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The World BankVietnam New Model University Project (P110693)

REPORT NO.: RES27297

DOCUMENT OF THE WORLD BANK

RESTRUCTURING PAPER

ON A

PROPOSED PROJECT RESTRUCTURING

OF

VIETNAM NEW MODEL UNIVERSITY PROJECT

APPROVED ON JUNE 24, 2010

TO

GOVERNMENT OF SOCIALIST REPUBLIC OF VIETNAM

EDUCATION

EAST ASIA AND PACIFIC

Regional Vice President: Victoria Kwakwa Country Director: Ousmane Dione

Senior Global Practice Director: Jaime Saavedra ChanduviPractice Manager/Manager: Harry Anthony Patrinos

Task Team Leader: Dung Kieu Vo

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ABBREVIATIONS AND ACRONYMS

CP Civil work package

FA Financing Agreement

IDA International Development Association

MoET Ministry of Education and Training

PMU Project Management Unit

US$ United States Dollar

VGU The Vietnamese-German University

VMU VGU’s Project Management Unit

BASIC DATA

Product Information

Project ID Financing Instrument

P110693 Investment Project Financing

Original EA Category Current EA Category

Partial Assessment (B) Partial Assessment (B)

Approval Date Current Closing Date

24-Jun-2010 30-Nov-2017

Organizations

Borrower Responsible Agency

Socialist Republic of Vietnam Ministry of Education and Training


Project Development Objective (PDO)

Original PDOThe project aims to develop an autonomous research-based university to demonstrate a new policy framework on governance, financing, and quality in Vietnam's higher education system.OPS_TABLE_PDO_CURRENTPDOSummary Status of Financing

Ln/Cr/Tf Approval Signing Effectiveness ClosingNet

Commitment Disbursed Undisbursed

IDA-47860 24-Jun-2010 13-Aug-2010 27-Dec-2010 30-Nov-2017 180.40 25.32 141.31

Policy Waiver(s)

Does this restructuring trigger the need for any policy waiver(s)?No

I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING

A. PROJECT STATUS

1. The project is making progress toward achieving the project development objectives. Progress towards achievement of the PDO and overall Implementation Progress (IP) are both rated Moderately Satisfactory (ISRs archived on December 23, 2016 and June 21, 2017), and all other project ratings are either Satisfactory or Moderately Satisfactory including implementing agency performance. The project was previously in problem status, but was upgraded in June 2015 when notable progress had been made since February 2015 with 18 months of solid implementation progress and increased progress towards achievement of the PDO. To date, the project has: (i) updated the Vietnamese-German University (VGU) charter and a governance structure and was approved by the Prime Minister in June 2017 (PDO indicator 1); (ii) developed financial sustainability plans for VGU (PDO indicator 2) – three financial models with ten levers – with Ministry of Education and Training (MOET) adopting one of the three models; and (iii) developed high quality academic programs for VGU (PDO indicator 3), including 12 German accredited study programs – seven Masters and five Bachelors – exceeding the PDO target of 10.

2. Implementation has experienced gains with progress being achieved in: (i) development of policies for the institution and reflected on the day-to-day running of the University, (ii) building of the faculty, and (iii) well planned for campus construction. However, there has been slow progress in the disbursement of project funds which is reflected by the low disbursements rate of 15.20 percent. This is largely attributed to the implementation delays in campus construction and procurement of goods (lab equipment and campus facilities). These delays were the result of: (i) a long delay in the selection of the Organizer of Architectural Design Contest and a General Design Planner; (ii) a prolonged development of a Basic Design because lab equipment specifications required for lab design was more complicated than anticipated; (iii) ineffective Presidential Board with resignation of two German Presidents over the course of the project; (iv) MOET’s prolonged appraisal and approval of annual procurement plans, which shortened


the implementation period (by about 30 percent) in every year of the past six years and consequently delayed project implementation; and (v) insufficient capacity in procurement and contract management due to the lack of adequate experience in Bank-financed projects and high staff turn-over rate at both implementing agencies (MOET’s Project Management Unit, PMU and VGU’s Project Management Unit, VMU). The disbursement rate will increase now that the construction packages are being executed. Furthermore, the project has no unresolved legal or safeguard issues.

3. Challenges and Areas for Improvement: Slow implementation of the project has been attributed to a number of factors. These are: (i) late start of campus construction; (ii) student enrolment has been well below the targets since the academic year 2015-2016 but is expected to be improved so as to meet the 2022 target once the construction is completed and VGU is staffed up; (iii) the cost of running the university continues to grow quicker than revenue; (iv) even though a sustainable financial model has finally been adopted by MOET, there was a long delay in finalizing this due to a prolonged process of both governments involved in deciding on a longer term public investment in the VGU; (v) ineffective University Council and Presidential Board in strategic decision making, mainly due to over-dependence on the Vietnam-German partnership which has led to low enrolment and slow research capacity development; (vi) lengthy processing times for appraisals and approvals by MOET (as the project owner); (vii) lack of adequate capacity in procurement and contract management by both implementing agencies; (viii) long absence of a project management consulting firm due to a contractual dispute with the PMU leading to ceasing services since June 2016; and (ix) the lack of a Chief Engineering Officer at the PMU. The dispute with the project management consulting firm has been resolved and another international firm was hired in November 2017.

4. The Project Disbursement. The disbursement rate is currently 15.20 percent and will remain the same until the current project closing date of November 30, 2017. Significantly greater disbursement is expected if an extension of the closing date is approved as delayed construction packages are now being executed, which would allow for full disbursement of the IDA credit by the proposed closing date of November 30, 2020. US$25 million expenditure has been committed due to contracts that have been signed with two civil work contractors and design and construction supervision consulting firms.

5. Fiduciary performance. To date, the project has had nine (9) Implementation Support Supervision Missions (every 6 months) and a mid-term review mission that took place in February-March 2014. In general, the project is performing well in terms of financial management, with adequate systems in place, and Interim Financial Reports being submitted on time. All audit reports have been received with an unqualified opinion, and Financial Management is rated Moderately Satisfactory. The Procurement performance under project has also been rated as Moderately Satisfactory in general, but has still been facing a number of challenges as presented in paragraphs 2 and 3 above.

B. RATIONALE FOR RESTRUCTURING

6. Initial delays were incurred (during the first 30 months of implementation) because preparatory work needed to build a quality campus (i.e. architectural drawings, lab equipment specifications etc.) was more complex than anticipated during project design. A two-year action plan was put in place in October 2015 to remedy the situation, which is now nearing completion, and construction (which uses 75 percent of the project’s financial resources) started in October 2016 with US$25 million expenditure being committed for contracts that have been signed with two civil work contractors and design and construction supervision consulting firms. The government has put in place an action plan to complete the remaining project activities, including the campus construction and equipment installation, by the end of the proposed extended implementation period, including an enhanced implementation arrangement and capacity. A 36-month extension will allow for: (i) construction of the new campus to be completed and become operational; (ii) support for the implementation of the university’s financial sustainability plans; and (iii) support for


further expansion of the university research capacity that would lead to more scientific papers being published and will help to establish the university’s reputation as a leading research institute in Vietnam and internationally.

7. The expected impact of the completion of the project will be the development of an autonomous model university that demonstrates a new policy framework on governance, financing and quality for other higher education institutions in Vietnam. There is strong will and determination from the Government of Vietnam for VGU to become an international-standard research university, whose achievements and reputation are based on the results of its scientific research, and share the results with the country and international community. Unless extension is granted permitting time to fully complete the intended objectives of this project, the university will be unlikely to acquire the technical and financial resources required to achieve the set goal.

II. DESCRIPTION OF PROPOSED CHANGES

The development objective of the project remains unchanged.

8. Extend the project for an additional 36 months from November 30, 2017 to November 30, 2020 to:

a) Complete all consultancy works under Component 1: Policy and governance development, and Component 2: Academic and Research Development. Completion of the policy work will help strengthen VGU governance and develop a policy framework for VGU which will be demonstrated to other higher education institutions in Vietnam.

b) Complete procurement of all laboratory equipment for 23 study programs and research under Component 2, which will contribute to the provision of high quality study and research programs at VGU.

c) Complete research and professional development activities under Component 2 that will enhance research and teaching capacity of VGU’s recruited academic staff, especially newly recruited lecturers/professors.

d) Complete construction of 120,000 m2 of the new campus under Component 3 to accommodate 3,290 students by 2021 and 4,512 students by 2030.

9. Revise the Results Framework to ensure progress toward achieving the project development objective (PDO) is more clearly measurable. The revised Results Framework will restate one PDO level indicator to better measure progress toward PDO achievement and will add one additional indicator to measure research capacity. Intermediate indicators will also be revised by restating three of the current intermediate indicators, deleting one current indicator on accredited programs which has been moved up to the DPO indicator. The revisions of the intermediate indicators are measurable and will help monitor the project implementation effectively.

10. Revise categories of expenditures and change component cost. The original costing of the project included unallocated project funds which was reflected in the Project Appraisal Document (PAD) and the project financing agreement. The restructuring seeks to allocate the unallocated funds to eligible expenditure categories and revise categories of expenditures based on the latest estimated expenditure and restructuring activities. The restructuring will modify disbursement categories in the interest of reducing complexity while increasing flexibility. Presently, the project consists of five disbursement categories with Works and Goods presented in two separate categories and a category designed for “Unallocated”. Since the MOET has approved the total investment project cost, which includes both the construction of the campus and equipment, the restructuring will group these categories into one new


category “Works and Goods” and remove the “Unallocated” category. The restructuring also seeks to change the cost of components based on the restructuring activities and related costs.

11. Change institutional implementation arrangements to: i) streamline and accelerate MOET’s appraisal and approval of procurement-related decisions; and ii) ensure project management units are provided with sufficient resources and staffed with competent personnel to implement over 80 percent of the loan over the extension period of 36 months. In particular, MOET will maintain the Projects Management Board with functions, composition, staffing and resources acceptable to the Association, to be responsible for: (a) reviewing and submitting to MOET for approval annual implementation, procurement, and financial plans for the project; (b) setting forth rules, procedures, and guidelines for project implementation, reporting and monitoring and evaluation; (c) monitoring progress of project implementation on a quarterly and yearly basis to ensure continued alignment of actions and processes within set rules, manuals and guidelines; (d) evaluating progress of deliverables in line with agreed performance indicators, targets and milestones; and (e) overseeing the activities of the PMU and the VMU.

12. Update the procurement procedures agreed in the financing agreement because there have been some changes in the World Bank’s guidelines on the thresholds for prior review of the procurement decisions which shall follow risk-based approach, and mandatory use of Systematic Tracking of Exchanges in Procurement (STEP) for planning, monitoring and recording procurement transactions implemented under the project. The applicable version of the Bank’s Procurement and Consultant Guidelines in the project Financing Agreement will be upgraded to edition January 2011, updated July 2014. Furthermore, there have been changes to Vietnam’s related laws, including: i) Law on Procurement (No.61/2005/QH11) has been replaced by Law on Procurement (No.43/2013/QH13) and Decree 63/2014/NĐ-CP guiding implementation of the new Procurement Law; ii) Law on Construction 2003 (No.16/2003/QH11) has been replaced by Law on Construction 2014 (No.50/2014/QH13); iii) Decree No.12/2009/NĐ-CP on management of construction investment projects has been replaced by Decree No.59/2015/NĐ-CP; and iv) Decree No.15/2013/NĐ-CP on management of construction quality has been replaced by Decree No.46/2015/NĐ-CP. ANNEX to SCHEDULE 2 (so-called National Competitive Bidding Annex) will therefore be amended to replace the reference to the old version of Vietnam Procurement legislation with the current ones and to be consistent with the newly applicable version of the Bank’s Procurement Guidelines.

13. Change the frequency and due date of interim unaudited financial reports for the project covering the semester instead of quarter, with a due date not later than forty-five (45) days after the end of each calendar semester, instead of fifteen (15) days after the end of each quarter.

III. SUMMARY OF CHANGES

Changed Not Changed

Change in Results Framework ✔

Change in Components and Cost ✔

Change in Loan Closing Date(s) ✔

Reallocation between Disbursement Categories ✔

Change in Institutional Arrangements ✔

Change in Procurement ✔


Change in Implementation Schedule ✔

Change in Implementing Agency ✔

Change in DDO Status ✔

Change in Project's Development Objectives ✔

Cancellations Proposed ✔

Change in Disbursements Arrangements ✔

Change in Disbursement Estimates ✔

Change in Overall Risk Rating ✔

Change in Safeguard Policies Triggered ✔

Change of EA category ✔

Change in Legal Covenants ✔

Change in Financial Management ✔

Change in APA Reliance ✔

Other Change(s) ✔

Change in Economic and Financial Analysis ✔

Change in Technical Analysis ✔

Change in Social Analysis ✔

Change in Environmental Analysis ✔

IV. DETAILED CHANGE(S)

OPS_DETAILEDCHANGES_RESULTS_TABLE

RESULTS FRAMEWORK

Project Development Objective Indicators PDO_IND_TABLE

Updated charter and governance structure ensuring autonomy for VGUUnit of Measure: TextIndicator Type: Custom

Baseline Actual (Current) End Target Action

ValueFirst Charter was Approved by the Prime Minister

Revised Charter is approved by the Prime Minister

Updated Charter is implemented Revised

Date 01-Jan-2016 17-Nov-2017 30-Nov-2020

Development of a financial sustainability plan for VGU


Unit of Measure: TextIndicator Type: Custom


Value No plan

A Financial Sustainability Plan has been reviewed by the Ministry of Education and Training. Final approval is depending on commitment demonstrated by German Funders in a Government to Government Agreement.

Financial Sustainability Plan is executed Revised

Date 01-Jan-2016 17-Nov-2017 30-Nov-2020

Development of internationally accredited academic programs in VGUUnit of Measure: NumberIndicator Type: Custom


Value 11.00 11.00 21.00 Revised

Date 01-Jan-2016 17-Nov-2017 30-Nov-2020

Number of ISI publications by VGUUnit of Measure: NumberIndicator Type: Custom


Value 18.00 20.00 132.00 New

Date 01-Jan-2016 17-Nov-2017 30-Nov-2020

Intermediate IndicatorsIO_IND_TABLE

IR1: Establishment and implementation of VGU governance and administrative frameworkUnit of Measure: TextIndicator Type: Custom

Baseline Actual (Current) End Target ActionValue None Human Resources,

Quality Assurance and Charter is updated. Governance,

Revised


Financial Sustainability policies are being finalised

Financing and Quality assurance policies and regulations are being implemented on a day to day basis.

Date 01-Jan-2016 17-Nov-2017 30-Nov-2020

IR5: Number of scholarships provided to female students and students from disadvantaged groupsUnit of Measure: NumberIndicator Type: Custom


Value 117.00 120.00 190.00 Revised

Date 01-Jan-2016 17-Nov-2017 30-Nov-2020

IR3: Number of enrolled students (disaggregated by gender)Unit of Measure: TextIndicator Type: Custom


Value 1,209 (302 female students)

1,282 (288 female students)

2,516 (629 female students) Revised

Date 01-Jan-2016 17-Nov-2017 30-Nov-2020

IR7: Percentage of Lecturers with PhDUnit of Measure: PercentageIndicator Type: Custom


Value 100.00 100.00 100.00 Revised

Date 01-Jan-2016 17-Nov-2017 30-Nov-2020

IRNumber of academic programs introduced and accreditedUnit of Measure: NumberIndicator Type: Custom


Value 0.00 12.00 10.00 Marked for Deletion

Date 30-Aug-2010 05-Jun-2017 30-Nov-2017

IR8: Number of collaborative research projects with national and international partners launchedUnit of Measure: NumberIndicator Type: Custom



Value 2.00 9.00 23.00 Revised

Date 01-Jan-2016 17-Nov-2017 30-Nov-2020

IR9: Percentage of campus construction completedUnit of Measure: PercentageIndicator Type: Custom


Value 0.00 0.00 100.00 Revised

Date 01-Jan-2016 17-Nov-2017 30-Nov-2020

IR2: Revenue-to-Expenditure ratio is greater than oneUnit of Measure: NumberIndicator Type: Custom


Value 0.99 1.02 1.11 New

Date 01-Jan-2016 17-Nov-2017 30-Nov-2020

IR4: Number of academic staff disaggregated by genderUnit of Measure: TextIndicator Type: Custom


Value 74 (9 female staff) 138 (23 female staff) 253 (81 female staff) New

Date 01-Jan-2016 17-Nov-2017 30-Nov-2020

IR5: Percentage of graduates acquiring jobs related to their field of study after 6 months of graduationUnit of Measure: PercentageIndicator Type: Custom


Value 90.00 90.00 96.00 New

Date 01-Jan-2016 17-Nov-2017 30-Nov-2020

IR10: Number of people from MOET and other higher education institutions being consulted on VGU's new policy framework on governance, finance and qualityUnit of Measure: NumberIndicator Type: Custom



Value 44.00 44.00 80.00 New

Date 01-Jan-2016 17-Nov-2017 30-Nov-2020

OPS_DETAILEDCHANGES_COMPONENTS_TABLE

COMPONENTS

Current Component Name

Current Cost

(US$M)Action Proposed

Component NameProposed

Cost (US$M)

Policy and governance development 6.20 Revised Policy and governance

development 6.50

Academic and Research development 36.00 Revised Academic and Research

development 33.00

Campus and facilities development 109.00 Revised Campus and facilities

development 110.00

Project management, monitoring and evaluation 5.30 Revised Project management,

monitoring and evaluation 7.00

TOTAL 156.50 156.50

OPS_DETAILEDCHANGES_LOANCLOSING_TABLE

LOAN CLOSING DATE(S)

Ln/Cr/Tf StatusOriginal Closing

Revised Closing(s)

Proposed Closing

Proposed Deadline for Withdrawal

Applications

IDA-47860 30-Nov-2017 30-Nov-2020 30-Mar-2021

OPS_DETAILEDCHANGES_REALLOCATION _TABLE

REALLOCATION BETWEEN DISBURSEMENT CATEGORIES

Current Allocation Actuals + Committed Proposed Allocation Financing %(Type Total)

Current Proposed

IDA-47860-001 | Currency: XDR

iLap Category Sequence No: 1 Current Expenditure Category: IDA 47860 - Goods

38,180,000.00 4,099,072.39 4,099,073.00 90.00 90


iLap Category Sequence No: 2 Current Expenditure Category: IDA 47860 - Works

61,340,000.00 2,499,724.95 2,499,725.00 90.00 90

iLap Category Sequence No: 3 Current Expenditure Category: IDA 47860 - CS and Trng

13,820,000.00 5,947,899.90 14,931,753.00 100.00 100

iLap Category Sequence No: 4 Current Expenditure Category: IDA 47860 - Research&Scho Grants

950,000.00 28,432.18 285,915.00 90.00 90

iLap Category Sequence No: 5 Current Expenditure Category: IDA 47860 - UNALLOCATED

5,110,000.00 0.00 0.00

iLap Category Sequence No: 1 Current Expenditure Category: IDA 47860 - Goods and Works

0.00 0.00 97,583,534.00 90

iLap Category Sequence No: 2 Current Expenditure Category: IDA 47860 - Consultant's services and training

0.00 0.00 0.00 100

iLap Category Sequence No: 3 Current Expenditure Category: IDA 47860 - Research grants and scholarship grants

0.00 0.00 0.00 90

Total 119,400,000.00 12,575,129.42 119,400,000.00

A. DESCRIPTION OF PROPOSED CHANGES

14. There are further changes to the intermediary indicators which are not reflected in the restructuring data and consequently not described earlier in the main part of the restructuring paper. In particular Two (02) indicators from the PAD are not included: “Number of people trained at VGU, MOET, and HES on relevant

topics” and “Number of staff trained in key aspects of campus management”;


” Percentage of domestic and international academic staff with a Ph.D.” with the target 80/90 percent is revised to “Percentage of lecturers with PhD” with 100 percent target;

Four indicators are dropped including: “Project implementation rated satisfactory by all major stakeholders”; “Capacity to keep implementation schedule on track and efforts to minimize delays”; “Number of manuals, policies, and systems prepared related to Project management” and “Monitoring and evaluation systems developed with timely reporting”

15. The above-mentioned indicators were not included in the Portal from the beginning and the system did not allow major changes except minor revisions to indicator description and targets. There was one short form restructuring for NMUP in 2016 (archived in DOCUMENTS), which was part of an omnibus restructuring for 13 projects in Vietnam to remove the RF from the FA to the Operational Manual. While some revisions to indicators were being proposed and approved under the 2016 restructuring, including the grouping of two indicators “Number of people trained at VGU, MOET, and HES on relevant topics” and “Number of staff trained in key aspects of campus management)” into “b. Number of people trained at VGU, MOET, and other universities on relevant topics” the short form restructuring did not allow any changes in the system.

16. Agreement was therefore reached with the Government counterpart, though this restructuring, to add IR10: “Number of people from MOET and other higher education institutions being consulted on VGU's new policy framework on governance, finance and quality” to replace “b. Number of people trained at VGU, MOET, and other universities on relevant topics” as approved in the 2016 short form restructuring. IR10 monitors stakeholder consultation on development of policy framework which is more concrete and relevant than the one proposed in the 2016 restructuring. This Restructuring also proposes to remove the four indicators listed above which were meant to measure project management capacity which are not necessary because meeting other indicators will demonstrate project management capacity.

B. DETAILED CHANGES IN COMPONENT COST AND CATEGORIES AND EXPENDITURES15. The restructuring seeks to revise costs allocated for components based on the latest estimated expenditures and

restructured activities. Detailed revisions are included in Table 1.

16. Table 1: Component Costs

Original Revised VarianceComponent Name US$M1. Policy and governance development 6.2 6.5 0.32. Academic and Research development 36 33 -33. Campus and facilities development 109 110 14. Project management, monitoring and evaluation 5.3 7 1.7TOTAL 156.5 156.5 0

Notes: Component 1 cost increased US$0.3 million to cover increased marketing cost Component 2 cost reduced US$3 million as equipment is removed from professorship grant Component 3 cost reduced US$1 million based on the latest estimated expenditure


Component 4 cost increased US$1.7 million as additional project management resources is required during the extension period.

17. As defined in the Financial Agreement, the project consists of five categories of expenditures which will be adjusted to make them suitable with the actual needs and in accordance with the MOET approved Total Investment Cost (for the civil work). Detailed revisions are included in Table 2.

18. Table 2: Categories of Expenditures

CategoryAmount of the Financing Allocated

(expressed in SDR)Percentage of Expenditures to be

financed (inclusive of Taxes)

(1) Goods 4,099,073 90%(2) Works 2,499,725 90%(3) Consultants’ Services and Training 14,931,753 100%(4) Research Grants and ScholarshipGrants 285,915 90%

(5) Unallocated 0(6) Goods and Works 97,583,534 90%TOTAL AMOUNT 119,400,000

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