While the combination of projects with IP or DO rated moderately unsatisfactory or lower and those with three out of six flags may be a reasonable predictor for well-established projects, application of these two rules alone would not select recently approved projects, which are seldom rated moderately unsatisfactory or lower for any indicator. Hence, to complete the prediction model, and to potentially increase the prediction rate, it seems appropriate to include a third prediction module for those young projects that will turn out unsuccessful at exit, most likely as a result of poor quality at entry. Lacking a quality at entry indicator, the most reasonable proxy for such an indicator are lags from approval to signing of greater than three months and from approval to effectiveness of greater than six months. However, the correlation of the outcome rating with those delays is not been well established and appears rather weak, so this third rule or module would not be permanent, meaning that after the projects have completed the first year, the rule should no longer apply to them.

The country breakdown of the three watch list sets is in Table 1 of Annex 2.

In view of the well-established correlation between the outcome and the CPIA and recent country record, the percentages of project failure implied by the latest candor gap figures (see Table 1 of Annex 2) were used to calculate a predicted MU- rate for each country. This was then compared to the watch list generated by the model. The two lists have a few significant differences (China and Vietnam in particular), but overall there is a good consistency with 106 of projects identified at the regional level compared with 112 corresponding to 38 percent of expected MU- outcome based on the candor gap figure, as of July 1, 2014.

The composition of the list, broken down by module components, is summarized in Table 6.

**Table 6. FY15 Watch List Projects for EAP**

|**Age group**|**Three out of 6**<br>**flags but not**<br>**last IP/DO MU-**|**Three flagsand**<br>**last IP/DO MU-**|**Only MU-**<br>**IP/DO, but not**<br>**three flags **|**Approval to**<br>**signing/effect.**<br>**lags **|**Total**|
|---|---|---|---|---|---|
|**FY15 closings **|13|13|4|N/A|**30**|
|**< 1year old**|0|0|2|9|**11**|
|**Others**|23|17|25|N/A|**65**|
|**Total**|**36**|**30**|**31**|**9**|**106**|
|%|34%|28%|29%|8%|**100%**|

The breakdown of the watch list by module is as follows: 62 percent of the list is generated by the flagbased module, including 28 percent that are also rated MU- for IP and DO in their last ISR. Slightly less, 57 percent, would have been picked up by the problem project module alone. By age group, the projects in their closing years seem overrepresented compared with first-year projects (48 percent versus 19 percent), or even with the remaining group (37 percent), but several of these projects will not close and will be extended into the following year. It also seems sensible to be more cautious for the exit year than for the first-year projects.

The problem project, flag-based module and also a module of projects with delays to signing and effectiveness were used to create a watch list of EAP projects based on July 1, 2014 data. A review methodology was designed based on IEG ICR review criteria, i.e., relevance of objectives and design, efficacy, and efficiency. The reviews were prepared in batches and forwarded by the regional vicepresident to the task team leaders and their practice managers. Once the projects on the watch list 13