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Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No: 60066-LA
PROJECT PAPER
ON A
PROPOSED ADDITIONAL GRANT
IN THE AMOUNT OF SDR 6.4 MILLION
(US$ 10 MILLION EQUIVALENT)
TO THE
LAO PEOPLE‟S DEMOCRATIC REPUBLIC
FOR A
HEALTH SERVICES IMPROVEMENT PROJECT
May 3, 2011
Human Development Sector Unit
East Asia & Pacific Region
This document has a restricted distribution and may be used by recipients only in the
performance of their official duties. Its contents may not otherwise be disclosed without
World Bank authorization.
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CURRENCY EQUIVALENTS
(Exchange Rate Effective March 8, 2011)
Currency Unit = Kip
Kip 8,050 = US$1
US$ 1.5855 = SDR 1
FISCAL YEAR
October 1 – September 30
ABBREVIATIONS AND ACRONYMS
AF Additional Financing IFR Interim Unaudited Financial Report
ANC Antenatal Care IPD Inpatient Discharge
CAS Country Assistance Strategy ISR Implementation Status Report
CPS Country Partnership Strategy JICA Japan International Cooperation Agency
DG Director General
DGA District Grant Allocation MDG Millennium Development Goal
DHC Department of Health Care MOH Ministry of Health
DHO District Health Office MNCH Maternal, Neonatal and Child Health
DHP Department of Hygiene and Prevention OPD Outpatient Discharge
DPF Department of Planning and Finance ORAF Operational Risk Assessment Framework
DOP Department of Organization and Personnel PDO Project Development Objective
EGDP Ethnic Group Development Plan PDR People‟s Democratic Republic
EMP Environment Management Plan PHO Provincial Health Department
FM Financial Management PMU Project Management Unit
GOL Government of Lao PNC Postnatal Care
HEFs Health Equity Funds SOE Statement of Expenditures
HMIS Health Management Information System STP Sewage Treatment Plant
HRITF Health Results Innovation Trust Fund TORs Terms of Reference
HSIP Health Services Improvement Project VHVs Village Health Volunteers
ICHC Integrated Community Health Center 10MR 10 Minimum Requirements
Vice President: James W. Adams
Country Director: Annette Dixon
Country Manager Keiko Miwa
Sector Manager: Juan Pablo Uribe
Task Team Leader: Phetdara Chanthala
LAO PDR: HEALTH SERVICES IMPROVEMENT PROJECT
CONTENTS
I. Introduction ................................................................................................................................ 1
II. Background and Rationale for Additional Financing in the amount of $10 million .................. 1
III. Proposed Changes ..................................................................................................................... 3
IV. Appraisal Summary ................................................................................................................. 6
Annex 1: Results Framework and Monitoring............................................................................... 9
Annex 2: Operational Risk Assessment Framework (ORAF) ..................................................... 19
Annex 3: Detailed Description of Modified or New Project Activities ....................................... 23
Annex 4: Revised Estimate of Project Costs ............................................................................... 28
Annex 5: Revised Implementation Arrangements and Support .................................................. 29
LAO PEOPLE’S DEMOCRATIC REPUBLIC
HEALTH SERVICES IMPROVEMENT PROJECT
ADDITIONAL FINANCING
Data Sheet
Basic Information - Additional Financing (AF)
Country Director: Annette Dixon
Sector Manager/Director: Juan Pablo
Uribe
Team Leader: Phetdara Chanthala
Project ID: P124906
Expected Effectiveness Date:
September 1, 2011
Lending Instrument: Specific
Investment Loan
AF Type: additional, modified and
expanded activities
Sectors: Health (90%); Central
Government Administration (5%);
Compulsory Health Finance (5%)
Themes: Health System Performance
(P); child health (S); other
communicable diseases (S); population
and reproductive health (S); malaria
(S); nutrition and food security (S)
Environmental category: B
Expected Closing Date: June 30, 2014
Joint IFC:
Joint Level:
Basic Information - Original Project
Project ID: P074027 Environmental category: B
Project Name: Health Services
Improvement Project
Expected Closing Date: June 30, 2012
Lending Instrument: Specific
Investment Loan
Joint IFC:
Joint Level:
AF Project Financing Data
[ ] Loan [ ] Credit [ X ] Grant [ ] Guarantee [ ] Other:
Proposed terms: Standard IDA Grant terms
AF Financing Plan (US$m)
Source Total Amount (US $m)
Total Project Cost:
Cofinancing:
Borrower:
Total Bank Financing:
IBRD
IDA
New
Recommitted
12.4
2.4
10.0
Client Information
Recipient: Lao People‟s Democratic Republic
Responsible Agency: Ministry of Health
Contact Person: Dr. Khamphet Manivong, Acting Director General, Department of
Planning and Finance, Ministry of Health
Telephone No.: 856-21-223110
Fax No.: 856-21-223110
Email: [email protected]
AF Estimated Disbursements (Bank FY/US$m)
FY 12 13 14
Annual 4 3 3
Cumulative 4 7 10
Project Development Objective and Description
Original project development objective: To assist the Lao PDR to improve the health status of
the population, particularly the poor and rural population, in Project Provinces.
Revised project development objective: To assist Lao PDR to increase utilization and quality of
health services, particularly for poor women and children in rural areas in Project Provinces.
The AF will support additional and expanded activities that scale up the impact and development
effectiveness of the original Project. Specifically, the AF would support the following activities:
(a) scaling up of programs to reduce financial barriers to health services; (b) continued financing
of recurrent costs at province, district and health facility level; (c) focused investment in human
resource development; and (d) support to equipment and facility upgrading at district hospital
and health center level. These activities are expected to contribute to increased utilization and
quality of essential maternal, neonatal and child health services and, over the longer term, to
improved health outcomes.
Safeguard and Exception to Policies
Safeguard policies triggered:
Environmental Assessment (OP/BP 4.01)
Natural Habitats (OP/BP 4.04)
Forests (OP/BP 4.36)
Pest Management (OP 4.09)
Physical Cultural Resources (OP/BP 4.11)
Indigenous Peoples (OP/BP 4.10)
Involuntary Resettlement (OP/BP 4.12)
Safety of Dams (OP/BP 4.37)
Projects on International Waterways (OP/BP 7.50)
Projects in Disputed Areas (OP/BP 7.60)
[ X ]Yes [ ] No
[ ]Yes [X ] No
[ ]Yes [X ] No
[ ]Yes [X ] No
[ ]Yes [X ] No
[ X ]Yes [ ] No
[ ]Yes [X ] No
[ ]Yes [X ] No
[ ]Yes [X ] No
[ ]Yes [X ] No
Does the project require any waivers of Bank policies?
Have these been endorsed or approved by Bank management?
[ ]Yes [X ] No
[ ]Yes [ ] No
Conditions and Legal Covenants:
Financing Agreement
Reference
Description of
Condition/Covenant
Date Due
4.01. a The Recipient adopts an
updated Financial
Management Manual and a
Project Implementation Plan
acceptable to the Association
Effectiveness
4.01. b Appoints a consultant to assist
the Project director with
Project implementation, with
terms of reference and
qualifications acceptable to
the Association
Effectiveness
1
I. Introduction
1. This Project Paper seeks the approval of the Executive Directors to provide an additional
grant in an amount of SDR 6.4 million (US$10 million equivalent) to Lao People‟s Democratic
Republic Health Services Improvement Project, P074027, Grant Number H183-LA.
2. The proposed additional grant would support expanded activities that scale up the impact
and development effectiveness in line with OP13.20. The Project will be restructured (first order)
in conjunction with the preparation of additional financing (AF) to adjust the formulation of the
Project Development Objective (PDO), and to reflect the scale-up of some activities, and
modifications to implementation arrangements aimed at enhancing the Ministry of Health
(MOH) ownership of the Project. The original IDA Grant will be extended by 12 months.
3. The Project will be co-financed in the amount of US$2.4 million from the Health Results
Innovation Trust Fund (HRITF). Meanwhile, the Project seeks to minimize the risks of donor
fragmentation by focusing on working closely with the Government of Lao PDR (GOL) and
development partners to coordinate support for implementation of supported activities. To this
end, the team worked actively with Lux-Development, ADB, JICA, and UN partners, among
others, as part of the preparation process.
II. Background and Rationale for Additional Financing in the amount of $10 million
4. The AF will continue to support the second objective of the Country Assistance Strategy
(CAS) through strengthened public financial management (FM) and service delivery capacities
and targeted poverty reduction programs (the 2nd of 4 objectives of the 2005 CAS). The support
also aligns with the third objective of the CAS, namely to adopt a strategic approach to capacity
development and partnerships for better National Growth and Poverty Eradication Strategy
results; this has included stronger capacities to develop and implement priority sector strategies,
greater involvement of communities, and outreach with civil society and mass-based
organizations. A new Country Partnership Strategy (CPS) is currently under preparation, which
is expected to maintain achievement of Millennium Development Goals (MDGs) 1, 4 and 5 as
priority areas for World Bank engagement.
5. The original IDA Grant became effective on February 22, 2006, with financing of SDR
10.4 million (US$15 million equivalent). The PDO was to assist the Lao PDR to improve the
health status of its population, particularly the poor and rural population, in Project Provinces.
The Project was initially implemented in eight central and southern Provinces, but the coverage
has been reduced due to the subsequent merging of two Provinces and the initiation of support
from Lux-Development to the central Provinces; Project support was re-focused and currently is
centered on five southern Provinces. The proposed restructuring will include the foregoing
changes.
6. The Project has supported a number of activities aimed at strengthening the health sector.
These have included: (a) expanding access to, and improving the delivery of, a basic package of
health services in Project Provinces through financing recurrent costs for service delivery, with a
focus on outreach activities; (b) building institutional capacity, both technical and managerial, in
2
the health workforce through support to medical education, including associated civil works; and
(c) improving the equity, efficiency and sustainability of health care financing piloting of health
financing schemes, including Health Equity Funds (HEFs) and free deliveries, and strengthening
of the Health Management Information System (HMIS). These activities will be scaled up
through financing under the existing components.
7. The Project has contributed to significant achievements in the Lao PDR health sector.
Through the District Grant Allocation (DGA), the Project has provided recurrent financing to
districts and health centers to support outreach services, including immunization, in the context
of a very low level of facility attendance. The Project has supported a broad range of training
activities, including the expansion of two new cadres of health care workers to address human
resource gaps and promote improved opportunities for ethnic minority representation in the
health profession (e.g. Primary Health Care Workers have been recruited from rural
communities, trained and placed at local health centers, and Community Midwives have been
trained to improve the quality of midwifery services). Village Health Committees, Village Health
Volunteers (VHVs) and Traditional Birth Attendants have been trained and provided with
Village Drug Kits to improve community-based health services. The Project‟s support to the
development of an HMIS has contributed to increased availability of information on health
services and improved timeliness and completeness of reporting on health service utilization and
outcomes. The Project has also supported innovative health financing pilots, including the
development of a Free Delivery Pilot (in two districts) to assess the feasibility and impact of
reducing the financial barriers to facility-based delivery, and an expansion of HEFs to provide
user fee exemptions for poor households (as of June, 2010, HEFs were present in 38 districts
nationwide, 9 of which were supported by HSIP). These pilots have helped shape emerging
health sector policies related to the recent decree promulgated by the GOL to provide free
maternal, neonatal and child health (MNCH) services as well as efforts to develop a
comprehensive national health insurance system. Finally, the Project has led to improved
infrastructure for both medical training and service delivery facilities at both the central and
decentralized levels.
8. Progress towards achieving the PDO and overall implementation progress has been rated
as satisfactory in the most recent implementation status reports (ISRs), and was rated as
moderately likely in the Quality Assessment of the Lending Portfolio which was completed in
December 2010. The Project has currently disbursed SDR 8.86 million (US$13.5 million
equivalent), representing 85% of the financing. Key activities identified in the Project Appraisal
Document and Implementation Plan have largely been completed, and the bulk of the balance is
already committed to finance civil works, including waste water treatment activities. Although
data still suffer from a number of weaknesses, they suggest that the Project has either already
achieved or is on track to achieve end-point goals for the Project intermediate and outcome
indicators as shown in Table 1.
3
Table 1: Progress on outcome and intermediate project indicators Baseline 2006-
2007
2007-
2008
2008-
2009
2009-
2010
EOP
target
Percentage of children under 1 year of age immunized with DPT3 40% 50% 53% 59% 66% 70%
Percentage of children 12-23 months immunized against measles 33% 54% 49% 56% 57% 65%
Percentage of births attended by trained health personnel 16% 34% 40% 29% 35% 25%
Percentage of pregnant women receiving TT2 36% 32% 33% 29% 37% 45%
Percentage of women practicing modern contraceptive methods
obtained from public health facilities
17% 25% 20% 29% 34% 40%
Curative visits per capita to Health Centers 0.05 0.14 0.18 0.17 0.26 0.20
Note: Denominator using MOH publication “estimated population" (based on census), except for “curative visits”
per capita, which is based on HSIP village based information. It should be noted that coverage, completeness and
data collection procedures have changed over time, resulting in potential bias in trends. The baseline data are likely
to be particularly problematic as a functioning HMIS was not in place at the time and data were collected through
teams reviewing administrative records retrospectively.
9. With the approval of a new policy to provide free services to pregnant women and
children under five, the GOL has requested AF to HSIP to expand the scope of the free delivery
pilot, while also introducing financing for child health services and continuing support to human
resource development and service delivery capacity. Support in these areas is expected to
enhance the development impact of the Project, and also improve the prospect that key programs
and interventions will be sustained. While the team considered other means of supporting the
MOH, including preparation of a new Project, given that the core elements of the requested
support comprise scaling up or modifications of ongoing support under HSIP, utilizing AF was
deemed to be the most cost-effective approach to respond to the request from the GOL.
III. Proposed Changes
10. The AF will support additional and expanded activities that scale up the impact and
development effectiveness of the original Project. Specifically, the following activities will be
supported: (a) scaling up of programs to reduce financial barriers to health services; (b)
continued financing of recurrent costs at province, district and health facility level; (c) focused
investment in human resource development; and (d) support to equipment and facility upgrading
at district hospital and HC level. The Project will be restructured (first order) in conjunction with
the preparation of AF to adjust the formulation of the Project Development Objective (PDO),
and to reflect the scale-up of some activities, and modifications to implementation arrangements
aimed at enhancing the MOH ownership of the Project. The original IDA Grant will be extended
by 12 months, and the AF will have a closing date of June 30, 2014. Details for the changes,
summarized below, are provided in Annex 3.
11. Additional Financing. The anticipated changes to activities as a result of the AF to be
provided are as follows:
Part A: Improving the Quality and Utilization of Health Services. In addition to the
activities currently supported by this component, support will be provided for free child
(under five) health services and other RBF pilots in the Project Provinces. The project
will also provide support to minor facility upgrading (civil works) and equipment to
4
support delivery of MCH services, with a focus on health centers and district hospitals.
Focus on ethnic groups will be mainstreamed in project components (i.e., community
strategy for free MCH service policy, opportunities for training by ethnic group staff,
etc.)
Part B: Strengthening Institutional Capacity for Health Service Provision. Changes to
the activities include focusing on increasing impact of training activities, as well as
training of community midwives and other cadres. No civil works or equipment will be
provided to central or provincial hospitals. Financing for Project management remains,
but institutional arrangements changed through shift of project directorship to Director of
Planning and Finance of MOH and involvement of line departments in selection and
management of project consultants.
Part C: Improving Equity, Efficiency and Sustainability of Health Care Financing.
Continued support to the HMIS, while including the possibility of financing other
surveys. Support for HEFs will continue at the same scale, but with increased efforts to
improve targeting and learning lessons for replicating outside existing HEF Districts.
12. Restructuring and extension of the original grant. The Project will be restructured
concurrently with the processing of the AF as follows:
Modification of PDO. The PDO will be changed to focus on coverage and utilization of
key health services and interventions rather than health outcomes. The proposed PDO is
“to assist the Lao PDR to increase utilization and quality of health services, particularly
for poor women and children in rural areas in Project Provinces”. The revised PDO
focuses on changes that are more amenable and attributable to Project support, and less
susceptible to confounding influences.
Change in Project Coverage. The geographic coverage of the Project will be changed to
reflect that support is being provided to five (not eight) Provinces.
Change in results framework. The results framework will be adjusted to reflect the
change in the PDO and Project geographic coverage, and align with key MOH indicators
which are being captured by the HMIS (see Table 2 and Annex 1).
Modification in Project design. The Project‟s design will be adjusted to provide more
flexibility in activities to be supported, and reflect activities supported through the AF.
Extension of closing date of the original grant. The closing date of the original Grant
will be extended by 12 months to allow for completion of civil works and waste water
treatment systems at 3 hospitals.
Re-allocation of Project proceeds. The Project proceeds will be reallocated as a result of
differences in cost or implementation of some activities relative to the original plan.
Institutional and implementation arrangements during the extension period will be
largely retained, with modifications for the AF designed to address concerns about lack
of ownership by MOH technical departments.
5
Table 2: Project outcome indicators
Indicator Original
target
Changes with AF Revised target
Infant Mortality Rate 75/1,000 Dropped n.a
Under 5 Mortality Rate 95/1,000 Dropped n.a.
Percentage of children under 1 year of age
immunized against measles
65% Percentage of children 12-23 months of
age immunized against measles
90
Percentage of children under 1 year of age who
have received DPT3
70% Continued 90
Percentage of pregnant women receiving TT2 45% Dropped
Percentage of births attended by trained health
personnel
25% Continued 50
Curative visits per capita to health centers 0.2 OPD cases per capita at public health
centers and district hospitals
0.4
Number of district hospitals that meet the 10
minimum requirements
n.a. New indicator to be
determined
Percentage of villages receiving outreach (via
Health Days, Integrated Outreach and/or Mobile
Clinics) visits according to the agreed schedule
n.a. New indicator to be
determined
Project beneficiaries n.a. New indicator (core) to be
determined
Table 3: Costs by component from IDA financing
Component Original cost Changes with AF Revised cost
1: Improving the Quality and Utilization of Health
Services
5.12
5.03 10.15
2: Strengthening Institutional Capacity for Health
Service Provision
8.59
3.69 12.28
3: Improving Equity, Efficiency and Sustainability of
Health Care Financing
1.29
1.28 2.57
Total 15 10.00 25.00
13. The Project will be co-financed in the amount of US$2.4 million from the HRITF. This
co-financing will apply specifically for results-based financing (RBF) activities, which is
understood as financing based on verified outputs or outcomes. All RBF support will be
disbursed under that category, as indicated in Annex 4. RBF was implemented under the original
Project under the HEF and the free delivery pilots. In both cases, health facilities were paid on
the basis of the volume of service provided (case-based payment). The use of RBF will be
expanded under AF as follows:
Continued use of output-based payment for a comprehensive package of services under
HEFs;
Geographic expansion of implementation of free deliveries using payment based on
volume of services, and gradual introduction of output-based payment for child inpatient
services;
Introduction of RBF as a mechanism for financing outreach services; and,
Piloting and evaluation of approaches to use performance incentives for RBF to improve
the quality of hospital services (deliveries and child inpatient services) and to expand
coverage of services provided through outreach.
6
14. The verification mechanism for HEF will remain the contracted third party agency. For
free deliveries, verification will be based on arrangements under the ongoing pilot. However, it
will be enhanced to include both the current internal verification system as well as the use of
independent entity/auditor to provide assurance on the outputs produced. An ongoing FM
assessment will inform the specific approach, and a revised free delivery manual acceptable to
the World Bank shall be submitted together with the first annual work plan and budget.
Similarly, procedures for verification of outreach and hospital quality, using community and
internal (MOH) verification, as well as external spot checks, will be developed based on the FM
assessment and will be submitted with the work plan and budget.
15. The institutional and implementation arrangements will be adjusted to address concerns
about a lack of ownership by MOH technical departments under the original project, while at the
same time ensuring sustained capacity to implement planned activities. The Project will continue
to be executed by the MOH, with the existing Steering Committee providing overall policy
direction and guidance. As previously, the Department of Planning and Finance (DPF) will be
responsible for the overall coordination and management of the project. However, the Director
General (DG) will take on the role as Project Director. The DPF will be supported by dedicated,
full-time Coordinator, Procurement Specialist, FM Specialist, Administration Officer,
Accountant and Cashier reporting to the Project Director. They will be all co-located at the DPF.
Current FM and procurement staff may be retained in order to ensure continuity. It is also
expected that an engineer will be retained under the original project to supervise remaining civil
works. Other positions would be recruited competitively on the basis of well-defined revised
terms of references that will include capacity building and training of MOH and relevant
Department counterparts.
IV. Appraisal Summary
16. The economic analysis undertaken for the original Project concluded that a strong
rationale existed for the Project to provide support to the health system, and that the Project was
likely to be pro-poor. With the strong pro-poor nature of the activities proposed for continuation
under the AF, along with the elimination of civil works, it is expected that the Project will
continue to have a strong economic justification.
17. In terms of sustainability, the original economic analysis concluded that the recurrent
costs that would be incurred by the civil works supported by the Project would be manageable
given the projected increase in the level of recurrent GOL budget allocated to the health sector.
The recurrent cost implications of civil works and equipment under AF will be limited, and there
is not deemed to be a significant sustainability risk. The expansion of the free delivery pilot and
the introduction of free child health services will clearly have important long-term financing
implications. As part of the AF preparation process, the World Bank has provided support to the
MOH to cost the national strategy and review different scenarios and options for design and
implementation. The option chosen by the MOH (financing services in provincial hospitals and
below) represents an appropriate way to manage costs without compromising coverage. The cost
of this scenario for the whole country amounts to US$16.1 million for the next three years, with
7
actual costs likely to be lower due to phased implementation1. In the short term, implementation
will be supported by the HSIP AF and other development partners, but the Government has also
indicated a commitment to co-finance implementation, starting in FY2011/12. Overall,
domestically financed government spending on health is expected to increase significantly over
the coming years, reflecting a policy commitment to increase the share of social spending in the
budget (as part of the 7th
National Socioeconomic Development Plan). Given this commitment,
as well as growing revenues from natural resources, financing of the free MCH services policy is
deemed sustainable.
18. An FM assessment was carried out during pre-appraisal and updated again during
appraisal. It built upon previous assessment performed since May 2005, which was deemed to
meet the requirement of OP/BP 10.02, and additional information obtained in relation to
implementation arrangements and project activities during the pre-appraisal and appraisal
mission. The main risks that could impact the achievement of the project‟s development
objectives would be misuse of resources due to weak FM capacity and inadequate resources at
all levels. Current resources could be overstretched due to the scaling up and introduction of
pilot activities. Scaling up of current free delivery activity also increases the risk of misuse of
funds and will require strengthened verification procedures. To address these risks, a number of
mitigation measures have been proposed, discussed and agreed at appraisal (see details in Annex
5).
19. A Procurement Capacity Assessment of the Project Implementing Agency was carried
out a Bank procurement accredited staff during February 2011. Considering the limited
procurement experience of the DPF staff itself, and also keeping in view the broader fiduciary
risks in Lao PDR in the context of a weak procurement environment in the country, the
procurement risk under the AF was assessed as being “Substantial”. However, mitigation
measures have been agreed on which include continuation, subject to satisfactory performance
and need, of the existing Procurement Specialist and other supporting procurement consultants
who have been carrying out procurement under the current HSIP and will continue to work on
the remaining activities of HSIP as well as carry out procurement under the AF. Other mitigation
measures have also been agreed on (see Annex 5). Based on these, the residual procurement risk
is assessed as “Moderate”
20. Safeguards: HSIP AF is not expected to create any potential indirect and/or long term
negative impacts. Project activities are likely to be positive since these will contribute to better
services, including for non-Lao Thai ethnic groups and improved environmental conditions in
the health facilities. The original Project triggered Environmental Assessment (OP/BP 4.01) and
Indigenous Peoples (OP/BP 4.10). Given the AF will support scaling up of activities already on-
going under the parent Project, with a view to enhancing the impact and development
effectiveness, the same safeguard policies have been triggered for the AF. Civil works to be
supported under the Project will be minor building maintenance works, (such as simple
refurbishment of existing structures) which will not require any acquisition of private land or
damage to / loss of private assets, hence OP/BP 4.12 on involuntary resettlement is not triggered.
MOH already has experience in implementing Environment Management Plans (EMPs), which
1 This includes free deliveries, antenatal care (ANC), post natal care (PNC) for pregnant women; in-patient
discharge (IPD) and outpatient discharge (OPD) for children under five; transport and food allowance.
8
the AF would build on. The Ethnic Group Development Plan (EGDP) developed for HSIP
remains a relevant instrument for ensuring that Project activities benefit all ethnic groups in the
project areas.
21. However, financing of deliveries and child health services will be expanded under AF in
line with the new government “free maternal and child health services” policy. It is expected to
benefit all households in the targeted communities, including groups that meet World Bank
identification as indigenous persons. In order to ensure that the program is designed and
implemented in a manner consistent with this goal, the MOH, in collaboration with Provincial
and District Health Offices, will undertake consultation with communities and other local
stakeholders prior to implementation. This process will serve to inform community members
about benefits under the program, and the details of how it will work. For ethnic groups that have
been assessed by the task team as indigenous persons according to OP/BP4.10, the consultation
with them will be well documented to show free, prior, and informed consultation leading to
broad community support at the level of ethnic communities before any program can proceed in
a specific ethnic community.
22. Project risks are identified in the ORAF, and the overall risk rating by the Project team is
Medium-I. The AF will build on activities and implementation arrangements that have been
tested, and lessons from implementing the original Project have been taken into account in
preparing the AF. These facts help mitigate both implementation and fiduciary risk. There are
continued concerns about capacity and the internal organization and management of the MOH,
and uncertainty about future MOH leadership. Adverse developments in relation to these
institutional factors would potentially have a large impact on Project implementation, but the
likelihood of them materializing is considered low.
9
Annex 1: Results Framework and Monitoring
LAO PDR: Health Services Improvement Project Additional Financing
Results Framework
Revisions to the Results Framework Comments/
Rationale for Change
PDO
Current (PAD) Proposed
To assist the Lao PDR to
improve the health status of
the population, particularly the
poor and rural population, in
Project Provinces.
To assist the Lao PDR to increase
utilization and quality of health services
for poor women and children, in particular
in rural areas in Project Provinces.
The revised PDO focuses on
changes that are more directly
attributable to Project support.
Progress will be more easily
assessed using existing routine data
and limited additional survey data.
PDO indicators
Current (PAD) Proposed change*
Infant Mortality Rate Dropped Data not routinely available
Under 5 Mortality Rate Dropped Data not routinely available
Percentage of children 9-23
months of age immunized
against measles
Changed. Percentage of children under
1year of age immunized against measles
Alignment with EPI indicator
Percentage of children under 1
year of age who have received
DPT3
Continued
Percentage of pregnant women
receiving TT2
Dropped The indicator as it is collected in
HMIS does not measure
improvements in TT2 coverage
because it does not take into
account women who are already
immunized in the denominator.
Percentage of births attended
by trained health personnel
Continued
Percentage of women
practicing modern
contraceptive methods
obtained from public health
facilities
Move to component 1 Not a PDO indicator
Curative visits per capita to
health centers
Changed. OPD cases per capita at public
health centers and district hospitals
Less ambiguous and consistent
with HMIS (data aggregated for
health center and district hospital)
New. Number of district hospitals that
meet the 10 minimum requirements
Indicator used as a proxy of quality
of care and for RBF payment
New. Percentage of villages receiving
outreach (via health days, integrated
outreach and/or mobile clinics) visits
according to the agreed schedule
Captures progress towards PDO as
outreach is an important means of
reaching rural populations. Used
for RBF payment
New. Number of skilled birth attendants
working in health centers and district
hospitals
Monitors progress under HSIP AF
10
Revisions to the Results Framework Comments/
Rationale for Change
Intermediate Results indicators
Current (PAD) Proposed change*
Number of pregnant women
with 2 or more antenatal care
contacts with trained health
personnel
Revised. Number of pregnant women
receiving antenatal care during a visit to a
health provider
Alignment with core indicator
Number of impregnated bed
nets per person residing in
high-risk villages
Continued. No support under AF. Continued
but no new targets or updated data
under AF
Percentage of villages with
village drug kit maintaining a
minimum of 4 essential drugs
Continued. No support under AF. Continued
but no new targets or updated data
under AF
Number of outpatient
consultations per capita at
District and inter-District
hospitals
Dropped Duplication with PDO indicator
“OPD cases per capita at public
health centers and district
hospitals”
Hospital bed occupancy rates
at District and inter-District
hospitals
Revised. In-patient Department discharges
per capita at district hospitals
Utilization is better captured by in-
patient Department discharges
Number of operational
Integrated Community Health
Centers (ICHC)
Continued. No support under AF. Continued
but no new targets or updated data
under AF
Number of Province Hospitals
rehabilitated and equipped
Revised. Health facilities constructed,
renovated, and/or equipped
Alignment with core indicators
(includes Province Hospitals,
District hospitals and Health
Centers)
Number of District Hospitals
rehabilitated and equipped
Dropped Included in the above core
indicator
Number of Health Centers
rehabilitated or equipped
Dropped Included in the above indicator
Number of Districts
completing at least 80% of
planned activities
Dropped Indicator not found to be sensitive
and reliable
Percentage of women practicing modern
contraceptive methods obtained from
public health facilities
Moved from PDO indicator level.
New. Percentage of deliveries occurring in
a health facility
New. Will capture the change in
utilization resulting from the
implementation of the free delivery
policy in the Project provinces.
New. Number of children immunized New. Core indicator.
Number of Family Medicine
Interns trained
Continued No support under AF. Continued
but no new targets or updated data
under AF
Number of ethnic minorities
and students from remote areas
trained
Continued
Percentage of ethnic
minorities and students from
remote areas trained, actively
working as PHC workers in
own community
Dropped Indicator was not collected during
the original Project
11
Revisions to the Results Framework Comments/
Rationale for Change Planned in-service and short-
term training programs are
carried out in a timely manner
for PHO, DHO, district
hospitals, health centers and
VHVs personnel
Revised. Number of health personnel
receiving training
Alignment with core indicator
Number of Districts accredited
for financial management
capacity
Dropped Efforts to improve capacity
building on financial management
will be sustained but not
accreditation due to difficulties
encountered during the original
Project
New. Number of faculty at provincial
training institutions trained
Monitors progress under HSIP AF
Number of poor assisted by
NGOs with payment for health
care costs
Revised. Number of people assisted by
HEFs for the payment of health care costs
(including free outpatient care and free
ANC/PNC pilots)
Better alignment to Project‟s
activities and recognition that it is
not possible to check whether
people are poor with routine data
Number of districts
implementing new HMIS
Continued HMIS is already implemented
New. Percentage of districts submitting
HMIS quarterly reports on time
Number of policy studies
completed
Dropped Indicator was not collected during
the original Project
New. Number of districts implementing
free deliveries
Alignment to AF activities
New. Number of districts implementing
free inpatient care for children under 5
Alignment to AF activities
New. Percentage of Health Centers that
received supervision according to the
MOH agreed model and schedule
Alignment to AF activities
* Indicate if the indicator is Dropped, Continued, New, Revised, or if there is a change in the end of project target value
12
REVISED PROJECT RESULTS FRAMEWORK2
Project Development Objective (PDO):
To assist the Lao PDR to increase utilization and quality of health services for poor women and children, in particular in rural areas in
Project Provinces.
PDO Level Results Indicators
Co
re UOM3
Baseline
Original
Project
2005
Progress
To Date
(2009-
10)4
Cumulative Target
Values Frequency
Data Source/
Methodology
Responsibility
for Data
Collection
Comments
2011-
2012
2012-
2013
2013-
2014
1. Percentage of children under 1
year of age immunized against
measles
% 33 57 65 75 90 Semi-annual HMIS MCH5 DPF
Baseline
data is for
the 8 initial
provinces
and not for
the same
age group
2. Percentage of children under 1
who have received DPT3 % 40 66 70 75 80 Semi-annual HMIS MCH DPF
Baseline
data is for
the 8 initial
provinces
3. Percentage of births attended by
trained health personnel % 16 35 40 45 50 Semi-annual HMIS MCH DPF
Baseline
data is for
the 8
initial
provinces
4. OPD cases per capita at public
health centers and district hospitals Number 0.05 0.26 0.34 0.42 0.50 Semi-annual HMIS OPD DPF
5. Number of district hospitals that
meet the 10 minimum requirements Number n.a. / new 0 TBD TBD TBD Quarterly
Project
database DPF
RBF
payments
linked to
this
indicator
2 Targets are currently missing for indicators that rely on new data bases that will be established under AF, or where the details of support under AF are still
being developed by the MOH. Baseline values and targets are expected to be defined prior to implementation of the respective activity, and will be recorded in
Aide Memoires accordingly. 3 UOM = Unit of Measurement.
4 For new indicators introduced as part of the AF, the progress to date column is used to reflect the baseline value.
5 For indicators using HMIS data, the denominator used will change to align to MOH indicators. Census data will be used instead of village level data collected
in the Project‟s provinces.
13
Project Development Objective (PDO):
To assist the Lao PDR to increase utilization and quality of health services for poor women and children, in particular in rural areas in
Project Provinces.
PDO Level Results Indicators
Co
re UOM3
Baseline
Original
Project
2005
Progress
To Date
(2009-
10)4
Cumulative Target
Values Frequency
Data Source/
Methodology
Responsibility
for Data
Collection
Comments
2011-
2012
2012-
2013
2013-
2014
6. Percentage of villages receiving
outreach (via health days, integrated
outreach and/or mobile clinics)
according to the agreed schedule
% n.a. / new n.a. TBD TBD TBD Quarterly Project
database DHP
RBF
payments
linked to
this
indicator
7. Beneficiaries6
Project beneficiaries
Number
n.a. / new
Annual
Project
database DPF
New
indicator.
Baseline is
zero
- Expected number of
women benefiting from
free deliveries
Number n.a. / new
566 7,064 22,303 39,067 Annual
Project
database DPF
Using
expected
number of
births in
project
provinces
that will
occur at
facilities.
Cumulative
number.
- Outreach services Number n.a. / new
0 TBD TBD TBD Annual
Project
database DPF
Of which female (beneficiaries) %
n.a. / new
TBD TBD TBD TBD
6 Actual cumulative total number of project beneficiaries by gender. A beneficiary is anyone who directly derives benefits from an intervention.
14
Intermediate Results and Indicators
Intermediate
Results
Indicators Core
Unit of
Measurement
Baseline
Original
Project -
2005
Progress
To Date
(2009-
10) Target Values Frequency
Data Source/
Methodology
Responsibility
for Data
Collection Comments
2011-
2012
2012-
2013
2013-
2014
Intermediate Result 1: Improving the quality and utilization of health services Number of
impregnated bed
nets per person
residing in high-
risk villages7
Number
0.25
0.50
Percentage of
villages with
village drug kit
maintaining a
minimum of 4
essential drugs
%
40
70
1.1.In-patient
Department
discharges per
capita at district
hospitals
Number n.a. /
new 0.021 TBD TBD TBD Semi-annual HMIS IPD DPF
Number of
operational
Integrated
Community
Health Centers
(ICHC)
Number 26 34
1.2. Health
facilities
constructed,
renovated, and/or
equipped
Number n.a / new 0
TBD TBD TBD
Annual
Project
database
DHOs, PHOs,
DHP
Includes
province
hospitals,
district hospitals
and health
centers
7 Dark shaded indicators are indicators that will not be tracked during AF.
15
Intermediate Results and Indicators
Intermediate
Results
Indicators Core
Unit of
Measurement
Baseline
Original
Project -
2005
Progress
To Date
(2009-
10) Target Values Frequency
Data Source/
Methodology
Responsibility
for Data
Collection Comments
2011-
2012
2012-
2013
2013-
2014
1.3. Number of
pregnant women
receiving
antenatal care
during a visit to a
health provider
Number
n.a. /
new
31,776 36,052 38,190 40,328
Semi-annual
HMIS MCH
DPF
Number of
ANC1 is used as
a proxy.
Baseline data
from HMIS in
the five project
provinces. EOP
target assumes
the 60% MDG
target is
achieved.
1.4. Percentage of
women practicing
modern
contraceptive
methods obtained
from public health
facilities
%
17
34
40 48 55
Annual
Project
database
DPF
Baseline data is
for the 8 initial
provinces. MDG
target is 55%.
1.5. Percentage of
deliveries
occurring in a
health facility
%
n.a. /
new
n.a. TBD TBD TBD Semi-annual HMIS MCH DPF
Currently,
HMIS data does
not enable to
distinguish
facility based
and birth
attended by
skilled
personnel at
home. The
disaggregation
is however
possible and
will be done for
project
monitoring.
1.6. Number of
children
immunized
Number
n.a. /
new
0
43,702 90,526
140,472
Semi-annual
Project
database
(outreach)
DPF
As data on fully
immunized
children is not
16
Intermediate Results and Indicators
Intermediate
Results
Indicators Core
Unit of
Measurement
Baseline
Original
Project -
2005
Progress
To Date
(2009-
10) Target Values Frequency
Data Source/
Methodology
Responsibility
for Data
Collection Comments
2011-
2012
2012-
2013
2013-
2014
easily available,
DPT3 is used as
a proxy. Targets
estimated using
same targets as
in PDO
indicator #2.
Cumulative
numbers
1.7. Percentage of
Health Centers
that received
supervision
according to the
MOH-agreed
model and
schedule
Number
n.a. /
new
n.a. TBD TBD TBD Semi-annual
Project
database
DPF
1.8. Number of
districts
implementing free
deliveries
Number
n.a. /
new
0
42
42
42
Semi-annual
Project
database
DPF
Not cumulative
1.9. Number of
districts
implementing free
inpatient care for
children under 5
Number
n.a. /
new
0
5
42
42
Semi-annual
Project
database
DPF
Not cumulative
Intermediate Result 2: Capacity-building for health service provision Number of Family
Medicine Interns
trained
Number
0
102
2.1. Number of
ethnic minorities
and students from
remote areas
trained
Number
0
112 155 338 442
Annual
Project
database
DOP
Cumulative
number
2.2. Number of Number n.a. / 332 1,147 2,120 2,688 Annual Project DOP Cumulative
17
Intermediate Results and Indicators
Intermediate
Results
Indicators Core
Unit of
Measurement
Baseline
Original
Project -
2005
Progress
To Date
(2009-
10) Target Values Frequency
Data Source/
Methodology
Responsibility
for Data
Collection Comments
2011-
2012
2012-
2013
2013-
2014
health personnel
receiving training8
new
database number
2.3. Number of
faculty at
provincial training
institutions with
increased
qualifications
Number
n.a. /
new
0 0 10 40 Annual
Project
database
DOP
Cumulative
number
2.4. Number of
skilled birth
attendants
working in HCs
and DHs
Number
n.a. /
new
40 47 149 273 Annual
Project
database
DOP
Cumulative
number
Intermediate Result 3: Improving equity and sustainability of health care financing
3.1. Number of
people assisted by
HEF for the
payment of health
care costs
(including free
outpatient care
and free
ANC/PNC pilot)
Number n.a. /
new 36,509 43,811 52,573 63,087
Semi-annual
HEF quarterly
reports
DPF
Baseline data
using 5 districts
actual coverage.
Target values
assuming 20%
annual increase
in utilization of
services but no
expansion of
geographical
coverage.
3.2. Percentage of
districts
submitting HMIS
quarterly reports
on time9
%
n.a. /
new
90 100 100 100
Semi-annual
HMIS reports
DPF
8 Includes health worker trained, administrators/managers trained. Excludes training from DHO and hospitals through supervision
9 Will be measured in all provinces.
18
19
Annex 2: Operational Risk Assessment Framework (ORAF)
LAO PDR: Health Services Improvement Project Additional Financing
Project Development Objective(s)
The proposed development objective: to assist the Lao PDR to increase utilization and quality of health services for poor women and
children, in particular in rural areas in Project Provinces.
PDO Level Results
Indicators:
1. Percentage of children under 1 year of age immunized against measles
2. Percentage of children under 1 year of age who have received DPT3
3. Percentage of births attended by trained health personnel
4. OPD cases per capita at public health centers and district hospitals
5. Number of district hospitals that meet the 10 minimum requirements
6. Percentage of villages receiving outreach (via Health Days, Integrated Outreach and/or Mobile Clinics)
visits according to agreed schedule
7. Number of skilled birth attendants working in health centers and district hospitals
Risk Category
Risk Rating Risk Description Proposed Mitigation Measures
Project Stakeholder
Risks
Medium - I
Decision-making delays associated with the
upcoming political transitions are possible,
including confirmation of aspects of policy
design, and implementation of a
comprehensive package of policy measures.
This could result in individual donors pursuing
their own priorities for maternal and child
health.
MOH will take the lead in keeping key policy
makers apprised of MCH strategy, policies and
progress. Coordination with stakeholders in the
sector will continue to be pursued by the World
Bank to maximize coordination/efficient use of
funds, as MOH works to strengthen the formal
and informal sector wide coordination. Use
existing sector wide planning tool for annual
coordination with other partners and Government
budget. Medium and short term technical
support provided (in coordination with other
donors) for enhanced coordination and oversight
at provincial level.
20
Risk Category
Risk Rating Risk Description Proposed Mitigation Measures
Implementing Agency
Risks
Medium – I
Despite specific capacity building under the
HSIP, financial management capacity at
District level remains low, partially as a result
of high turnover. Geographic expansion of
pilots could also increase fiduciary risks.
Delays in procurement could impact
achievement of objectives, as could quality of
health care services provided, especially in
remote areas where Project is focused.
Performance based payment pilots may result
in inaccurate reports by health workers.
Relevant operational manuals will govern
implementation of the AF. A capacity
assessment of financial management of the health
sector is expected to be completed by
effectiveness; recommendations could be
supported through the additional financing.
Financial management technical assistance will
be provided at Provincial level, and the terms of
reference for the financial management and
procurement consultants at central level will
include at least training, in a monitorable way,
for Ministry staff. The AF will be supporting
training of health staff in Project Provinces to
increase quality of services. Support provided
through results based financing will, as is the
requirement, include appropriate verification
mechanisms. Disclosure of project results, as
well as audit reports, will be through the Ministry
of Health website.
Project Risks
Design
Medium - L
Services delivered through health centers rely
on lower grade, low paid staff and unpaid
recent graduates awaiting a government staff
position. Weak skills, variable supervision and
the lack of remuneration can undermine health
staff motivation to increase utilization and
quality of services.
Operation manual will provide clear guidance
and procedures on how to incentivize staff
performance and management.
Implement supportive supervision to provide
increased technical support to health staff.
21
Risk Category
Risk Rating Risk Description Proposed Mitigation Measures
Social and
Environmental
Low
The project is expected to have beneficial
results for all residents of the Project areas.
The concentration of many different ethnic
groups in project areas, however, makes it
challenging to ensure that all residents –
independent of ethnicity - will have equitable
access to health services, and there is a risk that
some ethnic groups have limited access. This
risk is compounded by linguistic and cultural
differences among the ethnic groups and the
predominately Lao health staff.
Health care waste management guidelines
developed by the Ministry of Health are not
fully applied at rural facilities.
The AF will build on the experience of the parent
Project and continue to strengthen the outreach
of health services to vulnerable people, including
ethnic minorities. The Ethnic Group
Development Plan has been updated to describe
measures to ensure that broad based support
from the ethnic groups is obtained and that they
will have equal access to health services.
Experiences already gained will feed into
targeting information, education and
communication to non-Lao speaking populations
during early implementation mobilization
campaigns.
Working closely with local authorities and
“koumban” leaders will help enhance community
awareness of the project, The Ethnic Group
Development Plan, previously translated and
disclosed, will be updated; the update will be
translated, and disclosed.
Upgrade the existing Primary Health Care
Workers and Community Medical Workers to
the mid-level.
Using current experience from implementing the
Environment Management Plan to ensure that all
activities are in compliance with the Plan and
existing government regulations.
22
Risk Category
Risk Rating Risk Description Proposed Mitigation Measures
Program and Donor
Low
Fragmentation of project management in
multiple PMUs in the MOH creates a risk of
lack of coherency in support from different
development partners.
Measures to strengthen donor coordination will
include: (i) district and provincial management
teams to ensure that donor resources are
efficiently allocated; (ii) continued consultative
process; (iii) active role of World Bank in the
donor sector coordination meeting, which
provides forum for updating on Project activities;
and (iv) develop explicit partnership plan in the
areas that partners are present to synergize the
outputs.
Delivery Quality
Medium-L
Lack of proper guidance and skills can
undermine service delivery, while the lack of
guidelines on supportive supervision weakens
support to staff, and weak Health Management
Information System make targeting of support
challenging.
Financing available for targeted (short-term)
capacity building to fill immediate gaps;
implement supportive supervision to provide
more effective, sustained and continuous capacity
improvement.
Consultant will be hired with dedicated
responsibility for monitoring of AF outcomes.
Overall Risk Rating at
Preparation
Overall Risk Rating During
Implementation Comments
Low Medium-I
23
Annex 3: Detailed Description of Modified or New Project Activities
LAO PDR: Health Services Improvement Project Additional Financing
Modifications to Parent Project
23. The following changes are being made to the parent Project:
The Project Development Objective is being revised from “to assist the Lao People‟s
Democratic Republic to improve the health status of its population, particularly the poor
and rural population, in Project Provinces” to “assist the Lao PDR to increase utilization
and quality of health services for poor women and children, in particular in rural areas in
Project Provinces.” This revision is being made to relate the objective to measurable
outcomes.
The results framework is being revised in line with the PDO and to remove indicators
which are not relevant (see Annex 1).
Reallocation of the Project funds (see Annex 4).
Changing the definition of Project Provinces from the current listing to five (Attapu,
Champasak, Salavan, Savanakhet, Xekong) Provinces as from November 1, 2008, as a
result of other development partners taking over the support from the remaining
Provinces.
References relating to activities in the dropped Provinces, and the specific numbers of
facilities to be supported, are to be removed from the Project description.
Including reference to a patient ward at Mahosot Hospital in Vientiane.
Extending the closing date by one year from June 30, 2011 to June 30, 2012.
Additional and expanded activities to be supported under the AF
Component 1: Improving the Quality and Utilization of Health Services.
24. Under component 1, the MOH will also implement mechanisms to subsidize health
services for target groups. This will include expansion of financing for “free deliveries” and
piloting and scaling up of free inpatient services for children under-5. Support to these activities
will be “results-based” in the sense that health facilities will be paid on the basis of the volume of
service provided.
25. In the case of free deliveries, the use of RBF was piloted through the provision of free
deliveries in two districts under the original Project. This support will be expanded to cover all or
most of the Districts in the Project Provinces in support of the recently promulgated National
Policy on Free MCH services. Also in response to Government policy, piloting of free child
inpatient care will be piloted in five Districts (Nong, Thaphanthong, Sanxay, Phouvong, and
Bachieng), with scale up planned for six months after the pilot. A World Bank financed FM
Assessment is being carried out which will: (a) evaluate whether additional accounting staff is
needed besides the one per Province currently planned for; (b) recommend implementation
requirements and FM arrangements for the implementation of free deliveries and child health
services. Moreover, depending on the findings of the planned FM assessment transport costs
24
from health center to hospital and a fixed per diem per delivery may be provided for poor
households. Given the close coordination required among the various central level MOH
Departments in order to successfully scale-up and supervise the free maternal and child health
(MCH) activities, budget for two additional consultants, and operating costs to support the team
for this mechanism has been included.
26. Subject to agreement with MOH, a pilot to provide higher level payments for free MCH
for District Hospitals that improve quality will be undertaken. The initiative will use the 10
minimum requirements (10MR) of the MOH as the measure against which such payments would
be made; the possibility of adapting a scoring system for level of compliance with standards is
currently under discussion. Payment for the free MCH will be the responsibility of the DPF, and
a nominal budget for the DHC for this activity has been included.
27. In addition to financing of free deliveries and child health services, support will continue
to be provided to the Provinces covered under the AF to finance operational budgets from the
Provincial down to health center level, including the integrated planning exercise (through what
was known as the “District Grant Allocation Mechanism” under the original project). It is
expected that the plans will indicate financing being provided through other development
partners in order to ensure efficient use of funds (e.g. coordination with UNICEF support to
quarterly integrated outreach in four southern Provinces through 2011). Core activities to be
supported from this allocation include outreach, intensified supervision, facility-based health
promotion days, as well as routine meetings. In line with current World Bank policy, financing
of sitting allowances for attending meetings will no longer be eligible for support from the AF.
28. Subject to agreement with MOH, mechanisms for providing incentives against
performance for health centers will be explored. Such incentives would be paid against
successfully implementing a pre-defined set of activities during biannual Health Promotion Days
and overnight mobile clinics. The Department of Health Care (DHC) has specific responsibility
for implementing quality improvement measures that will complement free MCH financing.
29. Financing of village drug kits will not continue under the AF, however support will be
provided for training of VHVs in support of implementation of the free MNCH program, as will
the costs of the VHV‟s outreach activities. Support will continue to be provided for supervision
by the MOH, however the emphasis will be on supporting an integrated approach. Financing for
this will be allocated among the MOH Departments responsible for supervision (DPF,
Department of Hygiene and Prevention-DHP, and DHC).
30. Instead of continuing to provide support to the integrated community health centers, the
AF will be supporting health centers in the Project Provinces in alignment with the free MCH
program. No additional expansion is planned for the ICHC, rather support will be provided for
minor renovations, including in-house connections for water in service delivery rooms, and the
provision of necessary equipment. Support will be predicated on its contribution to providing
basic MCH services.
25
Component 2: Strengthening Institutional Capacity for Health Service Provision.
31. The AF will continue to provide support for developing the capacity of existing health
staff, with a focus on those who are posted in rural and remote areas. The staff selected for
upgrading would be those most directly responsible for delivery of MCH services at health
center and District Hospital level, with a view to increasing the number of midwives, primary
health care workers and nurses. Training in provincial and district health management activities
will also be supported in order to improve the capacity of those health offices to manage the
delivery of health services.
32. Financing provided for training of new health staff (Registered Midwives, Community
Midwives, Primary Health Care Workers, and Nurses) for posting at health centers and district
hospitals is contingent on guarantees that graduates will be posted as civil servants in facilities
serving their own communities. The AF can also be used to assist the MOH achieve its targets
relating to equity and equal opportunity; recruitment and training should promote ethnic diversity
and gender balance among various health service cadres in remote and under-served
communities.
33. Three training institutions (the Colleges of Health Science in Savanakhet and the one in
Champasak, as well as the training center in Salavan Provinces which is being upgraded to a
School of Nursing) will be supported with minor renovations and essential training equipment.
Financing is also available for continuing education for selected faculty, and to cover supplies
and supervision activities of the training institutions.
34. Under the AF, the Project management remains under the DPF, with the DG of the
Department serving as Project Director. The consultants contracted to provide fiduciary support
will, for the most part, only report to a civil servant; the exceptions are the FM specialist and
procurement specialist who will be working for the AF and the parent Project during its one year
extension (see details in Annex 5).
Component 3: Improving Equity, Efficiency and Sustainability of Health Care Financing.
35. Support provided for the HMIS will continue under the AF, with a view to providing
limited support for Provinces other than the five it supports in the south on this activity.
Expanded financing will require confirmation that other support is not available, and would most
likely be limited in scale. Financing is available for shifting from an Excel database to a
relational database. Support for other surveys and/or information gathering activities could be
considered, based on a coordinated and harmonized approach.
36. Support for HEFs will continue in five Districts in the Project Provinces, with an
additional four financed from other sources. On the basis of the experience gained through
implementing HEFs, it is proposed that the HEF implementing agency work with the MOH to
pilot various options for financing free antenatal, prenatal and child outpatient care, with the aim
that these pilots can then help inform scaled up implementation in non-HEF districts. There is
also agreement that the approach to household level targeting of HEF benefits will be
strengthened. The terms of reference (TORs) of the HEF implementing agency will be revised to
26
reflect these changes. Regardless of when these pilots will commence, MCH record books will
be provided free of charge in free delivery sites; financing for this will be provided through the
AF.
37. While the AF is structured in accordance with the components of the original project,
project activities under AF will be clustered in line with the implementation responsibilities of
concerned MOH Departments. The relevant activity clusters, as well as key changes in the scope
of project activities relative to the original project, are outlined in Table 4 below.
27
Table 4: Original Activities, Activities Under AF, and Responsible MOH Departments
Components and sub-components Changes under AF Original
Component
Activities under the direction of Department of Planning and Finance Development and implementation of
Free MCH policy
- Expanded from two districts to all or most districts in five
Southern provinces; coordinated with and supporting
implementation of national policy; piloting of free child inpatient
services
1
HEFs - Measures to improve targeting; piloting models for financing of
child outpatient services, ANC and PNC with potential for
implementation in non-HEF districts
3
HMIS and Project Monitoring
Arrangements
- Continued support to core HMIS activities; possible support to
Lao Social Indicator Survey (LSIS) 3
Activities under the direction of Department of Hygiene and Prevention
District/ Provincial Planning and
Management
- Alignment with approaches by other development partners;
implementation partnership with JICA 1
Outreach, Supervision and other
recurrent costs
- Increased support to outreach and supervision, and alignment
with approaches by other development partners; increased results
orientation
1
Piloting incentives to improve outreach - New --
Activities under the direction of Department of Organization and Personnel
Capacity building of existing staff - Continued support, focus on training of community midwives and
some other cadres 2
Capacity building of new staff - Continued support; focus on training of community midwives and
some other cadres 2
Institutional capacity building at
province
- Substantially scaled down; some ongoing central level civil works
will be completed under an extension of the original credit; no
additional civil works or equipment focused on central or
provincial level; some continued support to upgrading of training
colleges
1, 2
Activities under the direction of Department of Health Care Facility Upgrading - No support at central or provincial level; focus on minor
upgrading and equipment to support delivery of MCH services at
DH and HC level
1
Training and Piloting of 10 MR - New --
Other Key Changes Relative to the Original Design Project Management - Institutional arrangements changed through shift of project
directorship to Director of Planning and Finance of MOH, and
involvement of line departments in selection and management of
project consultants
--
Ethnic group research and improvement
in access for ethnic minorities
- Continued and mainstreamed in project components (e.g.
communication strategy for free MCH service policy,
opportunities for training by ethnic group staff, etc.)
1
Village Drug Kits - No financing of village drug kits, but training of VHVs to support
implementation of free MCH program and outreach will be
supported
1
ICHC expansion (equipment, recurrent
costs, etc.)
- Integrated into comprehensive support to HCs in 5 Southern
provinces 1
Health Financing Policy Review and
Development (mostly study tour and
workshops)
- No specific activities planned, but funds included under
components to finance possible workshops and consultancies 3
Integrated supervision by MOH - Increased support; integrated under each of the components 1
28
Annex 4: Revised Estimate of Project Costs
LAO PDR: Health Services Improvement Project Additional Financing
Category Original
Grant
Allocation
(US$)
Original
Allocation
(SDR)
Revised
Grant
Allocation
(SDR)
Allocation
of AF
(US$)
Allocation
of AF
(SDR)
HRITF
Allocation
(US$)
% to be
Financed
1 Civil Works
4,300,000
2,980,000
4,300,000
-
100%
2 Goods
1,800,000
1,250,000
1,350,000
-
100%
3 Training,
Workshops and
Study Tours
2,000,000
1,420,000
1,335,000
-
100%
4 Consultants'
Services
2,060,000
1,390,000
1,200,000
-
100%
5 District Sub-
Grants
-
(a) disbursements
prior to March
2007
280,000
200,000
198,938
100%
(b) disbursements
on March 2007
and thereafter
1,720,000
1,190,000
1,165,000
100%
6 Sub- Grants under
Equity Fund
360,000
250,000
400,000
100%
7 Operating Costs
420,000
290,000
349,535
-
100%
8 Refunding of
Project
Preparation
Advance
560,000
390,000
101,527
9 Unallocated
1,500,000
1,040,000
-
100%
10 Civil works,
goods and non-
consultant
services, training,
workshops and
study tours,
district sub-
grants, sub-grants
under equity
funds, and
operating costs
7,000,000
4,400,000
100%
11 Results Based
Financing
3,000,000
2,000,000
2,400,000
100%
TOTAL
15,000,000
10,400,000
10,400,000
10,000,000
-
2,400,000
29
Annex 5: Revised Implementation Arrangements and Support
LAO PDR: Health Services Improvement Project Additional Financing
38. The arrangements for implementation put in place under the parent Project took into
consideration the capacity constraints facing the MOH at the time of design, and these have been
satisfactory. With a view to shifting away from project management units and to better align
with the Paris and Vientiane Declaration, the institutional arrangements for the AF are designed
to put activities supported from this financing under the direct responsibility of the MOH
technical department which is responsible for the activities, and providing capacity support
within the MOH. The policy direction will continue to be provided by the existing Steering
Committee within the MOH. Overall coordination and management will be the responsibility of
the DPF, who will also have responsibility for implementing activities in their work plan
supported by the AF. Other Departments receiving support for implementing activities in their
work plan include the DHP, the Department of Organization and Personnel (DOP), and the
DHC.
39. With DPF responsible for coordination and management, the DG, instead of a consultant,
will serve as the AF Project Director. The DPF will be supported by a contracted full-time
coordinator, procurement specialist, FM specialist, administration officer, accountant, and
cashier, all reporting to the Project Director. Financing has also been provided for contracting a
part time consultant to assist and build capacity of the MOH to monitor and report on
implementation of the EMP as needed. Consultants for these positions will be recruited in
accordance with the World Bank Consultant Guidelines, under TORs, to include capacity
building and training of relevant MOH counterparts. In addition to implementation responsibility
for specific activities mapped to DPF, the primary functions of the DPF will be: (a) overall
project planning, budgeting, coordination; (b) monitoring progress; (c) procurement and FM; and
(d) safeguards. A consultant to assist the Project director with implementation, with terms of
reference and qualifications acceptable to the Association, will be appointed prior to
effectiveness.
40. In accordance with the responsibilities in the Department‟s work plan, each Department
will designate a senior civil servant from its ranks whose selection and appointment will be
agreed between the respective DGs of that Department and the Project Director. The designated
person will be responsible for planning and day-to-day implementation of central activities and
provide oversight of planning, implementation, monitoring and evaluation at Province and
District level for activities under their responsibility. He/she will report directly to the Project
Director for Project-specific activities. Financing for training at the colleges which fall under the
responsibility of the DOP will be provided directly to those institutions; responsibility for
reporting on these activities will remain with DOP.
41. Support to the designated Department Project Coordinators during the initial 18 month
period is provided through financing of consultant(s) recruited under TORs acceptable to the
World Bank and in accordance with the Consultant Guidelines. Such contracted staff will be co-
located in the Department to which they are supporting. Financing for enhancing project
management skills and technical competence of Component Coordinators through targeted short-
term training, seminars, and regional conference, agreed to on a case-by-case basis during
30
implementation. Support for equipment and furniture for the Departments is available, as well as
operating costs to facilitate implementation.
42. The role of the Provincial and District Health Offices (PHOs and DHOs respectively)
will remain unchanged under the AF, however the Regional Coordinators will be phased out. It
is expected that AF supported activities (both the planning and management aspects) at the
decentralized level will be presented in the coordinated provincial plans in order to harmonize
with other donor support. Every effort will be made at the decentralized level to coordinate with
the Japan International Cooperation Agency (JICA) supported provincial management activities
in Attapu, Champasak, Salavan, and Xekong) and financing will be available for technical
assistance in Savanakhet, where JICA support is not present; close collaboration between the
consultant and the JICA team will be fostered with a view to providing similar assistance, and
management tools in the Provinces.
43. In recognition of the substantial scale of the activities being conducted at the
decentralized level, each Project Province will be provided with a full time accountant to support
districts and facilities in managing activities. These contracted staff will play an internal audit
function for AF support managed at the Province level and below, as well as providing on-the-
job training and support to the PHO accountants; this aspect will also be clearly indicated in their
TORs. The World Bank is commissioning a FM and institutional assessment in April/May to
including identification of needs for scaling up free delivery and child inpatient care. Findings
will cover needs associated with additional consultants, training, and systems development for
implementation of free MCH.
Financial Management Aspects
Summary of FM assessment
44. The objective of the assessment carried out during pre-appraisal and updated again during
appraisal was to determine the adequacy of FM arrangements for the AF. . It built upon previous
assessment performed since May 2005, which was deemed to meet the requirement of OP/BP
10.02, and additional information obtained in relation to implementation arrangements and
project activities during the pre-appraisal and appraisal mission.
45. The main risks that could impact the achievement of the project‟s development objectives
would be misuse of resources due to weak FM capacity and inadequate resources at all levels.
Current resources could be overstretched due to the scaling up and introduction of pilot
activities. Scaling up of current free delivery activity also increases the risk of misuse of funds
and will require strengthened verification procedures. To address these risks, the following
mitigation measures have been proposed, discussed and agreed at appraisal:
Experienced FM staff from the current HSIP will be retained to work on the remaining
activities of the current HSIP as well as the AF. To address the weak capacity and lack
of resources at the provincial level, qualified accountants will be recruited for each
province (five accountants), with TOR that include providing support to provincial
finance departments and on-the job training to both provincial and district finance staff.
31
The AF will be adopting the FM Manual currently used by HSIP as there were no
significant or fundamental changes in the implementing agency or project activities.
Result based financing activities such as HEF and free delivery have been piloted and
working satisfactorily under the current HSIP. The existing Manual for Free Delivery
has been deemed acceptable by the World Bank; however, as a result of the intended
scale-up of free delivery from 2 to 42 districts in 5 provinces, the verification mechanism
will need to be strengthened. This includes both the internal verification system as well as
the use of independent entity/auditor to provide assurance on the outputs produced.
Consequently, the overall manual and the specific manual/guideline on free delivery will
be revised in light of changes in institutional arrangements at central level and to take
account of lessons learned from the current HSIP.
Specific manuals, including funds flow and FM arrangements for other RBF pilots will
be drafted at a later stage; a consultant has been recruited to carry out a FM capacity
assessment of the health sector as well as provision of inputs into the drafting of
manuals/guidelines for pilot activities. The revised free delivery manual acceptable to the
World Bank will be submitted with the first annual workplan and budget.
FM staff at all levels will be trained before commencement of the AF activities.
46. Taking into account all mitigation measures being in place and implemented, the
proposed FM arrangements for the AF are considered adequate to meet the requirements of
OP/BO 10.02.
Staffing structure and Capacity Building
Central level
47. As noted above, it has been agreed that institutional arrangements will shift from a
Project Management Unit based structure to using the MOH‟s Technical Departments as
implementers of activities which fall under their work plan; overall responsibility for
coordination and management of the Project will rest with the DPF. The FM function at the
central level will also be placed under the DPF as part of a support group. From past experience,
fiduciary capacity at the MOH is limited. Therefore it has been proposed that the three
experienced finance staff from current HSIP be retained to work on both AF and the remaining
activities under the current HSIP. In an effort to build MOH capacity, it has been proposed to
the MOH technical working group that a junior finance staff member from the DPF be appointed
to work with the consultants or, alternatively, a new graduate be recruited through a competitive
process, with an agreement that the candidate will become a government official after the
completion of the AF.
48. The FM staff TORs shall be reviewed and revised to include explicit capacity building
tasks with measurable indicators.
Provincial and district levels
49. The FM arrangements at provincial and district levels will be retained with reporting
requirements to the Facilitators and the support group at the central level. Past experience has
32
indicated that staff members at the PHO level have sufficient capacity to handle accounting for
activities in their respective provinces. However, with the scaling up of activities and the
introduction of output-based payments and the proposal for piloting some pay for service
performance aspects in some project areas (pilot of RBF), FM staff capability at provincial and
district levels may become overstretched. To mitigate this potential issue, an accountant will be
recruited for each province to assist with the increased workload and support FM staff at the
district level. The incumbent will also assist in the capacity building of provincial and district
staff. The TOR for the provincial accountants will be drafted and finalized by end of April 2011.
The accountants shall be recruited and ready to start work by effectiveness. Other capacity
building or needs for additional staff may also be proposed after the completion of sector FM
capacity assessment.
50. Due to the decentralized nature of the project activities, it is essential that finance staff
have adequate FM capacity at all levels. Therefore, FM training shall be provided to FM staff at
all levels so that they fully understand the new procedures, their roles and responsibilities and are
able to perform their functions effectively. In addition, a sector FM capacity assessment will also
be conducted using the World Bank‟s own resources. The purpose of this is to assess the FM
capacity and capacity building needs at each level within the Health sector. The assessment will
also propose a medium term roadmap for strengthening FM capacity, systems and institutional
arrangements for implementation of the free MCH service policy and HEFs in the context of the
overall government budget system and other health financing/insurance schemes.
Agreed next steps
51. The MOH has agreed to proceed to prepare revised TORs for staff retained from current
HSIP, draft TORs for provincial accountants, commence recruitment of required FM staff, and
provide training based on needs established in the FM assessment. Progress in these respective
areas will be monitored by the WB team, and the MOH will provide a status report when the first
work plan and budget is submitted for no objection.
Accounting policies and procedures
Financial Management Manual and guidelines
52. A FM Manual acceptable to the World Bank has been developed under the current HSIP.
The manual contains accounting policies, procedures and internal controls. The AF will adopt
the same FM manual. However, it will need to be reviewed and revised in light of changes to
institutional arrangements and lessons learned from the earlier implementation and any other
changes in terms and conditions of the AF. The Recipient shall adopt an updated FM Manual and
a Project Implementation Plan before effectiveness.
53. Moreover, observations from field visits indicated that there is a need for a simple FM
guideline for activities to be carried out by Health Centers. A simple FM guideline, with
explanations of the reporting requirements, including illustrative examples, will be developed to
assist the health center staff. The timeliness of clearing of advances or submission of statement
of expenditures (SOEs) also depends on the timeliness, accuracy and completeness of the SOE or
33
the financial information provided by the health center. Hence, it is also important that they are
trained and provided with adequate guidance.
54. Due to the scaling up of free delivery activities, the verification mechanisms need
strengthening. Therefore, the current FM guideline for free delivery needs revision. The
enhancement of verification mechanism shall include both the current internal verification
system as well as the use of independent entity/auditor to provide assurance on the outputs
produced. A revised free delivery manual acceptable to the World Bank shall be submitted
together with the first annual work plan and budget.
55. Specific guidelines and manuals for other RBF pilot activities shall also be developed
with a view to aligning with the government systems where possible and also to ensure the
sustainability of such arrangements when the project phases out. The associated FM
manual/guidelines for other RBF activities will be submitted to the WB along with updated
workplan and budget for no objection prior to implementation. A consultant has been recruited
to perform a FM capacity assessment of the health sector as well as providing input to improve
the current FM Manual, free delivery manual and the drafting of manuals/guidelines for the other
RBF pilot activities which may be carried out in the future.
Planning and budgeting
56. In accordance with the requirements in the FM Manual, the work plan and corresponding
budget need to be prepared and submitted to the World Bank for approval annually.
Accounting software
57. The current accounting software „PAS‟ is capable of recording and reporting expenditure
by component, sub-component/activities, expenditure categories, provinces, and districts.
Financial statements can be produced by downloading the accounting data into an Excel
spreadsheet. The software will be reviewed to ensure that the chart of accounts reflect the
changes in project components, sub-components, expenditure categories etc. The MOH will
proceed to review the current accounting software and install at all levels (central and provincial
offices). Progress in this area will be monitored by the WB team, and the MOH will provide a
status report when the first workplan and budget is submitted for no objection.
Funds flows
58. Since there are no fundamental changes in the project activities, funds flows for the
DGA, HEF, and free delivery will follow the system already in place under the current HSIP:
DGA transfers will depend on the financial performance of each district, categorized as 1,
2, and 3. Category 1 will receive funds on a quarterly basis based on a quarterly plan.
Category 2 and 3 district transfers will be activity based. The district categorization shall
be based on the latest report from the accounting firm contracted under the ongoing
project on FM performance of districts and provincial offices. Reporting back to
provincial level shall occur on a monthly basis same as before.
34
For the HEF activity (which is contracted out to Swiss Red Cross), transfers will be made
on a quarterly basis based on requests for payments supported by claims from
provinces/districts health care providers. Administration cost is charged by Swiss Red
Cross at a fixed sum.
Free delivery transfers will be based on actual reports certified by relevant authorities i.e.
reimburse the service providers based on actual expenditure incurred. Funds will be
transferred to district level through the provincial account. The provincial finance unit
will check the correctness of the documents and then make the appropriate transfer to
district level; health centers are reimbursed at district level. The need to provide
advances to district hospitals and health centers will be reassessed; the FM consultant is
also tasked to review these procedures and provide input to the manual.
59. Existing bank accounts shall be retained and maintained as follows:
Type of Account Location Purpose
1. Designated Account (DA) Bank of Lao,
National
Treasury, MOH
The existing DA in USD will be maintained
to receive the AF funds. Replenishment to
the DA shall be the responsibility of the FM
consultant at central level.
2. MOH Project Account Support Unit-
DPF, MOH
The existing USD account at BCEL will be
maintained. Fund transfers from DA as and
when needed based on projected
expenditures for 6 months.
3. Provincial Project Accounts PHO All existing bank accounts at provincial
level will be maintained. Funds will be
transferred based on projected expenditures
for 3months based on approved annual
budget
4. District Project Accounts
Category 1
DHO All existing bank accounts are to be
maintained. Projected expenditures for 3
months based on the annual budget of the
District
Category 2 and 3 DHO All existing bank accounts are to be
maintained. Estimated cost of requested
activity appears in the approved Annual
budget of the District
60. In terms of reporting of expenditure, the DHOs will continue to submit their SOEs to
their respective provinces and they will certify that the amounts spent were for expenditures
approved in the district plan. The PHO will verify these and, if correct, replenish the advance to
bring it up to the level of the initial advance. Receipts, invoices and supporting documents shall
be retained at DHOs for Category 1districts and at PHOs for Category 2 and 3 districts.
Fund flow for activities under the direction of the Department of Organization and Personnel
61. For training activities to be implemented by the DOP, funds will be transferred directly to
Savanakhet and Champasak Health Science Colleges. Bank accounts will be opened by the
35
respective Colleges to hold such funds. Budgets for training activities and administration shall
be prepared for each training batch and will be reviewed and approved by the DOP. HSIP
Finance Unit will only transfer funds based on the budget approved by the DOP. The DOP is
responsible for the reporting on funds used and the submission of supporting documents to the
HSIP Finance unit. Documents shall be retained at HSIP Finance Unit.
62. Details of fund flows for each activity will be elaborated in the revised FM Manual. For
RBF pilot activities, fund flows shall also be elaborated in the FM manual/guideline to be drafted
later.
Financial Reporting
63. District and provincial levels will report expenditure or use of funds to central finance
unit on a monthly basis (the same as the current arrangement). Accounting data shall be
transferred electronically via the internet on a monthly basis for consolidation.
64. The project will prepare and submit a quarterly Interim Unaudited Financial Report (IFR)
in a format acceptable to the World Bank, within 45 days after the end of each quarter. The
format of the IFR shall be agreed and confirmed at negotiation.
Audit arrangements
External
65. For the AF and extension of the current HSIP, the project shall use the auditors appointed
by the Ministry of Finance under the audit bundling process from FY11 onwards. The audit
reports, together with management letter, shall be submitted to IDA within six months of each
fiscal year end. Due to the scaling up of result based activities (such as free delivery and pilots
of RBF activities), independent verification will be required to provide assurance on the validity
of outputs or results reported. An annual technical/output audit shall be performed in
conjunction with the project‟s financial audit. Negotiation or amendment to the scope of work
shall be made when the Ministry of Finance has appointed auditors under the audit bundling
process.
Disclosure of audit report
66. According to the new policy on Access to Information, new projects (including AF for
which the invitation to negotiate is made on or after July 1, 2010) are subject to the new
disclosure requirements. The World Bank requires that the borrower disclose the audited
financial statements in a manner acceptable to the World Bank. Following the World Bank‟s
formal receipt of these statements from the borrower, the World Bank makes them available to
the public in accordance with the World Bank Policy on Access to Information.
36
67. It was agreed with MOH at appraisal that the audit report will be disclosed on the MOH
website. The report shall remain on the website as long as HSIP is in operation. Failure to
comply with this requirement will result in a failure to maintain acceptable FM arrangements.
Internal
68. The need for internal audit will be determined after the completion of sector FM capacity
assessment.
Community awareness and feedback mechanism
69. A strong community awareness and feedback mechanism serves as a preventative
control. Audit and supervision is only an end of process control and the ability to supervise and
audit all areas is limited. The community is at the front line and they are the ones receiving the
benefits from the project. Therefore, they are well placed to contribute to the oversight function.
Community awareness can be achieved through education campaigns in local languages.
Services provided free of charge and other benefits provided under the project should be
disclosed at health facilities. Moreover, a simple and user friendly feedback mechanism will also
be introduced. This will provide an avenue for the community to express their satisfaction, as
well as dissatisfaction, with the services and benefits being provided. Information on feedback
shall also be disclosed to the community/public at large. This aspect will be considered by the
consultant when providing input to the drafting of various manuals/guidelines.
Implementation Support and Supervision Plan
70. To ensure that FM actions proposed above are implemented, the FM team will follow up
closely with project management throughout the early stages of implementation.
71. Due to the decentralized nature and increased complexity of project pilot activities
extended FM supervision and implementation support will be carried out twice a year initially
until the overall FM risk rating for the project changes or is reassessed. The supervision is
intended to be an integrated supervision with procurement and technical reviews where
appropriate.
Disbursement arrangements
72. The disbursement arrangements shall follow the arrangements agreed in the ongoing
HSIP. An existing designated account will be used. This DA is held at the Bank of Lao and
managed by the National Treasury, Ministry of Finance. Withdrawal applications from grant
account are authorized by the External Finance Department of the Ministry of Finance.
Disbursements shall be based on traditional method, i.e., made against the SOE. Applicable
disbursement methods shall include (a) advance, (b) reimbursement, (c) direct payment, and (d)
commitments.
37
73. The designated account ceilings for each source of funds shall be as follows, based on
estimated three month expenditure:
IDA – AF US$ 1,000,000
HRITF US$ 200,000
74. Disbursements shall be made against the following expenditure categories:
Expenditure Category
Amount Financing
percentage IDA- AF
US$
HRITF
US$
Total
1 CIVIL WORKS, GOODS
AND NON-CONSULTANT
SERVICES, CONSULTANT
SERVICES, TRAINING,
WORKSHOP AND STUDY
TOURS, DISTRICT SUB-
GRANTS, SUB-GRANTS
EQUITY FUND, AND
OPERATING COSTS
7,000,000
7,000,000
100%
2 RBF 3,000,000 2,400,000 5,400,000 100%
TOTAL 10,000,000 2,400,000 12,400,000
Procurement
75. Procurement for the proposed project shall be carried out in accordance with the World
Bank‟s “Guidelines: Procurement of Goods, Works and Non-consulting Services under IBRD
Loans and IDA Credits” dated January 2011; and “Guidelines: Selection and Employment of
Consultants by World Bank Borrowers” dated January 2011, and the provisions stipulated in the
Legal Agreements.
Procurement/Selection Methods and Prior Review Thresholds
76. The procurement and selection methods will remain the same as in the original HSIP,
except that Force Account and Least Cost Selection methods are now being added under the AF.
77. The revised procurement method threshold and prior review threshold for the AF are
indicated in the Table below:
Procurement Method Procurement Method
Threshold
Prior Review
threshold
1 International Competitive Bidding (ICB): Goods = > $100,000 All
2 National Competitive Bidding (NCB): Goods < $100,000 None
3 Shopping: Goods < $30,000 None
4 ICB: Works = > $500,000 All
5 NCB: Works < $500,000 None
6 Shopping: Works < $30,000 None
7 Direct Contracting (DC): Goods and Works All
8 Force Account All
38
Selection Method Selection Method
Threshold
Prior Review
threshold
1 Quality and Cost Based Selection, Quality-Based
Selection, Least Cost Selection (Firms)
= > $100,000 > $100,000
2 Selection Based on the Consultants Qualifications‟
(Firms)
< $100,000 None
3 Single Source Selection (Firms) All
4 Individual Consultants All fiduciary
(financial management
and procurement)
consultants
5 Sole Source Selection (Individual Consultants) All
Procurement Plan
78. A detailed Procurement Plan for the three years of project implementation has been
prepared by the Project and also agreed by the World Bank. The Procurement Plan will be
updated in agreement with the Task Team at least annually or as required to reflect the actual
project implementation needs and improvement.
39
Goods and Works
1 2 3 4 5 6 7
Ref.
No.
Contract
(Description)
Estimated
Cost
Procurement
Method
Review
by Bank
(Prior /
Post)
Expected
Bid-
Opening
Date
Comments
1 Goods
1.1 Health Center Medical Equipment 785,000 ICB Prior Aug. 2011
1.2 Computers for HMIS and project
management
35,000 NCB Post Aug. 2011
1.3 Educational tools for Public Health Colleges
(Savanakhet, Champasak, Salavan)
100,000 ICB Prior Aug. 2011
1.4 Water supply equipment (pumps) 50,000 NCB Post Sep. 2011
1.5 Vehicles 550,000 ICB Prior Sep. 2011
2 Works
2.1 Renovate Training Facilities (Savankhet,
Champasak, and Salavan)
60,000 Shopping Post Sep. 2011
2.2 Health Centers (in-house distribution lines
for water)10
156,600 NCB/Shop-
ping*
Post Sep. 2011
2.3 Health Centers (minor refurbishment)**11
TBD NCB/Shop-
ping/Force
Account*
Prior/Post**
Sep. 2011
* Applicable procurement method will be in accordance with the procurement method thresholds
specified above and will be determined when the estimated cost of each contract is confirmed.
Use of Force Account method will be in accordance with the conditions set forth in Paragraph
3.9 of the World Bank‟s Procurement Guidelines and will require justification to be submitted
by the Project for the World Bank‟s prior concurrence before using this method.
**Applicable World Bank Review requirement (prior or post review) will be in accordance with
the thresholds specified above and will be determined when the estimated cost of each contract
package is confirmed.
10
The amount indicated here is the estimated amount to cover some portion of approximately 300 health centers
under multiple contracts. 11
The amount for which the use of Force Account may be sought is not known at this time but will be based on an
assessment which is expected to be conducted prior to effectiveness.
40
Consultant’s services
1 2 3 4 5 6 7
Ref.
No.
Description of Assignment
Estimated
Cost
Selection
Method
Review
by Bank
(Prior /
Post)
Expected
Date of
Opening of
Proposals
(Firms)/CVs
(individuals)
Comments
1. Individual Consultants (national)
1.1 Consultants for Department of Hygiene and
Prevention and Maternal and Child Health
Center
57,600 IC Post To be
confirmed
1.2 Consultant for Department of Health Care 23,400 IC Post To be
confirmed
1.3 Consultant for Department of Personnel 23,400 IC Post To be
confirmed
1.4 Contractual staff to support Department of
Planning and Finance
36,000 IC Post Jul. 2011
1.5 Financial Management Specialist consultant
and overall project accountant
42,300 IC Prior Jul. 2012
1.6 Provincial Accountants (5 positions) 115,500 IC Prior Jul. 2011
1.7 Provincial consultants for Coordination
(multiple positions)
90,000 IC Post Jul. 2011
1.8 Consultant to Project Director 49,500 IC Post To be
confirmed
1.9 Cashier and Admin 26,400 IC Prior Jul. 2011
1.10 Consultant Service for facility upgrading 12,000 IC Post Jul. 2011
1.11 Procurement Specialist 39,600 IC Prior Jul. 2012
1.12 Consultants (2 positions) for free Maternal
and Child Health
48,400 IC Post Jul. 2011
1.13 Environment Safeguards Consultant 13,500 IC Prior Nov. 2011
1.14 Senior accountant 23,100 IC Prior Jul. 2012
1.15 Assistant accountant 13,200 IC Prior Jul. 2012
2. Consulting Firms (international)
2.1 Health Equity Fund Administration 345,000 QBS Prior Jul. 2011
Audit (External) + 75,000 QCBS Prior
+ The External Audit is expected to be included under the bundled audit contract (covering the portfolio of WB
financed projects in Lao PDR) whose selection and contracting will be undertaken by MOF and each project will
pay the corresponding fee for the audit services performed by the auditors on that project.
41
79. The Procurement Capacity Assessment of the Project Implementing Agency was carried
out by World Bank procurement accredited staff in February 2011. The main findings and agreed
actions for strengthening capacity are as follows:
Procurement activities under the ongoing HSIP have been carried out by the Procurement
section within the Project Management Unit (PMU) of MOH. All members of the PMU,
including of the procurement section, are consultants supported by HSIP. The
procurement activities under the HSIP included renovation of central and provincial
hospitals, procurement of medical equipment, and also selection of consulting firms and
individuals for various assignments supported by HSIP. Procurement under the AF will
also be of similar nature.
Under the ongoing HSIP project, the contracts of the Procurement Specialist and other
members of the procurement section will be extended to continue to work on the
remaining procurement activities of HSIP as well as carry out the procurement under the
AF. The AF will be managed by the DPF, and the DG will serve as the Project Director,
who was not directly involved in the implementation of the HSIP. The DPF will however
be augmented by the procurement specialist and other supporting procurement
consultants who have been working under the HSIP and are experienced in the
application of the World Bank‟s procurement and consultant procurement procedures and
are expected to have adequate capacity to manage the procurement under the AF.
Contracts of the existing procurement consultants under HSIP will be extended subject to
satisfactory performance and continued need and under TORs acceptable to the World
Bank that include measurable capacity building for the MOH.
Considering the limited procurement experience of the staff of the DPF, and also keeping
in view the broader fiduciary risks in Lao PDR in the context of a weak procurement
environment in the country, the procurement risk under the AF was assessed as being
“Substantial”. However, mitigation measures have been agreed which include (a)
continuation, subject to satisfactory performance and need, of the existing Procurement
Specialist and other supporting procurement consultants who have been carrying out
procurement under the current HSIP and will continue to work on the remaining
activities of HSIP as well as carry out procurement under the AF; (b) the Procurement
Specialist and other supporting procurement consultants will also assist and provide
training to the provincial and district staff to conduct and monitor the procurement and
contract management process at sub-national levels which is expected to be small value
and simple in nature; and (c) Integrated fiduciary supervision (including ex-post
procurement reviews, FM/SOE reviews, and technical/quality checks) will be carried out
jointly by the World Bank procurement, FM and technical staff. The procurement ex-
post review part will also include review of indicators of collusion as well as verifying
end-use delivery in addition to the review of procedural compliance and capacity. Based
on the above mitigation measures, the residual procurement risk is assessed as
“Moderate”.
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Safeguards
80. The activities proposed for support under AF have not resulted in triggering additional
safeguards from those in the on-going Project. Financing has been provided to contract a part
time consultant for the DPF to provide capacity building to MOH for monitoring and reporting
on the implementation of the EMP, including the operation and maintenance of the sewage
treatment plants (STP) at the three hospitals supported under the ongoing Project. The
Operational Manual will be updated to include the reporting forms for the verifying the EMP
implementation, the STP operation, and maintenance, and the health care waste reporting.
Reporting on implementation of the EGDP will be mainstreamed into the reporting provided for
activities conducted in the relevant communities.
