Pilot trainings “Managing Public Investments at th

The project "Managing Public Investments at the Municipal Level in Georgia" began in November 2010 and was implemented by NISPAcee, in co-operation with its Project Partner Institution "The National Association of Local Authorities of Georgia” (NALAG). The project is supported by SlovakAid.

Within the project, a training programme for Georgian financial officials was developed. In September and October 2011 a series of 4 pilot trainings were carried out for municipal officers from all over Georgia, each training session taking place in two phases – the 1st phase for municipal officers from Economic departments and the 2nd for municipal officers from Finance departments. All pilot trainings were run in Tbilisi, Georgia at ISET - International School of Economics at Tbilisi State University.

The trainings were opened by the Georgian Project Coordinator David Melua, project experts Akaki Dzagania or Mzia Mikeladze and by NISPAcee Project Manager, Elena Zakova.

The trainings were implemented by a team of Georgian trainers, trained in May 2011 in the framework of train the trainers. The trainers were selected from amongst practising practitioners experienced in the work of the municipalities, and from young academicians working mainly at ISET. In this way, trainees received the appropriate combination of theoretical and practical information and experience from the field.

During the entire series of training courses, 107 participants from 27 Georgian municipalities participated. The training was implemented in the Georgian language, but there was continuous interpretation into English so that the Slovak experts could take an active part and contribute with their knowledge and experience. At the beginning of each training phase, the Slovak experts, Juraj Nemec or Peter Kristofik introduced the topic of Decentralisation and Local Governments in Slovakia from the point of view of the EU accession process. Since this topic and EU experience is very actual and interesting for Georgian officials, it was usually followed by an open and intensive discussion.

The training programme consisted of the following main topics: "Municipal Investments Management / Investment appraisal” led by Maya Grigolia, Lasha Labadze and Ivane Jorjoliani; "Public Financial Management” was led by Kakha Gurgenidze, Maka Chitanava, Irakli Khmaladze and "Project Management” was led by Grigol Modebadze.

The feedback from the participants was very positive and motivating. They appreciated the possibility to find out more about the practice and experience of an EU member country. They also appreciated the possibility to discuss actual and practical examples from Georgia. In general, the officials confirmed the usefulness of this training for other municipalities and were pleased that all the training materials would be summarised in the form of a manual and that it would be available for them and their colleagues in the spring of 2012.

Peter Kristofik, Project Expert:

The training programme was designed to help with the application of standard management processes in Georgian municipalities. The training was targeted at staff from both economic and financial departments.

As well as the programme of professional training, another key factor in the success of the whole project was organisation. A major effort by NALAG and ISET representatives resulted in an excellent working environment for all participants and trainers, including infrastructure and the duplication of materials plus technical equipment for presentations and interpretation.

The first training began on Wednesday September 7, 2011 when the organisers eagerly awaited the first participants. Although all preparatory activities had been performed outstandingly well, the organisers still felt some apprehension about the reaction of practitioners. But, the first hours of training showed there was no reason for any fear, as trainers and participants turned to professional discussion and mutual exchange of experiences focussing on the current state of public administration in Georgia.

After the opening session, and greetings from NALA, ISET and NISPAcee representatives, we began with a presentation of the decentralisation process in Slovakia, stressing the basic features of the process. At the same time, we emphasised the usefulness of different managerial methods in decentralised municipalities. The reason was to show the importance of the topics that had been selected for training the municipal officers.

The main part of the training included a broad spectrum of topical issues. The programme began with the topic of project management, which is of key importance for municipalities. Next was the closely related topic of evaluating public investment projects. Both issues were relatively new for participants, but the participants recognised their utility and showed interest in solving specific problems and discussing case studies.

Other topics generated vigorous discussions because they are in the process of being introduced into Georgian public administration, or will soon be implemented. In particular, this was true for the topics: Public Procurement, Public-Private Partnerships, and Financial Control and Internal Audit in the Public Sector. The same was also true for Programme Budgeting, which is already in use in some municipalities, although there is scope for methodological improvement.

In both formal and informal evaluations, the participants stated that the structure of the training, as well as the selection of topics, met their needs and they would make use of the information in their jobs, either now or in the future.

Lasha Labadze and Maya Grigolia, Trainers on Investment Appraisal:

Our primary objective was to introduce the investment appraisal techniques, which enable municipalities to develop investment projects. The first part of the training included: general overview of the investment environment at the municipal level in Georgia and related legislation. We also highlighted the importance of investment appraisal in both private and public investment cases, distinguished the financial and economic analysis of investment using examples, and explained cash flows, time value of money and the calculation of future and present values. We then switched to capital budgeting and emphasised the different decision-making criteria: net present value, profitability index, internal rate of return, payback period and discounted payback. The second part of the training was Cost Benefit Analysis, where we explained this method of evaluating the net economic impact of public investments in detail and how to determine whether the project is acceptable or not in terms of social welfare. We were mainly interested in the analysis and assessment of new investment projects, so in the pre-investment phase. In this part, we covered the forecasting of the economic effects of a project, quantifying them by means of appropriate measuring procedures, monetising them (wherever possible), using conventional techniques for monetising the economic effects and finally, calculating the economic return, using a concise indicator that allows an opinion to be formulated regarding the performance of the project. The final section of the second part was risk assessment. We explained the statistical tools of dealing with uncertainty, such as expected value, range, standard deviation and coefficient of variation etc.

Overall, we have received positive feedback from all representatives of municipalities. However, some depths of cost benefit analysis were too theoretical. For example, some of them found it hard to understand monetising techniques of different external effects. Participants were mostly interested in time value of money and the capital budgeting process. They liked the idea and found it useful to use the net present value formula and other indicators.

The challenge for the future would be to work on real investment projects that were or are planned to be implemented by municipalities and to show all investment appraisal techniques using this real life example.

Maka Chitanava, Trainer on Public Finance Management:

The primary objective was to introduce the relevant concepts about public financial management. Georgia is on the path of reforming the sector; introducing new tools to increase efficiency, transparency and to improve public financial management. The module focuses on hot topics for Georgian reality, such as fiscal decentralisation, programme budgeting, public procurement, public private partnership, public internal financial control and cost centre approach.

The first part of the session included a general overview of fiscal decentralisation in Georgia, related legislation and problems faced by local authorities. After this introductory part we switched to Programme Budgeting, particularly to its objectives, advantages, steps required for successful implantation, possible challenges during transition, program identification, and performance measures. The existing Georgian experience of programme budgets and international examples were reviewed during the trainings; additionally participants were required to construct a simplified version of a programme budget based on methodology issued by the Ministry of Finance of Georgia.

The second part of the session included Public Procurement, Public Private Partnerships and Public Internal Control and Audit modules.

Within the first module, the general overview of procurement systems and international practice were presented. Apart from international practice, Georgian procurement legislation and practice was introduced to participants. During discussions, participants listed the main strengths and weaknesses of the current Georgian Public Procurement system.

The second module was devoted to Public Private Partnerships, the rationale behind PPP, its forms, and the planning and execution faces of PPP were introduced to participants. The PPP is a new concept for Georgia, so participants were listening to the presentation with interest. In the final stage of the presentation, the law about the Partnership Fund of Georgia was discussed.

The third module was devoted to Public Internal Control and Audit. The concept of Internal Control, its forms, components and rationale was presented to participants. During the second half of the presentation on Internal Audit, its rationale and forms were discussed. The difference between inspection and audit, external and internal audit was highlighted. The municipalities have to establish internal audit units from 2013, so this topic was interesting for participants.

Overall public financial management training received positive feedback from participants. However, time was limited and we were unable to introduce all topics in depth and be more oriented on practical issues.