Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No: 20375-MA

IMPLEMENTATION COMPLETION REPORT(35710; 3571A; 357IS; 20305)

ON A

LOAN

IN THE AMOUNT OF US$107 MILLION

TO

MALAYSIA

FOR THE

POLYTECHNIC DEVELOPMENT PROJECT

JUNE 15, 2000

Human Development Sector UnitEast Asia and Pacific Region

This document has a restricted distribution and may be used by recipients only in the performance of theirofficial duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

(Exchange Rate Effective February 1993)

Currency Unit = Ringgit (M$)M$1.00 = US$ 0.384

US$ 1.00 = M$2.605

FISCAL YEARJanuary 1 December 31

ABBREVIATIONS AND ACRONYMS

DSD Development and Supply DivisionESSP Education Sector Support ProjectHRDF Human Resources Development FundITTHO Tun Hussein Onn Technology InstituteMOE Ministry of EducationMOHR Ministry of Human Resources

MUCIA Midwest Universities Consortium for International ActivitiesNVTC National Vocational Training CouncilTAVED Technical and Vocational Education DivisionTED Technical and Vocational Education Division

Vice President: Jemal-ud-din KassumCountry Manager/Director: Julian Schweitzer

Sector Manager/Director: Alan RubyTask Team Leader/Task Manager: Omporn Regel

FOR OMCAL USE ONLY

CONTENTS

Page No.1. Project Data 12. Principal Performance Ratings I3. Assessment of Development Objective and Design, and of Quality at Entry 14. Achievement of Objective and Outputs 35. Major Factors Affecting Implementation and Outcome 56. Sustainability 67. Bank and Borrower Performance 68. Lessons Learned 89. Partner Comments 810. Additional Information 13Annex 1. Key Performance Indicators/Log Frame Matrix 14Annex 2. Project Costs and Financing 18Annex 3. Economic Costs and Benefits 20Annex 4. Bank Inputs 21Annex 5. Ratings for Achievement of Objectives/Outputs of Components 23Annex 6. Ratings of Bank and Borrower Performance 24Annex 7. List of Supporting Documents 25

This doCument has a restricted disibution and may be used by recipe only in theperformance of tr officia duties. its cantets may not otherwise be disclosed witonWorld Bank u that.

Project ID: P004309 Project Name: MY-POLYTECHNIC DEVTTeam Leader: Ompom Regel TL Unit: EASHDICR Type: Core ICR Report Date: March 16, 2000

1. Project Data

Name: MY-POLYTECHNIC DEVT L/C/TF Number: 35710; 3571A; 3571S;20305

Country/Department: MAIAAYSIA Region: East Asia and PacificRegion

Sector/subsector: ET - Higher Education

KEY DATESOriginal Revised/Actual

PCD: 04/10/91 Effective: 07/06/93 09/02/93Appraisal: 09/17/91 MTR:Approval: 03/16/93 Closing: 12/31/99 12/31/99

BorrowerlImplementing Agency: Government of Malaysia/Ministry of Education & Ministry of Human ResourcesOther Partners:

STAFF Current At AppraisalVice President: Jemal-ud-din Kassum Guatum KajiCountry Manager: Julian F. Schweitzer Callisto MadavoSector Manager: Alan RubyTeam Leader at ICR: Ompom RegelICR Primary Author: Robert L. Mcgough

2. Principal Performance Ratings

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=HighlyUnlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)

Outcome: S

Sustainability: HL

Institutional Development Impact: SU

Bank Performance: S

Borrower Performance: S

QAG (if available) ICRQuality at Entry:

Project at Risk at Any Time: No

3. Assessment of Development Objective and Design, and of Quality at Entry

3.1 Original Objective:

The project's development objectives were fully achieved. The objectives were to: (a) improve thepolytechnic system through decentralization; b) expand the training capacity of the polytechnic system; c) increasethe efficiency of the polytechnic system; d) improve the quality and availability of staff within the polytechnicsystem; e) strengthen the implementation and management capacity of the Development and Supply Division

(DSD - later changed to the Development, Privatization and Supply Division - DPSD) and Technical andVocational Education Division (TAVED - later changed to Technical Education Department - TED) of MOE; f)strengthen the capacity of Ministry of Human Resources (MOHR) to operate and maintain the Human ResourcesDevelopment Fund (HRDF); and g) strengthen the planning and research capacity of the National VocationalTraining Council (NVTC). The impact of the project was positive in all project institutions.

3.2 Revised Objective:

The objectives remained unchanged and the design was not modified. The loan agreement was amendedin January 1996 to: (i) increase the share of Bank financing for consultants' services from 80% to 100% and (ii)reallocate the cost savings of US$3.4 million from Category (6) (a) (consultants' services) to Category (1) (civilworks).

The Fifth (1985-1990), Sixth (1991-1995) and Seventh (1996-2000) Malaysia Plans and the SecondOutline Perspective Plan (1991-2000) placed a high priority on the promotion of increased private sectorinvestment and growth. The development objectives of the project supported this goal through improving theefficiency and capacity of technical education through establishing training practices that are market-oriented toreduce structural unemployment and encourage greater labor absorption and mobility. The project componentswere combined to encourage and support major reforms in a wide variety of areas including: curricula, teachertraining, introduction of new technologies and course offerings, and better linkages with industries and enhancedstudent placement (better trained graduates and more relevant job placements). The project design wascomprehensive and straightforward. The objectives were clearly conceived and were characterized by theirsimplicity and efficiency. Overall, the project design and objectives were judged to be well prepared, effective indesign and, above all, realistic in their expectations for change, cause and effect.

The project design also included a successful and innovative staff development program. Using anintemational technical assistance contractor (Midwest Universities Consortium for International Activities -MUCIA), the Government placed more than thirty technical teacher educators and administrators (for about 100consultant years) at the staff development center at the Institute Teknologi Tun Hussein Onn (ITTHO - it wasconverted to a teacher training institute from a polytechnic for the purposes of the project and as a result of itssuccess, the Government has decided to make the Institute a permanent establishment to provide training andsupport). The group effectively worked side-by-side with Malaysian counterparts to ensure that technology andteaching skills were fully transferred. Using these resources, with some additional recurrent support, ITIHO willcomplete the training of at least 3000 teachers within the next few years. This will be about 200% more teachersthan originally planned for the project. This huge effort has significantly reduced the average unit costs oftechnical teacher training as compared to typical costs for overseas fellowships. It has been estimated that therehas been a potential savings of at least US$100 million for the government. The project's unique approach toteacher training has clearly demonstrated a more cost-effective way to provide large numbers of trained technicaleducators within a national technical education delivery system.

3.3 Original Components:

Seven investment prograrns supported the project's main objectives, as follows:

Component 1 - Capacity Expansion: establishing three new polytechnics at Shah Alam, Penang (atSeberang Prai) and Johor Bahru to create abouit 13,000 additional training places.

Component 2 - Policy Reform and Institutional Strengthening: (i) establishing the structures tosupport a training system that is driven by employer demand; (ii) introducing more cost recovery andoperational efficiency; (iii) decentralizing the control of the polytechnic institutes to the extent feasible;and (iv) improving capacity utilization, teacher/student ratios, scheduling of services and the lowering ofunit costs.

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Component 3 - Staff Development: establishing a Polytechnic Staff Training Center at Batu PahatPolytechnic (this was later named Tun Hussein Onn Technology Institute - ITTHO) to train teachersincluding recruitment and training of about 1,000 new teachers and instructors for project institutions.

Component 4 - Curriculum Development: providing technical assistance to upgrade existing curriculaand develop new courses as necessary to expand the offering and service of the polytechnic system.

Component 5 - Related Studies: carrying out of three studies for the improvement of the polytechnicsystem.

Component 6 - Human Resources Development Fund (HRDF): providing technical assistance andtraining for the strengthening of HRDF.

Component 7 - National Vocational Training Council: providing technical assistance and training forthe strengthening of National Vocational Training Council.

3.4 Revised Components:Not revised.

3.5 Quality at Entry:Not available.

4. Achievement of Objective and Outputs

4.1 Outcome/achievement ofobjective:

The project met its overall development objectives. The justification for this assessment is based on: (i)satisfactory project outputs, as summarized below; (ii) sustained Government commitment throughout projectimplementation; (iii) good private sector participation; and (iv) an effective implementation agency. Based onthese factors, the overall outcome of the project is rated satisfactory.

4.2 Outputs by components:

Component 1 - Capacity Expansion: Construction works at all three polytechnics were completed onschedule and equipment was successfully installed before the closing date. Although faced with start-up delaysfrom inclement weather and contractor problems, the rescheduling of the civil works plans made implementationmore realistic and more manageable. The project design had taken into account such possible delays. Theunexpected delays at Penang were the result of additional site preparation work which involved extensive drainagework and earth-fill. Although soil studies were carried out during preparation, the complicated drainage issueswere not fully understood or addressed during project preparation. Later, these issues were effectively addressedwith inputs from both Government and Bank sources.

All site architects and engineers were well qualified and the DPSD/TED staff effectively supervised workin progress. Construction works at all three sites were well organized and well equipped. The capacity expansioncomponent was large, extremely complicated and not easy to organize and manage. Its successful implementationis a major accomplishment and the outcome of this component is rated as fully satisfactory.

Component 2 - Policy Reform and Institutional Strengthening: This component was designed tosupport the implementation of a coordinated program of reforms throughout the polytechnic system. At projectcompletion, the following were achieved: (i) a more decentralized, demand-driven polytechnic system was put inplace; (ii) a National Advisory Committee was established for the system; (iii) local-level industry/educationadvisory committees were established in all polytechnics; (iv) cost recovery policies were introduced that includedTime Share Programs with firms in existing institutions, a 25% increase in employer sponsored training and an

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establishment of student fee at RM2,000 per semester, (v) facility optimization policies were initiated for allinstitutions; and (vi) career guidance counselors were effectively introduced to reduce drop-out rates (ref. Annex 1:Key Performance Indicators). The Government provided a strong commitment to the implementation of thiscomponent. As a result, the component made excellent progress during implementation and in a number ofinstances, the activities were carried out ahead of schedule. The outcome of this component is rated as satisfactory.

Component 3 - Staff Development: Designed to improve the quality of new teachers and instructors, thecomponent has successfully trained: (i) 579 in a Master's (Technical Education) program, many of whom areserving as polytechnic lecturers and an additional 121 will complete their programs by the end of year 2000, givinga total target of 700; (ii) 740 in B.Sc. Engineering, which is above a target of 600; and (iii) 193 in Diploma coursescompared with the target of 200. For local fellowships, 110 scholarships were awarded for Bachelor degreecourses in local universities and 100 completed their training. For foreign fellowships, these programs include:129 Bachelors in hotel catering management, tourism management, fashion design, graphic design, industrialdesign and industrial design; 50 Masters in engineering and commerce and 30 in administration; and 6 Ph.Ds. inengineering, commerce and technical education. Counterpart Training. This program was designed to train 12senior lecturers to support on-going training activities in the various polytechnics and to provide future support tothe ITTHO after project completion and the departure of MUCIA. Ten lecturers have been trained under thisprogram. Continuation of the Staff Training Program: This training program at ITTHO and other localuniversities is continuing with local funding, with 360 diploma in engineering candidates, 1,080 Bachelor degreecandidates and 120 on Masters programs. The first intake was July 1997 and the expected date of completion is inyear 2003. The outcome of the training capacity-building is satisfactory.

Component 4 - Curriculum Development: Curriculum development and related equipmentidentification and specification for a group of new specialized courses was to have been completed in July 1998with the assistance of consultants under a contract with MUCIA. However, this activity was suspended due tobudget constraint during the 1997 economic downturn. By the time the consultants were asked to mobilize, theidentified specialists were not available to complete the assigmnent in 1998. To expedite this activity, the tasks ofcurriculum development and equipment listing and specification were then assigned to a team of polytechnic staff,with MUCIA validating their work. After completing the draft specifications in 1999, thirteen polytechnic staffvisited universities under MUCIA to be exposed to new curricula, equipment specifications, laboratory layout andteaching-learning materials. Following their visit, 15 MUCIA consultants visited the polytechnics in Malaysiawhere the proposed new courses were to be offered and validated the proposed curricula through visits to localindustries. A MUCIA consultant also visited Malaysia for two months to advise MOE regarding the establishmentof a career and guidance counseling system in the polytechnics. Two training courses were then conducted for 22participants from all 12 polytechnics. The system is now being institutionalized in all polytechnics. Althoughequipment for new courses can not be procured before the loan closing date, provisions had been made by theGovernment to use its own funds for this effort. The objective of this component has been partially achieved andthe activity will continue beyond the project with the full expectation that all will be satisfactory.

Component 5 - Related Studies: Significant outputs of this component include: (i) PolytechnicDevelopment Study (June 1997); (ii) Tracer Studies of Polytechnic Graduates (November 1999); and (iii) EmployerStudy (February 1999). The consultants selected to carry out these studies were well qualified and produced highquality outputs. The recommendations of these studies are being incorporated in an MOE action plan for thepolytechnics and therefore, the objective of this component has been successfully achieved.

Component 6 - Human Resources Development Fund (HRDF): This component has been successfullyimplemented. The technical assistance provided was to develop and enhance the capacity of the HRDF Secretariatin implementing the scheme to encourage private sector firms to provide company-specific training programs toupgrade the work force with specialized and up-to-date skills. Both local and overseas training activities weresuccessfully implemented and most were completed during the first year of the project implementation. ThreeHRDC staff completed short-term training in Taiwan, USA and Australia. The objectives of the component werefully achieved.

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Component 7 - National Vocational Training Council (NVTC): The objective of this component wasto strengthen the capacity of the NVTC Secretariat. The technical assistance successfully supported: a) thedevelopment of a national training philosophy and associated development strategies and action plans; b) thedevelopment of a computerized national information system for research and planning; c) the establishment of anevaluation methodology in vocational training; and d) the establishment of research methodology for identifyingtraining needs. Funding was also provided to conduct a research study to assess the skill training demand in themetal-based industries and to train staff in statistical manpower projections and in data collection and analysis.The objectives of this component have been fully achieved.

4.3 Net Present Value/Economic rate of return:

Net Present Value was not worked out in the SAR, therefore it cannot be calculated at the completion ofthe project.

4.4 Financial rate of return:

As in 4.3

4.5 Institutional development impact:

As the increased training capacity of the Polytechnic System becomes fully operational, more than 13,000additional persons will be able to access technical education/training over any given two-year period. With ademonstrated placement rate of at least 90% following graduation, the project will provide an increase of about6000 technicians and skilled workers each year. This sustained output of critically needed workers should have asignificant impact on the productivity of the nation's labor force over time.

Additional measures of institutional impact will not be available in the near future as the institutions arejust now coming on line as part of the existing polytechnic system. This ramp-up to full capacity will take abouttwo years. The Government will also conduct an impact study as a part of their continuing effort to refine anddevelop more polytechnic capacity.

5. Major Factors Affecting Implementation and Outcome

,. I Factors outside the control of government or implementing agency:

1997 Economic Crisis: The project was negatively affected by the Asian economic crisis in 1997-98 whenthe Government faced a difficult financial situation. This led to across-the-board reductions in budget allocationsfor most ministries (including MOE) and a slowdown in most project activities. The implementation of theCurriculum Development component was delayed by two years. Staff training and specification writing for newcourses were finally carried out in 1999 but this did not provide sufficient time for the procurement of equipment tosupport these courses.

5.2 Factors generally subject to government control:

Implementation Delays: Delays in MOF clearance and approval of consultant contacts and, of selectedoverseas training candidates were evident during project implementation.

5.3 Factors generally subject to implementing agency control:

Civil Works Johor Bahru- The construction was delayed due to additional time needed to obtain finalagreements with local authorities regarding site and types of program facilities required.Penang (Seberang Prai) - The construction was delayed because additional work was neededto prepare the site. This involved extensive drainage work and earth-fill. Soil surveys were

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conducted, but they were not taken into account during the preparation of the originalschedules.

Procurement The delays in the completion of the physical facilities led to further delay in equipmentprocurement. However, all equipment, except for the new courses, was successfully deliveredand installed before the closing date. Arrangements, satisfactory to the Bank, have been madeto complete all the procurement of equipment for the new courses, using local funds, after thecompletion date of the project.

5.4 Costs andfinancing:

Considerable project cost savings have been realized. The Government disbursed US$75.65 million, orabout 71% of the original loan amount of US$107 million. These cost savings were primarily the result of the1997 devaluation of the Malaysian Ringgit and the 1998 budget cuts which impacted the procurement ofequipment.

Implementation and disbursement delays: Delays in the execution of the civil works program which thenlinked to equipment procurement were the main reasons for the initial slow disbursements which steadily improvedduring implementation.

6. Sustainability

6.1 Rationale for sustainability rating:

Prospects for sustaining the project's outcomes are highly likely. At the policy level, the Governmentremains strongly committed to the promotion and development of high-quality technical and vocational training, infull partnership with employers. Successful initiatives supported under the project, such as the establishment ofITTHO for staff development and the construction of the three new polytechnics are expected to continually befunded by the Government own resources without any difficulties. Furthermore, government funding will be madeavailable during the Seventh Malaysia Plan to establish an additional three polytechnics. Funding is also availablefrom the Bank under the Education Sector Support Project (ESSP) to finance one new polytechnic in KotaKinabalu and upgrade six existing facilities.

6.2 Transition arrangement to regular operations.

Most programs supported by the project are fully integrated activities within the MOE structure and areexpected to continue. At the institutional level, the ITTHO has become a permanent institution, with theresponsibility of managing and producing teaching staff for the entire expanding polytechnic system. This is apositive move which will institutionalize professional technical teacher education and strengthen the quality ofservice delivery. Both of these will help sustain the project's achievements.

The recommendations of the three studies funded under the project are being incorporated in the MOEaction plan for the polytechnics. An impact evaluation study has also been added to the project, for completionshortly after project closing. The results of this study are intended to consolidate and improve existing monitoringand evaluation mechanisms while making them a more permanent feature of the polytechnic system.

7. Bank and Borrower Performance

Bank7.1 Lending:

Although this was a complex project on the construction side, the identification mission was able toproduce a thorough and comprehensive investment proposal that did not change much during subsequent stages ofprocessing. More than twenty quality working papers were produced and provided significant input to the

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preparation of the Polytechnic Development Study financed under the project. The preparation missions paidspecial attention to designing a training investment which was market responsive. Project development wasconsistent with the Government's technical education sector policies and in line with the Bank's policy paper onTechnical Education and Vocational Training. Preparation and appraisal teams were well staffed and appraisalwas comprehensive. However, the appraisal team over-estimated the Borrower's implementation capacity andproduced an implementation plan which was ambitious, especially for the civil works. However, this problem wasquickly recognized by the team and, in agreement with the Government, the plan was revised to bring about a morerealistic schedule. The performance indicators were well prepared and continuously updated, making tracking ofproject activities straightforward.

7.2 Supervision:

Implementation progress was adequately reported and project performance realistically rated. Problems werecorrectly identified and promptly addressed, and covenants were strictly enforced. Staff gave significant adviceand showed considerable flexibility in solving implementation issues. Supervision missions, at six-monthintervals, were adequately staffed. Relations with the Borrower were excellent throughout the project period.

7.3 Overall Bank performance:

Overall, the Bank's performance is rated satisfactory.

Borrower7.4 Preparation:

The Borrower participated actively in the project's design and preparation, and made many significantcontributions to the soundness of its concept and scope.

7.5 Government implementation performance:

Government was (and remains) strongly committed to polytechnic system. This is evidenced by its request foradditional Bank support to continue its expansion of the system. This request was approved as a part of therecently approved ESSP. Counterpart funds for the project were adequate. Covenants were in full compliance, andthere were no overdue audit reports throughout the project years.

7.6 Implementing Agency:

The performance of the implementing agency - MOEIDPSD was satisfactory. Despite some early delays inproject implementation mainly due to site preparation and the time needed during the start up phase to set up thenecessary systems and procedures, the management and coordination of this project, especially the large civilworks component, were well handled by DPSD. Procurement of equipment was achieved as scheduled butdisbursement for this component was not completed by the closing date and fell significantly short of the loanallocations by about US$ 22 million. However, objectives of the project have been fully met and all componentshave been well implemented. Staff commitment to the job was evident and initial weaknesses in procurement,disbursement and financial management were effectively addressed during implementation. The DPSD, theproject implementation unit, was well-staffed and budgeted to effectively carry out the implementation of theproject. Both the DPSD and the TED performed well in their coordination with the Bank during projectimplementation. However, closer coordination between the two units could further increase their effectiveness toimplement future external funded projects.

7.7 Overall Borrower performance:

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Overall, the Borrower's performance is rated satisfactory

8. Lessons Learned

Key lessons learned from this project are:

(a) Even large, infrastructure-based projects such as this one can be broken down into clearly designed,straight forward, and easy to understand elements which may then be formed into the components of the project.This in turn, allows for efficient implementation. It is important that, in such projects, extra effort be made duringproject preparation to be realistic in the estimates of cost, time and effort that must be made to turn the plan intoreality. Mistakes made in this process are often magnified as the implementation takes place.

(b) The use of contractor supported, in-country teacher training, can significantly reduce the costs for teachertraining as compared with the costs for international fellowships to train the samne number of teachers. Asmentioned earlier, the project clearly demonstrated the viability of this approach.

(c) As with many projects of that era, this was an input-oriented operation that did not lend itself easily to theassessment of improvements in the quality and relevance of vocational training. A future operation shouldestablish a Performance Management Framework to provide early and continuous assessment of both outcomes andimpact of the project on all stakeholders. This should include evaluations to measure the effect of investments incapacity building, improved training facilities and better-trained staff, and the cost effectiveness of public sectortraining.

9. Partner Comments

(a) Borrower/implementing agency:1. Project Objectives

The Government and the Bank on 31 December 1993 agreed on a Loan Agreement to undertake theimplementation of Polytechnic Development Project .The Project would establish three polytechnic institutes nearindustrial areas. The institutes would provide about 13,000 additional training places. The Project would alsopromote a more decentralized, demand-driven polytechnic system through the implementation of reforns inpolicies and organizational structures. Associated with these reforms the Project would increase the efficiency ofthe polytechnic system. To provide the required personnel to staff the institutes, the Project would train about 1000new teachers and instructors and 36 administrators. Loan proceed amounting up to US 107 million is disbursedthrough six categories, namely, i) civil works, ii) equipment and vehicle, iii) furniture, iv) books and materials v)training and vi) consultants' services

2. Achievement of Project Objectives

The period 1993-1999 observed remarkable efforts by the various implementation divisions to realize theobjectives of the Project. From the physical development aspect, the most crucial element in projectimplementation is the delivery of the completed projects. Unfortunately, none of the three polytechnics werecompleted on the initial targeted dates. However, the delays were mostly caused by factors beyond the control ofMinistry Of Education (MOE). Brief accounts of the implementation of each of the polytechnics are as follows:

2.1 Physical Aspect

Shah Alam Polytechnic

This was first project to get off the ground. Construction commenced on 15 November 1994 and was

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initially scheduled to be completed by 13 December 1996. However delays occurred due to the latesettlement of problems pertaining to the relocation of squatters on the project site as well as additionalrequirement by the Local Authorities imposed close the targeted completion date, particularly the need torealign the access road and its electricity supply posts. Appropriately, the contractor was given asix-month extension of time until 15 May 1997

Within this extension period some buildings were dully completed and section ally handed over to theMinistry beginning from April 1997. However, as the revised completion date approach a new problemsurfaced when the Nominated Subcontractor for built-in furniture faced financial problem and had to beterminated. The main contractor took over the uncompleted works and was further granted approximatelysix months extension of time. This took the final completion date to 27 November 1997. Despite theoutstanding furniture works, which the Ministry felt was not a hindrance, the first intake of students wassuccessfully conducted in July 1997

The original contract sum for the project was RM 67,168,000.00 but it is anticipated that the final costwill be RM 74,078,222.43, the variation of approximately 10% being additional works as well asremeasurement of items under provisional sum. Variation works were inevitable in most cases andpresented in detail to the Ministry's top management for approval before being executed.

Seberang Prai Polytechnic

Tihis was the next polytechnic to be constructed after Shah Alam Polytechnic but took the longest time tobe completed. Work commenced on I December 1994 and was originally scheduled to be completed on 25March 1998, a construction of about forty months. The nature of the proposed site, originally a paddy fieldand its soil condition warranted the lengthy construction period. As a matter of fact, the first one and halfyears were spent on earthworks and soil treatment alone.

To make matter worse, nine months after construction commenced the Local Authorities started to imposenew structure requirements that include additional drains along the perimeter of the site, the widening ofthe concrete monsoon drain that runs across the site from six to twelve meters and the lowering ofplatform way,'forced' to cater for the infrastructure necessities of upcoming surrounding developments.These additional works alone had costs the Ministry close to RM 20 millions. The new-targetedcompletion date was the set on 5 November 1998.

One of the direct consequences of the new requirement to lower the platform level of the site mentionedabove was the need to entirely redesign the external water supply and sewerage reticulation system. Assoon as the new design was ready, fresh submissions were made to the Local Authorities but they wereslow in granting appropriate approvals and thus causing a further delay to the main contractor's alreadytight schedule. As a result an additional extension time was given until 31 March 1999

By mid 1998 building works were progressing well only the external works were being hampered bydelays. Considering the acceptable condition of building the Ministry made a decision to take over somebuildings section ally beginning September 1998 to facilitate the accommodation of core administrativestaff as well as the installation of equipments and loose furniture.

By January 1999, 80 percent of the buildings had gradually been taken over. The first batch of studentswere recruited the following month after assurance from the project consultants and contractors that thebuilding that were to be occupied were safe for the students and staff.

This project is noted for its high escalation because of its unusually large variation works but as explainedearlier, more than half the amount was due to specific requirements by the Local Authorities a big portionof the remainder due to remeasurement of earthworks and piling that was originally estimated at morethan RM 32 millions. The anticipated final contract sum now stands at approximately RM 133 millions

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against the original sum of RM 94,990,000.00.

However this additional expenditure incurred on the upgrading of the surrounding infrastructure must beviewed from a more positive perspective. It was inevitable that the works had to be done, if not by theMinistry then by the Local Authorities themselves. Either way the cost would have to be sourced fromGovernment funds. Left to the Authorities, the works most likely would not be ready by the time thePolytechnic was completed and thus creating another set of problems for the Ministry.

Joher Bahru Polytechnic

This Polytechnic was the last to be launched with construction works commencing on 15 Jun 1995. It wasset in a straightforward condition almost simnilar to the Shah Alain Polytechnic and hence the completionperiod was determined at slightly over two years. The completion date was then fixed on 9 July 1997.

The main contractor started off well with this project but halfway through their progress was held up,again by matters relating to requirements of the Local Authorities. This time it was the regionalDepartment of Sewerage, which was slow in issuing comments and approval for the sewerage systemdesigned and submitted by the project consultants way before construction began. This slow process ofapproval was quite understandable as the regional department was small and had to cope with suddenburst of development in the construction of the polytechnic. For this the contractor was awarded about sixmonths of extension time, pushing the new-targeted completion date to 15 January 1998.

Construction progressed smoothly until the third quarter of 1997. At this time progress began todeteriorate due to the main contractor's poor internal management and financial problem. It wasapparent that they were beginning to be affected by the economic crisis that hit the nation at that time.In order to minimize delays, the Ministry and project consultants tried to steer the contractor but theefforts proved to be futile. Stern warnings were regularly issued and even contract termination washinted but the situation did not improve. Coupled with wet weather conditions that hampered externalworks, it was evident by the year-end that the new date of completion would not be met.

By then the contractor had completed about 80 percent of the total work and the outstanding workswere the finishing touches to the buildings and most of the external works. Upon advice by the projectconsultants the Ministry awarded another extension of time amounting to six months that establish anew completion date on 15 July 1998. In the consultant's opinion the contractor had a genuine case offinancial difficulties due to nationwide economic crisis that hit other contractors as well. Terminationof the contract was not advisable as it would involve a long process and besides, the contractor'soutstanding work was relatively small.

In June 1998 half of the buildings were taken over sectionally as they were already completed anddeemed fit by the consultants to be occupied. On 15 July 1998, the targeted final completion date, theremaining buildings and facilities were taken over just in time for the first student intake a week later.

The anticipated final contract sum now stands at approximately RM 75,000,000.00 against originalsum of RM 67,870,000.00. With this the total variation cost comes up to about 10 percent of theoriginal cost and this includes unavoidable works as well as remeasurement of qualities underprovisional sum.

2.2 Procurement Aspect

For all the three polytechnic procurement of equipment was successfully delivered and installed beforethe closing date. As for Johor Bahru Polytechnic, the original procurement operation was suspendedin early 1998 due to budget constraint. It was restarted in June 1998 but following project review in

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June 1998 and also strong recommendation to proceed together with the procurement of equipmentfor Seberang Prai. Equipment for new courses cannot be procured before the closing date. However,effort had been made to make sure that all procurement of equipment for new courses is done usingthe local fund.

2.3. Staff development and Curriculum Development Aspect

Most objectives for staff development aspects were achieved. As for curriculum development, out offifteen new proposed courses twelve were selected for implementation in the polytechnics. Generallythe project was successfully carried out. The format of the project which consisted of an initialattachment of local polytechnic staff to MUCIA's institutions and follow through by an attachment ofconsultants to the polytechnics involved were very beneficial. This format particularly enabled thelocal polytechnic staff to obtain very useful first hand experience of the set up and operation of similarcourses in established institutions.

2.4. Related Studies

All the three studies, i) Polytechnic Development Study, ii) Employer Study, and iii) Tracer Studywere successfully completed in time and yielded useful findings. The findigs have been presented atvarious forums. The respective divisions of the Technical Education Department are implementingsome of the recommendations while others are under review.

3. Major Factors Affecting the Project

Factors beyond the control of government or implementing agency

Due to changes of exchange rate from US$1.00 = RM 2.50 originally from the loan agreement to RM3.80 as a result of economic crisis in 1997-98, the borrower cannot fully utilize the loan. Related tothe economic turnoil, government had review the policy of sending officer for short-term courses anddoes it locally instead. As a result MOE were not in the position to fully spent the loan.

Factors generally subject to implementing agency control

From the physical aspect, factors affecting delay in progress implementation of projects were asfollows:

(a) Local authorities Requirements

This is a perennial problem that plagues not only the implementation of all three polytechnics butother educational projects under the ministry as well. It had singularly caused delays as well asadditional costs to the three polytechnics. There are two major issues to the problem, one is therequirement by the Authorities to provide new or upgraded drainage, access roads and water supply tocater fro surrounding developments and the other being late processing of approvals.

The Seberang Prai and Johor Bahru Polytechnics were the first development to be launched in anundeveloped area. Being the pioneer and catalyst for future growth the projects were being saddled bythe need to provide infrastructures amenities to the surrounding neighborhood. Under normalcircumstances the Ministry would pay a certain agreeable contribution cost to the Authorities but didnot expect to be burderied with the actual construction of these facilities.

It will not be as bad if the requirements were made known earlier so that the appropriate funds can besourced and the scope of work captured in the building documents but more often than not, as in thecase of the Seberang Prai Polytechnic, the requirements were imposed long after planningsubmissions were made and construction works already well ahead, leaving the Ministry with little

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choice but to treat the additional works as variation.

On matters pertaining to late approvals, the Ministry can only hope for the Local Authorities,especially the smaller ones, to strengthen their manpower and reduce bureaucracy in order to speed upthe approval process.

(b) Insufficient Supervision Manpower

With the consent of the Ministry of Finance, a site supervision team was set up for each of thePolytechnic during the period of construction. This team each comprised a Resident Architect, Clerkof Works for each of the architectural and engineering disciplines, and a general clerk. This teamplayed a crucial role in determining arnong others, the conformance, quality, workmanship andcoordination of the construction of the forty odd buildings spread over an area of hundred acres.

However the Ministry continuously faced the problem of the unattractive remuneration approved bythe Ministry of Finance for these supervisory staff, which was way below the market value.Consequently some of these posts remained vacant for a long time especially so for those of theMechanical and Electrical Clerk of Work. In the end the project suffered in terms of poorworkmanship, inefficiency and miscoordination that resulted in things turning out the way theyshould not.

To overcome this problem a proposal had been forwarded to the Ministry of Finance to included sitesupervision within the scope of the project consultants' services instead of treating it as separatepackage. A request was also made to increase the number of the site staff accordingly in order to copewith the bigger scope of future polytechnics

(c) Subcontracts

Some of the equipments used in the courses conducted by the polytechnics required specific servicesthat had to be provided earlier together with civil works such as gas and compressed air supply, sawdust and welding fume extraction system, fumace installation and the like. The Shah AlamPolytechnic alone had eight such services. Due to the specialized nature of the works separate bidswere called for each of these services with values ranging from RM 65,000.00 to RM 700,000.00. Themain problem with this arrangement was that too few bidders participated in the bidding and theoffers received were not competitive enough. Difficulties were also faced in coordinating andmonitoring the numerous subcontractors on site during construction. To overcome this problem, infuture the Ministry will group these services into fewer packages to reduce the number ofsubcontracts.

4. Evaluation of Bank's Performance

The Bank has provided significant input into the preparation and implementation of the projects. TheBank's officials had dispensed their responsibilities diligently and had contributed a great deal in materializingthis project. The Bank's personnel also were willing to discuss issues and problems faced by the implementingagency and giving advice accordingly. However, there was a lack of continuity in the interpretation ofprocurement guidelines. As Bank staff and management changed, procurement guidelines were interpreted indifferent and sometimes confusing ways.

5. Lesson Learned

The relationship between the Bank and the Borrowers has been cordial. Issues of concern werediscussed openly and attempts to resolve them were made as soon as possible. However, the MOE would also

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like to suggest to the Bank to consider the following;

(a) The Bank should be consistent and persistent in carrying out their policies and on type of informationand data to be furnished by the borrower.

(b) There should also be more flexibility and continuity given to the interpretation of the variousdocumentation requirements of the Bank.

(c) Officers involved in the Project must be able to conceptualize the standing procedure related to theProject, especially those concerning reimbursement of expenditures.

(d) Issues and problems should be addressed at the earliest possible date

(b) Cofinanciers:

(c) Other partners (NGOs/private sector):

10. Additional Information

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Annex 1. Key Performance Indicators/Log Frame Matrix

Outcome / Impact Indicators:

As with many projects of that era, this wasan input-oriented operabon that did not lenditself easily to the assessment ofimprovements in the quality and relevance ofvocational training. A future operation shouldestablish a Performance ManagementFramework to provide early and continuousassessment of both outcomes and impact ofthe project on all stakeholders. This shouldinclude evaluabons to measure the effect ofinvestments in capacity building, improvedtraining facilities and better-trained staff, andthe cost effectiveness of public sectortraining.

Output Indicators:

System Capacity Expansion

1. Additional full-time institubon on-based 10,360 students More than 13,000 student placesplaces established.

2. Additional part-time instution on-based 1,280 students More than 5,000 student places established.places

Policy Reform Issues

1. National advisory committee Committee established Established as planned.

2. Local advisory committee Committee established at existing institutions Established as planned.

Committee established at new institutons3. Local advisory committee Established as planned.

Cost Recovery

A. Time share Programs with Firms (TSP)

Initiate two pilot programs Pilot program initiated in existing institutions Pilot programs established in all newinstitutions.

Initiate full-scale program, existing Full program in existng institutons Full programs established in all existinginstitutions institutons.

Initiate full-scale program, new Full programs in new institutons Full programs are being established in newinstitutons institutons.

B. Employer Sponsored Training

Increase system participaton 25 per cent over 1991 Goal of 25% has been exceeded in mostinstitubons.

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C. Student Fee Policy

Review current fee policy Review canied out Review has been completed, new policyimplemented.

Intemal Efficiency

A. Personnel

Review teacher salary and benefit Review carried out Teacher salary review has been completedstructures and new policy implemented.

Reach optmum staffing levels in all Staffing levels reached OpUimum staffing Is still lacking, but effortsinstitugons are being made to reach optimum levels.

Employ administrators in new institutes Administrators employed All administrators have been employed.

B. Student Guidance and CounselingProgram

Introduce professional counselor in new Counselors introduced Complete.insttutions

Train 21 teacher counselors for existing 21 teachers counselors Training goals exceeded.institutionsC. Administrative Technology

Introduce computerized administrative System ntroduced Complete.system In existing institutions

Introduce computerized administrative System introduced Complete.systems In new institutons

D. Audio-Visual Aids and Ubrary Materials

Introduce use of audio-visual specialist Specialists employed Specialists were employed, some part-time.in new insttutions

Introduce use of audio-visual specialties Specialists employed Specialists were employed, some part-time.in existng institutions

Introduce use of professional librarians Ubrarians employed Professional Ubrarians were employed inin new institutions most institutions.

Introduce use of professional librarians Ubrarians employed Professional Ubrarians were employed InIn existing istitutions most institutions.

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E. Computerized Curriculum Services

Introduce use of computers in Computers introduced Computers introduced.cuniculum development in new insutibons

Introduce use of computers in Computers introduced Computers introduced.curriculum development in existinginstitubons

F. Optimum ublizabon of Fadlites

Introduce optimizaton policy Policy introduced Policy refined and introduced.

Initative optimizaton policy in new Facilites optmized Policy introduced and facilites modificatonsinstitutions initiated.

Initate optimizabon policy in existing Facilites opbmized Policy introduced and facilites modificabonsinsUtutions (1 institubons each year) initiated. New IBRD project will address all

items in 'F."

Decentralize Authority

For curiculum decision Fully impemented Fully implemented.

To establish contracted industry-based Fully implemented Fully implemented.training

To use ad hoc advisory committees Fully implemented Fully implemented.

To conduct operational research studies Fully implemented Fully implemented.

To initate training contracts Fully implemented Fully implemented.

Strengthen DPSD

Engage full-time architect for four yearsArchitect engaged Approach was modified, but spirit of the

Strengthen TED agreement was fully implemented.

Appoint Deputy Director

Dep. Director appointed TED was reorganized with a much improvedadministrative structure induding theappointment of a highly qualified and trained

Establish task force managers in key positions.

Task force established Established, findings led to thereorganizabon of the TED.

Staff Development

A. Project Center for Staff Development

Train engineering graduates aspolytechnic teachers

450 B.Sc. graduates 740 trained or currenty in training.Train engineers, commerce graduates,

home economics graduates700 graduate degrees A total of 700 trained or currentiy in training.

Train non-degree instructors

200 instructors 193 trained or in training.Counterpart training

12 counterparts 10 trained.

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B. Local Fellowships

Train selected commerce teachers 110 fellowships 100 scholarships offered and accepted.

C. Foreign Fellowships

Train bachelors degree teachers 130 degree teachers. 129 trained or in training.

Post-graduate degree programs in 56 post-graduates. 50 master degree teachers trained.specialized fields

Short-terms fellowships (3 months) in 74 fellowships Number unavailable.specialized fields

Administrator training-masters 30 degrees 30 trained or currently in training.

Administrator training-Ph.D. 6 degrees 6 Ph.Ds. trained.

Curriculum Development

Development new courses 16 courses Development complete.

Related Studies

Conduct tracer studies of existing Study completed Complete (November 1999).polytechnics

Conduct local employer surveys 3 surveys completed Complete (February 1999).

Conduct program reviews 6 reviews conducted 6 reviews complte.

Conduct Polytechnic Development Study conducted Complete (June 1997).Study

Human Resouroe Development Fund

Short terms fellowships for fund staff 10 months Complete (1994). Staff completed training inTaiwan, USA and Australia.

Consultancy services for design and 16 months Complete.implementaton of fund

National Vocational Training Council

Short-term fellowship for council staff 6 months Complete.

Consultancy services 12 months Complete.

End of project

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Annex 2. Project Costs and Financing

Proect Cost by Com onent (in US$ million equivalent)

Capacity Expansion 115.90 95.03 80Policy Refonn/Institutional Strengthening 0.20 0.18 90Staff Development 32.20 28.46 80Curriculum Development 1.20 0.80 60Related Studies 0.70 0.50 70HERD Fund 0.20 0.18 90NVTC 0.10 0.10 100

Total Baseline Cost 150.50 125.25Physical Contingencies 14.60Price Contingencies 19.90 .

Total Project Costs 185.00Total Financing Required 185.00 125.25

Project Costs by Procurement Arrangements (Apraisal Estimate) (US$ million equivalent)

.~~~~~~~~~t6 .._7 Tta C~t w 1. Works 71.30 9.00 0.00 80.30

(20.90) (3.20) (0.00) ( (24.10)2. Goods 33.40 17.00 2.00 52.40

(26.50) (11.00) (2.00) () (39.50)3. Services 0.00 0.00 34.40 34.40

(0.00) (0.00) (26.40) L (26.40)4. In-country training 0.00 0.00 0.80 0.80

(0.00) (0.00) (0.80) 0 (0.80)5. Overseas training. 0.00 0.00 14.70 14.70

(0.00) (0.00) (14.70) 0 (14.70)6. Book and Instl Mat'Is 0.00 0.00 2.00 2.00

() ~ ~~0 (1.60? ° (1.60)Total 104.70 26.00 53.90 0.00 184.60

(47.40) (14.20) (45.50) (0.00) (107.10)

Project Costs by Procurement Arrangements lActuaULatest Estimate) (US$ million eauivalent)

tP" W0Y C _ NF Totl Ost1. Works 69.40 0.00 0.00 69.40

26.94) (0.00) (26.94)2. Goods 12.01 10.60 3.02 0.00 25.63

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(7.20) (6.36) (3.02) (0.00) (16.58)3. Services 19.26 0.00 19.26

(0.00) (0.00) (19.26) (0.00) (19.26)4. In-country training 0.80 0.00 0.80

(0.00) (0.00) (0.80) (0.00) (0.80)5. Overseas training 10.98 0.00 10.98

(0.00) (0.00) (10.98) (0.00) 10.986. Book and Insti Mat'ls 1.72 1.72

()____________________ 0 1 (1.16) ( (1.16)Total 81.41 10.60 35.78 0.00 127.79

_______ ___________ (34.14) (6.36) (35.22) (0.00) (75.72)

" Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies.21 Includes civil works and goods to be procured through national shopping, consulting services, services of contracted

staff of the project management office, training, technical assistance services, and incremental operating costs related to(i) managing the project, and (ii) re-lending project funds to local govemment units.

ProJect Financing by Component (in US$ million equivalent)

,_ _ , - , . . . c ,* *D' ' : .* '0,. 9v'4 .Sn eF . ; I C oP.Civil Works and Prof. 24.10 56.20 26.94 42.46 111.8 75.6 0.0servicesEquipment 37.80 9.80 16.05 9.05 42.5 92.3 0.0Furniture 1.60 3.60 0.53 3.53 33.1 98.1 0.0Books and Insti Mat'ls 1.60 0.40 1.16 0.56 72.5 140.0 0.0In-Country Training 0.80 0.80 100.0 0.0 0.0Overseas Training 14.70 10.98 74.7 0.0 0.0Consultants related to civil 3.40 8.00 3.00 0.0 37.5 0.0worksOther consultants 23.00 19.26 83.7 0.0 0.0Total 107.00 78.00 75.72 58.60 70.8 75.1 0.0

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Annex 3: Economic Costs and Benefits

These were not calculated for this project.

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Annex 4. Bank Inputs

(a) Missions: _Stage of PrGject Cycle No. of Persons and Specialty Perform Rain

(e. 2 Economists, I FMS, etc.) Implementation DevelpmentMonthYear Count Specialty Ptogress Objective

Identification/Preparation 4 Industrial Training Specialist/11/90- 04/91 Economist/ Architect/ Technical

Education Specialist

Appraisal/Negotiation10/91 -02/93 5 Industrial Training

Specialist! Economist/Architect/ 2 - TechnicalEducation Specialists

Supervision05/93 2 Technical Education HS HS

Specialist/ ProcurementSpecialist

12/93 2 Technical Education Specialist/ HS HSProcurement Specialist

04/94 3 Technical Education Specialist/ HS HSProcurement Specialist/IndustrialTraining Specialist

11/94 2 Procurement Specialist/Industrial HS HSTraining Specialist

09/95 3 Industrial Training HS HSSpecialist/Architect/Implementation Specialist

06/96 3 Industrial Training HS HSSpecialist/Architect/Implementation Specialist

02/97 2 Technical Education Specialist! HS HSIndustrial Training Specialist

12/97 3 Industrial Training Specialist/ HS HSTechnical Education Specialist/Architect

06/98 1 Technical Education Specialist S S01/99 2 Technical Education Specialist! S S

Architect04/99 3 Technical Education Specialist/ S S

Architect/ Operations Officer10/99 3 Technical Education Specialist! S S

Architect! Operations Officer10/99 3 Technical Education Specialist! S S

Architect/ Operations Officer

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ICR10/99 3 Technical Education S S

SpecialistV Architect/Operations Officer

(b) Staff

Identification/Preparation 83.1 184.0

Appraisal/Negotiation 35.0 81.2Supervision 92.0 211.0ICR 10.0 20.0Total 220.1 496.2

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Annex 5. Ratings for Achievement of Objectives/Outputs of Components

(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)Rating

3Macro policies O H OSUOM O N * NA3Sector Policies O H *SUOM O N O NA3 Physical O H *SUOM O N O NA3 Financial O H *SUOM O N O NA

f Institutional Development 0 H * SU 0 M 0 N 0 NA3Environmental O H OSUOM O N * NA

SocialO Poverty Reduction O H OSUOM * N O NAZ Gender O H OSUOM * N O NAO Other (Please specify)

F Private sector development 0 H O SU O M 0 N 0 NA3 Public sector management 0 H O SU O M 0 N 0 NA

MOther (Please specify) O H OSUOM O N O NA

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Annex 6. Ratings of Bank and Borrower Performance

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)

6.1 Bank performance Rating

O Lending OHS OS OU OHUO Supervision OHS OS OU OHU0 Overall OHS OS OU O HU

6.2 Borrowerperformance Rating

O Preparation OHS OS O U O HUE Government implementation performance OHS O S 0 U 0 HU0 Implementation agency performance OHS OS 0 U 0 HU0 Overall OHS OS OU O HU

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Annex 7. List of Supporting Documents

IBRD Loan Agreement. April 7, 1993.IBRD Staff Appraisal Report. February 19, 1993.IBRD Final Supervision /Completion Mission Aide-Memoire. October 1999.

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