Module 12 - Nine Lessons for Improving Project Design for Better Investment Performance

Agriculture’s importance to poverty reduction is now widely recognized, but the complexity and perceived difficulty of investing in the sector, along with somewhat moderate performance relative to many other investment areas, has contributed to stagnant lending. The World Bank OED recently identified seven key lessons from previous experience that can help improve the quality of project design and implementation and thus significantly increase performance.⁷ Key recommendations include clearly identifying project rationale, analyzing poverty, phasing implementation, good M&E, and structuring stakeholder incentives.

The environment in which the agricultural sector contributes to poverty reduction, and the means by which it can most effectively contribute, continue to change rapidly. Fully exploiting the poverty reduction potential of agriculture requires that projects be evaluated critically to build an information base from which knowledge can be leveraged to improve future investment initiatives. This investment note draws from a recent OED study to outline the major generic issues to be addressed by practitioners during project design (World Bank 2003). It recognizes that sound project design is a precondition for good project performance and that the design process must draw from relevant lessons and be an ongoing process, in which changes in direction and the rationale for these changes are well documented. Sound project design must also include effective M&E systems to ensure that lessons can be articulated and used to guide future investments toward more sustainable and effective outcomes and impacts.

In recent years, Bank lending to agriculture has increased to some extent. Despite improvements in the persistent problems of sustainability and institutional development, the gains have largely been moderate. About 70 percent of projects are rated as “likely sustainable,” and nearly 60 percent are rated as contributing to “substantial institutional development.” This poor to moderate performance can be attributable to a variety of factors relating largely to project design. Problems include weak specification of objectives, weak translation of objectives into outcome-focused design, and poor policy and institutional design. An analysis of project evaluation results has identified several key lessons, outlined below, for future investments (World Bank 2003).

Recommendations for Practitioners

Identify the rationale. Clearly spell out the rationale for the project and the linkages from the rationale to the design. If the project rationale is not explicitly identified in an outcome-focused design, sound judgments made during preparation and appraisal may be compromised, and M&E may be hindered. Without documented recording of the evolution of project logic, staff changes may obliterate earlier logic and decisions. All significant design issues should be separately identified and addressed or disposed of rationally and explicitly in superseding documents (box 12.10).