the assessment of project targeting at specific productions within the supported OKEČ branches (Branch classification of economic activities, e.g. production of special equipment for operations with significant environmental aspects – recycling and environmental liquidation of waste, waste‐water treatment plants, air protection etc.). If classification tiers are clearly specified, the monitoring of projects following the degree of their environmental impact could basically suffice to describe the approach of the OPIE and its priorities and measures in relation to this horizontal priority. If we consider the issues of sustainable development or environmental improvements, they are clearly related to certain technical indicators concerning the establishment of industrial zones and buildings through the reconstruction of old business premises (brownfield remediation). The respective indicators (PU 02, SU 10 and SU 16) are directly linked to the CSF‐level indicator “Scope of the reclamation of environmentally affected industrial areas“. Positive environmental impacts can also be expected of aid implementation programmes in Measure 2.3, the implementation of which should be monitored using indicators “energy savings“ (PU 08 and SU 21) and “energy generated from renewable sources of energy “ (PU 09, SU 20). Within OPIE monitoring, project classification is used expressing their relation to the horizontal priority of “equal opportunities” (projects neutral in relation to equal opportunities, projects with positive impacts on equal opportunities and projects aimed mainly at equal opportunities). It would be suitable to precise the definition of this classification e.g. linked to the ownership share of women in the supported company, the expected structure of employment and the structure of jobs created, specific targeting of projects (e.g. training) at women‐entrepreneurs etc. If classification tiers are clearly specified, the monitoring of projects following the degree of their impact on equal opportunities could basically suffice to describe the approach of the OPIE and its priorities and measures in relation to this horizontal priority, considering also the fact that some



monitoring indicators defining specifically the scope of aid provided are monitored separately for both genders. Monitoring indicators effecting the area of information society at the Community Support Framework level have not been specified in greater detail in the OPIE monitoring indicator system for the respective measures. For OPIE monitoring, project classification has been used expressing their relation to the horizontal priority “information society” (projects neutral in relation to information society, with positive impacts on information society and projects aimed mainly at information society). It would be suitable to precise the definition of this classification e.g. linked to the structure of eligible project costs (e.g. share of costs of the purchased hardware and software) and the assessment of project targeting at specific productions within the supported OKEČ branches. If classification tiers are clearly specified, the monitoring of projects following the degree of their effect on the horizontal priority information society could basically suffice to describe the approach of the OPIE and its priorities and measures in relation to this horizontal priority. Monitoring indicators affecting the area of “balanced development of regions” at the Community Support Framework level have not been specified in the OPIE monitoring indicator system for the respective measures. A significant number of monitoring indicators, especially indicators for the scope of aid, are routinely monitored as regional averages within the individual OPIE measures. For OPIE monitoring, project classification has also been used expressing their relation to the horizontal priority balanced development of regions (projects neutral in relation to balanced development of regions, projects with positive impacts on balanced development of regions and projects aimed mainly at balanced development of regions). It is desirable to precise the definition of this classification e.g. based on links to the territory where the respective project will be implemented (concerning mainly less favoured and structurally affected regions) or considering their characteristics linked to the development of interregional cooperation among regions with different levels of economic development. If classification tiers are clearly specified, the monitoring of projects following the degree of their effect on the horizontal priority balanced development of regions, together with the monitoring of selected indicators in regional profiles, could suffice to describe the approach of the OPIE and its priorities and measures in relation to this horizontal priority.

3.4 TO4 – Financial Progress

The basic financial framework of OPIE implementation is defined in the OPIE Programme Complement approved by the Monitoring Committee on 19 May 2005. The values below issue from background documents provided by representatives of MIT. The allocations of funds were calculated using the official exchange rate EUR–CZK published by the European Central Bank in Official Journal „C“ as of the first calendar day of the months.

When assessing financial progress, the Evaluator must address evaluation questions. During the course of work, requirements occurred for bringing into compliance the applied methodology with the methodology used for evaluating the implementation of the Community Support Framework. In order to adhere to the requirements binding for the Evaluator and at the same time respect the methodology used in the CSF, the Evaluator submits data processed following both methodologies where needed. The basic difference



between both methodologies is that in the evaluation of financial progress we monitor the actually disbursed funds, while the CSF methodology follows only the volume of funds contracted.

The aggregate amounts of funds allocated for 2004 and 2005 for priorities and measures are illustrated in Table No. 5 and Table No. 6 in the columns “Funds allocated“. On the other hand, the amounts of the actually disbursed funds at the level of individual priorities and measures for the given period are shown in the columns “Funds disbursed“. Partial amounts are stated in their absolute values in thous. CZK and in relative values, i.e. in %. Relative values (%) for funds disbursed in individual priorities and measures always relate to the yearly allocation of the respective priority or measure. Table No. 5 Disbursements of Funds for 2004

Financing framework for

2004

Funds allocated Funds withdrawn

Thous. CZK % Thous. CZK %

Priority 1 1 256 493 0 0

Measure 1.1 402 078 23,3 0 0

Measure 1.2 577 987 23,3 0 0

Measure 1.3 150 779 23,3 0 0 Measure 1.4 125 649 23,3 0 0

Priority 2 798 613 64 000 8

Measure 2.1 400 757 15 64 000 16 Measure 2.2 301 558 23,3 0 0

Measure 2.3 96 298 10 0 0Priority 3 100 518 0 0

Measure 3.1 50 259 23,3 0 0

Measure 3.2 50 259 23,3 0 0

Source: MIT



Table No. 6 Disbursements of Funds for 2005

Financing framework for

2005

Funds allocated (Total)

Funds withdrawn (From the allocation)

Thous. CZK % Thous. CZK % Priority 1 1 799 699,9 33,4 19 626,1 1,1

Measure 1.1 575 904 33,4 0 0

Measure 1.2 827 862 33,4 14 938,6 1,8

Measure 1.3 215 964 33,4 1 195,7 0,6

Measure 1.4 179 970 33,4 3 491,8 1,9

Priority 2 2 162 598,5 43,6 844 731,1 39,1

Measure 2.1 1 370 730,5 50 843 083,1 61,5

Measure 2.2 431 928 33,4 0 0

Measure 2.3 359 940 39 1 648 0,5

Priority 3 143 976 33,4 22 737,4 15,8

Measure 3.1 71 988 33,4 7 853,8 10,9 Measure 3.2 71 988 33,4 14 883,5 20,7

Source: MIT (15.12.2005)

The tables show clearly that in 2004, the disbursements of funds were rather limited; only within Priority 2, Measure 2.1., funds were disbursed amounting to CZK 64 000 thous., i.e. 16% of the yearly allocation for the Measure. The situation partially improved in 2005. The highest disbursements were witnessed in Priority 2 and Measure 2.1 amounting in total to CZK 844 731 thous., or CZK 843 083 thous. respectively. In relative terms, 39% resp. 62% of the yearly financial allocation were disbursed. On the other hand, the level of disbursement in Priority 1 is still very low ‐ CZK 19 626 thous. which represents, in relative terms, 1% of the yearly financial allocation.

When assessing the capacity for disbursing financial allocations in various priorities, we followed the recommended procedure suggested within the CSF evaluation for analysing the financial progress of its implementation. Compliant with the mandatory evaluation questions, we monitored the absorption capacity of each Measure following the rate of funds disbursed.

When assessing the capacity of individual priorities to disburse the allocated funds, we must also consider various stages in the progress of disbursement. From this point of view, it is necessary to distinguish the following stages: a) funds contracted, b) costs incurred, c) funds disbursed and d) amount in risk.



Trends in disbursements from OPIE Measures

based on funds disbursed from yearly allocations

0 1,10 0 0 1,80 0,60 1,98

39,1

16

61,5

0 0 0 0,50

15,8

0

10,9

0

20,7

0

10

20

30

40

50

60

70

80

90

100

2004 2005 2006 2007

% d

isbu

rsed

Priority 1 Measure 1.1 Measure 1.2 Measure 1.3 Measure 1.4 Priority 2 Measure 2.1 Measure 2.2 Measure 2.3 Priority 3 Measure 3.1 Measure 3.2

Measure 3.1

Priority 3

Measure 3.2

Priority 2Measure 2.1

Measure 1.4

Measure 2.3

Source: MIT (15.12.2005)

If considering the rates of funds disbursed and contracted for 2004 and 2005 by measure, we can forecast disbursement trends for the next years, as illustrated in both charts.

The chart illustrating trends in disbursements in 2004 and 2005 shows rather an unfavourable picture. Should the disbursement trends from 2004 and 2005 continue, only one Measure (2.1) would be able to disburse the funds allocated. The whole Priority 1 incl. Measures 1.1 (Prosperity), 1.2 (Real Estates), 1.3 (Training Centres) and 1.4 (Clusters, International Trade, Register of Advisors) can hardly be traced in the chart because all of them move in values between 0 – 2 %. Similar values can be seen in Measures 2.2 (Innovations) and 2.3 (Renewables, Energy Savings). The average of Priority 2 is increased by Measure 2.1 thanks to which Priority 2 is the only priority approaching 100 % disbursement.



funds contracted from yearly allocations

0

10

20

30

40

50

60

70

80

90

100

2004 2005 2006 2007

% o

f fu

nds

con

trac

ted

Priority 1 Measure 1.1 Measure 1.2 Measure 1.3 Measure 1.4

Priority 2 Measure 2.1 Measure 2.2 Measure 2.3

Priority 3 Measure 3.1

Measure 3.2

Measure 2.1

Measure 2.2 Priority 2

Measure 1.1

Measure 1.4

Priority 1

Measure 1.2

Measure 2.3

Measure 3.2

Trends in disbursements based on shares of funds contracted in yearly allocations

Source: MIT (15.12.2005)

Measures with the lowest levels of funds contracted following the CSF methodology, i.e. measures which are threatened the most by their failure to adhere to the n+2 rule, are Measures 2.3 (Renewables, Energy Savings), 1.3 (Training Centres), 3.1 (TA ‐ CI); and Priority3. Disbursement trends issue from the developments in 2004 and 2005. The above‐mentioned measures have practically no chance of observing the n+2 rule if really effective steps to overrule this trend are not taken.

The tables bellow illustrate the current state of disbursements of OPIE funds as of the specified date at priority level within the individual measures and compare disbursement phases in 2004 and 2005. The tables distinguish the following basic stages in disbursements a) funds allocated, b) funds contracted, c) costs incurred, d) funds disbursed and e) Remains to be withdrawn in year „n+2“. The column for “funds allocated“ includes amounts allocated for individual measures. “Funds contracted“ represent the volume of funds for which co‐financing agreements were signed. “Costs incurred“ correspond to the aggregate amount of payment claims authorised by the SFD. “Funds disbursed“ represent funds actually withdrawn from the allocation, i.e. funds transferred to the Final Beneficiaries’ accounts (i.e. approved by the Payment Unit and disbursed from the state budget or refunded from the SFs). The last column “Remains to be disbursed in „n+2“ includes the undisbursed part of yearly allocations.



Table No. 7 Disbursement progress in 2004 Financing framework for 2004


Funds contracted Costs incurred (Payment claims submitted)

Funds disbursed (From the allocation)

Remains to be withdrawn in year

„n+2“ (amount in risk) Thous.CZK % Thous.CZK % Thous.CZK % Thous.CZK % Thous.CZK % Priority 1 1 256 493 581 287 46 3 300 0 0 0 1 256 493 100

Measure 1.1 402 078 23 0 0 0 0 0 0 402 078 100

Measure 1.2 577 987 23 577 987 100 0 0 0 0 577 987 100

Measure 1.3 150 779 23 0 0 0 0 0 0 150 779 100

Measure 1.4 125 649 23 3 300 3 3 300 3 0 0 125 649 100

Priority 2 798 613 181 115 23 184 000 23 64 000 8 734 614 92

Measure 2.1 400 757 15 181 115 46 184 000 46 64 000 16 336 757 84

Measure 2.2 301 558 23 0 0 0 0 0 0 301 558 100

Measure 2.3 96 298 10 0 0 0 0 0 0 96 299 100

Priority 3 100 518 20 937 21 13 625 14 0 0 100 519 100

Measure 3.1 50 259 23 6 289 13 5 103 10 0 0 50 260 100

Measure 3.2 50 259 23 14 648 29 8 521 17 0 0 50 259 100

Source: MIT



Table No. 8 Disbursement progress in 2005 Financing framework for 2004


Funds contracted Costs incurred (Payment claims submitted)

Funds withdrawn (From the allocation)

Remains to be withdrawn in year

„n+2“ (amount in risk) Thous.CZK % Thous.CZK % Thous.CZK % Thous.CZK % Thous.CZK % Priority 1 1 799 699,9 33,4 1 275 613 70,9 77 087,6 4,3 19 626,1 1,1 1 780 073,8 98,9

Measure 1.1 575 904 33,4 346 522 60,2 3 935,3 0,7 0 0 575 904 100

Measure 1.2 827 862 33,4 793 986 95,9 53 198,2 6,4 14 938,6 1,8 812 923,4 98,2

Measure 1.3 215 964 33,4 28 125 13 1 195,7 0,6 1 195,7 0,6 214 768,3 99,4

Measure 1.4 179 970 33,4 106 980 59,4 18 758,5 10,4 3 491,8 1,9 176 478,2 98,1

Priority 2 2 162 598,5 43,6 2 272 351,8 105,1 1 106 872,6 51,2 844 731,1 39,1 1 317 867,4 60,9

Measure 2.1 1 370 730,5 50 1 676 916,8 122,3 1 057 613,5 77,2 843 083,1 61,5 527 647,4 38,5

Measure 2.2 431 928 33,4 558 327 129,3 33 932,4 7,9 0 0 431 928 100

Measure 2.3 359 940 39 37 108 10,3 15 326,7 4,3 1 648 0,5 358 292 99,5

Priority 3 143 976 33,4 48 606,1 33,8 34 557,4 24 22 737,4 15,8 121 238,6 84,2

Measure 3.1 71 988 33,4 15 527,5 21,6 10 579,7 14,7 7 853,8 10,9 64 134,1 89,1

Measure 3.2 71 988 33,4 33 078,6 46 23 977,7 33,3 14 883,5 20,7 57 104,5 79,3

Source: MIT (as of 15.12.2005)



When applying the recommended approach to financial progress analysis within the evaluation of the CSF implementation, the absorption rate is used as a recommended criterion expressing the share of the contracted funds in the aggregate allocation. In this respect, Priority 1 and 2 appear to be “performing priorities”, i.e. priorities reaching at least 35% of the expected absorption rate.

In Priority 1, the absorption rate in both years exceeds the recommended value. Priority 2 reached, in 2004, the absorption rate of only 23%, but in the following year its value rocketed to 102%. On the other hand, Priority 3 reached a 21% absorption rate in 2004 and 34% in 2005, i.e. in neither case the recommended value was achieved.

Based on the above methodology we can state that, in Priority 1 and Priority 2, full disbursement of the allocated funds can be expected if the current development trends are been maintained. If the current development trends are maintained in Priority 3, its potential for withdrawing the allocated funds should be perceived as rather risky.

If a sufficient number of projects is assessed under individual priorities, we must consider different phases of project administration. Four basic administration phases can be distinguished: a) project submission, b) project evaluation, c) project rejection and d) project approval.

Table No. 9 below summarises the aggregate numbers of applications, or projects, within various priorities. The column for Applications submitted states the aggregate number of the submitted projects. The column Applications evaluated states the aggregate number of projects which are currently being assessed by evaluators. The column Applications rejected includes the aggregate number rejected and discarded applications, e.g. not meeting administrative requirements, withdrawn by the applicant etc. The percentage shown expresses the failure rate by measure. The last column Aid awarded shows the aggregate number of projects approved and recommended for funding.

When assessing the excess demand or lack of project proposals in individual measures, we must consider both the number of project proposals and the volume of funds allocated. Considering these two criteria in Table No. 7 or Table No. 8, we can state that the lack of projects is apparent especially in Measure 1.3 and 2.3. Priority 3 also shows a low level of disbursement but we lack available data on the number of projects and we cannot therefore evaluate the priority in this respect. An excess demand of projects meeting the formal selection criteria can be found in Measure 2.1, especially programmes Credit, Development, Start and also Marketing, the latter due to a low failure rate of applicants.



Table No. 9 – Overview of Applications (Aggregate numbers) Measure Applications

submitted Applications evaluated

Applications rejected

Aid awarded

Priority 1 Measure 1.1 – PROSPERITY 29 23 6 (21%) 7 Measure 1.2 – REAL ESTATES 189 137 52 (28%) 22 Measure 1.3 – TRAINING

CENTRES 30

20

10 (33%)

7

Measure 1.4 – CLUSTERS 26 21 5 (19%) 13 Priority 2 Measure 2.1 – CREDIT MARKETING DEVELOPMENT START

709 267 747 583

521 236 284 539

188 (27%) 31 (12%) 463 (62%) 44 (8%)

425 146 110 505

Measure 2.2 – INNOVATIONS ‐ SUBSIDIES INNOVATIONS ‐ COMBINED

219

69

150 (68%)

35

Measure 2.3 – RENEWABLES ENERGY SAVINGS

36 15

32 14

4 (11%) 1 (7%)

3 4

Priority 3 Measure 3.1 Measure 3.2 TOTAL 2850 1896 954 (33%) 1277 Source: CzechInvest (15.12.2005), verified by MIT

Some reasons of low disbursement can be found in the answers of respondents involved in a questionnaire survey among companies executed through the network of the Economic Chamber of the CR.

The businesses most often gain information on aid programmes for SMEs from the Internet, the Economic Chamber, professional magazines, Regional Development Agencies and informally from colleagues – in the decreasing order.

An overwhelming part of businesses in the OPIE target group do not apply for aid. The questionnaire survey offers findings revealing some important reasons of the low involvement of this group in the OPIE. Almost 40% of respondents find the preparation of project applications too difficult. Over 1/3 of respondents think that the Programme does not address their needs. These are rather weighty reasons especially for the smallest companies, which formed 42% of respondents, discouraging them from preparing projects and contradicting their dreams of gaining financial subsidies. Neither should we neglect another statement of almost 1/3 respondents who lack confidence in the OPIE. It is advisable to continue working with these findings and concentrate on the reasons of such a mistrust among businesses, consider what Measure would be suitable to remedy the situation and reconcile the needs of entrepreneurs with OPIE objectives. Almost 1/5 of companies stated that they did not avail of information on programmes, which is apparently another reason why they did not apply for a subsidy.



In the group of respondents who failed when applying for aid both small and medium‐sized businesses are equally represented (both 37%). 78% of respondents believe that the OPIE is useful mainly for its potential to support business development. For almost 80% of respondents aid programmes for enterprise are either a good instrument for the development of small and medium‐sized enterprise or offer support for business development. A fair part (37%) of respondents perceive OPIE rather as an instrument used by the state to promote its economic policy rather than to support SMEs. Although the applicants for aid claimed that they understood programmes and their operation, almost 2/3 of respondents did not consider the process of evaluating project applications as transparent. The respondents stated that they did not know where to find information on successful applicants and on the number of applications approved and rejected, which can be interpreted as an insufficient feedback between the Intermediate Bodies and unsuccessful applicants. This respondents’ statement also confirms the above finding concerning the mistrust in the transparency of the evaluation procedure.

One could assume that successful applicants will represent a group which is satisfied with the OPIE the most. Nevertheless, over ½ of them found it difficult to meet conditions specified in their projects. Although 76% of respondents consider the evaluation process as transparent, contrary to the group of unsuccessful applicants, over ½ of respondents stated that they did not know where to search for information on successful applicants and on the number of approved and rejected applications. It is clear that successful applicants do not really mind whether information on the success of other applicants is available or not.

If we target our attention at Measures 1.3 and 2.3 threatened the most by insufficient disbursement, we can find the following reasons for the insufficient utilisation of and interest in programmes Training Centres, Renewable Energy Sources and Energy Savings.

The “Training Centres” Programme used to be aimed only at business entities which, especially in the case of SMEs, did not reflect reality as these companies do not consider training as their priority. They are overwhelmed by other issues considered more important, address their topical problems and tend to concentrate on short‐term tasks. It was therefore necessary to open the Programme also to those who are involved in the training of staff, are skilled in this respect and interested in keeping the qualified labour in their region. That means that the programme has been opened to non‐profit and training organisations, regions, municipalities. In some cases, the max. size of support equalling CZK 30 million, can be a limiting factor and an increase in the size of maximum support should therefore be considered. The specific situation of the CR where car industry, which is ineligible for OPIE support, plays a significant role is also an aspect preventing numerous potential candidates from applying for aid. Limits laid down in OKEČ (branch classification of economic activities) specifying only certain sectors/branches as eligible for participating in the Training Centres programme have also narrowed the range of potential applicants for support. Further limiting factors include the reimbursement of aid to applicants which can bring them in a difficult, sometimes intractable situation; the ineligibility of costs linked to the establishment of the facility; increased administrative loads during project implementation. The applicants state that limiting aspects also include the obligation to submit a training plan of the centre for 3 successive years and provide a proof of a sufficient utilisation rate of the centre for at least 5 years after the project completion. We must nevertheless stress that the provider of aid must require from the final recipient an adequate and sufficient guarantee



of the purposeful and justified utilisation of state aid, and the recipient of support must be aware of this obligation and take it into account.

It is therefore necessary to adjust conditions concerning the candidates of these programmes to their potential and to the current situation. Some barriers have already been removed. It is especially the methodology for the calculation of eligible costs which used to be based on the methodology for environmental investment support, which is rather restrictive, and its application resulted the size of aid in the range of only 5‐10% of total investment costs. For the applicants the methodology of calculation also meant insecure final amount of subsidy. Even now, high demands are applied to projects on renewable energy sources and energy conservation issuing mainly from Decree No. 213/2001 Coll. on the energy audit and Procedures for the Environmental Impact Assessment of projects co‐financed from the EU Structural Funds in the programming period 2004‐2006 issued by the Ministry of the Environment. Both programmes in Measure 2.3 are earmarked for SMEs. This limits the scope of potential applicants which might include not only larger companies but also municipalities and regions. The restriction of the programme to cover only the sphere of processing industry does not correspond to the current needs of the CR in the sphere of environmental investments. In the next period, these programmes should be open to a broader range of applicants from private and public spheres which would reflect the importance of the support of renewable energy sources. Programmes should be also extended to support the production of environment‐friendly fuels from renewable sources. Further factors limiting absorption include long periods between the submission of application and the publication of evaluation results. These periods in Czech Energy Agency, the Intermediate Body for programmes within Measure 2.3, often reach even 200 days and exceed thus several times the periods allowed in OPIE documentation for the preparation of applications.

The Monitoring Committee executed steps or reallocations leading to a more efficient utilisation of the allocated funds. The Development programme marked a significant excess demand of applications (504) and was therefore suspended as of 14 September 2004 due to lack of funds (initial allocation for the whole programming period equalled 12 mil. €). It was decided to reallocate a part of funds from Start and Credit programmes for the benefit of Development. Funds for the Development programme were thus increased by € 15 mil. At the 4th Monitoring Committee meeting, the representative of DG Regional Policy of the European Commission recommended the approval of projects covering ca 110% of the allocated funds, otherwise the total of 100% might not be disbursed as we must be aware of the fact that not all the projects will be successfully completed.

On 30 June 2005, the acceptance of applications for support under the aid programme Innovations was temporarily suspended due to the excessive number of applications for assistance within this programme requiring such volume of subsidies which should ensure full disbursement of the programme funds. The Managing Authority suggested reallocations concerning Measures 1.3 and 2.3 based on background documents mapping the situation in these measures, including their expected developments and financial demands. The Monitoring Committee, at its 6th meeting, reached consensus on approving the proposal of the OPIE Managing Authority to re‐allocate CZK 300 million from Measure 1.3 to Measure 1.2 and CZK 190 million from Measure 2.3 to Measure 2.2. These amounts will be transferred



in their € equivalents. As of 21 December 2005, the acceptance of applications for support was suspended within the Real Estates aid programme within OPIE Priority 1. This step was caused by a large volume of applications for support within this programme, exceeding its financial allocation for the whole programming period.

3.5 TO5 – Physical Progress Within the analysis of physical evaluation, the following programmes have been analysed:

PROSPERITY – Support of infrastructure for industrial development, especially scientific and technological parks, business incubators and centres for the transfer of technologies;

REAL ESTATES – Support of projects for the preparation, development and recovery of industrial zones, business real estates;

TRAINING CENTRES – Support of projects for building reconstruction and modernisation of the existing buildings/structures of business training facilities, projects for the construction and equipment of new branch training centres serving for trainings of a larger number of business entities;

CLUSTERS – Support of projects for the establishment and development of clusters (branch associations) at regional and supra‐regional levels;

MARKETING – Support of increasing the competitiveness of Czech companies in foreign markets through the support of acquiring marketing information, preparation of promotional documents, participation in exhibitions or trade fairs abroad etc.;

START – Support of the implementation of business plans (acquisition of material and intellectual property and the funding of stock) of individuals and legal entities launching business for the first time or after a longer period of time; support is provided through soft loans;

CREDIT – Support of the implementation of development projects of SMEs with a shorter history (acquisition of physical and intellectual property or the funding of stock);

DEVELOPMENT – Support of the development of competitiveness of SMEs in their growth phase, i.e. support of increasing the technological level and improvement of processes as e.g. the introduction of certificates and international standards;

INNOVATIONS – Support of projects targeted at increasing the technical and performance value of products and services, increasing the efficiency of production processes and the provision of services, or at the introduction of progressive management methods, the execution of significant changes in administrative structures or changes in the strategic orientation of businessmen, or other non‐technical innovations;

ENERGY SAVINGS – Support of projects aimed at decreasing energy intensity in industrial enterprises through decreasing the energy intensity of processes linked to the production,



energy conversion and transmission, new technologies for the processing of energy‐intensive raw materials, introduction of cogeneration etc.;

RENEWABLE SOURCES OF ENERGY – Support of projects introducing the production of electricity or heat from renewable energy sources, e.g. projects for the construction, renewal or reconstruction of facilities for the utilisation of renewable sources of energy, co‐generation projects utilising renewable energy sources etc.

The OPIE Objectives are specified in the OPIE Programme Complement:

In the shortened programming period 2004 – 2006, the OPIE is based on 3 priorities: Priority 1: Business Environment Development Its measures are targeted at the construction, regeneration and development of business infrastructure, improvement of the environment for human resource development in industry and enterprise, development and improvement of the quality of information and consultancy services, and at the support of infrastructure for industrial research, development and innovations. Priority 2: Development of Enterprise Competitiveness Its measures are targeted at the assistance to business start‐ups and SMEs with development potential, support of innovation processes leading to the development of new products, technologies and services, support of efficient and economical energy management in business sector. Priority 3: Technical Assistance Its measures are targeted at the provision of funds for the administration, implementation, monitoring and control of OPIE operations, at studies, pilot projects, development of information systems and publicity.



OPIE monitoring indicators and targets Priority 1 – Business Environment Development Ref. Title of indicator Type of

indicator Measuring unit

Quantification

Baseline value (2001)

Target value (after programme completion)

PU 01 Number of supported incubators and science and technology parks

Output Number 0 15

PU 02 Developed business facilities and premises

Output m2 0 New Renewed

102900 m2 68900 30000

PU 03 Increase in the capacity of training facilities (Capacity)

Result Number 0 1000

PU 04 Number of gross jobs created Result Number 0 4000 PU 05 Growth of added value from production

created by the supported companies Impact % 0 10

Priority 2 – Development of Enterprise Competitiveness

Ref. Title of indicator Type of indicator

Measuring unit

Quantification


Target value (after programme completion)

PU 06 Increase in turnover (sales) of supported companies

Result % 0 15

PU 07 Number of supported SMEs

Output Number 0 1600

PU 08 Energy savings Result GJ/year 0 120000 PU 09 Energy generated

from renewable sources of energy

Result MWh produced

0 15 50000

PU10 Share of GDP covered by SMEs

Impact % 37,16 % (incl.Prague)

42,5

The OPIE indicators are soundly selected and follow the main global objectives of the OPIE. All indicators have been quantified and their application can be followed in all the basic OPIE documents, i.e. in the Programme Document, Programme Complement, Application for a Subsidy and Guidelines for Applicants.

As of 31 December 2005 it was not possible to monitor all the above indicators for 2 main OPIE priorities because many applications and projects are still in their preparation phase. Lots of projects have only launched their implementation and we avail only of financial indicators concerning the allocation of funds. We must also consider minor differences



between tables in the ISOP system and values stated in the Programme Document. Target values are stated in the PD tables in greater detail than in the ISOP outputs. Minor deviations can also be detected between tables for individual programmes and outputs/information for the whole measure (e.g. in the sums of gross jobs created). These differences do not have significant impacts on the overall evaluation of physical progress.

Physical evaluation of meeting the indicators:

The reference date established for this project was 15 December 2005. With a view to the half‐yearly and annual reporting and considering also the availability of accounting documents, this physical evaluation reference date has been shifted to 31 December 2005.



Priority 1: Business Environment Development

Ref. Title Type Measur. unit


Target value (after Programme completion)

Indicator value from approved projects of 31. 12. 2005

Indicator value from implemented projects as of 31. 12. 2005

Rate of meeting the indicator from

approved projects as of 31.12.2005 (in %)

PU 01 Number of supported incubators and science and technology parks

Output Number 0 15 15 0 100,00

PU 02 Developed business facilities and premises

Output

m2 of that new

renewed

0

102 900

68 900 30 000

201 479

165 973 35 506

0

195,80

240,89 118,35


Result Number 0 1 000 166 50 16,6

PU 04 Number of gross jobs created Result Number 0 4 000 376,4 0 9,41

PU 05 Growth of added value from production created by the supported companies

Impact % 0 10 15,54 14,168 155,40

Source: ISOP (Data as of 31.12.2005)



Priority 2: Development of Enterprise Competitiveness

Ref. Title Type Measuring

unit


Target value (after

Programme completion)





PU 06 Increase in turnover (sales) of supported companies

Result % 0 15 25,57 25,39 170,50

PU 07 Number of supported SMEs Output Number 0 1 600 1 054 38 65,88

PU 08 Energy savings Result GJ/year 0 120 000 24 326,868 0 20,27

PU 09 Energy generated from renewable sources of energy

Result MW installed/year

MWh produced/year

0

15

50 000

0,24

27 456,5

0

19 465,556

1,6

54,91

PU 10 Share of GDP covered by SMEs

Impact % 37,16 42,50 51,6 (2003) ‐ 121,41

Source: ISOP , CSO (Data as of 31.12.2005)



Priority 3: Technical Assistance



Target value (after


Value as of 31. 12. 2005

Rate of meeting

indicators as of 31.12.2005

SU 32 No. of implemented studies and seminars

Output Number 0 20 studies

400 seminars 18 studies

304 seminars 90 % 76 %

Source: ISOP (Data as of 31.12.2005) Within Priority 1 Business Environment Development, the Programme is heading towards meeting the majority of physical indicators, except indicators PU03 and PU04. The values considered have been taken from the approved projects; data from the implemented projects are still comparatively low because projects are still in the course of implementation. The following data specify indicators with problematic physical progress:




Indicator value from implemented projects as

of 31. 12. 2005




Result Number

1 000 166 50 16,6

PU 04 Number of gross jobs created Result Numbe

r 4 000 376,4 0 9,41

The most serious disproportions compared to the plan were identified in an indicator linked to the Training Centres programme. Recommendations on this programme are detailed in Chapter No 5. Within Priority 2 Development of Enterprise Competitiveness indicators with problematic physical progress can also be identified, namely:

Ref.

Title

Type

Measur. unit




Rate of meeting the indicator from approved projects as of 31.12.2005 (in %)

PU 08 Energy savings Result GJ/year 120 000 24 326,868 0 20,27

PU 09 Energy generated from renewable sources of energy

Result MW installed/year MWh produced/year

15

50 000

0,24

27 456,5

0

19 465,556

1,6

54,91



From the previous table, we can draw the following basic conclusions: 1. MIT has prepared sufficient absorption capacities for the implementation of OPIE programmes. There was a high demand among entrepreneurs for several measures within Priorities 1 and 2 and some programmes had to be prematurely suspended already in the first year of their implementation due to excess demand, namely “Development“ in 2004, “Innovations“ and “Real Estates“ in 2005. 2. On the premise of a timely administration of project applications, we can expect that the EU funds allocated in aggregate for the OPIE will be disbursed in the remaining programme period respecting the N+2 Rule. 3. Due to a high demand for programmes, there were considerable delays in the approvals of projects and the disbursement in the first year (2004) was lower than expected. Programmes Credit and Start have already achieved a higher speed in the processing of applications and their implementation is highly efficient – good practice. 4. For measures with delays in the disbursements of funds, specific recommendations are suggested in Chapter 5. The most serious delays in physical progress have been identified in programmes: Training Centres, Energy Savings and Renewable Sources of Energy. 5. Measure 1.1 Prosperity reflects a comparatively low innovation potential of applicants, as well as low rate in meeting physical progress targets concerning the newly constructed business facilities The general interest of entrepreneurs in the OPIE can be evaluated based on the submitted applications for aid. The following chart is based on the CzechInvest statistics as of 15 December 2005:

Numbers of applications for support within OPIE as of 15.12.2005

0 100 200 300 400 500 600 700 800

Dev

elop

men

t

Cre

dit

Sta

rt

Mar

ketin

g

Inno

vatio

ns

Rea

l Est

ates

Ren

ewab

le

sour

ces

Trai

ning

C

entre

s

Pro

sper

ity

Clu

ster

s

Ene

rgy

Sav

ings

CzechInvest, 15.12.2005



The above chart illustrates the largest interest in programmes Development, Credit and Start. The Development programme is attractive thanks to its broad offer and especially a certain degree of universality of the programme. General conclusions The MIT has succeeded in preparing programmes for businessmen with a large absorption capacity in the CR. The OPIE’s content complies with the overall purpose of the first priority axis of the Community Support Framework. The OPIE in its aggregate has been heading towards its quantifiable and physical objectives. As of 31.12.2005, data from the approved projects (i.e. the planned data) can be monitored. Actual achievement of physical targets will be known only after the projects in progress have been completed.

The following tables offer an overview of meeting the target indicator values in individual programmes

Physical Indicators: Measure 1.2 – Real Estates


unit





Rate of meeting the indicator from approved projects as of 31.12.2005

(in %)

PU 02 SU 10

Developed business facilities and premises (new and renewed) Output m2 0 72 900

200 329 165 973 (new) 34 356 (ren.)

0 274,80

SU 16 Size of areas prepared for investment (of which brownfields + greenfields

Result ha 0 550

220 (new) 330 (ren.)

16,6 0 (new) 16,6 (ren.)

0 3,02 0

5,03 SU 46 Rate of occupancy of areas

prepared for investment (brownfields, greenfields) within 1, 2 and 3 after the start of project

Impact % 0 1st year (10 %) 2nd year (30 %) 3rd year(50 %)

100 0 ‐




Physical Indicators: Measure 1.3 – Training Centres


unit






(in %)

PU 03 SU 23

Increase in the capacity of training facilities (Capacity) Result Number 0 1 000 166 50 16,6

SU 17 No. of refurbished and new training facilities (2004‐2006)

Result Number 0 27 10 1 37,03

SU 47 Rate of utilisation of modernised and new training facilities, training aids or programmes within 1, 2, 3 years after the start of a project

Impact % 0

1st year (35 %)

2nd year (60 %) 3rd year (80 %)

66,84 70 ‐


Physical Indicators: Measure 1.4 – Clusters


unit


Target value (after



Indicator value from

implemented projects as of 31. 12. 2005



SU 08 No. of joint services established ‐ clusters

Output Number 0 10 6 0 60

SU 48 Share of functioning clusters within 1, 2 and 3 after the start of a project

Impact % 0

1st year (100 %)

2nd year (90 %)

3rd year

(80 %)

23,08 0 ‐




Physical Indicators: Start Programme


unit


Target value (after





SU 02 No. of supported starting businesses and businesses in the initial stage of their development

Output Number 0 1 400 381 27,21

SU 31 Share of supported women starting business (In the case of Ltd./s.r.o. it is a company where a woman holds/ women hold more than 50% share in the registered capital)

Output % 0 min. 25 42,78 171,12

SU 52 Growth of added value of businesses in the initial stage of development within 1, 2 and 3 years after the start of a programme

Impact % 0

1st year (5%) 2nd year (10%)

3rd year (15%)

‐ ‐

HP EO No. of new SMEs established by women

Output Number 0 ‐ 163 ‐

HP IS No. of new SMEs developing IT and doing business in the sphere of ICT

Result Number 0 ‐ 7 ‐

PU 04 Number of gross jobs created Result Number 0 4 000 414 10,35 Source: ISOP (Data as of 31.12.2005)

Some indicators can be measured only after a year or more of operation of the company. These data were not available as of the reference date.



Physical Indicators: Credit Programme


unit


Target value (after






Output Number 0 1 400 151 10,79


Output % 0 min. 25 29,14 116,56

SU 52 Growth of added value of businesses in the initial stage of development within 1, 2 and 3 years after the start of a project Impact % 0

1st year (5%)

2nd year (10%)

3rd year (15%)

‐ ‐

HP EO No. of new SMEs established by women Output Number 0 ‐ 64 ‐


Result Number 0 ‐ 4 ‐

PU 04 Number of gross jobs created Result Number 0 4 000 1 048 26,20 Source: ISOP (Data as of 31.12.2005)

Some indicators can be measured only after a year or more of operation of the companies, or the initially planned values are not available. The percentage rates of meeting the indicators were not available as of the reference date.



Physical Indicators: Development Programme


unit Baseline

value (2001)

Target value (after







PU 05 SU 26

Growth of added value from production created by the supported companies

Impact % 0 10 28,63 29,9 104,44

Absolute growth of added value from production created by the supported companies

Result Thous. CZK 0 ‐ 1 186 631,417 369 383,933 31,13


Physical Indicators: Marketing Programme


unit Baseline

value (2001)

Target value (after







PU 05 SU 26


Impact % 0 10 12,78 ‐ 127,8


Result Thous. CZK 0 ‐ 203 304,263 ‐ ‐




Physical Indicators: Measure 2.2 ‐ Innovations


unit Baseline

value (2001)

Target value (after







SU 25 No. of new or innovated technologies, products and services

Impact Number 0 100 103 0 103

SU 07 No. of joint projects of research institutes and supported companies Result Number 0 20 29 0 145




Most of the indicators in individual programmes exceed the planned values in the approved projects and we can expect that they will be met, or even exceeded, compared to the OPIE target values. This holds true for data from the approved projects except Start and Credit programmes where most of the indicators can be considered as met already in the approved projects. In other programmes, the achievement rate can be specified only after the completion of projects which are being implemented. Problems have been identified in meeting the physical progress indicators in the following programmes:

Training Centres Energy Savings Renewable Sources of Energy

and also in meeting some indicators in Measure 1.1 “Prosperity” and Measure 1.4 “Clusters”. Detailed information is provided in chapters specifying outputs of the individual programmes. The most important background document for assessing the integration of horizontal priorities in programmes was the Horizontal Priority Manual of the Community Support Framework issued in July 2004. It classifies among horizontal priorities the following areas:

Equal opportunities;

Sustainable development, environmental aspects;

Balanced development of regions;

Information society.

All applicants must take account of the equal opportunity principle and its meeting is monitored in Project Application, part “Horizontal priorities, equal opportunities“. The Final Beneficiary/Recipient describes here how the equal opportunities principle has been reflected in project preparation and suggested implementation. A general rule applies to all projects, that they must not negatively impact equal opportunities and deepen the discrimination of one group. The equal opportunities principle should be included among evaluation criteria of all operational programmes. Linked to this principle, the Managing Authorities are obliged to monitor the balanced representation of men and women in evaluation and selection committees. They are also obliged to apply the gender mainstreaming method.



Integration of horizontal priorities in the OPIE The levels of detail for the integration of individual principles and especially procedures for their measurement, evaluation and integration into the implementation mechanisms as specified in the HP Manual vary. In general we can state that the HPM formulates very well procedures and recommendations for the application of HP Equal Opportunities, HP Information Society and, to a certain extent (with respect to the monitoring of impacts) also HP the Environment. The HP Manual lays various levels of stress at the integration of horizontal priorities in all operational programmes in the CR. The Horizontal Priority Manual which has only the nature of a recommendation and provides a basis for the integration of horizontal priorities into OPIE, was prepared only after the preparation of the OPIE Programme Document and Programme Complement. The OPIE MA informed the CSF on its opinion that the impact on horizontal priorities should not be included in evaluation criteria. Horizontal priorities have been included in OPIE programming documents and have been continuously monitored.

Final Report on Project 001/05 Evaluation of the Mid‐term Implementation Progress of Operational Programme Industry and

Enterprise


4. Answers to evaluation questions

4.1 Implementation system and monitoring Question No. 1: Based on the analysis of the establishment and functionality of the implementation system (incl. its strengths and weaknesses) in the period April 2005 ‐ December 2005, is it necessary to modify the system to increase its performance and efficiency? Based on the OPIE analysis executed we can state that the system for administering applications is operational with exceptions caused especially by problems linked to continuous fine‐tuning of the whole system, compliant with the OPIE Implementation Manual. During the programme implementation, we have witnesses gradual improvements of the administration system that demonstrate the ever‐shortening periods needed for the administration of applications in particular programmes. Despite of this success, systematic steps must be taken aimed at simplifying the system for administering applications. For this purpose, the project “Simplification of the SF system” is being implemented. Using detailed process analyses, it identifies administration bottlenecks and suggests the simplification of some procedural steps. Applications accepted at regional offices have been passing through all partial procedures applicable to them within administration and we can therefore state that the administration system is functional. The process of administering applications is, to a large extent, influenced by the system of project evaluation executed by external evaluators and further by evaluation committees. The system structured in this way ensures the objectivity of evaluation and measures must therefore be implemented to support the above‐mentioned evaluation system. Due to the lack of evalauators’ capacity in specific areas and their diverse quality, CzechInvest has prepared a database of evaluators. This database also includes the evaluation of the evaluators’quality making it possible to increase the quality in evaluating applications. The benefits of retroactive evaluation of external evaluators in the system for administering applications can be assessed only after a certain period of time. CzechInvest, most important OPIE implementing agency, has faced frequent turnover of staff involved in evaluating applications. This situation increases demands on CzechInvest which must continuously introduce new staff in the whole implementation system. High qualification of administrative staff is required for a successful OPIE implementation. The ability to keep the staff depends mainly on carrier growth models introduced, remuneration comparable to the private sphere with higher motivation elements in salaries, and also other suitably established mechanisms, e.g. high personal responsibility, study involvement


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of staff at various administration levels within the agency, study affiliations at other ministries etc. To achieve an adequate financial remuneration, we recommend to utilise to a maximum degree the Technical Assistance funds so that financial remuneration reflects the responsibility of and demands on the respective staff. Considering the preparation for a new programming period, the current staff with their experience of implementation are crucial for setting up a new implementation system. The increasing number of project payment claims submitted and evaluated in 2004 and 2005 caused growing demands on the time of the current implementation staff who administered applications for aid during their administrative compliance and technical evaluation. The requirement to execute 100 % site controls of projects submitting payment claims prevents the occurrence of irregularities but on the other hand will certainly demand high time capacities of project managers. Especially the half of 2006 will be a critical period because the last applications for subsidy will be submitted and, simultaneously, most of the approved projects will be implemented. The planning of controls and the quality of the monitoring system will play a crucial role. It is purposeful to consider the selection of a sample of projects to undergo physical control of project implementation. The current practice of attaching all accounting documents to payment claims still needs to be addressed. A hundred percent check of documents leads to high time demands on staff executing the control and requires also capacities for archiving copies. It might be purposeful to introduce an audit concerning all state aid beneficiaries based on usual international auditing standards and reduce thus the time required for controlling all documents and the issuing archiving. The responsibility of Intermediate Bodies and of the Managing Authority for the correctness of tenders, analytical accountancy and all other requirements issuing from the Guidelines for Applicants places high professional demands on the implementation staff executing control but also on the control itself. There is the possibility of using external service providers for well‐selected control activities. As for the responsibility of the Managing Authority for the correctness of physical utilisation of the funds disbursed, the evaluators have not identified a straightforward methodology for controlling the relevance and purpose of the disbursement of public funds within project implementation. As many types of control activities are executed, their targeting must be checked and results shared. Concerning the work of internal audit, sharing and coordination are executed by the Internal Audit Working Group. For other types of controls (process, project and control foll. Art. 10‐12 of Regulation No. EC 438/2001) no official communication platform has been established. As each type of control is executed by another entity, it is suitable to set up a coordination system when planning these activities to avoid clashes of the activities of various control entities, which may meet at the same time in one place (especially at Intermediate Bodies’ and Final Recipients’


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premises), or frequently repeated controls targeted at the already controlled spheres where no serious finding have been identified. With a view to efficient application of Technical Assistance which is also used for the implementation of projects increasing the implementation efficiency, it will be necessary to make operative those functions within ISOP++ implementation system which serve for the monitoring and planning of TA but also for publicity as an integral part of TA. The staff prepare their own databases and use them for executing the necessary activities. The ISOP++ thus currently offers only the basic functions needed for the approval, monitoring and reimbursement of costs of Technical Assistance and publicity. The preparation of a tender, its implementation, the administration of each TA action in ISOP++ put high demands on administration and time capacity which can also be the reason of the failure to withdraw Technical Assistance from the allocation for Priority 3 and the preference of procedures administratively less demanding and quicker for the implementation of actions from the budgets of other agencies. The TA plans are not prepared for specific actions but include only indicative amounts allocated for disbursement. The TA Disbursement Plan will have to undergo a review in 2006; it will be purposeful to prepare a detailed analysis of plans and needs in various entities linked to the implementation of the current programming period and the already launched preparation for the new programming period. The review of the TA Disbursement Plan can specify realistic requirements on the disbursements of TA funds. Based on interviews with relevant implementation staff, it was established that Technical Assistance is delivered by individual SFD staff as a part‐time job following various criteria. Situations often occur that civil servants are involved in the approval of a TA project, or its implementation, but they are not involved in the authorisation of the payment claim after the project completion. Considering our recommendation to implement a detailed TA plan and monitor it with suitable instruments, it will be necessary to allocate sufficient HR capacity for the planning, administration and control of Technical Assistance. Large capacity requirements and the importance of the TA management will probably call for the establishment of an independent team within SFD. Question No. 2: Has the programme monitoring system, issuing from the monitoring of the project cycle, been set up and operated efficiently? What adjustments are required to accommodate for its weaknesses and strengths, if identified? The medium‐term evaluation of the OPIE monitoring system was aimed mainly at three areas crucial for monitoring: the monitoring information system, monitoring administration (including the preparation of monitoring reports) and indicators. These areas were evaluated from the point of view of the OPIE monitoring system set‐up, functionality and efficiency.

We can state that the OPIE monitoring system as a whole has been set up correctly and is fully operational, i.e. it can provide financial and statistical data on project


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implementation under OPIE. Monitoring methods have been suitably chosen to reflect the methodology and state of OPIE implementation, and they have also been introduced and utilised and fulfilled in a suitable way.

If the evaluation criterion were the efficiency of programme monitoring, we could identify certain weaknesses which in the current programming period do not represent a direct risk for OPIE implementation and monitoring but should not be transferred into the next programming period. The point is that these potential bottlenecks can impair the coordination of work and put higher loads on HR capacities.

The framework areas to which those weaknesses can be attached include: transfers among various levels of the information system, work with data in ISOP++, adequate staffing for OPIE monitoring, inaccuracies and lack of clarity in the programming documentation and indicators.

Transfers among various levels of the monitoring information system, which settles and monitors the incoming support from the Structural Funds, was until recently complicated especially by the fact that the relevant entities kept clarifying details during the implementation and even now further instructions are being formulated more precisely on what information the system should, or on the contrary, did not have to include. Nevertheless, these changes must be executed in whole chains, i.e. if a change is made at one monitoring system level (e.g. in MSSF‐CENTRAL), this usually calls for specific changes at other levels (i.e. at the ISOP++ level and in the electronic application form). Subsequent changes cause temporary setbacks in coordination and increase demands on human resource workloads.

Information systems used for the monitoring of Structural Funds support should not be only used as instruments for archiving data in the electronic form. Offering varied and easily generated outputs, the information systems should add quite a distinctive value compared to a mere archiving instrument – they should serve as management information systems which will be a mainstay for decision‐making at various levels. By improving the logic of the set‐up and user friendliness of the system, the potential will be raised for its utilisation for strategic decision‐making.

As the SF assistance monitoring system has been introduced for the first time in this programming period in the CR, its users lack experience of its operation but the OPIE monitoring has already undergone its teething troubles and has now been reaching the operational stage where no serious troubles are expected. We must nevertheless admit that the intercepting of minor errors and system adjustments have lead to higher workloads on HR capacities than envisaged for the future when the information system will already be tailored according to the needs of the relevant entities. The staff have been unnecessarily burdened by the preparation and processing of various reports and records which should be easily generated by the MSSF‐CENTRAL information system. As the system has developed and its staff has gradually acquired further experience in partial monitoring aspects, it has become clear that the employees in many positions are not mutually substitutable because each of them specialises in a different activity.

The OPIE must avail of a unified terminology and unified procedures for programme implementation and monitoring – not only because of the new staff hired but also for


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better coordination. Partial inaccuracies, unclarities and omissions in the titles of reports in the programme implementation documentation (lack of compliance in titles: e.g. interim regular report vs. interim extraordinary report) and in their designation (e.g. the programme documentation often mentions reports which are actually only background documents for the preparation of those reports) can be often confusing for the monitoring staff.

The basic programme documentation (OPIE and its Programme Complement) includes a sufficiently wide list of monitoring indicators exceeding the practical needs of monitoring the OPIE implementation progress.

The selection and application of monitoring indicators for OPIE Priority 1, operational objectives 1‐4 and for OPIE Priority 2, operational objectives 5‐7 enable a sufficiently detailed evaluation of meeting the specific operational objectives within the implementation of Measures 1.1, 1.2, 1.3 and 1.4 in Priority 1 and Measures 2.1, 2.2 and 2.3 in Priority 2 of the OPIE.

In all cases where a target value has been established for an OPIE indicator which can be related to a specific OPIE Measure, the principle of linking monitoring indicators among various levels has been respected. This applies to indicators specifying the economic performance of supported businesses, developments in employment, development and utilisation of capacities, and to indicators specifying the scope of support and measured mainly by the number of supported projects and businesses.

The method of acquiring and processing data crucial for the assessment of progress in OPIE implementation with a view of achieving its quantified targets expressed in the values of the respective monitoring indicators is functional and meets the reliability requirements necessary for the monitoring of the OPIE implementation progress.

There are deviations and apparently also partial inaccuracies in the definition of monitoring indicators targeted at the monitoring of OPIE objectives which can cause doubts about their compatibility if monitored in projects within various measures. We therefore recommend to precise and unify the definition of the indicators monitored and use identical titles for identical indicators (titles and codes) consequently at all levels of programme documentation.

In order to monitor the relation of the supported projects to horizontal priorities, the classification of projects used in the OPIE for monitoring reports distinguishes projects aimed mainly at the horizontal priority, projects with positive impacts on the horizontal priority and projects neutral in relation to the horizontal priority. This classification is not clearly defined in the basic OPIE programming documentation. It is advisable to formulate its specification in a way strengthening the objectivity and validity of the assessment of project impacts on the respective horizontal priority.

Question No. 3: Are the issues of the EC horizontal policies sufficiently integrated in the Programme implementation system? Does the level of knowledge of staff in implementation structures concerning horizontal priorities allow for addressing these issues within the OPIE following the recommendations of the HP Manual?


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The basic background document used during the medium‐term evaluation was the Horizontal Priority Manual of the Community Support Framework (July 2004) which has for all the Managing Authorities only the nature of a recommendation. The following priorities are ranked among horizontal:

Equal Opportunities;

Sustainable development, environmental aspects;

Balanced development of regions;

Information society.

The Horizontal Priority Manual, providing a basis for the integration of horizontal priorities into the OPIE, was prepared only after the OPIE Programme Document and Programme Complement had been completed. The MA informed the CSF on its opinion that the impact on horizontal priorities should not be included in evaluation criteria. The levels of detail for the integration of HP principles and especially procedures for their measurement, evaluation and integration into the implementation mechanisms as specified in the HP Manual differ. Generally speaking, the HPM introduces, in a very sound way, procedures and recommendations for the application of HP Equal Opportunities, HP Information Society and, to a certain extent (with respect to the monitoring of impacts) also HP The environment. The HP Manual lays diverse levels of stress at the application of horizontal priorities in various operational programmes in the CR. From September till November 2005, staff involved in the implementation structures of Managing Authorities and Intermediate Bodies of operational programmes, including OPIE, and Final Beneficiaries were trained in project “Training in the sphere of horizontal priorities“. Thirteen specific seminars were organised, of that 5 seminars held in Prague were earmarked for the staff of implementation structures in five operational programmes. The total number of 105 participants from implementation structures were trained which, on average, makes 21 members of staff per one operational programme. In a training held in Prague on 5 October 2005, 18 representatives of the OPIE Managing Authority and Intermediate Bodies participated. The participants of seminars acquired a comprehensive overview of general issues concerning horizontal priorities and the rationale of their relevance in programme and project documents. They learned how to classify projects following their relation to various horizontal priorities, assess the relevance of projects in relation to horizontal priorities and how to approach project evaluation in the sphere of horizontal priorities. Apart from their training function, the seminars offered opportunities for discussions of staff dealing with horizontal priorities, for exchanging experience, sharing problems they


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must face, and finding solutions. Most of the problems, nevertheless, require a comprehensive systemic approach.

• Have horizontal priorities been successfully integrated in programmes with a view to the recommendations of the Horizontal Priority Manual and have they been actively meeting their objectives?

The Czech Republic is obliged to monitor the above first three priorities based on Council Regulation (EC) No. 1260/1999 laying down general provisions on the Structural Funds, and Commission Regulation (EC) No. 438/2001 on the implementation provisions linked to the SF administration and control mechanisms. (see Regulation 438/2001/EC of 2 March 2001, Annex IV). The last priority, the information society, has been highlighted by the European Commission as a key priority for SF interventions in general principles for programmes for 2000 – 2006 (Regulation No. 344/ 1999/ EC).

The priority position of the above four themes is documented by the fact that they belong among basic objectives of the European Communities included in the Amsterdam Agreement. High level of employment, social protection, increasing the standard of living and the quality of life are basic tasks of the European Communities which can be achieved only through horizontal priorities. Structural Funds represent one of the instruments supporting the fulfilment of the Community tasks.1 Promoting the policy of equal opportunities, environmental protection and information society is the prerequisite for reaching sustainable development which has been defined as a global objective within the Community Support Framework, a strategic document of the CR for the SF assistance. Sustainable development is described as a process which must ʺmeet the needs of the current generation without compromising the ability of future generations to meet their own needsʺ. Adherence to the equal opportunities principle is compulsory for all applicants and it is monitored in the part of project application “Horizontal priorities, equal opportunities“. The Final Beneficiary/Final Recipient describes there how the equal opportunities principle has been reflected in project preparation and its proposed implementation. There is a general rule applicable to all projects that they must not negatively impact equal opportunities or deepen the discrimination of one group. The equal opportunities principle should be integrated in evaluation criteria of individual operational programmes. In compliance with this principle, the Managing Authorities are obliged to monitor a balanced representation of men and women in evaluation and selection committees. OP Managing Authorities are also obliged to apply the method of gender mainstreaming. 1 Art. 1 of Council Regulation (EC) No. 1260/1999 laying down general provisions on the Structural Funds defines: “… while adhering to these Community objectives contributes to a harmonious, balanced and sustainable development of economic activities, development of employment and human resources, protection and improvement of the environment, removal of inequalities and promotion of gender equality.“


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Basic evaluation of horizontal priorities (HP)

Integration of HPs in OPIE implementation Obligations following the HP Manual Equal Opp. Sustain.

Dev. Reg. Dev. IS

1. MA is obliged to reflect the HP principle in Programme Document and Programme Complement

Yes Yes Yes Yes

2. MA of is obliged to include HPs in monitoring documents, monitor their implementation

Yes Yes Yes Yes

3. MA is obliged to monitor impacts of project activities on HPs at all stages of project implementation*

‐ ‐ ‐ ‐

* Projects are only at the approval and inception stages; the data available have not yet allowed evaluation.

4.2 Evaluation of physical benefits of the OPIE incl. its financial implementation progress Question No. 4: What financial and physical progress has been achieved in the implemented programmes compared to the planned progress and state (analysis of fund disbursement; proposals for increasing the disbursement rate in measures with slow progress)? Is the current state of disbursement in line with the n+2 rule (allocation for 2006 must be disbursed till the end of 2008) in relation to the OPIE financial plan for 2004 and 2005)? 4.2.1 Financial implementation progress

• What funds have been allocated for various priorities and measures and how much has been disbursed?

In 2004, the disbursement of funds was rather limited, namely to Priority 2, Measure 2.1. where it amounted to CZK 64 000 thous., i.e. 16% of the yearly allocation for this Measure. The situation partially improved in the following year 2005. The largest funds were withdrawn in Priority 2, and Measure 2.1 and equalled CZK 844 731 thous. and CZK 843 083 thous. respectively. In relative terms, 39%, or 62% of the yearly financial allocation were disbursed. On the other hand, the disbursement rate in Priority 1 is still at a very low level of CZK 19 626 thous., which in relative terms represents ca 1% of the yearly allocation of funds.

• Are individual priorities able to disburse the allocated funds completely?


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• Which measures are threatened by the repayment of funds due to their failure to adhere to the n + 2 rule with a stress laid on the OPIE financial plan for 2004 and 2005? What are the potential variant solutions? Do these measures have a sufficient absorption capacity or is it advisable to reallocate the funds to an other measure (reallocations are allowed only within one priority; funds must not be transferred between priorities)?

• What corrections (reallocations between measures) have already been executed and which are planned?

There are rather an unfavourable development trends in fund disbursement in 2004 and 2005. If the disbursement trends of 2004 and 2005 are maintained, practically only one measure (2.1) will be able to withdraw the allocated funds. Disbursements in the whole Priority 1 incl. Measures 1.1 (Prosperity), 1.2 (Real Estates), 1.3 (Training Centres) and 1.4 (Clusters, International Trade, Register of Consultants), move between 0 – 2 %. Similar values have been achieved in Measures 2.2 (Innovations) and 2.3 (Renewable Energy Sources, Energy Savings). On average, Priority 2 is being saved by Measure 2.1, thanks to which Priority 2 manifests a trend showing that it could be the only priority achieving 100% disbursement. The lowest rate of funds contracted following the CSF methodology, i.e. measures threatened the most by their failure to meet the n+2 rule and lacking sufficient absorption capacity are Measures 2.3 (Renewable Energy Sources, Energy Savings), 1.3 (Training Centres), 3.1 (TA CI) and Priority 3, which is threatened the most. The disbursement trends issuing from developments in 2004 and 2005 give these measures practically no chances of meeting the conditions of the n+2 rule unless really effective steps have been taken to reverse these trends. Practically the only way of addressing the current situation in the threatened measures, while maintaining unified conditions in all programmes till the end of the programming period, is the reallocation of funds into other measures within one priority. In 2005, the Monitoring Committee already took this step and approved the re‐allocation of funds from Measure 1.3 in Measure 1.2 and from Measure 2.3 in Measure 2.2. Despite the reallocations executed we recommend further to monitor the development in fund disbursement in Measures 2.3 and 2.2. If those measures do not prove sufficient absorption capacity, a further reallocation will be necessary, probably to Measure 2.1, of course with a view to its development. Considering Priority 3 and its undisbursed funds, more attention should be paid to activities aimed at expanding consultancy, evaluating the purposefulness of the awarded aid, but also at maximising efforts to identify and address problems using the previous experience of the OPIE to prepare a programme for the next programming period.

• Have all measures been sufficiently covered by projects? In which measures surplus or lack of project proposals meeting at least formal selection criteria have been identified?


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When assessing the surplus or lack of project proposals in various measures, it was necessary to consider both the numbers of project proposals and the volumes of allocated funds. With a view to those two criteria we can state that there is a lack of projects especially in Measures 1.3 and 2.3. There are low disbursement rates also in Priority 3 which lacks available data on the numbers of projects and could not therefore be evaluated. Excessive numbers of projects meeting formal selection criteria have been established in Measure 2.1, especially programmes Credit (521 projects), Start (539 projects) and, due to the low success rate of applicants, also Marketing (236 projects). Development (284 projects) belongs to the group of programmes with the highest number of projects meeting formal selection criteria, although 62% of projects submitted within this programme have not met these criteria and have been rejected. It is the highest rate of projects rejected because of their failure to meet formal selection criteria in the whole operational programme.

• What are the reasons of low disbursement? Some reasons of low disbursement can be found in the respondents’ answers in the questionnaire survey executed among companies through the network of the Economic Chamber of the CR. Most of the companies from the OPIE target group do not apply for aid. The results of the questionnaire survey findings highlight important reasons for the non‐involvement of this group of companies in the OPIE. The preparation of project application is too demanding for almost 40% of respondents. Over 1/3 of respondents think that the programme does not address their needs. These reasons are sufficiently serious to prevent especially the smallest companies, which created over 42% of the respondents, from taking up projects, despite the tempting possibility of gaining a financial subsidy. There is another finding deserving attention ‐ almost 1/3 of respondents mistrust the OPIE. These findings should be further elaborated in order to find out what has caused such mistrust of companies, what measures would be suitable to remedy the situation and to bring into compliance the entrepreneurs’ needs and programme objectives. Almost 1/5 of companies have stated that they lacked information on programmes, which was apparently a further cause why they did not apply for subsidies. In the group of respondents who failed when applying for a subsidy, small and medium‐sized businesses are evenly represented (37% each). Although the applicants for subsidies, following their statements, understand the programmes and their operation, almost 2/3 of respondents do not evaluate the application process as transparent. The respondents in the research stated that they did not know where to find information on successful applicants and on the numbers of approved and rejected applications which can be interpreted as an insufficient feed‐back between the Intermediate Bodies and unsuccessful applicants. This respondents’ opinion has confirmed one of the previous findings concerning the mistrust in the transparency of the evaluation process.


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If considering Measures 1.3 and 2.3 threatened the most by insufficient disbursement, we can find the following reasons of insufficient utilisation of and interest in the following programmes: Training Centres, Renewable Energy Sources and Energy Savings. Until recently, the Training Centres Programme was earmarked only for business entities which, especially in the case of SMEs, did not reflect the current situation as these companies do not consider training as a priority and are overwhelmed by other problems considered more important and addressing their topical situation; they tend to concentrate on short‐term tasks. In some cases, the max. limit of support equalling CZK 30 million, can be a limiting factor. The specific situation of the CR ‐ where a significant role is played by car industry ineligible for OPIE support ‐ is also an aspect preventing numerous potential candidates in applying for aid. Limits laid down in OKEČ (branch classification of economic activities) specifying only certain sectors/branches eligible for participation in the Training Centres programme have also narrowed the range of potential applicants for support. Further limiting factors include: the reimbursement of costs borne by project promoters which can bring them into a difficult, sometimes intractable situation; limited scope of the eligibility of costs linked to the establishment of facilities, high administrative loads during project implementation. The applicants also state among the limiting aspects the requirement to submit the centre’s training plan for 3 successive years and prove sufficient rate of utilisation of the centre for at least 5 years after the project completion. In the Renewable Energy Sources and Energy Savings programmes certain conditions forming barriers were established but some of them have already been removed. The most important change has been executed in the methodology for the calculation of eligible costs. It used to issue from the methodology for environmental investment aid, which was rather restrictive, and the application of the methodology resulted the volumes of aid between only 5‐10% of total investment costs. For the applicants it also meant insecurity in the final amount of subsidy based on the relevant calculation. Even now, high demands are applied to projects on renewable energy sources and energy conservation, issuing mainly from Decree No. 213/2001 Coll. on the energy audit and Procedures for the Environmental Impact Assessment of projects co‐financed from the EU Structural Funds in the programming period 2004‐2006, issued by the Ministry of the Environment. Both programmes in Measure 2.3 are earmarked for SMEs which limits the scope of potential applicants. The restriction of the Programme only to the sphere of processing industry does not reflect current needs of the CR in the sphere of aid for environmental investments. Another factor limiting absorption are long periods between the submission of application and the availability of evaluation results, which in case of the Intermediate Body for programmes within Measure 2.3, Czech Energy Agency, reach even 200 days and exceed several times periods laid down for the preparation of applications in the OPIE documentation. 4.2.2 Physical implementation progress

• What are the expected outputs, results and impacts of projects for which loan agreements have been signed or Decisions on the award of subsidy issued following the relevant monitoring indicators for the selected Measures?


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(e.g. projects planning to achieve: number of newly created gross jobs, growth of the productivity of labour in the supported businesses, number of supported SMEs, no. of joint services established ‐ clusters, increase in turnover (sales) of supported companies)

In the shortened programming period 2004 – 2006, the OPIE is based on 3 priorities, the meeting of which is monitored through the following monitoring indicators: Priority 1: Business Environment Development Its measures are aimed at the construction, regeneration and development of business infrastructure, the improvement of the environment for human resource development in industry and enterprise, the development and increase of the quality of information and consultancy services, and the support of infrastructure for industrial research, development and innovations. Monitoring indicators: Number of supported incubators and science and technology parks; developed business facilities and premises; increase in the capacity of training facilities; number of gross jobs created; growth of added value from production created by the supported companies Priority 2: Development of Enterprise Competitiveness Its measures are earmarked for assistance provided to start‐ups and small and medium‐sized enterprises with development potential (SMEs), support of innovation processes leading to the development of new products, technologies and services, support of efficient and economical energy management in business sector. Monitoring indicators: Increase in turnover (sales) of supported companies; number of supported SMEs; energy savings; energy generated from renewable sources of energy; share of GDP covered by SMEs Priority 3: Technical Assistance Its measures target at funding the management, implementation, monitoring and control of OPIE operations, studies, pilot projects, development of information systems and publicity.


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The following table includes basic data on the process of approving project applications in the OPIE: (Source: CzechInvest, Prague, 17.12.2005):

NUTS 3 =kraj/

programme Prosperity Real

Estates Training Centres Clusters Development Marketing Innovations

Energy Savings

Renewable Energy

Sources Start Credit Total Jihočeský kraj 3 (0) – 2 6 (0) –

0 4 (2) –

1 2 (1) –

1 65 (42) – 8 4 (1) – 1 17 (14) – 0 0 (0) – 0 2 (0) – 0 44 (1) –

38 40 (8) –

26 187 (69) –

77 Jihomoravský kraj 12 (3) – 2 16 (5) –

0 3 (0) –

0 1 (0) –

1 105 (73) – 14 42 (4) – 18 34 (18) – 8 1 (0) –

0 6 (0) – 1 82 (3) – 72

84 (23) – 43

386 (129) – 159

Karlovarský kraj 0 (0) – 0 1 (1) – 0

1 (0) – 0

3 (0) – 2 18 (12) – 2 1 (0) – 0 7 (7) – 0 2 (0) –

1 2 (0) – 0 11 (0) – 10

20 (1) – 17

66 (21) – 32

Královéhradecký kraj 0 (0) – 0 14 (5) –

0 1 (0) –

0 1 (0) –

1 47 (31) – 9 19 (3) – 9 20 (13) – 6 2 (1) –

0 3 (0) – 0 37 (4) – 32

62 (16) – 37

206 (73) – 94

Liberecký kraj 0 (0) – 0 5 (1) – 1

1 (1) – 0

2 (0) – 1 31 (18) – 3 13 (0) –

10 8 (4) – 3 0 (0) – 0 2 (0) – 0 20 (2) –

18 23 (4) –

13 105 (30) –

49 Moravskoslezský kraj 2 (0) – 1 28 (6) –

4 4 (2) –

0 8 (4) –

3 67 (50) – 7 24 (2) – 14 22 (14) – 5 2 (0) –

0 2 (2) – 0 186 (15) – 167

106 (38) – 56

451 (133) – 257

Olomoucký kraj 2 (2) – 0 14 (3) – 1

3 (0) – 1

1 (0) – 1 60 (33) – 14 22 (1) –

14 16 (14) – 1 0 (0) – 0 1 (0) – 0 35 (2) –

30 44 (9) –

28 198 (64) –

90

Pardubický kraj 1 (1) – 0 14 (0) – 1

3 (1) – 2

2 (0) – 1 61 (36) – 9 30 (1) –

17 16 (11) – 3 0 (0) – 0 4 (0) – 0 16 (0) –

16 69 (21) –

37 216 (71) –

86

Plzeňský kraj 1 (0) – 1 52 (22) – 11

0 (0) – 0

1 (0) – 0 33 (22) – 5 10 (1) –

8 10 (5) – 1 2 (0) – 0 3 (0) – 0 16 (1) –

15 68 (9) –

53 196 (60) –

94

Středočeský kraj 5 (0) – 0 7 (3) – 1

5 (3) – 0

1 (0) – 1 93 (39) – 18 27 (4) –

14 33 (25) – 2 2 (0) – 1 3 (0) – 0 30 (3) –

26 67 (25) –

33 273 (102) –

96

Ústecký kraj 1 (0) – 0 7 (1) – 0

2 (0) – 1

1 (0) – 0 37 (26) – 2 10 (2) –

6 8 (5) – 2 0 (0) – 0 4 (1) – 1 48 (6) –

36 38 (10) –

23 156 (51) –

71

Vysočina 0 (0) – 0 9 (2) – 0

0 (0) – 0

1 (0) – 0 60 (34) – 10 18 (2) –

10 11 (8) – 2 1 (0) – 1 0 (0) – 0 37 (5) –

30 41 (12) –

26 178 (63) –

79

Zlínský kraj 2 (0) – 1 16 (3) – 3

3 (1) – 2

2 (0) – 1 70 (44) – 9 48 (10) –

25 17 (12) – 2 3 (0) – 1 3 (1) – 1 23 (2) –

18 55 (12) –

37 242 (85) –

100

Unspecified 0 (0) – 0 0 (0) – 0

0 (0) – 0

0 (0) – 0 0 (0) – 0 0 (0) – 0 0 (0) – 0 0 (0) –

0 1 (0) – 0 0 (0) – 0

0 (0) – 0

1 (0) – 0

Total 29 (6) – 7 189 (52) – 22

30 (10) – 7

26 (5) – 13 747 (460) – 110 268 (31) –

146 219 (150) –

35 15 (1) –

4 36 (4) – 3 585 (44) – 508

717 (188) – 429

2861 (951) – 1284

The first figure states the aggregate number of applications, the figure in brackets gives the number of rejected applications and the last figure stands for the number of approved applications. The above overview illustrates basic reasons of difficulties faced when evaluating physical progress towards meeting indicators in Priorities 1 and 2 as of the reference date, namely:

1. Start and Credit Programmes: Most of the applications for aid had been prepared and approved or rejected as of the reference date;

2. Other programmes prepared by CzechInvest are in the process of approval and

only 30‐50% applications have been prepared. Impacts of the supported projects thus cannot be established as of the reference date but can be monitored only in the year following project completion; impact indicators specified in the OPIE text (for priorities and the whole programme) can be evaluated only after the programme completion;

3. The reference date for this project was initially 15.12.2005 following the

methodology of CSF. As reporting is executed half‐yearly or annually (which is also linked to the availability of accounting data), this reference date for physical evaluation was postponed till 31 December. Most of the data are from the selected projects.



Financial progress within OPIE implementation Priority 1: Business Environment Development

Allocated funds (Total) Contracted funds Costs incurred

(submitted payment claims)

Funds withdrawn (from the allocation)

Remains to be disbursed in „n+2“

Year Thous. CZK % Thous. CZK

% Thous. CZK % Thous. CZK

% Thous. CZK

%

2004 1256493 23,3 6599 0,5 6599 0,5 0 1256493 100 2005 1799699 33,4 1886148 104,8 95198 5,3 6983 0,4 1792716 99,6 2006 2334750 43,3 0 0 0 2334750 100 Priority 2: Development of Enterprise Competitiveness







% Thous. CZK

%

2004 798614 16,1 161826 20,3 368000 46,1 128000 16 670614 84 2005 2162598 43,6 2366171 109,4 2081883 96,3 1507492 69,7 655105 30,3 2006 1998455 40,3 0 0 0 1998455 100 Priority 3: Technical Assistance







% Thous. CZK

%

2004 100519 23,3 27028 26,9 27249 27,1 0 100519 100 2005 143975 33,4 81393 56,5 46167 32,1 28806 20 115169 80 2006 186780 43,3 0 0 0 186780 100



The following tables from the ISOP system indicate the expected outputs of projects approved by 31.12.2005. Values of the implemented projects are mostly zero due to the current project implementation level.

Measure 1.1 Prosperity


unit


Target value (after





approved projects as of 31.12.2005

(in %)

PU 01 SU 11

Number of supported incubators and science and technology parks Output Number 0 15 15 0 100

PU 02 SU 10

Developed business facilities and premises Output m2 0 30 000 1 150 0 3,83

SU 43 No. of innovative companies supported by incubators and science and technology parks


SU 44 No. of projects aimed at intellectual property protection

Result Number 0 50 1 0 2

SU 45 No. of science and research institutions and universities involved in supported projects



Meeting indicators PU02/SU10, SU43 and SU44 will be problematic. The situation reflects a relatively low potential of applicants in the sphere

of developing new business facilities and a low potential in the sphere of innovative enterprise. These values nevertheless differ from those stated in Real Estates Programme which has apparently been caused by an error in the output of the ISOP system.



Measure 1.2 Real Estates


unit


Target value (after







PU 02 SU 10

Developed business facilities and premises

Output m2 0 72 900

200 329 165 973 (new) 34 356

(renewed)

0 274,80

SU 16 Size of areas prepared for investment (of which brownfields + greenfields

Result ha 0

550 of that

220 (new) 330 (renewed)

16,6

0 (new) 16,6

(renewed)

0

3,02 0

5,03

SU 46 Rate of occupancy of areas prepared for investment (brownfields and greenfields) within 1, 2 and 3 years after the start of projects

Impact % 0

1st year (10 %)

2nd year (30 %)

3rd year (50 %)

100 0 ‐


Physical progress in Real Estates Programme in general complies with the plan, but the size of areas is much smaller than planned.



Measure 1.3 Training Centres


unit


Target value (after







(in %)

PU 03 SU 23

Increase in the capacity of training facilities (Capacity) Result Number 0 1 000 166 50 16,6

SU 17 No. of refurbished and new training facilities (2004‐2006)


SU 47 Rate of utilisation of modernised and new training facilities, aids or programmes within 1, 2, 3 years after start of project Impact % 0

1st year (35 %)

2nd year (60 %)

3rd year (80 %)

66,84 70% ‐


If considering the approved projects, Training Centres Programme still lags behind in implementation, its physical implementation values are at the level of 16‐37%.

Measure 1.4 Clusters

Ref. Title Type Measuringunit






approved projects as of 31.12.2005 (in

%)

SU 08 No. of joint services established clusters

Output Number 0 10 6 0 60

SU 48 Share of functioning clusters within 1, 2 and 3 years after the start of a project

Impact % 0 1st year (100 %) 2nd year (90 %) 3rd year (80 %)

23,08 0 ‐




Measure 2.1 Physical indicators for the whole Measure


unit Baseline

value (2001)

Target value (after





(in %)

PU 05 SU 26


Impact % 0 10 24,23 29,07 242,30


Output Number 0 1 400 532 ‐ 38,00


Output % 0 min. 25 38,91 ‐ 155,64

SU 52 Growth of added value of businesses in the initial stage of development within 1, 2 and 3 years after the start of a project

Impact % 0


3rd year (15%)

‐ ‐ ‐

HP EO No. of new SMEs established by women Output Number 0 ‐ 227 ‐ ‐


Result Number 0 ‐ 11 ‐ ‐

PU 04 Number of gross jobs created Result Number 0 4 000 1 828 115 45,70




Measure 2.1 Marketing


unit


Target value (after






(in %)

PU 05 SU 26


Impact % 0 10 12,78 ‐ 127,80


Result Thous. CZK

0 ‐ 203 304,263 ‐ ‐


The programme is heading towards meeting its physical indicators.

Measure 2.1 Development


unit Baseline

value (2001)

Target value (after






(in %)

PU 05 SU 26


Impact % 0 10 28,63 29,9 286,30


Result Thous. CZK

0 ‐ 1 186 631,417 369 383,933 ‐





Measure 2.1 Start



Target value (after







Output Number 0 1 400 381 ‐ 27,21


Output % 0 min. 25 42,78 ‐ 171,12

SU 52 Growth of added value of businesses in the initial stage of development within 1, 2 and 3 years after the start of a project

Impact % 0


3rd year (15%)

‐ ‐ ‐

HP EO No. of new SMEs established by women

Output Number 0 ‐ 163 ‐ ‐


Result Number 0 ‐ 7 ‐ ‐

PU 04 Number of gross jobs created Result Number 0 4 000 414 ‐ 10,35


The programme is heading towards meeting its physical indicators; meeting the indicator of newly created jobs appears as problematic.



Measure 2.1 Credit



Target value (after







Output Number 0 1 400 151 ‐ 10,79


Output % 0 min. 25 29,14 ‐ 116,56

SU 52 Growth of added value of businesses in the initial stage of development within 1, 2 and 3 years after the start of a project Impact % 0


3rd year (15%)

‐ ‐ ‐

HP EO No. of new SMEs established by women Output Number 0 ‐ 64 ‐ ‐

HP IS No. of new SMEs developing IT and doing business in the sphere of ICT Result Number 0 ‐ 4 ‐ ‐

PU 04 Number of gross jobs created Result Number 0 4 000 1 048 ‐ 26,20


Start and Credit are successful programmes within the OPIE which already show first physical results. Most of the physical indicators exceed their target values and we can expect that they will be fulfilled compliant with OPIE objectives. Low values have so far been achieved mainly in the indicator “Number of newly created gross jobs”.



Measure 2.2 Innovations

Ref. Title Type Measuring unit






SU 25 No. of new or innovated technologies, products and services

Impact Number 0 100 103 0 103,00

SU 07 No. of joint projects of research institutes and supported companies




Measure 2.3 Energy Savings and Renewable Sources of Energy

Ref. Title Type Measuringunit Baseline value (2001)

Target value (after




Rate of meeting the indicator from approved projects as of 31.12.2005 (in

%)

PU 08 SU 21

Energy savings Result GJ/year 0 120 000 24 326,868 0 20,27

PU 09 SU 20

Energy generated from renewable sources of energy

Result

MW installed/year

MWh produced/year

0 0

15

50 000

0,24

27 456,5

0

19 465,556

1,6

54,91


The programmes still show low fulfilment of physical indicators.


Enterprise


• If considering the actual disbursements, are the implemented measures expedient? What measures would be more suitable?

It is difficult to evaluate the expediency of the measures applied based on data available as of the reference date. For a relevant evaluation, topical data from the ISOP are required and we must also consider that most of the projects will be implemented only in 2006. At the time of evaluation, the results and actual disbursements were only in their initial phases. Detailed evaluation would be purely academic. • Assessment of OPIE contribution to the European Employment Strategy or the

National Employment Action Plan In general, the programmes have positive impacts on employment. In projects (or loans) approved within Start and Credit programmes, the fulfilment rate of the indicator “newly created gross jobs” has achieved 25% (of the 1.462 jobs planned in both these programmes). In Measure 2.1, the indicator “newly created gross jobs” in the approved projects equals 1828 jobs, of which 115 jobs had been created in projects completed by 31.12.2005. These values represent ca 25% of the aggregate target value of newly created gross jobs. Question No. 5: What progress can be expected in meeting the OPIE priorities? Which aid programmes or measures are the most attractive for business sphere (the Evaluator shall explain why certain programmes are attractive for entrepreneurs, while others are unattractive) and are they suitable for the next programming period? Programmes Renewable Sources of Energy, Energy Savings and Training Centres belong among programmes with the lowest demand in this programming period. We nevertheless believe that, with a view to their important roles in supporting the development of industry and enterprise in the CR compliant with the development of all three pillars of sustainable development, favourable conditions must be created for potential project promoters within these programmes which will contribute to an increased awareness of their expediency and usefulness and increase demand for support in the respective areas. The Training Centres programme supports projects aimed at the reconstruction and modernisation of the existing facilities of companies and also at projects for the construction and equipment of new sectoral training facilities earmarked for trainings of a larger number of business entities, which provides the programme with a unique position among other programmes in the sphere of training and human resource development in the CR (OP HRD and SPD3). A programme of this type can also be fully justified in the new programming period. Our findings show that if its terms are adjusted to the actual demand and the potential of small and medium‐sized businesses, the demand for this programme should grow in near future.


Enterprise


XXI century has been under the sign of renewable sources of energy and the importance of supporting Renewable Sources of Energy and Energy Savings is indisputable. These programmes deserve much more attention and relevant promotion aimed mainly at programme target groups, but general public should also be continuously informed on the necessity, usefulness and efficiency of supporting renewables and energy conservation in general. When conditions and terms of programmes with the above targets have been adjusted in the next programming period, within the purport of the submitted recommendations justified by the experience of this programming period, we expect an increase in the attractivity of and, consequently, demand for these subsidy programmes. Programmes with the highest demand are as follows: Development We recommend to include the programme also in the next programming period. Entrepreneurs have shown significant interest in the programme and its universality enables the involvement of a wide range of entrepreneurs. Indicators of the Development programme contribute significantly to meeting the objectives of the whole OPIE. Credit, Start When assessing Credit and Start programmes, we must consider that they have been prepared by the Czech and Moravian Guarantee and Development Bank, i.e. an institution which has been providing support to businesses for many years and was active in this sphere already before the EU accession. Programmes of the CMZRB are widely known and many entrepreneurs have already opened their accounts at this bank and have established regular communication with it. We recommend this programme to be implemented in the next period especially with a view to the high rate of its achievements in physical indicators with respect to meeting the overall OPIE objectives. Marketing The Marketing programme is actually a follow‐up of the previous CzechTrade programmes implemented before the EU accession and ranks among programmes which the entrepreneurs have utilised for many years. High demand of entrepreneurs can be expected also in the next period and we can realistically assume that it will be completely disbursed. The programme has positive impacts on added value in businesses and, as Czech economy is strongly dependent on export potential, we recommend its further implementation. Real Estates By 27. November 2005, the aggregate number of 177 projects had been submitted which are now at various implementation stages. Twenty two of them have already been awarded subsidies amounting almost to CZK 794 mil. Project proposals that remain to be evaluated apply for ca CZK 3.0 bill., while the Real Estates programme avails


Enterprise


in aggregate of ca CZK 2.7 bill. High‐quality business infrastructure is an important aspect for upholding the competitiveness of Czech companies in global economy; we therefore recommend its further implementation in the next period. Innovations The Innovations programme has been suspended since 30.6.2005 due to an excess demand of entrepreneurs. Before the suspension date, 198 projects had been submitted within the programme. Innovations belong among basic cornerstones of the competitiveness of Czech companies in global economy and contribute to upholding long‐term employment. We recommend that this programme should be further implemented in the next programming period.

4.3 Summary and recommendations

Question No. 6: Has the OPIE been heading towards meeting its target values and physical objectives? When assessing the meeting of the OPIE target values and physical objectives, we can classify the programmes into two categories, namely to those for which there is a significant demand and those which do not meet with much of a demand. Programmes with the highest demand include: Development Programme Development‐I was suspended already in 2004. In March 2005, a new programme, Development‐II was published. By 28 November 2005, all projects submitted within a restricted round of call of programme Development‐II had been prepared for assessment by evaluation committees. Final sessions of the last evaluation committees were planned to be completed by the end 2005. As of the date of report, the OPIE Managing Authority availed of the results issued by evaluation committees for 93 recommended projects of the aggregate number of 220 projects submitted for evaluation to the CzechInvest headquarters. 36 applicants whose scoring is so high that, when compared to other projects, they will quite undoubtedly be placed above the “red line” drawn based on the availability of funds for the programme, have already been contacted by CzechInvest with the aim of speeding up the preparation of a formal Decision on the award of funds. 15 applications have already been rejected following negative decisions of the evaluation committees. Credit, Start Concerning Credit and Start, we must consider that they have been prepared by the Czech and Moravian Guarantee and Development Bank, i.e. an institution which has been providing support to businesses for many years and was active in this sphere already before the EU accession. Programmes of the CMZRB are widely known and


Enterprise


many entrepreneurs have already opened their accounts at this bank and have established regular communication with it. Marketing The Marketing programme is a follow‐up of the previous CzechTrade programmes implemented before the EU accession and ranks among programmes which the entrepreneurs have utilised for many years. High demand of entrepreneurs can be expected also in the next period and we can realistically assume that it will be completely disbursed. Real Estates As of 21. 12. 2005, the Ministry of Industry and Trade suspended the submission of applications for aid within the Reality programme of the OPIE co‐financed from the EU Structural Funds. The reason was the high volume of applications for aid within this programme exceeding its financial allocation. By 27. November 2005, the aggregate number of 177 projects had been submitted which are now at various implementation stages. Twenty two of them have already been awarded subsidies amounting almost to CZK 794 mil. Project proposals that remain to be evaluated apply for ca CZK 3.0 bill., while the Real Estates programme avails in aggregate of ca CZK 2.7 bill. Innovations The Innovations programme has been suspended since 30.6.2005 due to an excess demand of entrepreneurs. Before the suspension date, 198 projects had been submitted within the programme. By now, there have been 16 evaluation committee meetings within the programme. After each evaluation committee meeting, the OPIE Managing Authority takes further steps required for the administration of projects and the provision of information to successful and unsuccessful applicants. Programmes with the lowest demand (considering the number of submitted applications) include: Renewable Sources of Energy, Energy Savings Rather specific programmes linked to the environment, we expect that demand for these programmes will further grow along with the planned increases in the prices of energy which have already been launched. Further growth can also be witnessed if the CO2 limit is decreased as envisaged. Training Centres The interest in this programme has been growing and we can expect that it will continue gaining in importance. Many employers face insufficient qualification of labour, even in structurally affected regions. Projects co‐financed from the SFs within OP HRD to a certain degree compete with this programme.


Enterprise


Prosperity The programme strives to support infrastructure in order to strengthen links of research and development to industry, support infrastructure for industrial research, technological development and innovations, improve environment for technologically oriented companies. Special attention deserves the preparation of infrastructure for the establishment and operation of business incubators and science and technological parks, as well as centres for transfers of technologies. Within the measure, numerous steps have been taken ensuring easier access to the programme. It is a comparatively demanding measure requiring the cooperation of the applicant with several partners. With a view to the complexity of the programme, we can evaluate the accepted applications as of good quality. As of the reference date, physical results of projects cannot be evaluated. Clusters The programme is also supported by regional institutions, e.g. kraj offices, and its situation has been gradually improving. It is a specific programme and we cannot expect demand comparable to regular OPIE programmes. Its preparation is considerably costly and demanding. Its dynamics and mainly the quality of applications are very positive; projects are often aimed at structurally affected regions, e.g. Moravia‐Silesia. The MIT has succeeded in preparing programmes for with a large absorption capacity in the CR. The OPIE corresponds, by its content, to the target purpose of the first priority axis of the of the Community Support Framework. The OPIE is heading towards meeting its physical objectives and target values. Question No. 7: How does OPIE implementation approach the established global and specific objectives, considering the fulfilment of indicators at the level of the Programme, its priorities and measures? Are the OPIE targets and impacts being met? The available information sources clearly show that real values of physical indicators from projects approved in some programmes exceed target values and we can expect that they will be met compliant with OPIE objectives or even exceeded. We have assessed data as of 31.12.2005. Real Estates Indicator PU02/SU10 Developed business facilities and premises has already reached over 274% in approved projects. Marketing Indicator PU05/SU26 Growth of added value from production created by the supported companies has reached 127.8 % in approved projects.


Enterprise


Development Indicator Growth of added value from production, with its target value after programme completion planned for 10 % , reached 286.30 % in approved projects as of 31.12.2005. Start Indicator Share of supported women starting business (Note: In the case of Ltd./s.r.o. it is a company where a woman holds/women hold more than 50% share in the registered capital) reached 171.12 % in approved projects as of 31.12.2005. The result of this indicator in Credit programme is similar – it has reached the value of 116.56%. Innovations Indicator SU25 Number of new or innovated technologies, products and services has reached the value of 103% in approved projects. Indicator SU07 Number of joint projects of research institutes and supported companies has reached the value of 145% in approved projects. Real Estates Indicator Number of developed business facilities and premises has exceeded more than twice the value planned in the Programme Complement. The fulfilment of physical indicators in the following programmes appears as problematic: Training Centres Indicators Increase in the capacity of training facilities and Number of new and

renewed facilities are moving between 16‐37% in approved projects. Energy Savings and Renewable Sources of Energy Indicators Energy savings and Energy generated from renewable sources of energy

are at very low levels, if considering approved projects. In Measure 1.1, meeting the following physical indicators appears as problematic: SU08 Number of joint services established ‐ clusters, where the value of approved

projects has reached 60% of the planned values; SU43 Number of innovative companies supported by incubators and science and

technology parks has reached 7,33% of the planned values; SU44 Number of projects aimed at intellectual property protection has reached 2%

of the planned values. All the values issue from approved projects but already now they suggest a comparatively low innovative potential of applicants in Measure 1.1. compared e.g. to Measure 2.1.where projects approved in the Innovations programme have already exceeded the respective planned values.


Enterprise


Question No. 8: Considering the evaluation of disbursements and progress in meeting the OPIE objectives, should possible re‐allocations among measures be considered? What further changes in the OPIE might be purposeful? From the assessment of disbursements and progress in meeting the OPIE objectives, we can draw the following conclusions: 1. The MIT has prepared sufficient absorption capacities for the implementation of OPIE

programmes. Entrepreneurs showed excess demand for several measures within Priorities 1 and 2 and some programmes had to be prematurely suspended already in the first year of their implementation, namely “Development“ in 2004, “Innovations“ and “Real Estates“ in 2005.

2. On the premise of a timely administration of project applications, we can expect that

the EU funds allocated for the OPIE will be disbursed. 3. Due to high demand for programmes and delays in the selection and administration

of projects, relevant disbursements were not achieved in the first year (2004). Programmes Credit and Start have managed to process applications much more quickly and their implementation is highly efficient – good practice.

4. Start and Credit are the only programmes within the OPIE showing the first physical

results. All the envisaged indicators have exceeded their planned values and we can expect that they will meet their targets issuing from the OPIE objectives.

5. We recommend to introduce such an information system which will enable

the generation of interim data on meeting the indicator values and increase thus the quality of monitoring and evaluation.



Question No. 9: Does the OPIE implementation comply with its plan (with respect to meeting indicators and disbursing funds)?

The following table provides an overview of indicator target values for individual programmes. The table includes only those programmes and measures where some target values had been met by 31.12.2005.

Programme Title Measuring unit


Indicator value from approved projects of

31. 12. 2005




No. of supported incubators and science and technology parks

Number 15 15 0 100,00 Prosperity

No. of science and research institutions and universities involved in supported projects

Number 20 24 0 120,00

Developed business facilities and premises (new and renewed) m2 72 900

200 329 165 973 (new) 34 356 (renew.)

0 274,80

Real Estates Rate of occupancy of areas prepared for investment (brownfields, greenfields) within 1, 2 and 3 after the start of project

% 1st year (10 %) 2nd year (30 % 3rd year (50 %

100 0 ‐

Training Centres

Rate of utilisation of modernised and new training facilities, training aids or programmes within 1, 2, 3 years after start of project

% 1st year (35 %) 2nd year (60 % 3rd year (80 %

66,84 70 ‐

Start

Share of supported women starting business (Note: In the case of Ltd./s.r.o. it is a company where a woman holds/ women hold more than 50% share in the registered capital)

% min. 25 42,78 ‐ 171,12



Programme Title Measuring unit


Indicator value from approved projects of

31. 12. 2005




Credit

Share of supported women starting business (Note: In the case of Ltd./s.r.o. it is a company where a woman holds/ women hold more than 50% share in the registered capital)

% min. 25 29,14 ‐ 116,56

Develop‐ment Growth of added value from production created by the supported companies % 10 28,63 29,9 286,30

Marketing Growth of added value from production created by the supported companies % 10 12,78 ‐ 127,80

No. of new or innovated technologies, products and services Number 100 103 0 103,00

Innovat‐ions No. of joint projects of research institutes and supported companies Number 20 29 0 145,00

* Deviation from data included in the Programme Complement

The above indicators exceed targets planned in the OPIE.



Question No. 10: Were the executed re‐allocations of funds adequate to needs?

Reallocations from Measure 1.3 to Measure 1.2 and from Measure 2.3 to Measure 2.2. approved by the Monitoring Committee have addressed the current situation in the respective measures so that the expectations of the OPIE can be met both regarding the fulfilment of Programme objectives and the planned fund disbursements.

In 2004, there were zero disbursements in Measures 1.3 and 2.3; re‐allocations have therefore been aimed at utilising the funds which must be disbursed by the end of 2006. Overview of fund allocations for Priorities 1 and 2 for 2004 and 2005 before re‐allocations of funds between Measures 1.3 and 1.2; and Measures 2.3 and 2.2

Financial framework for

2004

Allocation of funds (Total) 2004


2005

Allocation of funds (Total) 2005

Thous. CZK % Thous. CZK % Priority 1 1 256 493 Priority 1 1 799 699,9 33,4

Measure 1.1 402 078 23 Measure 1.1 575 904 33,4

Measure 1.2 577 987 23 Measure 1.2 827 862 33,4

Measure 1.3 150 779 23 Measure 1.3 215 964 33,4

Measure 1.4 125 649 23 Measure 1.4 179 970 33,4

Priority 2 798 613 Priority 2 2 162 598,5 43,6

Measure 2.1 400 757 15 Measure 2.1 1 370 730,5 50

Measure 2.2 301 558 23 Measure 2.2 431 928 33,4

Measure 2.3 96 298 10 Measure 2.3 359 940 39

Source: MIT

As these re‐allocations were executed in 2005, we assume that the funds should be included in allocations for 2005. We have proceeded from this assumption in the synoptic table below showing the state after the re‐allocations. At any rate, the table is only of illustrative nature and demonstrates how the lack of disbursement in 2004 has been addressed and the issuing changes in the 2005 allocations.

Before the re‐allocation, only 13 % of yearly allocation within Measure 1.3 had been contracted as of 15.12.2005, while after the re‐allocation the amount increased to 42% as of the same date. The extension of the target group of potential project promoters within the Training Centres programme should facilitate further utilisation of the programme and increase its disbursement rate in the forthcoming months. Before the re‐allocation, only 10,3 % of yearly allocation within Measure 2.3 had been contracted as of 15.12.2005, while after the re‐allocation the amount increased to 14% as of the same date. The excessively restrictive methodology for the calculation of eligible



costs in Measure 2.3 has been amended which has offered further potential for improving the situation in programmes Renewable Energy Sources and Energy Savings. Overview of fund allocations for Priorities 1 and 2 for 2004 and 2005 after the approved re‐allocations of funds between Measures 1.3 and 1.2; and Measures 2.3 and 2.2

Source: MIT


2004


2005

Allocations of funds (Total) 2005

Thous. CZK Thous. CZK Priority 1 1 256 493 Priority 1 1 799 699,9

Measure 1.1 402 078 Measure 1.1 575 904

Measure 1.2 577 987 Measure 1.2 1 127 862

Measure 1.3 0 Measure 1.3 66 743

Measure 1.4 125 649 Measure 1.4 179 970

Priority 2 798 613 Priority 2 2 162 598,5

Measure 2.1 400 757 Measure 2.1 1 370 730,5

Measure 2.2 301 558 Measure 2.2 621 928 Measure 2.3 0 Measure 2.3 266 238



5. Recommendations 1. Changes in the allocations of funds for measures within one priority

Practically the only way that could solve the current situation in the threatened measures, while observing unified terms and conditions of the individual programmes and measures till the end of this programming period, is transferring funds to other measures within one priority. The Monitoring Committee has already taken this step; in 2005, it approved the transfer of funds from Measure 1.3 to Measure 1.2, and from Measure 2.3 to Measure 2.2. Despite the transfers executed, we recommend continuously to monitor the development in disbursements within the above Measures, especially Measure 2.3 and 2.2, and if these Measures do not prove sufficient absorption capacity, further transfers would be required, probably to Measure 2.1, respecting of course developments in 2.1. 2. Low disbursement of Technical Assistance and proposed remedial measures

Priority 3, earmarked for the OPIE Technical Assistance, is the most threatened priority. For the current programming period, we recommend to pay more attention especially to Measure 3.1. and promote activities extending consultancy and including also the evaluation of the purposefulness of the provided assistance. In the next programming period, more attention should be paid to a detailed and sound ex‐ante analysis of individual programmes and measures, incl. their absorption capacity, to a rigorous evaluation of its results and to the implementation of remedial measures in good time before launching the new operational programme. We recommend using funds in Measure 3.2 for a profound identification and solution of problems, utilising the previous experience of the OPIE for the preparation of a subsequent programme for the next programming period, based on high‐quality evaluation analyses. In order to achieve efficient disbursement of TA funds, which are also used for projects increasing the implementation efficiency, we recommend to make operational those functions within the ISOP++ IS that serve for the monitoring and planning of TA, as well as for publicity which forms a part of TA. The preparation and implementation of tenders and the administration of each TA action in the ISOP++ IS pose high demands on administration and time and must therefore be simplified so that they do not cause poor disbursement of TA funds from allocations for Priority 3 due to the preference of procedures with lower administration and time intensity offered by actions covered from the budgets of other agencies. We recommend reviewing the TA disbursement plan following a detailed analysis of aims and needs of entities involved in the current programming period and considering also the already launched preparations for the new programming period. The review of the TA disbursement plan can set up realistic requirements concerning the TA funds. The proposed TA actions should address the programme bottlenecks in a systemic way and should not support partial ad hoc solutions. The challenging nature and importance of TA management will probably enforce the establishment of an independent TA team at the SFD.



3. Measures/programmes with low numbers of submitted projects resulting in low

disbursements The findings of a questionnaire survey executed by the Economic Chamber in business community have lead to the following recommendations. The feedback between Intermediate Bodies and rejected and successful applicants should be significantly improved and a maximum volume of information on the evaluation results should be published as soon as possible after the evaluation process has been completed; lists of approved projects published should be clear and easily accessible, project promoters should receive the evaluators’ opinion and a clear justification of the evaluation results. Information on the adherence to standard procedures during the administration of applications, evaluation process, selection of high‐quality evaluators, execution of independent evaluations must be ensured. The evaluators must satisfy generally accepted and clearly defined professional qualification criteria securing an indisputable guarantee of the quality of the selected evaluators. Only a very small part of those for whom the OPIE is earmarked participate in the programme because information on the OPIE has failed to reach many of them. One third of respondents in the research claimed lack of trust in the OPIE, which actually does not mean mistrust of this specific operational programme but lack of faith in the soundness of awarding state aid in general. This again has deeper roots in the sociological climate and low trust of citizens in state administration, especially national authorities. Appropriate attention should be paid to the analysis of the causes of this mistrust and application of measures leading to increasing the trust of citizens. Over a half of successful project promoters consider meeting the requirements specified in projects as difficult and regard the preparation of project applications as demanding. There is therefore rather a large scope for more pro‐active consultancy methods concerning the administrative aspects of the preparation of applications which would contribute to decreasing the rate of applications rejected due to their failure to comply with formal requirements, or the number of projects abandoned by applicants due to high administrative demands, and decreasing also the applicant’s fear of failure. These recommendations are fully compliant with recommendations on the purposeful utilisation of funds earmarked for Technical Assistance.

4. Recommendations on increasing the interest in measures threatened the most by low numbers applications and low disbursement of the allocated funds

The Training Centres programme must be opened to those who are actively involved in the training of labour and corporate trainings and are interested in keeping qualified labour in their region, i.e. especially to non‐profit training organisations, krajs, municipalities. In some cases, the limit of support equalling CZK 30 million can be the limiting factor and we therefore recommend considering increasing the maximum size of support. Renewable Sources of Energy and Energy Savings are programmes earmarked for SMEs. This limits the scope of potential applicants which might include not only companies exceeding the size of an SME but also municipalities and regions. In the next period, these



programmes should therefore be open to a wider range of applicants both from the public and private spheres, reflecting thus the importance of supporting renewables. The programmes should also be extended to support the production of environment‐friendly fuels utilising renewables. The absorption of programmes would be improved and the disappointment of project promoters caused by delays would be significantly decreased by adhering to deadlines specified for the administration of application and evaluation procedures. The Development and Innovations programmes contribute to technological development of companies and their higher competitiveness and we recommend their implementation in the next programming period. Credit and Start programmes significantly contribute to meeting the objectives of the whole OPIE, support the start‐ups and represent thus an important element of the OPIE. Their implementation in the following period is desirable. We also recommend keeping in the next OPIE the Real Estates programme strengthening business infrastructure and Marketing strengthening the export capacity of Czech economy.

5. Amend the indicator system in OPIE • Definition and use of context indicators and global indicators describing

the development of economy as a whole Context indicators monitoring the basic macroeconomic characteristics lack unified approach. While for the indicators of GDP per caput within CSF (CO 01) and gross added value of production (CO 03) their monitoring of the whole CR is envisaged, i.e. incl. Prague, the unemployment rate indicator (CO 02) is monitored only for Objective 1 regions (excluding Prague). Due to diverse economic levels of Prague cohesion region and other (i.e. Objective 1) regions, it would be suitable to monitor the relevant intra‐regional comparison of indicators describing the level of their economic growth on the basis of both aggregated sets of data, i.e. not only values for the CR as a whole but also aggregate values for Objective 1 regions. All context indicators should be monitored in a unified way at the CSF level and should be included in the OPIE monitoring reports (and, analogically, in other operational programmes) only in the scope required by the EC. With a view to the level for which these indicators are earmarked in the first place we recommend applying the suggested approach only in the next programming period. • Definition and use of context indicators and global indicators describing the

development of unemployment rates Unemployment rate indicator (CO 2) is closely linked to indicators specifying the economic development level. We therefore recommend monitoring the unemployment rate in aggregate at the CSF level for the whole CR and for the aggregate of Objective 1 regions. With a view to the accessibility, topicality and unambiguousness of inputs, it is advisable to use for this context indicator the rate of registered unemployment monitored by the MoLSA and issuing from monthly updates of Labour Office records. Considering the level for which



the indicator is earmarked in the first place we recommend to apply the suggested approach as binding only in the next programming period. • Definition and identification of the indicator specifying the share of expenditures for

research and development in GDP Already the title of context indicator (CO 04) “R&D as % of the GDP“ lacks sufficient exactness. The monitoring of developments in costs of R&D is desirable with a view to global OPIE objectives. We therefore recommend to use an indicator specified as the “share of costs of research and development in the GDP“. It is also advisable to define the indicator more closely and specify e.g. the sectors funding research and development (sources of funding), or monitor the development of expenditures on research and development from main sources of funding, i.e. the public and private sectors. Considering the level for which the indicator is preferentially earmarked, we recommend to apply the proposed measure only in the next programming period. If the EC does not impose an other procedure, it would be suitable to monitor the indicator using the CSO data. • Definition and identification of the indicator specifying “employment in science and

technology per 1000 inhabitants“.

The content of the context indicator CO 05 “employment in science and technology per 1000 inhabitants“ is not sufficiently clearly defined. For the next programming period, we recommend to precise the indicator and specify it as a share of staff in research and development in the aggregate number of employees in national economy (based on the average registered number of employees expressed in FTE). Considering the level for which the indicator is preferentially earmarked, we recommend to apply the proposed measure only in the next programming period. If the EC does not impose an other procedure, it would be suitable to monitor the indicator using the CSO data. • Definition and use of (context) indicators earmarked for the monitoring of equal

opportunities of men and women at the CSF level Indicators aimed at monitoring the horizontal progress of equal opportunities at the level of measures related to the OPIE must be précised; their designation as “indexes” should definitely be avoided. We recommend defining them unambiguously as the share of women in the respective aggregate values of relevant indicators for the whole economy and monitoring them at the CSF level. The indicator “number of new SMEs founded by women” could be replaced by the indicator “share of SMEs founded by women in the overall number of newly established SMEs“ because this indicator for the whole national economy would be analogical to the structure of indicators applied within the OPIE implementation process. Considering the level for which the indicator is preferentially earmarked, it is recommended to apply the proposed amendment only to the next programming period. • Definition and use of (context) indicators monitoring the information society HP at the

CSF level



The indicator monitoring trends in expenditures for information and communication technologies as a percentage of GDP is suitable but its title needs précising. Other indicators included in the current set of indicators for this horizontal priority, i.e. the “number of new SMEs developing ITs and doing business in the sphere of ITs“ and “SMEs using regularly the Internet for e‐business“ are questionable considering their definitions and potential sources of reliable information. The monitoring of these indicators is linked to the OPIE global objective only indirectly and their exclusion for the next programming period can be considered. • Application of the indicator ʺgrowth of added value from production created by the

supported companiesʺ at the level of priorities and measures OPIE documentation lacks compliance in the application of indicators measuring the growth of added value from production created by the supported companies (PU 05 and SU 26). While the indicator PU 05 relates to Priority 1 in the OPIE for 2004–2006, the identical indicator SU 26 specified in the OPIE Programme Complement, as amended, is earmarked for measures or programmes aimed at meeting the objectives of OPIE Priority 2. The lack of compliance between the OPIE and its Programme Complement concerning the application of indicators measuring the “growth of added value from production by the supported companies” to priorities and measures should be eliminated. The lack of compliance should be addressed in a review amending OPIE Programme Complement for 2004‐2006. Within the review, the indicator ʺgrowth of added value from production created by the supported companiesʺ should be included among indicators monitored in Measures 1.1, 1.2, 1.3 and 1.4 of OPIE Priority 1. • Mutual links of indicators monitoring the development of employment (No. of jobs)

at the level of the OPIE, its priorities and measures. The definition of indicators monitoring the employment within the OPIE is not unified. There are indicators linked to the number gross jobs created (PU 04, SU 22, result indicator of HP Equal Opportunities), an indicator linked to the number of net jobs created (OP 03) and an indicator linked to the number of newly created jobs by region (result indicator of HP Balanced Development of Regions). Within the preparation of monitoring indicators for the next programming period, it is advisable to precise the definition of indicators of this type. It would be suitable to implement some more exact specifications already in the current programming period within the OPIE Programme Complement review, which would support the intent of using the indicator of the “number of gross jobs created” for all OPIE levels. • Definition of the indicator specifying the growth in the turnover of the supported

companies The programme documentation lacks compliance in the definition of indicators targeted at the monitoring of growth in the turnover of the supported companies (PU 06 and SU 27). While in the OPIE these indicators are specified as “increase in the turnover of supported companies“, the Programme Complement uses for them for them and the definition of links



between measures and operational objectives the designation “increase in the net turnover of supported companies “. We recommend unifying the defined specifications of indicators describing the growth in the turnover of the supported companies. The specification of this indicator should issue from the conventional indicator of the total turnover. The measure should be at least partially implemented already during the current programming period in case of reviewing the OPIE Programme Complement for 2004‐2006. • Definition of proportional monitoring indicators specifying performance

of the supported businesses The indicator “growth of added value” is not clearly defined with a view to the specification of its content. The basic OPIE documentation includes indicators specifying the “gross added value from production“ (CO 03), added value as such (OP 01, PU 05, SU 26, SU 29, SU 52), created added value (SU 28). Similarly, the indicator “growth of the productivity of labour” has not been defined based on the absolute value of economic performance for its calculation. We recommend to specify the definition of indicators ʺgrowth of added valueʺ and ʺgrowth of the productivity of labour in supported businessesʺ so that it is clear from which absolute values these proportional indicators issue. It seems to be suitable to deduce the indicator “growth of added value” from the “accounting added value” and the indicator of the productivity of labour from the turnover (or sales), or (alternatively) from the created (accounting) added value in the businesses supported. • Definition of monitoring indicators specifying the capacity of the constructed facilities The basic OPIE documentation does not follow a unified approach to the interpretation of indicators specifying the capacity of the constructed facilities so that it is closely linked to the target value and classifies the respective capacities by business facilities and premises and new and renewed buildings/structures (indicators PU 02 and SU 10). We recommend to precise the definition of the relevant indicators specifying the capacity of the constructed buildings/structures so that it is more closely linked to the quantified objective; the respective capacities should be classified by business facilities and new and renewed buildings/structures. • Unambiguous definition of the content of indicators ʺnumber of supported companies ʺ and ʺnumber of SMEs supportedʺ linked to specific aid programmes aimed at the development of business infrastructure (especially Prosperity, Real Estates and Clusters ensuring the implementation of OPIE Measures 1.1, 1.2 and 1.4)

Result indicators “number of supported companies within project implementation” (SU 35) and “number of supported SMEs” (PU 07) are not clearly defined in the programme documentation with a view to the specificities of the implementation programmes for some measures or Priority 1 (Business Environment Development).



It will be suitable to define more precisely indicators specifying the scope of support “number of supported SMEs” (and similarly ʺnumber of supported companiesʺ and “number of supported companies within project implementation“) following the nature of the respective measures or aid programmes aimed at their implementation so that it is for example clear how businesses using for their activities newly constructed capacities and recording this indicator will be evaluated (in standard or preferential regimes) and how will be evaluated businesses included in clusters in various periods of time). We recommend to amend the OPIE Programme Complement for 2004‐2006. • Definition of the indicator ʺnumber of SME start‐ups in a technologically advanced

sectorʺ The output indicator “number of SME start‐ups in a technologically advanced sector“ (SU 05) is not clearly defined in OPIE documentation. It was included in the list of indicators suggested for individual measures in the OPIE Programme. It is only an indicative list because definitions of indicators for measures or aid programmes are given in the Programme Complement. • Definition of indicators specifying the “number of SME start‐ups in a technologically

advanced sectorʺ, ʺnumber of existing SMEs developing and doing business in the sphere of information technologiesʺ (SU12) and ʺnumber of companies that have become new exportersʺ (SU 15).

The definition of indicators SU 05 (number of SME start‐ups in a technologically advanced sector) and SU 15 (number of companies that have become new exporters or export to new markets) in OPIE documentation is ambiguous. There are doubts whether these are SMEs or companies in general (as indicated by the indicator titles), or supported SMEs, or companies in general (as indicated by the indicator codes). This indicator was on the list of indicators suggested for individual measures in the OPIE. . It is only an indicative list because definitions of indicators for measures or aid programmes are given in the Programme Complement. We recommend to precise the definition of indicator “number of existing SMEs developing and doing business in the sphere of information technologiesʺ so that it is clear whether they include the supported SMEs or all SMEs. The possibility of implementing the suggested measures in the review of OPIE Programme Complement for 2004‐2006 should be considered. This indicator has been defined for loan programmes Start and Credit and includes only the supported SMEs; it has always been reported as a certain value of the aggregate number of loan agreements signed.

6. Unification of the definitions of objectives in aid programmes, through which specific measures within OPIE priorities are implemented

There are formal and methodological differences in the definitions of aid implementation programme objectives, which clearly copy the implementation structure. In the definitions of objectives, there are differences in links to specific forms (types) of support and to barriers



of business development, to the removal of which the respective implementation programme shall contribute. For the next programming period, we recommend to unify the methodology for the definition of aid programme objectives, through which the relevant OPIE measures are implemented, and in the definition of specific aid implementation programme objectives to express links to the form (type) of support and links between the aid implementation programme objective and the improvement of specific weaknesses in business environment.

7. Monitoring the impact of projects on horizontal priorities

• Monitoring of projects with positive impacts on meeting the objectives of HP the Environment

The OPIE has not defined specific objectives and indicators linked to the CSF indicator “Supported projects with positive impact on the environment“ but each half‐yearly or annual report within the monitoring system always includes information concerning the impacts of projects within the respective measure on the Community HPs, stating this indicator. For OPIE monitoring, classification of projects is used expressing their relation to the environment (projects neutral in relation to the environment, with positive impact on the environment and projects targeted mainly at the environment). Nevertheless, the project classification mentioned has not been specifically developed in OPIE documentation. We recommend to precise the classification of projects expressing their relation to HP the Environment (projects neutral in relation to the environment, with positive impact on the environment and projects targeted mainly at the environment), while applying criteria for the assessment of environmental technologies and environmental products, and the targeting of each project at a specific production type within the supported OKEČ class (e.g. production of specialised equipment for operations with significant environmental impacts – e.g. recycling and environment‐friendly liquidation of waste, waste‐water treatment plants, air protection etc.). After their more precise specification, indicators expressing the relation of projects to the HP the Environment should be considered as sufficient for the monitoring of this HP within the OPIE. Relevant indicators and their definitions should then be included in the monitoring indicators system for the measure level within the review of OPIE Programme Complement for 2004‐2006. • Monitoring of projects with positive impacts on meeting the objectives of HP Equal

Opportunities of Men and Women In OPIE monitoring, the classification of projects is used expressing their relation to the HP Equal Opportunities (projects neutral in relation to equal opportunities, with positive impact on equal opportunities and projects targeted mainly at equal opportunities). The classification applied is not specified in detail in the programme documentation (OPIE and its Programme Complement) but each half‐yearly or annual report within the monitoring system always includes information concerning the impacts of projects within the respective measure on the Community HPs, stating this indicator. We recommend to precise the classification of projects expressing their relation to the HP Equal Opportunities of men and women (projects neutral in relation to equal opportunities,



with positive impact on equal opportunities and projects targeted mainly at equal opportunities). Precise the definition of this classification e.g. linked to the ownership rate of women in the supported companies, the expected employment structure and the structure of new jobs created, specific targeting of projects (e.g. training) at women‐entrepreneurs etc. After their more precise specification, indicators expressing the relation of projects to the HP Equal Opportunities of men and women should be considered as sufficient for the monitoring of this HP within the OPIE. Relevant indicators and their definitions should then be included in the monitoring indicator system at the measure level already in the current programming period. • Monitoring of projects with positive impacts on meeting the objectives of HP

Information Society In OPIE monitoring, the classification of projects is used expressing their relation to the HP Information Society (projects neutral in relation to IS, with positive impact on IS and projects targeted mainly at IS). The classification applied is not specified in detail in the programme documentation (OPIE and its Programme Complement) but each half‐yearly or annual report within the monitoring system always includes information concerning the impacts of projects within the respective measure on the Community HPs, stating this indicator. We recommend to precise the classification of projects expressing their relation to the HP Information Society (projects neutral in relation to IS, with positive impact on IS and projects targeted mainly at IS), while using e.g. the evaluation of links to the structure of the eligible project costs (e.g. % value of the HW and SW purchased), and classify projects based on the targeting of each project at a specific production type within the supported OKEČ class. After their more precise specification, indicators expressing the relation of projects to the HP Information Society should be considered as sufficient for the monitoring of this horizontal priority within the OPIE. Relevant indicators and their definitions should then be included in the monitoring indicator system at the measure level already in the current programming period. • Monitoring of projects with positive impacts on meeting the HP Balanced

Development of Regions In OPIE monitoring, classification of projects is used expressing their relation to HP Balanced Development of Regions (projects neutral in relation to BDR, with positive impact on BDR and projects targeted mainly at BDR). The classification applied is not specified in detail in programme documentation (OPIE and its Programme Complement) but each half‐yearly or annual report within the monitoring system always includes information concerning the impacts of projects within the respective measures on Community HPs, stating also this indicator. We recommend to precise the classification of projects expressing their relation to the HP Balanced Development of Regions (projects neutral in relation to BDR, with positive impact on BDR and projects targeted mainly at BDR) and to precise this classification e.g. linked to the area in which the respective project will be implemented (especially weak and structurally affected regions) or linked to regional characteristics considering the development of intra‐regional cooperation with various levels of economic development.



After their more precise specification, indicators expressing the relation of projects to the HP Balanced Development of Regions should be considered as sufficient for the monitoring of this horizontal priority within the OPIE. Relevant indicators and their definitions should then be included in the monitoring indicator system at the measure level already in the current programming period. • Recommendations on the monitoring of HP Equal Opportunities With a view to meeting the programme objectives, it is recommendable to select such indicators which equal, or are comparable with, indicators monitored by the Czech Statistic Office at the national level, and also indicators introduced within the European Employment Strategy, or proceed from the recommendations of technical documents, e.g. the Gender Impact Manual, Equal Opportunities as a Productive Factor. When preparing programming documents for the next programming period, we recommend ensuring the compliance of the prepared documents with a unified approach to meeting the equal opportunities principle. We also recommend applying the criterion of a balanced representation of men and women in all bodies of the OPIE with decision‐making powers, including the membership on evaluation committees. For the next programming period, it will be necessary to prepare and deliver training courses for the implementation staff, aimed exclusively at deeper understanding of the equal opportunities principle, its application and the importance of this factor for the economic, demographic and regional development of our society and the labour market. • Recommendations on the monitoring of HP the Environment (Sustainable

Development) Considering the requirements laid down in the Horizontal Priority Manual and also resolutions specified for the OPIE in its Programme Complement, we recommend to follow, in the period to come, also indicators at the environmental HP level, namely for all relevant measures. • Recommendations on the monitoring of HP Balanced Development of Regions Considering the importance of regional policy, we believe that it is suitable to extend the number of indicators aimed at HP Balanced Development of Regions. As for the indicators of outputs and probably also results, they should be accessible within the OPIE monitoring system practically without any thematic limitations. • Recommendations on the monitoring of HP Information Society In compliance with the European Commission, the following recommendations on the evaluation of HP Information Society in the CR have been issued:

• Establishment of a best‐practice databank; • Discussions on methods applied in feasibility studies with project promoters

at workshops;



• Consistent classification of monitoring data by gender; • Charging the CSO with specific data collection.

These recommendations have not yet been specifically evaluated, the data has not been detected in the submitted background documents and ISOP records; 3 basic indicators introduced for the Information Society HP or indicators in specific measures with an IS element within the OPIE do not monitor the above indicators. The list of suggested indicators has been used for the preparation of recommendations on the Information Society HP. We also recommend to introduce new indicators reflecting the exponential growth of IT and update it in a period shorter than five‐years. We also recommend that 3‐ SME, use of Internet for business should be better described and further developed.

8. Definition and unification of titles and designations of monitoring indicators at various OPIE levels

In the definitions of the indicators monitored, there are differences and apparently partial inaccuracies, which may give rise to doubts on their compatibility they are monitored for projects within various measures. There are differences in the definition of the period established for monitoring using expressions like “for the last/previous year”, “for the last yearly accounting period” etc. We recommend to precise and unify the definitions of the indicators monitored and use uniform designations (titles and codes) for identical indicators at all levels of programming documentation. For the period monitored, we recommend to use a unified definition of the yearly accounting period. We recommend to implement the changes, wherever possible, in the current amended of the Programme Complement to OPIE 2004‐2006.

9. Recommendations on the topicality of data for physical evaluation The absence of topical data for physical evaluation is a bottleneck; the ISOP data still show inaccuracies and their generation is comparatively difficult and time‐consuming. We therefore recommend introducing a functional informational ISOP system with continuous outputs. The introduction of an IS is a relatively time‐ and fund‐intensive operation. Currently, the updating of indicators in the IS has been completed, but IS ISOP still needs to be fine‐tuned so that it provides data continuously and with a maximum accuracy.

10. Recommendations on low disbursement of funds as of the current date We recommend to analyse the system of launched programmes with a view to the MIT’s and CzechInvest’s administrative capacities and compare it to the system of periodic calls e.g. based on the experience of a grant scheme system for entrepreneurs within the JROP.



11. Recommendations on respecting the Horizontal Priorities Manual The Horizontal Priorities Manual has not been considered in selection criteria because it was published only after the OPIE had been prepared and issued only recommendations for Managing Authorities; we therefore recommend that the HPM be respected only during the preparation of the new OP.

12. Extend the range of evaluators The evaluation of project applications is the most significant process influencing the transparency of the whole system. Based on the previous findings, we therefore recommend extending the range of evaluators especially by including experts able to evaluate specific programmes, e.g. Innovations. They could be nominated based on recommendations of professional associations, universities etc.

13. Adopt measures preventing high turnover of labour High turnover of labour stakes large claims on a systemic induction training and involvement of new staff and seriously impacts the operation of the whole implementation system. The ability to keep experienced staff in the implementation system depends especially on the established carrier growth models, remuneration comparable with the public sphere, incl. higher motivation elements in wages, and also on other mechanisms, as e.g. high personal responsibility, internship of staff at various administration levels within the agency, internships in other ministries etc. To achieve this objective, we recommend utilising the TA funds to a maximum degree. Considering the new programming period, the current staff with their experience of implementation are key actors for setting up the new implementation system.

14. Measures eliminating high time‐intensity of controlling all FR’s documents and their archiving

Issues linked to submitting all required documents to payment requests are still unresolved. The 100% control of all documents exerts rather high time loads on the staff executing control and requires resources for archiving these documents. The introduction of mandatory audits of all state aid beneficiaries seems to be purposeful; it would be based on usual international auditors’ standards and reduce the time intensity of controlling all background documents and the linked archiving.

15. Utilise outsourcing in suitable spheres of administrative and physical control

The responsibilities of Intermediate Bodies and of the Managing Authority for the correctness of the executed tenders, analytical accountancy and all other tasks issuing from the Guidelines for Applicants pose high technical demands on the implementation staff executing controls and also on the content of controls. Carefully selected control activities can be outsourced using the TA funds.



16. Prepare clear methodology for the verification of the actual use of state aid With respect to the Managing Authority’s responsibility for the relevant and purposeful use of the awarded funds, the evaluators have not identified a clear methodology for controlling the relevance and purposeful use of the expended public funds within project implementation. The availability of this methodology would also contribute to transparent public spending during project implementation. The methodology would also increase the transparency of addressing possible irregularities, or other proceedings.

17. Share experience of individual controls in an efficient way and plan control activities in the implementation system

Because of the large numbers of control activities executed, it is necessary to coordinate the targeting of these controls and share results. The Internal Audit Working Group is responsible for sharing and coordinating experience and its utilisation for the work of internal auditors. For other types of controls (process controls, site controls of project implementation) no official communication platform has been established. As each type of control is executed by an other entity, it is suitable to establish a coordinating system when planning these activities so that various control bodies do not encounter each other at one place at the same time (especially at the offices of Intermediate Bodies and Final Recipients) or that controls are not frequently repeated in areas that have already been controlled without any serious findings.

18. Prepare a Monitoring Manual During the OPIE implementation, there have been subsequent changes in the requirements concerning monitoring information systems. At the time of the initial set‐up of MSSF‐CENTRAL, it was not completely clear what types of information would be collected in the information system. Functions generating such information were therefore not specified. At later stages, changes in the set‐up of MSSF‐CENTRAL were executed which required changes at the ISOP level. That required rather comprehensive communication between the bodies that had established the systems (MPD and MA OPIE). Those subsequent changes have partially impeded the coordination of monitoring activities, subsequent input of data in the system, the aggregation of data and have resulted in higher labour intensity. It would therefore be suitable to prepare a joint Monitoring Manual at the CSF level for all Managing Authorities. This Manual, prepared at the beginning of the next programming period, would clearly specify information which could be generated in a simple way at any time during the programme implementation – both from ISOP and from MSSF‐CENTRAL. Information systems would be set up and properly tested based on those documents. The manual should also include a methodology for potential changes in the monitoring methodology (requiring changes in the Manual), which would coordinate the developers of information systems who would be obliged to closely cooperate, within pre‐determined deadlines, and jointly define changes at all levels, considering links between the respective ISs. For better coordination of the entities involved, the establishment of an e‐room could be also useful. It would provide for quicker and more transparent communication among all the relevant monitoring staff.



19. Enable the IBs to control data in MSSF‐CENTRAL Before data are transferred from ISOP++ into MSSF‐CENTRAL, they are validated. After the data transfer into MSSF‐CENTRAL, another control must be executed verifying whether all the data transferred are intact and complete. The problem is that, although the data is complete from the point of view of ISOP, it is incomplete considering the MSSF‐CENTRAL requirements because ISOP does not need to monitor all data required by MSSF‐CENTRAL. Frequent changes in ISOP have therefore been executed which are afterwards often difficult to test. The monitoring staff cannot check the completeness of data in MSSF‐CENTRAL in a simple way. The control could be simplified if the IBs could view data through a web access to MSSF‐CENTRAL and check the correctness of data transfers. This access should have the ʺread‐onlyʺ authorisation and be restricted only to a pre‐defined set of information subject to the control of Intermediate Bodies. That means that it would not be possible to execute changes directly in MSSF‐CENTRAL but information could be searched, amended or complemented in ISOP++ and transferred again into MSSF‐CENTRAL (the IS author/contractor should be notified of serious mistakes).

20. Modify the functionality and increase the user‐friendliness of ISOP++ ISOP++ is still perceived mainly as an archiving instrument and it includes data which the Intermediate Bodies must process outside this information system. Although it is not the fault of the system, its information value (exceeding archiving) would increase if further functions were added to it. Apart from being an archiving instrument, the system should also be approached as a management information system with high logic standards and user friendliness. If a higher user‐friendliness of ISOP++ is achieved (e.g. achieving the automation of references within/between modules, increasing the speed of the system etc.) and its functions extended and made accessible to staff working with the information system (N+2 planning, etc.), the system might be utilised in greater extent for strategic decision‐making.

21. Ensure the substitutability of the OPIE monitoring staff The substitutability of staff in the sphere of OPIE monitoring is insufficient. In cases of illness, accident, sudden absence from work etc. individual members of staff often lack their immediate substitutes. Only a limited number of employees are able to prepare background documents for reports or work with ISOP++, execute certain procedures required by internal manuals etc. In case of absence of relevant people, this can impact the flexibility and updating of the system. We therefore recommend ensuring the substitutability of staff. This could be addressed through training larger numbers of employees in the respective spheres. The trainings might use e.g. the principle of shadowing the current monitoring staff or include short‐term or medium‐term internships of the staff in various departments.



22. Automate processes linked to monitoring The relevant MA and, consequently, also IB staff face excessive workloads due to the monitoring. During the implementation of various programmes, the MA and IB staff are burdened with the preparation of ad‐hoc reports and records for various purposes that could be generated in a uniform format for all operational programmes if the MSSF‐CENTRAL system were functional and included updated information. It is therefore suitable to automate some processes linked to the monitoring. Further improvement and adjustment of reports which could be generated by information systems at all levels will decrease the workloads laid on staff responsible for monitoring (who will not be forced to prepare supplementary tables etc.).

23. Unify terminology in documents concerning the monitoring There is a certain lack of accuracy and clarity in the titles of reports (e.g. lack of compliance of titles interim/mid‐term regular report vs. interim/mid‐term extraordinary report, etc.) and in their content (often these are not reports but only background documents for their preparation). There are also cases where, in practice, some activities are routinely executed but are not mentioned at all or only partially in the programme operational documentation (the documentation does not, for example, mention that monitoring reports are also prepared for TA projects). Terminology in programme implementation documentation must therefore be complemented and unified, reflecting terms in common use.



6. Conclusion In compliance with Council Regulation (EC) No. 1260/1999 laying down general provisions on the Structural Funds and its Art. 40‐43 specifying basic requirements concerning the content of the SF aid evaluation and its cycles, and further in compliance with the Recommendation of DG Regional Policy of the European Commission (Working Paper No. 9) to new Member States, the Evaluator’s team has prepared a partial mid‐term evaluation of the OPIE following the ToR issued by the Managing Authority. The implementation of Project 001/05 “Evaluation of the OPIE Mid‐term Implementation Progress “has enabled the assessment of progress achieved in OPIE implementation in the period 2004 ‐ 2005. The OPIE is responsible for a significant share of the aggregate funds allocated from the Structural Funds for Objective 1 and reaching 17,94 %. In financial terms, this allocation awarded from the European Regional Development Fund amounts to EUR 260.8 million. The evaluation has targeted at assessing the set‐up and functionality of the OPIE implementation and monitoring systems including the monitoring of individual projects. Attention has also been paid to the evaluation of the specification of the OPIE indicator target values. Last but not least, the mid‐term evaluation also included the assessment of financial progress in the OPIE implementation and its physical progress achieved. Based on a research, strengths and weaknesses of several thematic areas have been assessed. Conclusions of the analyses executed have issued in the formulation of recommendation, which can help and improve or increase the efficiency of the whole OPIE implementation system and support the preparation of a new operational programme for the next programming period 2007 – 2013. With a view to the schedule of preparatory works for programming period 2007 – 2013, it is necessary to start applying recommendations already now, as the preparation of programming documents has already been launched. Final Report on Project 001/05 “Evaluation of the OPIE Mid‐term Implementation Progress” summarises the whole Project and can be used as an independent output of the whole mid‐term evaluation process. The Evaluator’s team members are indebted to the Managing Authority’s staff (Ministry of Industry and Trade of the CR, SF Department), the Intermediate Bodies (CzechInvest, CzechTrade, Czech and Moravian Guarantee and Development Bank, Czech Energy Agency) and also to the addressed applicants and potential applicants for aid, who have offered information and suggestions contributing thus to a successful progress of the mid‐term evaluation.



Annex No. 1 – List of Relevant Documents

1. Operational Programme Industry and Enterprise for 2004 – 2006, MIT CR, Prague, December 2003

2. Programme Complement to Operational Programme Industry and Enterprise, MIT CR, of 30 April 2004, as amended and approved by the Monitoring Committee on 19 May 2005

3. OPIE Annual Report 2004, MIT CR, April 2005 4. OPIE Monthly monitoring tables of for April ‐ July 2005 5. Decree No. 18/2004 of the Minister of Industry and Trade on the implementation

of Operational Programme Industry and Enterprise within the sector of Ministry of Industry and Trade

6. Inception audit on the compliance with the regulation and system audit of the SF and CF implementing structures, Operational Programme Industry and Enterprise, Report on the assessment of compliance with regulations, 26 November 2004

7. Commentaries of the MIT CR concerning the Report on the assessment of compliance with regulations

8. Evaluation of individual OPIE programmes for 1st half of 2005, MIT CR OPIE, 30. 6. 2005

9. Implementation Manual of the Operational Programme Industry and Enterprise, versions 6/0, 6/1, 6/2 and 6/3.

10. Guidelines for Applicants and Beneficiaries of Aid from the OPIE, MIT CR, Prague, July 2005

11. Methodological approach to the evaluation of medium‐term progress in the CSF implementation, REDECo, Prague, August 2005

12. Recommendation of analyses and evaluations for Operational Programmes 2007+ 13. http://www.czechinvest.org 14. http://www.mpo.cz 15. http://www.strukturalni‐fondy.cz 16. Evaluation of 1st implementation phase, Operational Programme Industry and

Enterprise, Centre for Regional and Administrative Science, VŠE Prague, May 2005 17. Study – Transparency principle when publishing information in the sphere

of Structural Funds, MRD CR, Community Support Framework Department 18. Analysis and evaluation of bottlenecks in the Structural Funds implementation

system, and of risks of failures, MRD CR, Community Support Framework Department

19. OPIE Implementation Manual (Issue/update No.: 6/0, effective from 1 May 2005) 20. Methodological approach to the evaluation of medium‐term progress in the CSF

implementation 21. Draft methodology for SF (Objective 1) monitoring at the CSF level 22. Operational Programme Industry and Enterprise for 2004‐2006 23. Half‐yearly report on the OPIE for 2005 (October 2005) 24. Programme Complement to the Operational Programme Industry and Enterprise 25. Project 4/05 – Evaluation of medium‐term progress in the CSF implementation 26. Users’ Manual ISOP++ (version 1.04.05, version 1.00 of 22 August 2005)



27. Outputs of CSF Project 1/04 – Analysis and evaluation of bottlenecks in the Structural Funds implementation system, and of risks of failures

28. Outputs of CSF Project 6/04 Evaluation of indicators and the expediency of their definition

29. European Employment Strategy, MoLSA CR , Prague, 2005 30. National Employment Action Plan, MoLSA CR , Prague, 2005 31. Final Evaluation Report of Project CSF 4/04: Barriers to the growth of competitiveness

in the CR, MIT, Prague, June 2005 32. General principles governing implementation criteria and procedures of SFs

supporting electronic communication, MICR, November 2004 33. General principles for programmes in 2000 – 2006 (Regulation No. 344/ 1999/ EC) 34. Action Plan eEurope, 2005, National Information and Communication Policy

of the CR, March 2004 35. Manual of horizontal priorities within the Community Support Framework, Ministry

for Regional Development of the CR, Community Support Framework Department, July 2004.

36. Horizontal priorities in Structural Funds programmes, Evaluation practice and experience, Ministry for Regional Development of the Czech Republic, Community Support Framework Department, Prague, June 2006.

37. Methodological guidelines for evaluators 38. Indicators on gender equality in the European Employment Strategy (EES) 39. Equal opportunities as a productive factor 40. Bíziková, Lívia, Filadelfiová, Jarmila, Králíková Alena., Sokačová, Linda. Gender

Audit of the EU Pre‐Accession Funds 1999‐2004. Prague, Bratislava: Gender Studies, o.p.s., 2005. 35 pg. ISBN 80‐86520‐05‐6.

41. Guide to gender impact assessment Legislation in Force Applied 1. Documentation on the interface of IS MSSF Central x IS IB; 2. Methodology for financial flows and controls within SFs and FSs (appl. since 1 July

2005); 3. Module “Links to Brussels“ – Eelectronic data exchange with the EU foll. Regulation

No. 438/2001, Annex IV, into the Structural Funds Common Database; 4. EC Regulation No. 438/2001; 5. Council Regulation (EC) 1260/1999; 6. Working Document No. 8 – Annex 1; 7. Working Document No. 9 (DG Regio); 8. Technical documentation of Structural Funds 2000 – 2006 ‐ Electronic data exchange

between Member States and the European Commission; 9. Government Resolution No. 102/2002; 10. Government Resolution No. 148/2001; 11. Government Resolution No. 40/1999; 12. Personal Data Protection Act No.01/2000; 13. Act on Free Access to Information (No. 106/1999); 14. Report on Management and Control Systems foll. EC Regulation No. 438/2001, Art. 5.



Annex No. 2 – OPIE Implementation Structure

(OPIE Implementation Structure: OPIE Programme Complement of 18 February 2004)

• Managing Authority – MIT, Structural Funds Department: overall responsibility for the implementation of OPIE;

• CzechInvest – administration of most of the OPIE programmes; • CzechInvest Regional Offices – acceptance of applications, contacts with applicants; • Czech Energy Agency – evaluation of projects in the sphere of energy; • CzechTrade – evaluation of projects in the sphere of marketing; • CMRZB – implementation of soft loans; • Paying Agency – MF, Budgeting and Funding Department: overall responsibility for

financial flows; • Payment Unit – MIT, Budgeting and Funding Department: payments to applicants; • Monitoring Committee – supervision over implementation (regional, economic and

social partners), approves aid programmes;

• Control Department – executes detailed controls of min. 5% of eligible costs.

Payment Claim

Control of samples of oper.

Refund

Refunds

Supervision -implementatio

Paying Authority National Fund

Ministry of Finance

Managing Authority Structural Funds Department Ministry of Industry and Trade Payment Unit

Budgeting and Funding Department

Ministry of Industry and Trade

Control Department Ministry of Finance

Control and Internal Audit Department

Ministry of Industry and TradeCI

Final Recipient - ApplicantTax Office

Winding-up declaration, methodology, coordination, supervision over the control of samples of operations

Monitoring Committee

Fusion of funds from national and EU

budgets

Refun

Refund

CI Regional Office

CEA CzechTrade

CMRZB