Pilot trainings "Managing Public Investments at the
Municipal Level in Georgia”
Tbilisi, Georgia
September 7 - 10, 12 -
15, 28 - October 1, 3 – 6, 2011
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.