full document - Center for Economic and Social Research


full document - Center for Economic and Social Research
USC Development Portfolio
Management Group
Getting results from investments
in economic development
The development
Those who invest in projects to improve lives
in the developing world face tough challenges
in ensuring the effectiveness of their assistance.
How can they identify and address the many
risks inherent in their ventures? What assurances
can they give to funders that their investments
will achieve the desired results?
iii Development Portfolio Management Group
Cover photo: Francis Dobbs/World Bank
Scott Wallace/World Bank
What’s at stake?
Billions of dollars!
Billions of dollars have been spent on development programs. In 2011,
commitments to the developing world by members of the OECD’s Development
Co-operation Directorate, the World Bank, and regional development banks
alone amounted to more than $200 billion.
Given the magnitude of these investments, even modest failure rates—that is,
the proportion of projects that fail to achieve their development objectives—
lead to an enormous waste of resources. Applying a conservative estimate
of a 30-percent failure rate to aid commitments of $200 billion means that
$60 billion could potentially be wasted in a single year.
Some investments will always be lost—socioeconomic development is a
complex and inherently risky business. But waste and loss can be significantly
reduced in five ways:
• More effective program design
• Accurate monitoring of ongoing programs
• Targeted interventions for failing projects
• Extracting the key lessons from completed operations
• Assessing the institutional effectiveness of development institutions.
1 Development Portfolio Management Group
Taking corrective steps
While there’s still time
The USC Development Portfolio Management Group (DPMG) helps clients
get the results intended from their development investments.
DPMG’s core approach to assessing the effectiveness of development programs
uses an independent panel of development experts to:
• Diagnose the likelihood that projects will succeed before they close
and in time to rescue those that are in trouble
• Identify specific measures to get failing projects back on track.
While DPMG focuses on the active portfolio, it also evaluates projects after they
have closed. It works with clients to identify institutional bottlenecks that prevent
the achievement of development results and also conducts comprehensive assessments of the institutional effectiveness of development organizations.
Curt Carnemark/World Bank
2 Development Portfolio Management Group
Alfredo Srur/World Bank
DPMG assesses not only whole portfolios, but also subsets of a portfolio of special
concern to the client. Subsets can be projects for a country, a region, a sector,
a time period, or those that the client has identified as “problem projects.”
DPMG also helps clients improve their policies and procedures, provides technical
assistance and training in principles of project design and implementation that
raise the odds of success, and trains clients to set up and manage their own
portfolio monitoring and management systems.
DPMG assessments are confidential. They are designed to be constructive: DPMG’s
review panels focus on corrective measures for improving outcomes, rather than on
missteps, and use the assessment process to mentor and coach the client’s project teams.
DPMG also generates standards of good practice by highlighting common issues
across assessments, drawing lessons about successes and failures, and sharing
case studies—with clients’ agreement—to exchange knowledge that can benefit
the entire development community.
DPMG’s clients include:
• Governments of developing countries
• Development banks
• Bilateral donors
• Regional cooperation institutions
3 Development Portfolio Management Group
• Nongovernmental organizations
• Foundations
• Private businesses.
Comparative advantage
DPMG’s approach to assessment was developed and initially applied at
the World Bank. After an alarming decline in the success rate of the Bank’s operations, this approach was designed to overcome two important limitations in the
standard means for managing portfolios: relying on self-reporting to track projects’
effectiveness and evaluating projects well after they had been completed.
The World Bank found self-reporting to be highly unreliable: Only about 50 percent
of failing projects were correctly identified. Although evaluations of completed
projects are necessary and useful in improving future initiatives, they cannot
rescue failing projects before they close. A broader perspective is required to
address problems across the project cycle.
4 Development Portfolio Management Group
Curt Carnemark/World Bank
To overcome these limitations, DPMG’s approach is based on five principles:
• A focus on active projects in midstream
• Independence of project assessments
• Identification of corrective actions to turn failing projects around
• Analysis of lessons learned from closed projects
• Identification of institutional bottlenecks
By applying these principles, DPMG offers clients a range of tools to assess and
improve their investment portfolios. Clients and their stakeholders—citizens,
institutional funders, boards of directors, government leaders, and taxpayers—
can be confident that they are doing their utmost to maximize their investments’
chances of success. Most important, DPMG clients can be confident that they are
making lasting and measurable improvements in the lives of those in poverty.
5 Development Portfolio Management Group
Xavier Legrain, former director of the World Bank’s Quality Assurance
Group, brings 30 years of economic development experience to his leadership
of DPMG. At the Bank, he pioneered the innovative method of assessing portfolio
performance that DPMG now offers to clients working in a wide range of sectors
and countries.
DPMG also draws on the expertise of hundreds of senior professionals with deep
experience in economic development in countries around the globe, technical
expertise in multiple sectors, fluency in major world languages, and extensive
experience in assessments of active development portfolios.
These independent experts are familiar with institutional conditions facing our
clients and are keenly alert to factors that influence the success and failure of these
programs. They also offer DPMG’s clients the benefits of their extensive experience
in such specialized areas as procurement, financial management, governance and
anti-corruption initiatives, gender assessments, social assessments, poverty
assessments, and environmental safeguards.
DPMG also has ready access to USC’s faculty, research centers as well as professional schools, whose collective expertise spans a wide range of disciplines—from
economics and the behavioral sciences to medicine, engineering, and mathematics.
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Eric Miller/World Bank
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Costs low
DPMG understands the cost constraints faced by its clients and structures its
operations in ways to keep costs as low as possible. Neither DPMG nor USC is a
profitmaking organization. DPMG works with a very small dedicated, full-time staff
and integrates the services of independent experts on an as-needed basis.
8 Development Portfolio Management Group
In the early 1990s, the World Bank’s Task Force on Portfolio Management evaluated
the Bank’s approach to managing its lending portfolio. It discovered that nearly two
out of every five closed loans had failed to achieve their development objectives.
Furthermore, the evaluation found that the Bank’s existing system of monitoring its
active portfolio through self-reporting by task teams had failed to detect anything
near this scale of failure.
As a result, the World Bank established the Quality Assurance Group (QAG) in 1996
with a mission to monitor ongoing projects, advise on ways of rescuing failing
projects, and identify strategies for avoiding future failures.
Over the next 14 years, the group pioneered innovative approaches to assessing
more than 4,000 World Bank investment projects and analytic activities. The
result was continuous improvement in the World Bank’s overall performance.
After the World Bank allocated its quality assurance function among its six regions
as part of a 2010 decentralization strategy, QAG’s director, Xavier Legrain, and
the QAG’s core management team felt it important to make the group’s services
available to the broader development community.
The result was the establishment of the DPMG, housed with the Center for
Economic and Social Research (CESR) of USC’s Dana and David Dornsife College
of Letters, Arts and Sciences.
Xavier Legrain Director
P +1-213-821-0521
E [email protected]
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Washington, DC 20006
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USC Development Portfolio Management Group