Democratic Republic of Timor-Leste: Mid-Level Skills Training Project

Transcription

1 Mid-Level Skills Training Project (RRP TIM 45139) Project Administration Manual Project Number: November 2011 Democratic Republic of Timor-Leste: Mid-Level Skills Training Project

2 Contents ABBREVIATIONS I. PROJECT DESCRIPTION 1 A. Impact and Outcome 1 B. Outputs 1 II. IMPLEMENTATION PLANS 4 A. Project Readiness Activities 4 B. Overall Project Implementation Plan 5 III. PROJECT MANAGEMENT ARRANGEMENTS 8 A. Project Implementation Organizations Roles and Responsibilities 8 B. Key Persons Involved in Implementation 9 C. Project Organization Structure 9 IV. COSTS AND FINANCING 11 A. Project Investment Plan 11 B. Project Financing Plan 12 C. Detailed Cost Estimates by Expenditure Category 13 D. Allocation and Withdrawal of Grant Proceeds 14 E. Detailed Cost Estimates by Financier 15 F. Detailed Cost Estimates by Output 16 G. Detailed Cost Estimates by Year 17 H. Fund Flow Program 19 V. FINANCIAL MANAGEMENT 20 A. Financial Management Assessment 20 B. Disbursement 20 C. Accounting 22 E. Auditing 22 VI. PROCUREMENT AND CONSULTING SERVICES 22 A. Advance Contracting 23 B. Procurement of Goods, Works and Consulting Services 23 C. Procurement Plan 24 D. National Competitive Bidding 28 E. Outline Terms of Reference for Consulting Services 31 VII. SAFEGUARDS 35 VIII. GENDER ACTION PLAN 36 IX. PERFORMANCE MONITORING, EVALUATION, REPORTING AND COMMUNICATION 38 A. Project Design and Monitoring Framework 38 B. Monitoring 38 C. Evaluation 39 D. Reporting 39 E. Stakeholder Communication Strategy 39 X. ANTICORRUPTION POLICY 40 XI. ACCOUNTABILITY MECHANISM 41 XII. RECORD OF PAM CHANGES 41 Appendix 1: Design and Monitoring Framework Appendix 2: Guidelines on the Preparation of the Proposed Partnership Agreement iv

3 Project Administration Manual Purpose and Process The project administration manual (PAM) describes the essential administrative and management requirements to implement the project on time, within budget, and in accordance with the Government of Timor-Leste and Asian Development Bank (ADB) policies and procedures. The PAM includes references to all available templates and instructions either through linkages to relevant URLs or directly incorporated in the PAM. The Secretariat of State for Vocational Training and Employment (SEFOPE) as the executing and implementing agency, is wholly responsible for the implementation of ADB financed projects, as agreed jointly between the Government of Timor-Leste and ADB, and in accordance with the Government of Timor-Leste and ADB s policies and procedures. ADB staff are responsible to support implementation including compliance by the executing agency of its obligations and responsibilities for project implementation in accordance with ADB s policies and procedures. At Grant Negotiations, the Government of Timor-Leste and ADB shall agree to the PAM and ensure consistency with the Grant Agreement. Such agreement shall be reflected in the minutes of the Grant negotiations. In the event of any discrepancy or contradiction between the PAM and the Grant Agreement, the provisions of the Grant Agreement shall prevail. After ADB Board approval of the project's report and recommendation of the President (RRP), changes in implementation arrangements are subject to agreement and approval pursuant to relevant Government of Timor-Leste and ADB administrative procedures (including the Project Administration Instructions) and upon such approval they will be subsequently incorporated in the PAM.

4 Abbreviations ADB = Asian Development Bank DMF EMP GAP = = = design and monitoring framework environmental management plan gender action plan ICB = international competitive bidding IEE = initial environmental examination INDMO = National Labor Force Development Institute LMIS = labor market information system NCB NQF PMU PPMS SEFOPE = = = = = TOR = terms of reference TVET = VTDC = national competitive bidding national qualification framework project management unit project performance management system Secretariat of State for Vocational Training and Employment technical and vocational education and training Vocational Training Development Center

5 I. PROJECT DESCRIPTION 1. The Mid-Level Skills Training project will assist the Democratic Republic of Timor-Leste in introducing and implementing mid-level skills training in construction and automotive trades by strengthening selected public and private training providers. The project will build on existing training programs and facilities which have a proven record of delivering quality skills training at basic levels. By filling skills gaps in the current technical and vocational education and training (TVET) system, the project will help the government develop a skilled workforce and improve employment opportunities for Timorese men and women. A. Impact and Outcome 2. The project will contribute to the development of a skilled workforce in Timor-Leste with improved quality and higher levels of vocational training. The project s outcome will be an expanded TVET system with mid-level skills training (levels 2-4) that is relevant and responsive to labor market needs. B. Outputs 3. The project will deliver five outputs: (i) mid-level skills training provision, (ii) technical teacher training, (iii) enhancing labor market linkages of TVET, (iv) strengthening SEFOPE financing and support for TVET, and (v) project implementation and management. 1. Mid-Level Skills Training Provision 4. This output will support the provision of mid-level training at certificate levels 2-4 in construction and automotive skills by (i) developing national skills standards and curricula, (ii) improving technical skills of teachers, and (iii) upgrading facilities and equipment of selected training providers to deliver competency-based training. 5. Development of industry-based training standards and curriculum. The National Labor Force Development Institute (INDMO) has been developing competency-based skills standards for certificate levels 1-2 in construction and automotive skills based on industry inputs and the established procedures of the national qualification framework (NQF). The project will support INDMO to further develop levels 3-4 skills standards, including modular programs. Based on these standards, curricula and learning materials will be produced by adapting internationally available materials according to Timor-Leste requirements. 6. Upgrading facilities and equipment of public training provider. The Tibar Training Center (Tibar) is one of two public training providers and recognized by INDMO as delivering quality basic skills training in construction trades (e.g., carpentry, plumbing, electrical, masonry, solar energy). 1 The project will finance the upgrading of facilities and equipment at Tibar to enable the delivery of competency-based training at levels 2-4. The project will also finance the construction of dormitory facilities at Tibar to expand access to quality mid-level training by students from remote areas and by women. The dormitory facility will also be used to accommodate teachers participating in technical teacher training programs (see output 2). 1 Another public institution the Senai Training Center was established with support from the Government of Brazil which continues to fund all operational expenses except for salaries for trainers. Since the Senai Center intends to continue training based on Brazilian certificate standards, it declined to be included in the project.

6 2 7. Upgrading facilities and equipment of private training providers. The project will support two registered private (nongovernment) training providers DIT Baucau and Don Bosco at Comoro with facility and equipment upgrades to deliver mid-level skills training in the project s priority skills areas. 2 They will be required to enter into a partnership agreement with the Secretariat of State for Vocational Training and Employment (SEFOPE) within 6 months of grant effectiveness to take part in the project. 3 The agreement will specify the scope of assistance for each training provider and outline the rights and obligations of SEFOPE and training providers. Obligations by the training providers will include commitments to train specified numbers of trainees in mid-level skills programs, and to operate and maintain upgraded facilities and equipment. The agreements will ensure that support provided to the private training institutes is passed to trainees through the provision of improved quality training at a reduced cost. A long-term plan ensuring the continued delivery of mid-level skills training by these providers will also be developed during project implementation Technical Teacher Training 8. This output will enhance the technical and pedagogical capacity of teachers from participating training providers to ensure the delivery of levels 2-4 training in construction and automotive skills. The project will help SEFOPE establish a new Vocational Training Development Center (VTDC), deliver in-service training for TVET teaching staff, and develop long-term plans to improve the skills of the overall TVET teaching staff. 9. Establishment of VTDC. A new VTDC will be established at an existing facility at Tibar with appropriate equipment and staff to provide in-service training programs for TVET technical teaching staff. The project will also support the development of a long-term plan for TVET teacher training programs, and an institutional plan for VTDC outlining its financing mechanism and sustainability. 10. Training of TVET trainers. Intensive in-service training at VTDC will be provided by international trainers to TVET teaching staff to upgrade their teaching skills in construction and automotive trades according to approved certification standards. Technical training will be combined with the existing pedagogical training and training in relevant industry settings. The training programs will be in modular form, delivered within 2-3 week periods over 1-2 years. Teachers from the project s three training providers will form a cadre of master trainers capable of passing on their skills to other technical teachers. Further on-the-job training and monitoring will be provided by international trainers. The programs will be extended to staff from other training providers over time. 3. Enhancing Labor Market Linkages of TVET 11. Poor perception of TVET and lack of information about related career options deter many young people from developing skills relevant to labor market needs. This output will support SEFOPE to (i) expand its TVET promotion activities and job counseling services; (ii) facilitate private-sector employers to provide workplace training or internships; and (iii) improve the labor market information system (LMIS). 2 The criteria for selecting private training providers for project support are described in the linked document on Profiles of Project Training Centers and Summary of Project Support in Appendix 2. There are currently only four private vocational training providers that deliver basic level training in construction and automotive skills outside the formal educational system. Of these four training providers, two did not satisfy selection criteria, and hence only the two remaining private training providers were included. 3 The guidelines on the preparation of the proposed partnership agreement are included in Appendix 2 of the PAM. 4 The long-term plan will consider any developing public-private partnership framework, if appropriate.

7 3 12. TVET promotion and career guidance. To promote TVET and increase awareness of related career options, social marketing and outreach activities will be undertaken through information materials, media campaigns, and national skills fairs. Career counseling services of SEFOPE will be strengthened to assist TVET trainees with job applications, job placements, and self-employment. These activities will be closely coordinated with employers and industry representatives, with special attention to encouraging female participation in nontraditional technical skills areas. 13. Workplace training. The project will assist mid-level skills training providers in developing internships or workplace training programs with relevant enterprises. Contracting programs for workplace training will be developed with a fixed payment per student to employers to defray costs of on-the-job training. The program will pay special attention for the placement of female trainees by offering a higher payment to employers, if necessary. The project will also organize workshops and events through which private sector employers can better understand the role of skills training in improving worker productivity and enterprise profitability. 14. Improved LMIS. The existing LMIS under SEFOPE is confined to supply-side information gathered from job-seekers through six district employment centers and from trainees registered with TVET providers. To enhance the relevance of training to labor market needs, the project will introduce demand-side data through employer surveys and enterprise training needs assessments. Combined with supply-side data, the information will yield indicators of skills shortages and training needs, which will help SEFOPE decide on funding allocations and assist TVET institutions in tailoring training programs and courses. 4. Strengthening SEFOPE Financing and Support for TVET 15. The project will help SEFOPE strengthen the delivery of new mid-level skills training and improve its capacity in overall TVET management. It will support SEFOPE to (i) develop financing plans to sustain mid-level skills delivery in public and private training institutions; (ii) design strategies to expand access to TVET by young men and women, especially those from poor and disadvantaged backgrounds; and (iii) expand the implementation of mid-level skills training. 16. Once the TVET Strategic Plan, currently under development, is approved by the government, the project will assist SEFOPE in expanding mid-level skills training in accordance with the TVET Strategic Plan. The expansion will involve (i) up-scaling mid-level skills training with additional training providers or programs; (ii) implementing scholarship programs for mid-level skills trainees, with a targeted allocation for females; and (iii) increasing support for workplace training and placements with employers. Specific selection criteria for these expansion programs will be developed and adopted by SEFOPE in accordance with the TVET Strategic Plan. 5. Project Implementation and Management 17. The project will provide necessary support for the project management unit (PMU) to (i) establish the facilities and systems required for effective project implementation and management; (ii) develop and implement a project monitoring and evaluation system for main project outputs and the gender action plan; and (iii) effectively and efficiently manage project activities, including procurement procedures, accounting, and regular reporting of project progress.

8 4 II. IMPLEMENTATION PLANS 18. The project will be implemented from April 2012 to December 2016, with grant closing on June An implementation plan is shown in Section II B. A. Project Readiness Activities Indicative Activities Establish project implementation arrangements Responsible Parties Sep Oct Nov Dec Jan Feb Mar Apr X ADB Board approval X ADB Advance contracting actions X X ADB Grant signing Government legal opinion provided X X SEFOPE, ADB Government, ADB Government X Government, Grant effectiveness ADB ADB = Asian Development Bank, SEFOPE = Secretariat of State for Vocational Training and Employment. Source: Asian Development Bank.

9 5 B. Overall Project Implementation Plan Activity 2012 (quarterly) Outputs Deliver mid-level skills training by selected TVET providers 1.1 Develop training standards and curricula for selected skills level Develop national skills standards levels 3-4 in construction and automotive skills training by Q Design curriculum frameworks and develop training materials by Q Upgrade training facilities and equipment Finalize proposals by selected training providers for facility and equipment provision by Q Finalize partnership agreements between SEFOPE and training providers by Q Undertake facility upgrading and provide equipment from Q Enhance teaching standards for levels Develop teacher training programs in construction and automotive skills by Q Conduct teacher training at VTDC with teachers from selected training providers from Q Provide additional teacher training and monitoring by overseas trainers from Q Develop long-term teacher training policy and implementation plans by Q Enhance labor market linkages of TVET 3.1 Develop TVET promotion strategies and materials Prepare TVET information brochures and media materials from Q Disseminate TVET promotion materials and undertake activities throughout districts from Q Expand job counseling services to TVET trainees Prepare plans for job counseling programs and services for TVET institutions and trainees from Q2 2013

10 6 Activity 2012 (quarterly) Outputs Undertake job counseling services and workshops for TVET trainees from Q Expand job counseling services to other vocational training institutions including technical high schools from Q Involve industry representatives in developing skills 3.3 standards Industry subcommissions agree on national skills standards for construction and automotive training levels 3-4 by Q Increase awareness of skills training among employers Develop case studies showing the value of skills training and on-the-job training for workers and enterprises productivity by Q In coordination with industry groups, organize workshops from Q Develop workplace training programs Develop payment schemes for employer contracting programs on workplace training from Q Implement employer contracting programs for levels 3-4 trainees, including women s placement from Q Improve LMIS Design core elements of demand-side data collection methods by Q Implement demand-side data collection by Q Produce analysis results on skills demands by Q Implement second round of data collection and analysis from Q Strengthening SEFOPE financing and support for TVET 4.1 Develop financing mechanism for training providers and trainees Develop implementation plans for financing skills training programs by private (nonprofit) training providers based on the National TVET Strategic Plan by Q Develop financing options to expand access to TVET, especially by women and the disadvantaged by Q4 2013

11 7 Activity 2012 (quarterly) Outputs Expand mid-level skills training Establish guidelines and selection criteria on selecting additional training providers and programs for funding support by Q Review applications and provide expansion support for midlevel skills training from Q Efficient project management and implementation by PMU 5.1 Establish PMU by Q Tender and award contracts for consultants and other civil works from Q and manage contracts Monitor progress in facility upgrades and other project outputs, including safeguard issues and GAP from Q Provide timely progress reports; carry out accounting and 5.4 annual audits from Q Organize capacity building training on finance and 5.5 procurement for SEFOPE and prepare additional capacity development plans for SEFOPE from Q Conduct periodic socioeconomic monitoring surveys to 5.6 assess accessibility, relevance, and socioeconomic outcomes of mid-level skills programs in GAP = gender action plan, LMIS = labor market information system, PMU = project management unit, Q = quarter, SEFOPE = Secretariat of State for Vocational Training and Employment, TVET = technical and vocational education and training, VTDC = Vocational Training Development Center. Source: Asian Development Bank.

12 8 III. PROJECT MANAGEMENT ARRANGEMENTS A. Project Implementation Organizations Roles and Responsibilities Project Implementation Organizations Executing Agency (SEFOPE) Project Steering Committee Project Director (SEFOPE) Project Management Unit ADB Management Roles and Responsibilities Responsible for the overall execution of the project Provide counterpart funding in a timely manner Provide overall guidance to the project Facilitate cross-agency policy dialogue on TVET and the project Provide strategic guidance for involving employers and private enterprises in TVET development Provide guidance for coordinated TVET activities with other development partners Report to the government and development partners as required Supervise and oversee project implementation Mobilize professional staff to support project implementation Ensure compliance of all project activities with grant covenants Review and endorse any requests and documents within its jurisdiction during project implementation (e.g., approval of bidding documents, bidding evaluation results, and contract awards procured by PMU) Submit periodic and ad hoc reports on project performance as required Responsible for the day-to-day implementation of project activities including the gender action plan (GAP) Facilitate the government compliance with grant covenants Responsible for financial management and administration of the project, including preparation of annual work plans and budgets, submission of withdrawal applications, retention of supporting documents, submission of quarterly and annual reports, preparation of annual audit reports and financial statements Responsible for negotiating and procuring all contracts Monitor and evaluate progress in civil works, facilities, and equipment upgrading Manage and coordinate activities of consultants, industry representatives, private sector employers, and other concerned agencies during project implementation Coordinate activities with participating training providers and hold quarterly meetings to discuss project s progress Establish project performance indicators and include the progress of these indicators in quarterly and annual reports Oversee project implementation and ensure compliance with the Grant Agreement and the Project Administration Manual (PAM) Review and respond to procurement and disbursement documents submitted by the executing agency Review the project every 6 months and undertake a mid-term review mission jointly with the government after two years of project commencement Monitor the project progress and provide inputs to the executing agency and PMU to achieve the expected outputs and outcomes

13 9 B. Key Persons Involved in Implementation Executing/Implementing Agency Secretariat of State for Vocational Training and Employment (SEFOPE) ADB Urban, Social Development, and Public Management Division Pacific Department Mission Leader Officer's Name: Bendito dos Santos Freitas Position: Secretary of State Telephone: address: Office Address: Ex-UN House, Caicoli Dili, Timor-Leste Staff Name: Andrea Iffland Position: Director Telephone No.: address: aiffland@adb.org Staff Name: Sunhwa Lee Position: Principal Social Development Specialist Telephone No.: address: sunhwalee@adb.org C. Project Organization Structure 19. SEFOPE will be the executing and implementing agency. SEFOPE will appoint a project director, who will supervise and oversee project implementation. A project steering committee (PSC) will provide overall project guidance, support cross-agency policy dialogue, and serve as a liaison with private sector employers. The Secretary of SEFOPE will chair the committee, with the project director as committee secretary. The PSC will consist of senior representatives from the Ministry of Education, members of the INDMO executive commission, and representatives from the Chamber of Commerce and Industry. Key development partners in the TVET subsector will participate as observers. 20. SEFOPE will appoint the project director and establish the PMU. The grant will not become effective until the project director is appointed and the PMU team leader is recruited. Under the guidance of the project director, the PMU will be responsible for day-to-day project implementation; planning and budgeting; procurement; disbursement; monitoring; supervising and overseeing of implementation at the training provider level; and submitting the required reports to the government and the Asian Development Bank (ADB). The PMU will be supported by consultants.

14 10 Figure 1. Project Organization Structure SEFOPE (EA/IA) Project Steering Committee SEFOPE Project Director Project Management Unit Responsible for implementation of all aspects of the project Project planning and budgeting Procurement of civil works, equipment, and materials Monitoring and evaluation Reporting EA = executing agency, IA = implementing agency, SEFOPE = Secretariat of State for Vocational Training and Employment.

15 11 IV. COSTS AND FINANCING 21. The total cost of the project is estimated at $13 million, including taxes and duties of $159,000, and physical and price contingencies of $1.44 million. The project investment plan is summarized in Table A. A. Project Investment Plan Item A. Base Cost b Description Amount a ($ 000) Total Cost (%) Output 1: Mid-Level Skills Training Provision 4, Output 2: Technical Teacher Training 1, Output 3: Enhancing Labor Market Linkages of TVET 1, Output 4: Strengthening SEFOPE Financing and Support for TVET 3, Output 5: Project Implementation and Management 1, Subtotal A 11, B. Contingencies c Physical Price Subtotal B 1, Total Project Cost (A+B) 13, TVET = technical and vocational education and training. a Includes taxes and duties of $159,000 to be financed by ADB. b In mid-2011 prices. Physical contingencies are computed at 10% for civil works and 5% for equipment and services. Based on cost escalation factors for Timor-Leste for local currency costs, there is a devaluation offset included in the price contingency based on the US dollar inflation rate of 1%. Source: Asian Development Bank estimates. 22. The government has requested a grant of $12 million from ADB s Special Funds (ADF) resources to finance 92.3% of the project cost. The grant will cover civil works, equipment, materials, consulting services, workshops, studies, study visits, vehicles, project operation and management, and taxes and duties. 5 The government will provide in-kind and financial contributions equivalent to $1 million to cover the costs of counterpart staff, office space, contingencies, operating costs for additional mid-level trainees at the Tibar Training Center, and a proportion of teacher training and national consultant costs (e.g., additional teaching staff, job counseling officers) essential for the sustainability of project activities. The financing plan is shown in Table B. The grant is issued on standard ADF terms and such other terms and conditions as set forth in the draft grant agreement. 23. Tax calculations are based on customs tariffs and import levies and government service taxes. Taxation rates applied include government service tax of 2.5%, sales tax of 2.5%, and custom duty of 2.5% on imported goods. Physical contingencies have been provided at 10% on civil works and 5% on equipment and services. Price contingencies were provided for civil works, materials, equipment, and services, based on ADB s domestic cost escalation factors for Timor-Leste for local currency costs. A devaluation offset is included in the price contingency based on a US dollar inflation rate of 1%. 5 The amount of taxes and duties to be financed (i) is within the threshold identified in the Timor-Leste Country Partnership Strategy (CPS) ; (ii) does not represent an excessive share of project investment; (iii) applies only to ADB-financed expenditures; and (iv) is relevant to the success of the project. Transportation and insurance are also eligible expenses for ADB financing.

16 12 B. Project Financing Plan Source Amount ($ million) Share of Total (%) Asian Development Bank Government of Timor-Leste Total Source: Asian Development Bank. 24. The proceeds of the grant will be used to finance eligible project expenditures. All goods, works, and services to be financed out of grant proceeds will be procured in accordance with the grant agreement and will be used exclusively in carrying out the project. ADB may refuse to finance a contract where goods or services have not been procured under procedures in accordance with those agreed between the government and ADB, or where the terms and conditions of the contract are not satisfactory to ADB.

17 13 C. Detailed Cost Estimates by Expenditure Category Amount a ($'000) I. Investment Costs Local Foreign Total % of Total Cost A. Civil Works - Upgrading Training Facilities 0 1,830 1, % B. Equipment 0 1,000 1, % C. Training and Curricula Development , % D. TVET Promotion and Surveys % E. Consulting Services 1. International Consultants 0 1,750 1, % 2. National Consultants % 3. International and Domestic Travel % Subtotal Consulting Services 200 2,673 2, % F. Workplace Training Program % G. Expansion of Mid-Level Skills Training Program 0 2,000 2, % H. Workshops, Study Visits, Skills Olympics % I. Project Operation and Maintenance % Total Investment Costs ,654 11, % II. Recurrent Costs A. Project Staff Costs b % B. Office Rental and Utilities b % C. Tibar Operational Costs % Total Recurrent Costs % Total Project Base Costs ,654 11, % III. Contingencies A. Physical Contingencies c % B. Price Contingencies d % Total Contingencies 95 1,346 1, % Total Project Costs (I+II+III) 1,000 12,000 13, % TVET = technical and vocational education and training. a In mid-2011 prices. b These amounts represent in-kind contributions by the government. c Computed at 10% for civil works and 5% for equipment and services. d Based on cost escalation factors for Timor-Leste for local currency costs, there is a devaluation offset included in the price contingency based on the US$ inflation rate of 1%. Note: Figures may not sum up exactly due to rounding. Source: Asian Development Bank estimates.

18 14 D. Allocation and Withdrawal of Grant Proceeds 25. Except as ADB may otherwise agree, each item of expenditure will be financed from the proceeds of the grant on the basis of the percentages set forth in the table below. Category No Item ADB Financing $'000 a ADB Financing Percentage and Basis for Withdrawal from the Grant Account 1 Civil Works - Upgrading Training Facilities 1, % of total expenditure claimed 2 Equipment 1, % of total expenditure claimed 3 Training and Curricula Development % of total expenditure claimed 4 TVET Promotion and Surveys % of total expenditure claimed 5 Consulting Services 5a. International Consulting Services 1, % of total expenditure claimed 5b. National Consulting Services % of total expenditure claimed 5c. International and Domestic Travel % of total expenditure claimed 8 Workplace Training Program % of total expenditure claimed 9 Expansion of Mid-Level Skills Training Program 2, % of total expenditure claimed 10 Workshops, Study Visits, Skills Olympics % of total expenditure claimed 11 Project Operation and Maintenance % of total expenditure claimed 12 Unallocated 1,346 Total 12,000 TVET = technical and vocational education and training. a Total amount allocated for ADB financing.

19 15 E. Detailed Cost Estimates by Financier a I. Investment Costs Total Government Amount in $'000 % ADB Amount in $'000 % A. Civil Works - Upgrading Training Facilities 1, % 1, % B. Equipment 1, % 1, % C. Training and Curricula Development 1, % % D. TVET Promotion and Surveys % % E. Consulting Services 1. International Consultants 1, % 1, % 2. National Consultants % % 3. International and Domestic Travel % % Subtotal Consulting Services 2, % 2,673 93% F. Workplace Training Program % % G. Expansion of Mid-Level Skills Training 2, % 2, % H. Workshops, Study Visits, Skills Olympics % % I. Project Operation and Maintenance % % Total Investment Costs 11, % 10,654 96% II. Recurrent Costs A. Project Staff Costs b % 0 0% B. Office Rental and Utilities b % 0 0% C. Tibar Operational Costs % 0 0% Total Recurrent Costs % 0 0% Total Project Base Costs 11, % 10,654 92% III. Contingencies A. Physical Contingencies % % B. Price Contingencies % % Total Contingencies 1, % 1,346 93% Total Project Costs (I+II+III) 13,000 1,000 8% 12,000 92% TVET = technical and vocational education and training. a The project costs are inclusive of taxes and duties ($159,000) to be financed by ADB. b These amounts represent in-kind contributions by the government. Note: Amounts and financing %s may not sum up exactly due to rounding. Source: Asian Development Bank estimates.

20 16 F. Detailed Cost Estimates by Output Amount (in $'000) a Items Output 1 Output 2 Output 3 Output 4 Output 5 % of % of % of % of % of Cost Cost Cost Cost Cost I. Investment Costs Amount Category Amount Category Amount Category Amount Category Amount Category Total A. Civil Works Upgrading Training Facilities 1, % 0 0% 0 0% 0 0% 0 0% 1,830 B. Equipment % % 90 9% 0 0% % 1,000 C. Training and Curricula Development % % 0 0% 0 0% 0 0% 1,052 D. TVET Promotion and Surveys 0 0% 0 0% % 0 0% 0 0% 540 E. Consulting Services 1. International Consultants % % 120 7% % 160 9% 1, National Consultants 58 7% 53 7% % 0 0% % International and Domestic Travel 98 30% 18 6% % 62 19% 34 10% 324 Subtotal Consulting Services % % % % % 2,873 F. Workplace Training Program 0 0% 0 0% % 0 0% 0 0% 520 G. Expansion of Mid-Level Skills Training 0 0% 0 0% 0 0% 2, % 0 0% 2,000 H. Workshops, Study Visits, Skills Olympics 30 5% 0 0% % % 0 0% 545 I. Project Operation and Maintenance % 0 0% 60 8% 0 0% % 757 Total Investment Costs 4,125 37% 1,369 12% 1,904 17% 2,737 25% 982 9% 11,117 II. Recurrent Costs A. Project Staff Costs b 0 0% 0 0% 0 0% 0 0% % 12 B. Office Rental and Utilities b 0 0% 0 0% 0 0% 0 0% % 30 C. Tibar Operational Costs 0 0% 0 0% 0 0% % 0 0% 400 Total Recurrent Costs 0 0% 0 0% 0 0% % 42 10% 442 Total Project Base Costs 4,125 36% 1,369 12% 1,904 16% 3,137 27% 1,024 9% 11,559 III. Contingencies A. Physical Contingencies c % 77 12% % % 57 9% 647 B. Price Contingencies d % 94 12% % % 70 9% 794 Total Contingencies % % % % 127 9% 1,441 Total Project Costs (I+II+III) 4,640 36% 1,540 12% 2,141 16% 3,528 27% 1,151 9% 13,000 TVET = technical and vocational education and training. a In mid-2011 prices. b These amounts represent in-kind contributions by the government. c Computed at 10% for civil works and 5% for equipment and services. d Based on cost escalation factors for Timor-Leste for local currency costs, there is a devaluation offset included in the price contingency based on a US$ inflation rate of 1%. Note: Figures may not sum up exactly due to rounding. Source: Asian Development Bank estimates. `

21 17 G. Detailed Cost Estimates by Year Amounts (in $ '000s) Items Total I. Investment Costs A. Civil Works - Upgrading Training Facilities 0 1, ,830 B. Equipment ,000 C. Training and Curricula Development ,052 D. TVET Promotion and Surveys E. Consulting Services 1. International Consultants , National Consultants International and Domestic Travel Subtotal Consulting Services ,873 F. Workplace Training Program G. Expansion of Mid-Level Skills Training ,000 H. Workshops, Study Visits, Skills Olympics I. Project Operation and Maintenance Total Investment Costs 834 4,095 2,495 1,930 1,763 11,117 II. Recurrent Costs A. Project Staff Costs a B. Office Rental and Utilities a C. Tibar Operational Costs Total Recurrent Costs Total Project Base Costs 842 4,204 2,604 2,038 1,871 11,559 III. Contingencies A. Physical Contingencies B. Price Contingencies Total Contingencies ,441 Total Project Costs (I+II+III) 898 4,605 2,929 2,353 2,215 13,000 Expenditure per Year (%) 7% 35% 23% 18% 17% 100% TVET = technical and vocational education and training. a These amounts represent in-kind contributions by the government. Note: Figures may not sum up exactly due to rounding. Source: Asian Development Bank estimates.

22 18 Figure 2: Contract and Disbursement S-Curve Figure 3: Annual and Cumulative Disbursements

23 19 H. Fund Flow Diagram 1 Asian Development Bank Consultants / ILO 2. Consulting Firms 3. Service Providers 4. Large Civil Works Project Management Unit (PMU) 3 SEFOPE Imprest Account Ministry of Finance 6 1. Materials 2. National Consultants 3. Equipment 4. Service Providers 5 Tibar Operational Costs Flow of Funds Flow of Documents 1. Direct Payment Procedures in accordance with the Loan Disbursement Handbook 2. Imprest Account -Funds released to US $ imprest account 3. Payment Request - Direct payment request prepared and reviewed by PMU 4. Replenishment of Imprest Account -Full supporting documents prepared by PMU and approved by SEFOPE 5. Imprest Account Payments -PMU manages imprest account payments 6. Counterpart Funds -Earmarked funds released from SEFOPE budget or the Human Capital Development Fund ILO = International Labor Organization, PMU = project management unit, SEFOPE = Secretariat of State for Vocational Training and Employment.

24 20 V. FINANCIAL MANAGEMENT 26. The financial management assessment was prepared in accordance with ADB s Guidelines for the Financial Management and Analysis of Projects 6 (the Guidelines) and Financial Due Diligence: A Methodology Note. 7 The assessment was completed at the country level and for SEFOPE as the executing agency using ADB s Financial Management Assessment Questionnaire. A. Financial Management Assessment 27. The assessment concluded that while improvements have been made at the country level in financial management systems, the capacity within SEFOPE remains low for implementing the project in line with ADB policies and procedures. The most significant financial management risks are outlined in the Risk Assessment and Risk Management Plan 8 and include: (i) limited capacity and shortage of human resources; (ii) poor planning and budgeting; (iii) weak financial reporting arrangements; and (iv) limited internal and external audit capability. 28. To mitigate the risks in financial management, SEFOPE will engage one international finance and procurement specialist and one national finance consultant in the PMU who will assist with financial management. All SEFOPE and PMU staff will receive training in ADB policies and procedures to help ensure compliance with ADB financial management and disbursement requirements. 29. The international finance and procurement specialist will assist SEFOPE in building capacity within the finance and procurement departments of SEFOPE and establish working relationships between the PMU and these departments. This specialist will develop financial management guidelines, financial reporting, and related administrative activities for the project, which will include as a minimum (i) budget preparation and oversight, (ii) preparation of an annual training program on financial management and procurement for SEFOPE and PMU staff, (iii) ensuring financial reporting requirements in accordance with ADB policies and procedures, (iv) ensuring that internal control systems are in place to safeguard project data and assets, and (v) ensuring preparation of all supporting documents to fulfill ADB financing and procurement requirements. All of the above requirements will be agreed and approved by SEFOPE and ADB. B. Disbursement 30. The ADB grant proceeds will be disbursed in accordance with ADB s Loan Disbursement Handbook (2007, as amended from time to time), 9 and detailed arrangements agreed upon between the government and ADB. 31. Pursuant to ADB's Safeguard Policy Statement (2009), 10 ADB grant proceeds may not be applied to the activities described on the ADB Prohibited Investment Activities List set forth in Appendix 5 of the Safeguard Policy Statement. The executing and implementing agency will ensure that their investments in construction and refurbishment of facilities under output 1 are in compliance with applicable national laws and regulations and will apply the prohibited investment activities list (Appendix 5) to subprojects financed by ADB. 6 ADB Financial Management and Analysis of Projects. Manila. 7 ADB Financial Due Diligence: A Methodology Note. Manila. 8 Risk Assessment and Risk Management Plan is available from the linked documents of the RRP Appendix 2. 9 Available at: Available at:

25 32. The project will use a combination of direct payment and imprest account procedures during project implementation. An imprest account will be established and administered by the PMU, from which project payments will be made. The bank in which the account will be opened will be agreed by ADB and the government, and will be established immediately after grant effectiveness to ensure project implementation and timely disbursement of funds Direct payment procedures will generally be used whenever a large amount of payment is required. Direct payments will be used for international consultants or consulting firms engaged by the project. Direct payments will also be used for large civil works, purchases of materials and equipment made by the project. 34. The consultants or contractors will submit appropriate supporting documentation (invoice or request for payment) to the PMU for verification and certification. The PMU will prepare withdrawal applications, along with the certified supporting documents, for endorsement by the project director of SEFOPE, which will be submitted to ADB. ADB will make the payment to the payee directly. 35. An imprest account will be established, managed, replenished, and liquidated in accordance with ADB s Loan Disbursement Handbook (2007, as amended from time to time). The ceiling of the imprest account will not at any time exceed the estimated ADB-financed expenditures to be paid from the imprest account for the next 6 months or 10% of the grant amount, whichever is lower. The imprest account will generally be utilized for local and short-term individual consultant payments, training materials, workshops, and operational expenses of the project. 36. The request for initial advance to the imprest account should be based on the estimated expenditures to be financed through the imprest account for the first 6 months of project implementation, and submission of evidence satisfactory to ADB that the imprest account has been duly opened. For every liquidation and replenishment request of the imprest account, the executing agency will furnish to ADB (i) a statement of account (bank statement) from where the imprest account is maintained, and (ii) the imprest account reconciliation statement showing the abovementioned bank statement against the executing agency s cashbook. 37. For the first withdrawal application, SEFOPE should submit to ADB sufficient evidence of the authority of the person(s) who will sign the withdrawal applications on behalf of the executing agency, together with the authenticated specimen signatures of each authorized person. The minimum value per withdrawal application is $100,000 unless otherwise approved by ADB. The PMU is to consolidate claims to meet this limit for reimbursement and imprest account claims. Withdrawal applications and supporting documents will demonstrate, among other things, that the goods and/or services were produced in or from ADB member countries and are eligible for ADB financing. 38. A review of financial management capacity of the PMU and SEFOPE will be completed during project implementation to determine if statement of expenditure (SOE) procedures may be used for reimbursement, liquidation, and replenishment of the imprest account, as outlined in ADB s Loan Disbursement Handbook (2007, as amended from time to time). The review will take into account the outcome of the first independent external audit performed on the project s financial statements. ADB will advise the PMU and SEFOPE of the ceiling amount below which SOE procedures will be used replacing the full supporting documentation. SOE records and full supporting documents should be maintained at the PMU and made readily available for review by ADB's disbursement and review missions or upon ADB's request for submission of supporting Bank charges may be financed from the ADB grant.

26 22 documents on a sampling basis, and for independent audit. 12 For payments of the ceiling amount or higher, full supporting documents will be submitted to ADB together with withdrawal applications, and the PMU will keep a copy of the submission for records and audit. 39. For counterpart funding, the PMU will prepare annual project disbursement projections (budget), which will be approved by the Secretary of SEFOPE and submitted to the Ministry of Finance for inclusion in the government s annual budget to ensure that sufficient funding is available to meet the government s share of project expenses. The release of counterpart funds will be in accordance with the government s financial management procedures. C. Accounting 40. SEFOPE, through the PMU, will maintain separate project accounts and records by funding source for all expenditures incurred by the project. The project accounts will follow international accounting principles and practices and should be prepared for audit within 4 months of the end of the financial year. The project accounts will be maintained on computerized software, with separate project records and accounts classification adequate to identify (i) goods and services financed from grant proceeds; (ii) financing resources received; (iii) detailed breakdown of expenditures by project output; and (iv) counterpart funds received and expended. D. Auditing 41. SEFOPE will cause the detailed consolidated project accounts to be audited in accordance with International Standards on Auditing by an auditor acceptable to ADB. The audited accounts will be submitted in the English language to ADB within 6 months of the end of the fiscal year by SEFOPE. The annual audit report will include a separate audit opinion on the use of the imprest account and the SOE procedures (if such procedures are approved). The government and SEFOPE have been made aware of ADB s policy on delayed submission, and the requirements for satisfactory and acceptable quality of the audited accounts. ADB reserves the right to verify the project's financial accounts to confirm that the share of ADB s financing is used in accordance with ADB s policies and procedures. VI. PROCUREMENT AND CONSULTING SERVICES 42. A procurement capacity assessment was completed for the SEFOPE procurement department. The overall conclusion of the assessment was that the low level of procurement resources and limited numbers of technically qualified staff would leave project procurement challenging for SEFOPE during project implementation. The PMU will carry out the procurement of goods, works, and services under the project with the help of an international finance and procurement expert. The expert will assist in developing procurement capacity in the procurement department, which will be responsible for procurement processing on behalf of the executing agency. 12 Checklist for SOE procedures and formats are available at:

27 23 A. Advance Contracting 43. All advance contracting will be undertaken in conformity with ADB s Procurement Guidelines (2010, as amended from time to time) and ADB s Guidelines on the Use of Consultants (2010, as amended from time to time). The issuance of invitations to bid under advance contracting will be subject to ADB approval. The government has been advised that approval of advance contracting does not commit ADB to finance the project. 44. To expedite project implementation, the government has requested advance contracting actions to proceed with the selection of PMU consultants. Advance contracting allows the government to commence recruitment activities prior to signing of the grant agreement but does not allow for the award of contract until the grant becomes effective. ADB will assist the executing/implementing agency with the preparation of terms of reference, advertisements, and the selection of the PMU consultants. 45. There will be no retroactive financing. B. Procurement of Goods, Works, and Consulting Services 46. All procurement of goods and works will be undertaken in accordance with ADB s Procurement Guidelines, including all procurement carried out through national competitive bidding. 47. Procurement of civil works. Procurement will be carried out following international competitive bidding (ICB), national competitive bidding (NCB), and shopping methods. ICB will be used for procurement of works above $1 million; NCB will be used for procurement of works above $100,000 up to $ 1 million; and shopping will be used for contracts up to $100, Procurement of goods and services. ICB procedures will be used for goods contracts estimated above $500,000; NCB procedures for goods estimated between $100,000 and $500,000; and shopping methods for goods with an estimated value of less than $100,000. Procurement of goods and services is envisaged for training facility equipment and materials, vehicles, promotional materials, etc. It will be grouped into (i) two packages of construction materials, (ii) nine packages for equipment for training providers, (iii) two packages for vehicles, (iv) two packages of equipment for LMIS and PMU, (v) surveys, (vi) audit, and (vii) workshops. 49. Consulting services. All consultants will be recruited according to ADB s Guidelines on the Use of Consultants. 14 An estimated 751 person-months (93 international and 658 national) are anticipated to (i) develop skills standards, curricula, and technical teachers capacity; (ii) strengthen TVET policy and institutional capacity of training providers; (iii) improve the capacity of TVET technical staff; (iv) undertake TVET promotion activities and career guidance services; (v) strengthen the LMIS; and (vi) support project management. The outline terms of reference for all consulting services are in section E. 50. The International Labor Organization (ILO) will be engaged to provide 118 person-months (46 international and 72 national) of technical services for output 1 and part of output 2 through single-source selection (SSS). The justification for SSS is ILO s experience in 13 The current procurement plan does not have any civil works package over $1 million. 14 Checklists for actions required to contract consultants by method are available in e-handbook on Project Implementation at: