which ICRRs are available), nine were to sub-national entities, either regions or municipalities, that had little or no prior experience of working with World Bank lending projects. Some of these were also multisector projects, with more than one implementing agency.

# **_Staffing inputs to the project production process_**

We turn now to the role of key staff in the production of project quality. Prior work has consistently found the supervisory TTL to be important in determining outcomes. Both Denizer et al. (2013) and Geli et al. (2014) find that the record of supervisory TTLs is, along with the CPIA, one of the two best predictors of quality. Similar results were obtained by Moll et al. (2015) for World Bank development policy financing,<sup>12</sup> and Álvarez et al. (2012) for Inter-American Development Bank projects. Earlier work by Kilby (2000) finds that the number of weeks dedicated to project supervision has a positive and significant impact on project performance. We build on these earlier studies by extending our consideration of staff inputs to include preparation TTLs, sector managers, and country directors.

The key metric we construct for staff inputs is a `value added’ measure that attempts to predict the contribution of the TTL to project quality by investigating how all other projects developed or supervised by the TTL performed relative to expectations. Expected project performance is estimated by a regression model that predicts project performance on the basis of various standard characteristics such as country CPIA level and change, national population, per capita GDP, sector of project, and pledged project size, as well as country fixed effects. The staff `value added’ measure, which we term staff predicted performance, is then calculated as the average deviation of actual project rating from the predicted rating for all other projects the TTL has either designed or supervised.<sup>13</sup> Once normalized, this approach generates a distribution of predicted performance across staff with a mean of zero and a fair degree of dispersion. This approach is in line with the teacher value-added framework (Hanushek, 1971; Chetty et al., 2014), and has also been used to study the effects of managers in firms (Bertrand and Schoar, 2003). Annex 3 discusses this ‘value added’ framework in more detail, presents the ‘value added’ regressions, and the distributions of predicted performance for preparation TTLs, supervisory TTLs, practice managers, and country directors.

Table 5 explores the relationship between the predicted performance of staff and project success. Our first finding is that TTL ‘quality’, as proxied by the predicted performance, is indeed associated with project success. A one standard deviation change in predicted performance for preparation TTL is associated with a 0.09 increase in the project rating, controlling for the standard project and country characteristics. By comparison, a one standard deviation change in the CPIA score at year of project approval is associated with a 0.16 change in outcomes, therefore the preparation TTL effect is about 60% as strong. However, the effect is substantially greater among IBRD borrowers (Annex 4: Table A4.6e). Indeed, for projects in IBRD countries, the preparation TTL coefficient is 0.15, on the same order of magnitude as the CPIA score at approval. We will see that differential influence of staff predicted performance by country income status is a common thread in the findings on the importance of staffing,

> 12 The World Bank offers different financing instruments to client countries. The focus of Moll et al. (2015) is development policy financing, which provides budget support to governments, while this paper investigates investment project financing, which provides financing to governments for activities that create the physical/social infrastructure necessary to reduce poverty and create sustainable development.

> 13 Where applicable, the same individual staff would have a separate predicted performance for project design and project supervision activities.

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