PHN 1991 Sector Review analysis and the design of institutional development strategies and components. The Africa and LAC regions have divisions in their technical departments fer Institutional development and management, and for public sector management, respectively, that provide such support, although resources devoted to sector operating division are limited.

# _c. Increasing Use of Consultants_

4.7 A review of the composition of preparation, preappraisal, and appraisal missions for FY91- approved operations revealed that, in some projects, expertise in management and institutional development was under-represented relative to their prominence in the projects. Sector operations divisions may wish to consider supplementing missions with experts in the management field, which would not only benefit the project, but would also provide onthe-job training for Bank staff working with that expert. PHRHN and technical departments could facilitate this process by compiling and disseminating rosters of qualified consultants.

- _d. Increasing Instditional Development Epertise in Divisions Responsible for PHN Sector_

4.8 There are relatively few management and institutional development specialists among aU PHN staff in the Bank PHN's increasing focus on policy anci institutional issues caUs for reexamination of the skills mix of PHN staff with a view to increasing the proportion of institutional development specialists working in the sector. The shortage of such expertise in all SOD divisions (and not just PHN, in particular) was identified as a constraint in the Bank's capacity to support its overall development objectives, at a recent Bank symposium on public sector management, held in early September of 1991 and attended by staff from a large cross-section of divisions (TDs, SODs, CODs, PRE). Diversifying the skills mix in those divisions by recruiting institutional development specialists was strongly recommended.

## 2. _Chanl= hfores and Pracdces in the Bank_

4.9 This report recommends several changes in priorities and practices in the Bank, which would support high-quality institutional development work:

- a. OED has clearly demonstrated the key role of supervision for successful institutional development and project sustainability. Discussions with Bank staff reveal agrowing concem that a casualty of the tightening of supervision coefficients may be poor performance of institutions. Sector operations divisions could make more economical use of scarce resources devoted to supervision, by focusing more on key issues affecting institutions and management and by using the most appropriate and qualified expertise. In addition, the low level of supervision coefficients in the PHN sector needs to be addressed by senior management: this Issue wil surely be raised again in the ARIS. With the changing nature of PHN projects, which are increasingly more policy and institution oriented and which pass on more responsibility to government, and the even stronger emphasis on reaching the poor, whose administrative and implementation capabilities are generally weak, the nature and extent of supervision requirements need to be redefined and given due priority and resources.

- b. The importance of upstream diagnostic work has been repeatedly emphasized in numerous review documents, including some PHN PCRs produced this year. Yet some of the Baks sector work and project preparation does not include sufficiently in-depth institutional analysis. Even with a no-growth budget, more resources must be allocated to such upstream work, which, if wel done, will lead to greater efficiency in lending and supervision work.

- c. The discipline of systematic institutional analysis wiUl become Bank practice only when senior managers seek evidence of such analysis whenever institutional development designs or reforms are proposed in projects. Bank management should evaluate more rigorously

' The essence of these recommendations is drawn from Working Paper Series No. 392, 'Institutional Development in World Bank Projects: A Cross Sectoral Review', by Samuel Paul and has been greatly substantiated by the findings of this review.