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					                             Fraser Associates
                             Management and Economics Consultants




EX POST EVALUATION OF THE COHESION FUND (INCLUDING
           FORMER ISPA) - WORK PACKAGE D:
          MANAGEMENT AND IMPLEMENTATION

             (N°2011.CE.16.C.AT.004)




            COUNTRY REPORT – LATVIA




                  February 2012
European Policies Research Centre
     University of Strathclyde
      Graham Hills Building
         40 George Street
         Glasgow G1 1QE
         United Kingdom

      Tel: +44-141-548 3339
      Fax: +44-141-548 4898
E-mail: john.bachtler@strath.ac.uk

http://www.eprc.strath.ac.uk/eprc/
 Ex Post Evaluation of Cohesion Fund (incl. ISPA) - Work Package D: Management & Implementation
                                      Country Report – Latvia


                                       TABLE OF CONTENTS
1.           INTRODUCTION ............................................................................... 1

2.           ISPA/COHESION FUND INVESTMENTS IN LATVIA ....................................... 1

3.           FUND MANAGEMENT AND IMPLEMENTATION ........................................... 2
     3.1   The Baseline Position ........................................................................... 2
     3.2   The Fund Management and Implementation Architecture, 2000-06 ................... 2
     3.3   The Effectiveness of Management and Implementation Architecture ................. 4
     3.4   Evolution and the Integration of Learning .................................................. 4

4.           STRATEGIC PLANNING ....................................................................... 5
     4.1   The Baseline Position ........................................................................... 5
     4.2   Strategic Planning Arrangements, 2000-06 ................................................. 6
     4.3   The Effectiveness of Strategic Planning Arrangements, 2000-06 ....................... 6
     4.4   Evolution and the Integration of Learning .................................................. 6

5.           PROJECT DESIGN AND DEVELOPMENT ................................................... 7
     5.1   The Baseline Position ........................................................................... 7
     5.2   Project Design and Development Arrangements for ISPA/CF, 2000-06 ................ 7
     5.3   The Effectiveness of Project Design and Development Arrangements, 2000-06 ..... 8
     5.4   Experiences of the Decision Process ......................................................... 9
     5.5   Evolution and the Integration of Learning .................................................. 9

6.           PROCUREMENT ..............................................................................10
     6.1   The Baseline Position .......................................................................... 10
     6.2   Procurement Arrangements for 2000-06 ................................................... 10
     6.3   The Effectiveness of Procurement Arrangements, 2000-06............................. 11
     6.4   Evolution and the Integration of Learning ................................................. 11

7.           PROJECT MANAGEMENT AND IMPLEMENTATION .....................................12
     7.1   The Baseline Position .......................................................................... 12
     7.2   Project Implementation and Management Arrangements, 2000-06 ................... 12
     7.3   The Effectiveness of Project Implementation and Management Arrangements,
             2000-06 ........................................................................................ 14
     7.4   Evolution and the Integration of Learning ................................................. 15

8.           CONCLUSIONS: A SYSTEM-WIDE PERSPECTIVE ........................................16
     8.1   General ........................................................................................... 16
     8.2   Performance of the Cohesion Fund Delivery System ..................................... 16
     8.3   Key Learning .................................................................................... 17
     8.4   The Contribution of Capacity Building Support ........................................... 17
     8.5   Scope for Management Improvements: Issues for the Member State ................. 18
     8.6   Scope for Administrative Reform: Issues for the Commission .......................... 18

ANNEX I: MANAGEMENT AND IMPLEMENTATION ARCHITECTURE ...............................20

ANNEX II: DOCUMENTARY SOURCES ..................................................................21

ANNEX III: LIST OF CONSULTEE ORGANISATIONS ..................................................23




European Policies Research Centre                       i                                    Fraser Associates
 Ex Post Evaluation of Cohesion Fund (incl. ISPA) - Work Package D: Management & Implementation
                                      Country Report – Latvia




European Policies Research Centre              ii                              Fraser Associates
    Ex Post Evaluation of Cohesion Fund (incl. ISPA) - Work Package D: Management & Implementation
                                         Country Report – Latvia



                                   EXECUTIVE SUMMARY
This report presents an overview and summary evaluation of the management and
implementation of the Instrument for Structural Policies for Pre-accession (ISPA) and the
Cohesion Fund (CF) in Latvia from 2000 to 2011, focusing on projects approved in the 2000-
06 period. It has been prepared by EPRC, Fraser Associates and the University of Latvia. The
research in Latvia and the drafting of the report were carried out in October - December
2011 by Tatjana Muravska and Jānis Aprāns. The report was edited by Frederike Gross, Alec
Fraser and John Bachtler.1

During 2000-06, 46 projects were planned and implemented, with total eligible expenditure
amounting to €964.3 million. By the start of November 2011, 85.2 percent of the planned
allocation had been spent.         Strategic planning was effective in setting clear strategic
investment priorities and included project pipelines for both transport and environment
sectors. Overall fund management and implementation was effective, though the change
from the ISPA to the CF system was challenging.

The most serious issues affecting the performance of the ISPA/CF delivery system were:
significant delays associated mainly with procurement procedures; lack of knowledge and
capacity in all aspects of the design and development of EU co-funded projects; slow and
bureaucratic decision making (including by EC); and capacity issues among project
beneficiaries. External factors included construction sector inflation, price rises associated
with the sharp increase in post-accession funding and an inadequate supply of consultancy
expertise.

The 2000-06 period saw increases in capacity across the ISPA/CF delivery system and key
areas of learning included: reducing the administrative burden; greater decentralisation of
implementation       and    more    responsibility      given   to   beneficiaries   (supported    by
methodological guidelines, training and standardised application forms); better use of
CBA/EIA; improved experience with procurement. Sources of capacity building included TA,
external consultants, training, Twinning and IT system support and the EDIS process.

Despite the advances made in the 2000-06 period, capacity building is still required in the
CF delivery system. Of particular importance is the sustainability and dissemination of
existing experience and knowhow. This includes avoiding high levels of staff turnover and
developing robust methodological guidelines and standardised documentation (including
information from the EC) which can be used throughout the delivery system. In terms of
the EC, a greater focus on the outcome and results of investment (through evaluation) was
highlighted as more beneficial to delivery than the current emphasis on the control of the
implementation process. Ensuring consistency of advice across EC services was also noted.



1
  The research team are grateful to the staff (past and present) of authorities involved in the
management and implementation of ISPA and the Cohesion Fund, who were interviewed for the
research and who participated in the workshop, and to the Commission officials in the DG Regio
Evaluation Unit and Steering Group who provided helpful comments on an earlier version of the
report. The views expressed in the report are those of the research team.


European Policies Research Centre                 iii                                Fraser Associates
 Ex Post Evaluation of Cohesion Fund (incl. ISPA) - Work Package D: Management & Implementation
                                      Country Report – Latvia




European Policies Research Centre              iv                              Fraser Associates
 Ex Post Evaluation of Cohesion Fund (incl. ISPA) - Work Package D: Management & Implementation
                                      Country Report – Latvia



1.      INTRODUCTION
This report presents an overview and summary evaluation of the management and
implementation of the Instrument for Structural Policies for Pre-accession (ISPA) and the
Cohesion Fund (CF) in Latvia from 2000 to 2011, focusing on projects approved in the 2000-
06 period. The report is based on research conducted at national level, comprising a review
of documents and data, 10 interviews with stakeholders whose collective experience
spanned the period of the evaluation, and a workshop where all levels of Latvia’s Cohesion
Fund delivery system were represented. The report begins with a brief review of the
allocation and absorption of ISPA and Cohesion Fund investment in Latvia, followed by
assessments of each of the components in Latvia's ISPA/Cohesion Fund delivery system, and
it concludes with a synthesis of findings.


2.      ISPA/COHESION FUND INVESTMENTS IN LATVIA

Prior to Latvia's accession to the EU, the country was granted ISPA investment assistance in
the areas of transport and environmental infrastructure and related technical support
measures. As a Member State from mid-2004, Latvia became eligible for Cohesion Fund
support, and its ISPA projects continued to be implemented according to the Cohesion Fund
Regulations.

During 2000-06, 18 transport infrastructure, 26 environmental infrastructure and two
Technical Assistance projects were planned and implemented. Total eligible expenditure on
the projects amounted to €964.3m, of which ISPA/CF amounted to €710.8m (73.7 percent).
Of this total, 50.8 percent was allocated to transport (€490.3m eligible expenditure,
€353.9m ISPA/CF), 48.7 percent to environmental projects (€469.7m eligible expenditure,
€353.2m ISPA/CF) and 0.4 percent to Technical Assistance (€4.2m eligible expenditure,
€3.7m ISPA/CF).

In Latvia, the absorption of Cohesion Fund and ISPA funding at the start of November 2011
was relatively high. Actual payments were highest in the transport sector, where the figure
represented 90.8 percent of commitments. In the area of environment, absorption was 79.6
percent, and for Technical Assistance it was slightly lower at 78.4 percent. This difference
in the implementation pattern might be explained by the fact that the environment sector
is characterised by larger number of projects that are smaller in volume, and thus more
administrative effort is required to achieve the same level of progress. In terms of project
completion levels, all transport and environment projects had been physically completed by
early November 2011, however formal closure was still pending for a number of them (see
Table 2.1).




European Policies Research Centre              1                               Fraser Associates
    Ex Post Evaluation of Cohesion Fund (incl. ISPA) - Work Package D: Management & Implementation
                                         Country Report – Latvia


Table 2.1: ISPA/ CF commitments, payments and implementation progress

                                                                    No. of    Physically    Formally
Area of            Commitments        Payments         Spending
                                                                   projects   completed      closed
investment           (€million)       (€million)       ratio (%)
                                                                               projects1    projects
Transport              357.9             325             90.8        18          18            10
              2
Environment            353.2            281.1            88.1        26          25            11
TA                      3.7              2.9             79.6         2           1             1
Total                  714.8            609.0            85.2        46          45            22
1
 This refers to projects, for which payments are at around 80 percent or more of commitments.
2
 One project was cancelled and de-committed.
Source: DG Regio, Information on Cohesion Fund financial execution, cut-off date 03.11.2011.


3.        FUND MANAGEMENT AND IMPLEMENTATION
3.1       The Baseline Position
Prior to 2000, responsibility for strategic policy and decision-making on investment in
transport and in environmental infrastructure lay with the ministries responsible for the
sectors – the Ministry of Transport (MoT) and the Ministry of Environmental Protection and
Regional Development (MoEPRD). Apart from public service providers' own resources (water
utilities, Latvian Railway Company and many others), the main funding source was the
State Investment Programme.

A need for capacity-building was identified, particularly in relation to distinctive issues in
implementing EU co-financed investment projects and the specific requirements of ISPA:
English language skills, elaboration of feasibility studies, cost–benefit analysis, mandatory
electronic monitoring system, procurement rules applied, and evaluations.

3.2       The Fund Management and Implementation Architecture, 2000-06
The ISPA management and governance system (MGS) involved the following organisations
and committees: the National ISPA Coordinator (Minister of Finance), the National Fund
(Ministry of Finance), the Central Financial and Contracting Unit (CFCU), Intermediary
Bodies (Ministry of Transport and the Ministry of Environmental Protection and Regional
Development), Final Beneficiaries, and the Monitoring Committee.

As may be seen in Tables I-1 and I-2 (see Annex I), the 2004-06 period saw only marginal
changes in the MGS for implementation of the Cohesion Fund, notably the winding-up of the
EC Delegation, the National ISPA Coordinator, and the CFCU and modified roles for some of
the other institutions.

Although the authorities had been preparing for changes in implementation arrangements
(including through the EDIS process, although the goal of EDIS accreditation was never
achieved), the transition from ISPA to the Cohesion Fund created some uncertainty for the
MGS, although most of the underlying reasons could have been foreseen:

     the amount of funding available approximately tripled in a relatively short period of
      time, and implementation rules changed significantly;



European Policies Research Centre                  2                                  Fraser Associates
    Ex Post Evaluation of Cohesion Fund (incl. ISPA) - Work Package D: Management & Implementation
                                         Country Report – Latvia


     administering bodies had to adjust to a different legal and institutional environment,
      notably with the shift from PRAG rules to national procurement law; and

     Latvian replaced English as the official language. The outputs under Technical
      Assistance service (consultancy) contracts, usually delivered in English, were no longer
      acceptable without further revisions and improvements.

Gradually, the Cohesion Fund MGS moved towards more a formalised system, acquiring
features of the EU Structural Funds implementation system, governed by strict
administrative rules and procedures. However, during the establishment of the Structural
Funds MGS for the period 2004-06, a number of practical arrangements such as, for
example, checklists for monitoring procedures, were actually borrowed from ISPA
implementation and adapted to the needs of the Structural Funds.

    3.2.1 The Monitoring Committee

The ISPA Monitoring Committee was composed of representatives from a wide range of
organisations – the EU Commission, the National ISPA Co-ordinator, the National Fund, the
CFCU, and Implementing Agencies. Beneficiaries and representatives of other organisations
were also present at the meetings. In the ISPA period, the meetings were formal or even
‘ceremonial’ in character, with established procedures, previously approved agendas, strict
working order and documented minutes of the meetings. Discussion was very detailed and
focused on problems at project level.

After the transition to the Cohesion Fund, meetings of the Monitoring Committee became
more informal. The larger number of projects resulted in implementation issues becoming
more discussed at the level of the Fund. Membership of the Cohesion Fund Monitoring
Committee broadened to include social partners such as the association of trade unions,
employers’ confederation, the association of local governments and others.

The Managing Authority performed the function of Monitoring Committee Secretariat,
organising the MC meetings, keeping records of the minutes of the meetings, coordinating
written procedures, compiling information on project progress, and assisting in identifying
the projects for consideration during the MC meetings. At the end of the period 2000-06
(March 2005), the Technical Assistance project ‘Technical Assistance for Cohesion Fund
Managing Authority in Latvia’ was approved, one activity of which was to provide support
for the organisation of Cohesion Fund Monitoring Committee meetings.

    3.2.2 The Central Administration

For both ISPA and the Cohesion Fund, the central administration role was carried out by the
Ministry of Finance, or more specifically by its various departments or its subordinated
institution (CFCU) – a body established for the specific purpose of administering EU pre-
accession aid. The central administration very actively enforced its function of financial
control in strategic planning in the sense of designing the MGS, but it had a much lower
involvement in the planning of sectoral priorities, which were mainly performed by line
ministries, along with the project pipeline stimulation tasks.



European Policies Research Centre                 3                               Fraser Associates
 Ex Post Evaluation of Cohesion Fund (incl. ISPA) - Work Package D: Management & Implementation
                                      Country Report – Latvia


The central administration was successful in formalising the management and governance
processes of the Cohesion Fund and aligning them with the existing legal framework
governing public administration in Latvia.

However, a relative weakness of the central administration was its inability to correctly
understand and interpret implementation at ‘ground level’, and to demonstrate flexibility
in dealing with separate, sometimes exceptional, cases that did not fit into the generalised
framework.

The employees of the central administration were involved in all the capacity-building
measures, including those financed from Technical Assistance. This may be one of the
reasons why the staff turnover within the central administration, even though high, was
lower than in other institutions of ISPA/CF administration. In addition, salaries for the staff
dealing with Structural Funds at the MoF were higher than in other institutions.

3.3     The    Effectiveness          of     Management           and      Implementation
        Architecture
The research found that the MGS had been generally effective, in that the system delivered
its main goals. The ISPA Strategies for transport and environment and the Cohesion Fund
framework document set clear strategic investment priorities, and almost all of the
approved projects were implemented and the available funding largely absorbed.

Reflecting the multiple organisations involved in the administration of ISPA/CF, the
decision-making process was relatively slow and heavy. This was especially true when the
European Commission services became involved, because the lead time for clarifications
and/or opinions could be up to six months. However, it also needs to be noted that
although Commission involvement was not always mandatory, the Latvian administration
was keen to obtain ex ante validation of their decisions before any actions were taken.
Effective financial management at the strategic level was enabled insofar as it depended on
strategic decisions: information about physical progress was gathered routinely, but the
indicators and data did not always allow for a meaningful interpretation.

3.4     Evolution and the Integration of Learning
Overall, during almost ten years of implementation of the ISPA/Cohesion Fund, the MGS has
become more regulated and formalised, but at a price of reduced flexibility in responding
to new challenges and issues arising during the implementation of projects. Now it is fully
integrated into the national public administration and its legal framework, as all
implementation aspects are governed by the law and subordinated normative legal acts
adopted by government, i.e. Cabinet of Ministers Regulations based on various laws.

Between 2000 and 2004, the administrative capacity of the bodies involved in the
management of the ISPA programme was improved in various ways – through training
courses, by hiring external consultants, and by participation in twinning arrangements.
Through the EDIS process, different aspects of administrative capacity were addressed and
development plans elaborated. However, it was only following EU accession in 2004 that
the administration became organised in a systematic way, when human resources



European Policies Research Centre              4                               Fraser Associates
    Ex Post Evaluation of Cohesion Fund (incl. ISPA) - Work Package D: Management & Implementation
                                         Country Report – Latvia


development plans were elaborated and financing was allocated for their implementation,
mainly from Technical Assistance.

A comparatively large number of studies (labelled as evaluations) have been carried out in
relation to EU funds in Latvia, including almost twenty studies on Cohesion Fund
implementation.2 Their scope has varied from recalculations of cost-benefit analysis at
single project level to studies analysing problems at the funds level – cost increase and its
implications, avoidance of double financing, public awareness, opportunities to use public
private partnership in the implementation of the CF projects and others. In general, even if
the findings and recommendations of the studies were not directly introduced into
procedures or legal acts, they were appropriately addressed, considered and discussed
during the Monitoring Committee meetings, and in most cases applied in the
implementation process.


4.        STRATEGIC PLANNING
4.1       The Baseline Position
Prior to 2000, responsibility for identifying and directing public investment in transport and
environment lay with the respective line ministries: MoT and MoEPRD. Investments were
mainly financed from the State Investment Programme (SIP) approved by government.

In the transport sector, under the Cabinet of Ministers Regulation ‘Order of elaboration
and implementation of national programmes’ of November 1995, the Cabinet of Ministers
approved the National Transport Development Programme (1996–2000), subsequently
updated in 2002. The programme included an analysis of relevant transport sector
development factors, comprising a background analysis and problem identification,
description of modes of transport, the investment process, funding sources and the wider
social economic impact of the national programme implementation.

In the environment sector, strategies or master plans for the water sector (‘800+’) and
waste sector (‘500-’) had been developed between the mid and late 1990s. Sectoral priority
projects for funding from the SIP were established and approved by the Committee for
Approval of Investment Projects (environment) through a well-defined and consistent
process.

A need for capacity-building was identified prior to the commencement of ISPA
implementation, including strategic planning activities such as forecasting future economic
development trends, demographic changes, ability to deliver complex plans, perception of
potential risks and problems associated with the implementation of individual projects.
Technical Assistance support was used to enhance the existing capacity of organisations and
their staff involved in the planning process as well as to finance consultancy contracts for
the elaboration of most strategic documents.


2
 For an exhaustive list, see web address: http://esfondi.lv/page.php?id=906. Please note that in the
context of the present country research it has not been possible to provide a comprehensive
assessment on the quality of these studies.


European Policies Research Centre                 5                               Fraser Associates
 Ex Post Evaluation of Cohesion Fund (incl. ISPA) - Work Package D: Management & Implementation
                                      Country Report – Latvia


4.2        Strategic Planning Arrangements, 2000-06
In the environment sector, the MoEPRD had responsibility for preparing the National ISPA
Strategy (Environment) in consultation with other stakeholders and this was completed in
May 2000. Whereas this strategy built upon the sectoral strategies developed in the 1990s,
its priorities were primarily based on the Directive-specific implementation plans that had
to be enforced in order for Latvia to become an EU Member State. For instance, the
European Commission particularly favoured an ‘air pollution protection sub-sector’ project,
but this was regarded with scepticism by the national sectoral administration.

In the transport sector, the MoT played the principal role in preparing the National ISPA
Strategy (Transport), but other stakeholders were consulted and involved. It was completed
in February 2000. Although there was more freedom of choice to select the priorities in the
transport sector, the EU recommendations were still significant, for example resulting in
priority being given to railway development rather than road building that would have been
the national preference.

The ISPA Strategies for transport and environment and the Cohesion Fund framework
document that followed them set clear strategic investment priorities, and the documents
were elaborated to include lists of projects to be financed from the ISPA/CF.

In broad terms, the priorities have remained the same, as their goals and objectives have
not been yet achieved (for example, the connection rate to the centralised water supply
and wastewater system). However, the scale of accomplishment has significantly increased
compared with the situation almost ten years ago.

4.3        The Effectiveness of Strategic Planning Arrangements, 2000-06
The strategic planning arrangements for 2000-06 are assessed as having been successful.
Durable priorities were identified and these directed investment. Inclusion in the National
ISPA strategy for transport or environment was almost the only way a project could get
financing from ISPA or Cohesion Fund during the 2000-06 period. By the end of the period,
only one of the identified ISPA/CF projects had not been implemented.

In comparison to other ISPA/ CF management and implementation processes, strategic
planning experienced a smaller number of challenges.

4.4        Evolution and the Integration of Learning
While some capacity-building was required and preparation of the National ISPA Strategies
was supported by Technical Assistance, this built upon an existing culture of strategic
planning and experience obtained during the previous periods. It can be concluded that,
although there is room for improvement, the quality of strategic planning, in relation to EU
funds in general and Cohesion Fund in particular, exceeds the overall standards in public
administration. Now the greatest challenge is to elaborate the strategy that integrates all
aspects of national development in a consistent way and provides a basis for further
actions.




European Policies Research Centre              6                               Fraser Associates
 Ex Post Evaluation of Cohesion Fund (incl. ISPA) - Work Package D: Management & Implementation
                                      Country Report – Latvia


Evolution in the approach to strategic planning occurred mainly as a consequence of
external circumstances rather than internal development, specifically by the transition
from ISPA to the Cohesion Fund and from the 2000–06 to 2007-13 period. However, the
differences between 2000-06 and 2007-13 were not very pronounced in strategic planning,
being mostly associated with the new strategic documents and the involved institutions;
priorities and content did not change much. There was less emphasis on the horizontal
policies in 2000-06 period; the environmental sector became more integrated with other
sectors through the Operational Programmes of 2007-13.


5.      PROJECT DESIGN AND DEVELOPMENT
5.1     The Baseline Position
Before the ISPA programme implementation was started, the respective line ministries were
mainly responsible for transport and infrastructure projects. However, it should be noted
that there were fewer large-scale projects, particularly in the environment sector, than
were subsequently implemented under the ISPA programme and Cohesion Fund. The focus
was on the preparatory process for forthcoming ISPA implementation, although some
smaller-scale Phare projects were implemented, mainly with soft activities.

5.2     Project Design and Development Arrangements for ISPA/CF, 2000-
        06
A project pipeline with identified scope of work and estimated budgets existed for both the
transport and environment sectors, and they formed part of the National ISPA strategies
approved by the European Commission in the first half of 2000. However, the draft project
concepts were not sufficiently elaborated to meet ISPA financing rules. In practice, the
objectives and scope of the projects were established by the sectoral ministries in
cooperation with beneficiaries (or local governments if they differed). Most of the projects
had Project Steering Groups, established with wide participation, in charge of the strategic
decisions.

The main challenge at the beginning of IPSA programme implementation was to develop a
sufficient number of projects to utilise all the financing available to Latvia. Therefore,
according to one interviewee, such details as the availability of data and their quality was
not regarded as an impediment to strategic planning. Different opinions were expressed on
the data quality issue, one stating that data necessary for cost-benefit analysis were
missing or were of poor quality, but cost increases impacted on the quality of the GDP
forecast.

The largest effort was put into translating those earmarked, clearly focused draft project
concepts with defined activities and estimated budgets into the EC ISPA application forms,
in order for them approved by the European Commission. The lack of capacity in almost all
aspects of project design and development was recognised: technical specification, costing,
option generation and appraisal, detailed design, cost-benefit analysis, environmental
impact analysis, and project finance.




European Policies Research Centre              7                               Fraser Associates
 Ex Post Evaluation of Cohesion Fund (incl. ISPA) - Work Package D: Management & Implementation
                                      Country Report – Latvia


Initially, the gaps in capacity were overcome by contracting external consultants for almost
all project design and development tasks. The service contracts for project development
were partly financed from ISPA Technical Assistance, but also from bilateral technical
assistance programmes (for example, SIDA financing) and, to much lesser extent, from
national funds (state and local government budgets).

Environmental impact assessment was performed in the cases required by the law ‘On
Environmental Impact Assessment’ (1998), which was in line with general practice of the
European Union, and the corresponding EU Directives were transposed into national
legislation by this law. According to this law, the initiator (in the CF project cases, mostly
the beneficiary) of the ‘intended activity’ has to submit a ‘Proposal of an Intended Activity
to the Competent Authority’, which may then require the initiator to perform a full EIA,
including public discussions. In the ISPA/CF cases, the beneficiaries usually outsourced the
preparation of EIA to external consultants.

The situation was not so clear in relation to cost-benefit analysis (CBA). Although the
approach of CBA was familiar in Latvia, having been practised since the mid-1990s, when it
was first applied in World Bank’s education development project, it was not applied in
relation to ISPA projects initially because the European Commission did not require it for
approval purposes. CBA only became mandatory later. However, as noted above, the
rationale and overall objective of almost all environmental investment projects was to
meet the requirements imposed by EU Directives. One of the interviewees expressed the
opinion that the use of CBA in the context of projects which are a regulatory obligation is
questionable.

Nevertheless, the capacity for the elaboration and application of CBA has grown
significantly since it was introduced as a mandatory requirement by European Commission.
Now there are methodologies and guidelines in place for carrying out the analysis. In
addition, the assumption-related macroeconomic indicators are set by the Managing
Authority.

In the initial phase, the national ISPA authorities relied almost completely upon
international and national consultants, who played key roles in the design and development
of ISPA and Cohesion Fund projects, including technical specifications, financial analysis
and other aspects. Over time, the capability of the Intermediate Bodies and beneficiaries in
both sectors to assess the quality of consultants work has increased, and their attitude has
become much more realistic and critical. Under the current 2007–13 period arrangements,
the function of project development and design has been fully delegated to beneficiaries,
who still mostly rely on external consultants for elaboration of the technical
documentation. However, the administrative parts of project applications were prepared by
the beneficiaries themselves or often in close cooperation with consultants.

5.3     The Effectiveness of                  Project     Design      and      Development
        Arrangements, 2000-06
Overall, the arrangements for designing and developing projects in 2000-06 worked
successfully. Although the project design and development process was not very fast, the
required number of funding-ready projects were produced to make commitments for all

European Policies Research Centre               8                              Fraser Associates
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                                      Country Report – Latvia


ISPA/Cohesion Fund allocations for Latvia during this period, and all but one of the projects
were implemented.

During the interviews, various problems were highlighted, depending on the role of
respondent’s organisation in the implementation system. The demand assessment and tariff
setting was perceived to be complicated in cases of waste landfill projects. These types of
projects sometimes also encountered legal problems caused by the requirements to carry
out Environmental Impact Assessments (EIA), and they were further complicated by issues
related to property rights. The problems related to EIA were also reported in some
transport projects, because according to established procedures one of the EIA process
elements is a public hearing, which might require a considerable time and consequently
delay the project implementation process.

Increases in costs while projects were being designed and developed were another factor
affecting the subsequent implementation. As experience suggests that project planning
might last up to five years, costs might fluctuate very significantly during this period as a
result of changing market conditions.

In order to mitigate the identified problems, additional communication and information
measures were carried out by the Managing Authority, Intermediate Bodies and the
beneficiaries, seeking to involve the largest possible audience but especially gaining
representation from the most concerned social groups (such as land owners). The Managing
Authority and Intermediate Bodies also improved planning procedures to shorten the
required time period for project development and to speed up the start of implementation.

5.4     Experiences of the Decision Process
According to interviewees, the system was quite responsive, but very slow. On average, it
took about three months from the submission of the application before the first requests
for clarifications were received from the European Commission by the applicant
organisation, and sometimes it took almost a year before the project was approved. On the
other hand, when the clarifications were received, normally they were well articulated,
reasonable and proportionate.

No projects were rejected. If projects were not approved when first submitted, they were
further elaborated and the improved versions received approval from the European
Commission.

The decision-making process did not change much with the transition from ISPA to the
Cohesion Fund, but it became significantly faster from 2007, when the European
Commission’s approval was needed for major projects only. It was noted by some
respondents that the approval period became shorter immediately prior to accession, as the
capacity of applicant institutions had increased through more extensive experience and
knowledge that resulted in better-quality project applications.

5.5     Evolution and the Integration of Learning
One of the principal changes emphasised by almost all interviewees is the progressive
decentralisation of project design and development. At the beginning of the 2000-06

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period, ministries were not only responsible for project submission to the European
Commission but were also actively engaged in the development of project applications.
Gradually, this function was transmitted to the beneficiaries, and under the current
framework of 2007-13, the project beneficiaries are solely responsible for developing the
project applications and submitting them to the ministries for approval.

Project development capacity has increased, as a greater number of projects are now being
prepared and implemented, which means that more people are involved in their
development. The MGS has become more formalised with regard to the project design and
development process. Precisely formulated requirements regulating the development of
project-related   documentation     (feasibility    studies,   applications,   etc.)   have   been
established. Consequently, the quality of the proposed projects should also have increased.

The role of JASPERS in supporting project development in 2007-13 is controversial.
Interviewees reported different experiences of cooperation with individual consultants
providing JASPERS services. Some of the consultants were reported to be highly professional
and able to contribute significantly, but there were cases when participation of JASPERS’
experts were less involved and delivered no explicit added value.


6.      PROCUREMENT
6.1     The Baseline Position
The major State-financed infrastructure projects were procured by the MoT and MoEPRD
before EU financial aid was available from the ISPA programme. The distinguishing feature
of the period before pre-accession assistance was that much less public funding was spent
on infrastructure investment, particularly in the environmental sector. On the other hand,
the transport sector had some additional sources of income, such as vehicle ownership
levies and petrol excise tax, which could support the ‘State Motor Road Fund’, for example,
the financing source for investments in road infrastructure.

National public procurement legislation was introduced in 1996 and promoted the general
principles of transparency, proportionality and equal treatment.

6.2     Procurement Arrangements for 2000-06
During the 2000-04 period, procurement of ISPA /CF investments and related services (such
as construction supervision) was carried out according to PRAG rules, rather than national
procurement legislation, by the ISPA Intermediate Bodies, MoT and MoEPRD. It was normal
practice for representatives from final beneficiaries and municipalities, where the
beneficiaries were situated, to participate in the procurement procedures as members of
evaluation committees.

Following accession in 2004, procurement was carried out in line with national legislation
from 2001. Although this change should have been foreseen, many stakeholders were not
prepared and experienced delays and negative impacts in the form of enhanced costs.




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Apart from amendments to the legal framework and procedural changes, the main
development was a sharp increase in the number of projects and associated tendering
opportunities. This had an impact on the workload in Intermediate Bodies, prompting the
employment of additional (generally inexperienced) staff to carry out procurement tasks;
the result was still slower-than-planned procurement procedures.

6.3     The Effectiveness of Procurement Arrangements, 2000-06
Although procurement was the most evident cause for delays in the implementation of
projects, the arrangements for procurement during 2000-06 were satisfactory overall in
securing enough bids at reasonable prices to make contracts possible and the
implementation of sufficient projects to utilise all the available financing in this period.
Fluctuations in the number of bids were more dependent on the economic cycle and the
stage in the planning period than on deficiencies in the procurement system.

During the ISPA period, procurement decisions were usually not appealed as this was rather
complicated under PRAG rules.. However, when the implementation of the Cohesion Fund
began and National legislation consistent with EU Directives was applied, a very large
proportion of award decisions were appealed by unsuccessful tenderers. The contracting
period tended to be very long (up to a year) under both legal regimes. Under the PRAG
rules, the main reasons for delay were the long procedure (especially for service contracts)
and very strict and detailed ex-ante controls by the EC Delegation; when national rules
were applied, the main reason for delays was appeals by tenderers.

However, once the contracts were concluded, implementation proceeded smoothly, and
most contracts were completed in line with the overall objective of implementing
infrastructure projects and making them operational. A very small number of contracts
were subject to major disputes regarding cost increases and claims for their remedies.
Penalty clauses were applied in very few exceptional cases.

6.4     Evolution and the Integration of Learning
Capacity-building needs in procurement were related to insufficient knowledge of PRAG
procedures on one hand, but on the other hand many employees in the ISPA administrating
institutions were very young, usually with limited work experience, particularly in
procurement procedures. Because there were very few projects of such size and complexity
implemented prior to the ISPA programme, the ISPA administration required new skills and
knowledge that were quite rare in public administration at that time (how to use contract
guarantees, apply FIDIC Contract rules, etc).

Technical Assistance measures were used quite broadly to enhance the capacity of the staff
working within organisations that were part of ISPA MGS, but also to outsource some of the
tasks, for example, to external technical experts for the tender Evaluation Committees. As
a general rule, tender documentation was developed by external consultants, financed
from Technical Assistance.

Comparing the arrangements for 2000-06 and 2007-13, the first conclusion is that the
implementation system of the 2007-13 period is much more decentralised, with
procurements below the so-called ‘EU threshold’ carried out by the beneficiaries. This

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represents a logical step forward in view of the large increase in the number of projects
and beneficiaries. However, it also had side effects, because decentralisation has brought
more politicisation (at local level), a slightly reduced level of inclusivity and objectivity,
and a much reduced use of (availability of) external expertise.

Nevertheless, within the system there has been a significant increase in various aspects of
the capacity to procure large-scale complex investment projects in transport and
environment. The administrative staff members in the organisations forming the ISPA MGS
have increased their knowledge of national and EU legislation and the European Court of
Justice decisions, and they have become interested and able to apply them in their day-to-
day work. The national consultancy sector has accumulated the required experience and
‘know-how’, and it is now able to produce the technical parts of tender documentation to a
higher standard.

Altogether, the process has perhaps become even more transparent than it was under the
EU Direct Implementation System, as appeal procedures have been simplified, with an
integral focus on each tenderer’s rights to access information and documents justifying the
decision of the Procurement Commission, including evaluation reports of tender
procedures.


7.      PROJECT MANAGEMENT AND IMPLEMENTATION
7.1     The Baseline Position
Prior to 2000, part of the investment in the transport and environment sectors was
managed by sectoral ministries – MoT and MoEPRD - but another part was the responsibility
of the public service providers. This was particularly the case when large and financially
experienced public companies such as the JSC ‘Latvian Railways’ were involved.

7.2     Project Implementation and Management Arrangements, 2000-06
Some changes in existing procedures and structures were necessary before the
implementation of the ISPA programme could start. First of all, the CFCU was established
under the supervision of the Ministry of Finance, but new structures were also gradually
forming in the line ministries, namely the EU Projects contracting units established within
the Investment Departments at the MoEPRD and the MoT for the implementation of ISPA
projects. Changes in procedures mainly stemmed from the necessity to comply with EU
requirements for ISPA implementation. In this respect, the most important change was ex-
ante approvals (endorsements) of all key implementation processes and decisions by the
CFCU and the EC Delegation.

The Intermediate Bodies emphasised the need to enhance the existing administrative
capacity related to project implementation at least in the following fields: procurement,
planning, project management, and financial management. The beneficiaries stressed the
lack of expertise and methodologies for the development of feasibility studies, CBA,
technical aspects (railway), project planning, and financial planning.




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The existing gaps were addressed by elaborating methodologies and guidelines, and training
courses were offered by the Managing Authority, financed from the Technical Assistance
Fund. Some respondents indicated that the training organised as part of Technical
Assistance tended to be too theoretical and lacked practical focus. The exchange of
experience with other countries was very limited and was started at a very late stage (one
of the respondents mentioned 2011).

There was a slight difference in project implementation and management arrangements
between the Technical Assistance projects, where the ISPA MGS bodies were the recipients
(e.g. MA, MoT, MoEPRD), and in those cases where the recipients were other beneficiaries
(local governments, public companies, utilities). The most typical, of course, were the
projects/contracts where the beneficiary was the recipient of grant, where physical
progress was monitored in the first instance by a project manager in the beneficiary
organisation. In the case of constructions contracts, the construction supervisor (engineer)
and the project coordinator in the Intermediate Body (line ministry) also monitored project
progress.

Compliance with the technical specifications for construction contracts was verified by the
project manager and supervisor, while compliance with service and supply contracts was
controlled by project managers and to some extent also by project coordinators in
Intermediate Bodies.

Project finances were managed in close cooperation between the Intermediate Bodies and
the beneficiaries. The beneficiaries submitted cash-flow forecasts that were checked by
the finance units (separate from physical compliance control), and then forwarded to the
Managing Authority and Paying Authority for planning at Programme/Fund level. The
process was similar with payment claims submitted by contractors. First, they were
checked by beneficiaries, then verified by Intermediate Bodies and forwarded to the Paying
Authority to execute the payments.

Apart from claims for incidental expenditure, which occurred in some cases, there was no
established practice for the approval of additional costs. Where costs rose pre-contract,
additional funding had to be secured to enable the project to proceed. Where contracts
had been awarded, cost inflation could result in contractors no longer being interested in
continuing the project. Latvian officials did not share the European Commission audit
service’s view that any additional work identified during project implementation was the
result of ‘poor planning’. According to the interviewees, this mismatch was one of the
system-level obstacles jeopardising smooth project implementation and successful
utilisation of CF assistance, as it represented a high-risk factor that could have rendered a
large amount of costs ineligible.3

In addition to the regular monitoring and control procedures described above,
representatives of Intermediate Bodies or their contracted external experts performed ‘on-
the-spot checks’ in project locations, verifying physical progress, compliance with technical



3
    Discussions concerning several projects are ongoing with the European Commission.


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documentation, existence of sound financial management and internal control systems in
beneficiary organisations.

Aware of the increasing number of CF final beneficiaries in the environmental sector, which
in most cases tended to be of low capacity, the Latvian Authorities proposed several
Central Project Implementation Unit contracts for approval as part of the Financial
Memoranda for Technical Assistance in the environmental sector. Subsequently, the
contracts with external consultants were concluded, providing beneficiaries with
experienced experts to help them not only with their capacity assessment and the provision
of adequate training, but also with the day-to-day administration of projects – drafting
tender documentation, assisting in the tendering process, monitoring the implementation of
progress, and assessing project results.

7.3     The Effectiveness of Project Implementation and Management
        Arrangements, 2000-06
The effective control of physical delivery was ensured by the project managers and
construction supervisors, and additionally checked by the representatives of MGS
organisations or external consultants on their behalf. In cases where significant deviation
from the initial physical specification occurred (and these are assessed to have increased
between 2000-2011), this was presented as being due to unexpected incidents such as
different conditions or configurations of existing networks in technical documentation,
geological conditions differing from the results of surveys, etc., but it was not caused by
neglecting monitoring and control procedures and measures.

Almost all projects that had an investment (construction) component in the 2000-06 period
exceeded the initially estimated budgets. According to the interviewees, this was due to
the unforeseen rise of construction costs that followed EU accession, increasing the
availability of public and private funding and stimulating domestic demand, while the
supply side of the market could not catch up with the increase in demand.

The largest share of the projects that experienced serious delays (more than 20 percent
longer than planned durations) was characterised by long procurement procedures, cost
increases, and inadequate quality in technical documentation related to detailed designs
and survey results. The problems were addressed, where appropriate, by the elaboration of
methodologies, templates for documents, and guidelines, i.e. by attempting to standardise
the processes. However, there are seen to be limits as to how precisely projects of that
scale can be planned in advance as well as regarding the resources that should be allocated
to collecting data and carrying out surveys.

When problems beyond the MGS were encountered, such as market conditions and legal
provisions, the MGS bodies tried to adapt to them by demonstrating reasonable flexibility.
For example, to comply with cost increases, additional financing was allocated to the
projects, negotiations were organised with beneficiaries and contractors, etc.

The main cause for a cost increase was associated with the sharp increase in demand as the
result of EU accession, which caused a large inflow of funds (not only public, but also
private investments were encouraged through greater stability and predictability granted


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by participation in the EU), while the supply side could not absorb the growing demand.
That was one of the most acute systemic problems beyond the ISPA/CF MGS. In addition,
interactions with European Commission services were reported to have been problematic,
thus complicating the implementation process.4

7.4       Evolution and the Integration of Learning
As the number of projects under implementation has grown significantly since the beginning
of ISPA implementation in 2000, one of the greatest challenges for the MGS over time - in
addition to enhancing the capacity – has been to ensure the distribution of accumulated
expertise for the much larger number of people and organisations involved in
implementation.

Compared to 2000-06, decentralisation was the most profound tendency reflected in the
regulatory framework of the 2007-13 period. The workload and responsibilities were
redistributed from principally Intermediate Bodies to project beneficiaries. This has also
occurred with the implementation component of the MGS.

To ensure the successful functioning of 2007-13 system and in response to the increase in
the number of projects in during the period, the Managing Authority and Responsible
Institutions performed several preparatory steps such as elaboration of guidelines for
procurement, methodology for CBA, concretising the requirements for feasibility studies
and unifying project applications forms. In summary, the 2007-13 period was a major step
forward in the formalisation and standardisation of implementation processes and
corresponding procedures.

Simplification of processes, first of all of reporting, must be emphasised, as there are fewer
reports to be submitted to the controlling institutions. Regular attempts are made to
diminish other aspects of the administrative burden, such as the number of monitoring and
audit visits and the range of documentary proof to be retained, but it is not possible to
conclude that the situation has improved since 2000–2006 period in this respect.

Given the increased number of people involved in the administration of CF assistance, on
average the skills and knowledge required for contract implementation have increased
among the employees at the ministries and beneficiaries to large extent due to the
availability of Technical Assistance.




4
  Cases have been reported by respondents according to which the European Commission’s audit
missions have not recognised the EC Delegation’s endorsements as valid, which had been mandatory
during the ISPA period. Similar experiences were observed in cases where documented opinions
expressed by European Commission representatives at ISPA or Cohesion Fund Monitoring Committee
meetings were not recognised as binding by other European Commission services. Such cases have
created the impression that the information provided by the European Commission and the EC
Delegation on very crucial aspects of ISPA and Cohesion Fund implementation (for example, on the
eligibility of costs) might be inconsistent, and thus pose the question whether these are separate and
unrelated cases or relate to a systemic problem undermining the trust in legal certainty.


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Overall, the implementation capacity concerning project planning, financial management,
and the application of monitoring and control measures in the form of improved electronic
monitoring tools, has slightly increased within the MGS throughout the period observed.


8.      CONCLUSIONS: A SYSTEM-WIDE PERSPECTIVE
8.1     General
In concluding the report, this section brings together the main findings from the evaluation
of the different components of the overall CF delivery system. It considers the interaction
of the different components and their performance as an overall system: where the most
significant bottlenecks occurred; the most difficult issues confronting institutions; the main
lessons learned; and the scope for further capacity-building in order to improve the
effectiveness of the Cohesion Fund management and implementation.

It is important to note that this not only reflects findings based on desk research and
interviewees’ opinion but also includes insights from the workshop and judgements by the
evaluators.

8.2     Performance of the Cohesion Fund Delivery System
One of the most explicit shortcomings in the ISPA/CF delivery system was that it constantly
generated significant delays. They occurred for various reasons, but it seems that the most
important factor was problems in procurement procedures. Whereas under ISPA
arrangements, the main reasons were the long duration of procedures defined by PRAG
rules and the very detailed, perhaps excessive, controls by the EC Delegation of all
procurement-related     documentation     (tender   documents,     evaluation   reports,   draft
contracts), under the national legal framework for the Cohesion Fund it was the appeals by
unsuccessful tenderers to the Procurement Monitoring Bureau, contesting almost all
procurement decisions.

The delays also occurred because of changes in conditions beyond the control of the
organisations involved in the MGS. The most explicit case is the rise in market prices in the
construction sector. As a result of market fluctuations in the construction sector, it became
impossible to implement the project within the budget limits estimated during the project
development process that had taken place several years earlier.

The capacity of organisations within the MGS was also an issue. Initially, there was a lack of
knowledge and skills for the administration of EU co-funded projects, such as: project and
financial planning, procurement, elaboration of feasibility studies, cost–benefit analysis,
evaluations, technical specification, contract management, and technical aspects. When
these gaps were gradually closing, it became very important to ensure the sustainability of
the capacity as staff turnover was high; subsequently, when the number of projects and
beneficiaries increased significantly, and implementation became more and more
decentralised, the challenge was to disseminate the accumulated expertise as widely as
possible.




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Understandably, the easiest issues to overcome were those where administrative bodies
could make a direct impact – by training their staff, and by designing well-functioning
processes and corresponding procedures. It was much more difficult to cope with challenges
outside the control of institutions involved in the administration of ISPA/CF assistance, such
as changing market conditions, interaction with the European Commission, legal
framework, insufficient ability of the consultancy sector to provide the requested services,
and the capacity of project beneficiaries.

8.3     Key Learning
Several changes in the implementation framework for the 2007-13 period can be associated
with lessons learnt during the previous period of 2000-06. One of them is the reduction in
the administrative burden, confirmed by Intermediaries and beneficiaries, with reduced
and simpler reporting requirements, fewer monitoring and control visits, and more self-
reliance in project implementation. Another change in the approach to the functioning of
the implementation system, accommodating further increases in the numbers of projects
and beneficiaries, was the introduction of decentralisation and the delegation of more
competencies and responsibilities to beneficiaries. This change was accompanied by the
provision of various support measures in the form of guidelines and standard documents for
procurement, methodologies for cost-benefit analysis, and unified applications forms.

The system has become much better defined, regulated and formalised, introducing more
clarity, but at the same time less flexibility and capability to adapt to new challenges and
changing conditions.

Along with the enhanced capacity in the public sector, the services providers in the private
sectors, such as consultants for the elaboration of technical solutions and documentation,
CBA, and evaluation studies, have increased in number and quality.

Implementation of ISPA and the Cohesion Fund was carried out mainly by using the existing
structures, but also by designing new processes and procedures; more precisely, new
structural units were developed within the existing public administration bodies. According
to respondents, practically the only new specialised administrative body established for
pre-accession assistance was the Central Finance and Contracting Unit which, in fact, was
excluded from the Cohesion Fund implementation system just after accession.

8.4     The Contribution of Capacity-Building Support
Technical Assistance played a significant role in enhancing the capacity of the MGS, as it
was a major source of financing. It functioned in two ways. In the initial phase, when the
ISPA/Cohesion Fund implementation capacity was very low in various respects, many of the
functions (for example, the development of projects) were outsourced to external
consultants, but the contracts were financed from Technical Assistance. Several major
Technical Assistance contracts and even separate Financing Memoranda were concluded for
the implementation of projects whose scope was purely Technical Assistance. Of course,
the contracts were mainly intended for the elaboration of technical documentation, but
capacity-building components for project beneficiaries were also included (for example,
Central Project Implementation Units in the environment sector).


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The second strand of Technical Assistance was to provide direct support for capacity-
enhancing measures to the bodies of the MGS. Although, for the Cohesion Fund’s technical
assistance, this type of support became more relevant in the arrangements under the
current 2007-13 planning period, as they permit the use of Technical Assistance to cover
the salaries of staff employed within these institutions, the memorandum for the
introduction of EDIS envisaged some limited support for capacity-raising activities such as
the elaboration of development plans, electronic monitoring systems, and training.

Both types of Technical Assistance measures must be considered as very valuable and
beneficial - for in-house capacity-building and for the procurement of external expertise -
and certainly favoured over the assistance provided under JASPERS arrangements.
Experience with JASPERS consultants varies from case to case, being mainly dependent on
the individual consultants providing input. Also in this regard, giving the Administrating
Bodies within the CF MGS the opportunity to select the service provider through their own
procurement procedures allows them scope to address their needs better and to secure the
appropriate services.

8.5     Scope for Management Improvements: Issues for the Member State
Although the capacity of the MGS has increased very significantly during the ten years since
the commencement of the ISPA/CF implementation, gaps still remain. Consequently, the
process will continue during next 2014-20 period, and the availability of Technical
Assistance would be very helpful in achieving further advances in this regard.

The priority areas would include ensuring the sustainability of existing experience, which
could be achieved through safeguarding the institutional memory of in-house expertise by
making the MGS institutions more attractive places for work and career development.
Another direction is to continue the dissemination of accumulated expertise to other
participants in the MGS, primarily the final beneficiaries, in the context of continued
decentralisation. In this case, the main form would be continuing to provide all types of
methodological support through manuals, guidelines, and templates of standard documents,
as well as organising training, preferably closer to where the beneficiaries are located. One
other possible solution would be the short-term secondment of staff from the central
administration to the beneficiaries for the period of project development, to provide them
with ‘expert staff’ during this phase of the Project Management Cycle. In addition,
successful examples on how price indexation clauses and / or contingency reserves been
applied elsewhere could help improve in the development of project contracts and
minimise the risk of irregularities.

8.6     Scope for Administrative Reform: Issues for the Commission
Another aspect that would contribute substantially to the sound management and
implementation of projects would be the adaptation and dissemination of information by
the European Commission services using a standardised approach for cases when
unavoidable changes occur in the project implementation process (e.g. unforeseen
geological conditions, conditions of existing infrastructure that must be integrated with
newly constructed infrastructure). To date, the attitude by the European Commission
services (particularly audit) has often been that these are mistakes in planning and could


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have been foreseen. To some extent, this statement might be true, but it does not take
into account that such ‘perfect planning’ would make the planning process much more
expensive than the actual costs for the additional works. Unfortunately, additional works
and services have been one of the most important reasons for irregularities (in the opinion
of audit missions), causing reimbursement of funds.

According to domestic stakeholders, greater concentration on results to be achieved by
Cohesion Fund measures rather than focusing on controlling the implementation processes
through financial audits would also be seen as a necessary step that would simplify and
unburden the implementation process. In this regard, evaluation is understood as a helpful
tool that could be used to assess the outcomes and results of investments.




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ANNEX I: MANAGEMENT AND IMPLEMENTATION ARCHITECTURE

Table I-1: Management and Implementation Architecture for Transport Projects in Latvia
                                                ISPA (2000-04)                              CF (2004-06)                                CF (2007-13)
Managing Authority                            Ministry of Finance                        Ministry of Finance                         Ministry of Finance
Paying Authority                                State Treasury                             State Treasury                               State Treasury
Intermediate Bodies                          Ministry of Transport                      Ministry of Transport                        Ministry of Transport
Implementing Bodies                          Ministry of Transport
Key beneficiaries                     JSC ‘Latvian Railway’, JSC ‘Latvian        JSC ‘Latvian Railway’, JSC ‘Latvian        JSC ‘Latvian Railway’, JSC ‘Latvian
                                                 State Roads’                                State Roads                  State Roads’, Riga International airport



Table I-2: Management and Implementation Architecture for Environment Projects in Latvia
                                                ISPA (2000-04)                              CF (2004-06)                                 CF (2007-13)
Managing Authority                            Ministry of Finance                         Ministry of Finance                         Ministry of Finance
Paying Authority                                State Treasury                              State Treasury                              State Treasury
Intermediate Bodies                  Ministry of Environmental Protection             Ministry of the Environment           Ministry of Environmental Protection
                                          and Regional Development                                                               and Regional Development
                                                                                                                              Central Finance and Contracting
                                                                                                                                          Agency
Implementing Bodies                  Ministry of Environmental Protection
                                          and Regional Development
Key beneficiaries                   Water utilities and waste management       Water utilities and waste management        Water utilities and waste management
                                                   companies                                  companies                                   companies




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ANNEX II: DOCUMENTARY SOURCES
National Strategic Reference Framework for Latvia, 2007 – 2013,

http://www.esfondi.lv/page.php?id=659

Operational programme ‘Infrastructure and services’

http://www.esfondi.lv/page.php?id=660

National ISPA strategy for Environment

http://www.varam.gov.lv/eng/print/files/text/Epubl/invest//National_ISPA_Strategy_Envi
ronmental_Sector.doc

Law ‘On Management of European Union Structural Funds and the Cohesion Fund’

http://www.esfondi.lv/page.php?id=815

The Republic of Latvia: Reference Framework for Assistance from the Cohesion Fund for the
period 2004–2006, Riga, 2005,

http://www.esfondi.lv/upload/02-
kohezijas_fonds/FMNotp_100106_ietvara_dokuments2.doc

‘Official Language Law’

http://www.vvc.gov.lv/export/sites/default/docs/LRTA/Likumi/Official_Language_Law.do
c

‘Eiropas Reģionālā Attīstības fonda un Kohēzijas fonda Apakškomitejas reglaments’.
http://www.esfondi.lv/upload/Uzraudziba/ERAF_KF_AK_Reglaments_23.12.10.doc

Law ‘On Environmental Impact Assessment’

http://www.vvc.gov.lv/export/sites/default/docs/LRTA/Likumi/On_Environmental_Impact
_Assessment.doc

‘On State and Local Government procurement’

http://www.likumi.lv/doc.php?id=41265&from=off

Law ‘On Procurement for State or Local Government Needs’

http://www.vvc.gov.lv/export/sites/default/docs/LRTA/Likumi/On_Procurement_for_Stat
e_or_Local_Government_Needs.doc

Practical Guide to contract procedures financed from the General Budget of the European
Communities in the context of external actions


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http://ec.europa.eu/europeaid/work/procedures/implementation/practical_guide/index_
en.htm

Vadlīnijas atbildīgajām un sadarbības iestādēm - Eiropas Savienības fondu projektu izmaksu
efektivitātes novērtēšanas un izmaksu-ieguvumu analīzes pamatprincipi

http://www.esfondi.lv/page.php?id=1099

Skaidrojošs materiāls par izmaksu un ieguvumu analīzes veikšanu ES fondu 2007.-2013.gada
plānošanas perioda projektiem (tajā skaitā par konversijas faktoriem un makroekonomi-
kajiem pieņēmumiem Latvijā)

http://www.esfondi.lv/page.php?id=1099

Prezentācija par izdevumu - ieguvumu analīzes veikšanu ES fondu 2007.-2013.gada
plānošanas perioda projektiem (LV) / Presentation of cost-benefit analysis and revenue-
generaneng projects for EU funds 2007.-2013.planning period (EN)

http://www.esfondi.lv/page.php?id=1099

Izmaksu pamatotības un sadārdzinājuma riska novērtēšanas metodoloģija

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European Policies Research Centre             22                               Fraser Associates
 Ex Post Evaluation of Cohesion Fund (incl. ISPA) - Work Package D: Management & Implementation
                                      Country Report – Latvia



ANNEX III: LIST OF CONSULTEE ORGANISATIONS
Representative of EU Funds Monitoring Department at the Ministry of Finance

Representative of the Ministry of Transport

Representative of the Ministry of the Environmental Protection and Regional Development

Representative of the Ministry of the Environmental Protection and Regional Development

Representative of Latvian Railway company

Representative of the Ministry of Finance

Representative of the Ministry of Finance

Representative of the State Treasury (Paying Authority)

Representative of the State Treasury (Paying Authority)

Representative of the Ministry of the Environmental Protection and Regional Development

Representative of the Ministry of the Environmental Protection and Regional Development

Representative of PIU at water utility company

Environmental Consultant

Representative of an International Consultancy company branch in Latvia

Lawyer, Adviser at the Latvian Employers Confederation




European Policies Research Centre             23                               Fraser Associates

				
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