Post-disaster Condition

At the end of this step, the team should be able to do the following:
a) Quantify the need for investment to implement the recovery and reconstruction plan
b) Define an investment plan
c) Define a financial strategy for the plan

Local partners and technical expertise

The table below presents a list of suggested local partners and technical expertise required to contribute to or lead the activities of this step.

Module 7.1. Plan’s structure and cost 

Activities in this module focus on quantifying the cost of the intervention and proposing a structure for the investment plan.

Activity 7.1.1. Define a structure for the investment plan aligned with that of the intervention strategy  

The purpose of this activity is to define the structure of the investment plan, based on the intervention strategy. The investment plan tends to mirror the intervention strategy in structure. Adjustments may be needed to make the structure of the investment plan conform to that of the country’s public investment system. With decentralized government structures, for instance, the investment plan has to be disaggregated by levels of government and according to the resource allocation schemes. Task teams should review the outputs under step 4 related to the public investment system requirements and define accordingly the investment plan’s structure before conducting the cost estimate.

Guidance:

Metrics must be consistent among the budgeting unit, programs, lines of intervention, and results. Each line of intervention has a specific metric, an associated unitary cost, and a result indicator. For the investment plan, however, investments are aggregated by budgeting units, which is the lowest level at which the cost estimate will be aggregated (usually, the school facility level). Infrastructure managers may also want to use other budgeting units to distribute investments, such as classrooms, education levels, or number of students. It is important that task teams ensure consistency among different options by properly defining the budgeting unit (for example, a classroom by area) and the associated aggregation algorithm. 

The investment plan’s multiyear investment structure should support its disaggregation over time. Task teams should work with the planning office at the ministry of education, or any other relevant agency, to learn about the annual budgeting process and make sure the investment plan, results, and cost estimate can be duly applied on an annual basis. 

In post-disaster conditions, the investment plan changes if it must operate under exceptional investment provisions. Sometimes governments incorporate temporary investment mechanisms (like dedicated funds) or provisions under which the private sector and civil society may participate in reconstruction. In these cases, the investment plan may differ slightly from normal conditions. On the other hand, since the public investment needs of a reconstruction plan also call for a multiyear effort, the budgeting process should be the same as under normal conditions.

Activity 7.1.2. Estimate the cost of interventions  

This activity seeks to provide guidance on the cost estimation process for the intervention strategy. The purpose is to quantify the investment needs for each line of intervention and program and, subsequently, for the entire plan. The three key elements of estimating intervention costs in large school infrastructure portfolios efficiently are, first, the definition of unitary costs; second, the definition of algorithms; and, third, the application of appropriate statistical software analysis. Unitary costs refer to the average cost per unit (U.S. dollars per square meter, for instance) of a single activity (such as the construction of a perimeter wall). These unitary costs may vary from urban to rural areas. Defining this metric is important, as the unitary cost for each line of intervention under the plan can be estimated by aggregating activities, as illustrated under step 6. This process can be systematically conducted by means of algorithms that combine activities and lines of intervention based on predefined dependencies and relationships. A structured database, coupled with supporting software, is necessary both to run the algorithms and visualize the results.  

Guidance:

The cost estimate analysis should be used to inform the planning and decision-making process. The use of representative index buildings and, in some cases, proxies for some of the parameters means this analysis will use average values. Furthermore, the accuracy and reliability of the cost estimates for the interventions will depend on the level of detail and quality of information in the baseline database, the definition of engineering solutions, and the knowledge of the local construction market. Records from past public investment projects are valuable to complement the available information and to finetune costs. Relying on local experts with extensive experience in budgeting and implementing civil works in school infrastructure is also useful for this cost estimate analysis. 

Task teams should progressively incorporate several considerations in the cost estimation. Perhaps the most relevant is the tune-up exercise that must be carried out between the investment needs and available budget (see next activity). This balancing act will finally define the expected results of the plan. Other aspects that may also affect cost include different procurement approaches for construction services, the cost of transportation to remote locations, and the introduction of new technologies, among others.

Estimation of the cost of interventions in post-disaster conditions involves additional considerations. A disaster affects the construction sector, with increased costs of labor and materials and shortages of engineering services and available workforce. To restore services as quickly as possible, the interventions also need to be implemented within a shorter time frame than under normal conditions, which adds even more considerations for the cost estimation. These market distortions, which tend to dissipate over time, have to be considered at this stage to ensure a realistic estimate. 

Module 7.2. Investment scenarios

In this module, task teams will compare investment scenarios to identify cost-efficient options.

Activity 7.2.1. Define parameters for the investment scenarios  

This activity is focused on defining the parameters that will be used to forecast school infrastructure budget allocation and proposing investment scenarios within the plan’s time frame. The parameters used for this analysis should build on activities carried out under step 4, in addition to other key parameters. These may include, for example, the country’s gross domestic product (GDP), spending on education as a share of GDP, spending on school infrastructure as a share of education spending, and expenditure capacity. Three investment scenarios are usually considered: base, pessimistic, and optimistic. The base scenario assumes historical trends will continue, while the optimistic scenario assumes an increase (for example, 10 percent from the base scenario), and the pessimistic scenario assumes a decreasing trend over time (for example, 15 percent). The degree to which the optimistic and pessimistic scenarios vary from the base scenario should be discussed and agreed on with the government and, in particular, with the respective entities managing the budget and resources for the education sector, as described below. 

Guidance:

This activity should be carried out in coordination with the technical teams and experts on these topics from the ministries of finance and education. Task teams should engage with key relevant departments within these ministries to secure their active participation. The definition of parameters and values for the projection will help determine the financial capacity of the education sector to allocate resources for the plan. The results from this analysis will provide decision makers with three realistic scenarios that project the investment needs in line with the financial capacity of the sector and the time frame of the plan and useful guidance for discussions on how to move forward the implementation of the plan, given the available and projected financial capacity of the sector. 

Nonpublic resources can be included in the projection as long as they are formally under the education sector. This activity focuses on the projection of public budget expenditure. While formally committed contributions may be included, given the vital role often played by donors, sources without this status could distort the actual investment scenarios. Any resulting financial gap will be addressed in the financing strategy design.

Although investment scenarios must still be evaluated under post-disaster conditions, the budget allocation forecast is usually altered by an atypical flow of financial resources for reconstruction. Large disasters trigger an exceptional financial intervention from both the government and the international community to accelerate the recovery and reconstruction phases. With projections for the post-disaster condition under this activity different than under the normal condition, task teams should evaluate whether the additional resources can be applied to the whole or partial reconstruction. In any case, as the reconstruction is a multiyear effort, we recommend proposing more than one investment scenario, to take into consideration changes in the government’s financial capacity over time. 

Activity 7.2.2. Analyze investment scenarios  

With task teams having projected an expected average allocation of budget per year, the purpose of this activity is to assess to what extent the plan can be funded on an annual basis under each scenario. This analysis consists of comparing the available budget and the investment needs of the plan to determine whether the plan is under- or overfunded. Task teams will then be able to deduce the pace at which the plan’s targets can be met over time under each investment scenario, and whether any investment gap will persist past the plan’s time frame.

Guidance:

Medium-term investment plans are rarely sufficient to meet fully the needs of existing and new school infrastructure. An investment gap will likely remain for the 10 to 12 years following the plan’s implementation. A huge investment gap can signify that, for example, the school design and construction standards and/or the engineering solutions are too costly for the country. Conversely, a small remaining gap (less than 20 percent) suggests the intervention strategy is appropriate for the country. In the RSRS, we mean by “solutions at scale” those that do not necessarily cover 100 percent of the investment needs but help to meet them progressively while maximizing the benefits for the children. 

Given these conditions, task teams should strive to craft solutions at scale within the proposed investment scenarios. Based on the initial results of this activity, task teams may have to review the intervention strategy (step 6) and find alternatives, especially for the highest investment lines of intervention. Alternative solutions may stem from the review of expected standards or policy (like the reduction of shifts), the focusing of interventions on high-priority regions or school building types, or the adjustment of regulations to introduce new construction technologies. The rationale, benefits, and implications of such changes should be discussed with and endorsed by relevant decision makers before being included in the plan. In cases in which the design and adoption of alternative interventions may take time and go beyond the RSRS implementation, the proposal can be developed under the plan’s implementation phase.

This approach is fully applicable to post-disaster conditions, albeit under a tight time frame. Since the full recovery of affected communities and infrastructure is at the center of a reconstruction plan, the analysis of investment scenarios and exploration of solutions at scale is even more pertinent. Task teams should keep in mind that the reconstruction process after a large disaster will be, in any event, a medium- to long-term effort.

Module 7.3. Financing strategy

Activities in this module focus on defining the investment plan based on the analysis of the financing options and previous activities.

Activity 7.3.1. Analyze financing options

This activity explores the funding sources available to the education sector for implementation of the plan. Task teams are to identify the financing options available for the investment plan, looking at both internal sources (public budget) and external sources (credit, donors, public-private partnerships, and so on). Task teams should be complemented by technical specialists from the budgetary and planning offices in the ministries of education and finance and other relevant government entities that oversee these areas and have access to this information. 

Guidance:

The available funding sources may be subject to requirements and conditions specifying what expenditures may be financed. It’s important to understand the lines of intervention and, if applicable, the government levels and their roles and responsibilities related to these interventions.

In the case of new financing options being introduced, task teams must understand their operational characteristics and the need for adjustments (if any) to the existing financing system. Since the plan will introduce several changes in the investment lines, prioritization, and project designs, the teams will need to address the required adjustments within the existing financing framework. In decentralized systems, the autonomy of subnational governments implies the validation of financing options through subnational budget allocation policies. At the central level, new incentive mechanisms can be created as conditionalities for budget transfer to municipal governments. Likewise, in the case of existing dedicated funds for school infrastructure, the operational scheme may need to be reviewed.

Despite an initial increase in the flow of resources following a disaster, the analysis of financing options is essential for the reconstruction plan. Even though large amounts of resources are channeled to dedicated funds in the early phases of the recovery and reconstruction, the financing strategy should cover the time frame of the reconstruction plan and ensure resources will be allocated beyond the early phases of it.

Activity 7.3.2. Analyze options for new sources of financing

This activity aims to complement the above and identify new sources of financing. It is part of the financing analysis, in that it promotes the need to identify new financing mechanisms that can complement the existing ones, given the limited public resources available. 

Guidance:

The task teams should note this process can require making changes to the legal and regulatory framework, in particular if the mechanisms have not been applied in the education sector. This may include, for example, the use of public-private partnerships (PPPs), which can bring in the private sector and accelerate the rate of implementation, particularly if the government has experience with the use of PPPs in other sectors. Other financing mechanisms allow private firms to finance infrastructure projects in lieu of future taxes, so that governments can redirect public funds to other high-priority areas as the private sector assumes the upfront costs and management of the new infrastructure projects. Social impact bonds and land use–related financing mechanisms are other alternatives  to leverage resources for school infrastructure.

Activity 7.3.3. Select an investment plan 

The purpose of this activity is to select an investment plan to support the implementation strategy. The investment plan is based on the integration of the results of the aforementioned activities and has three key areas: total investment needs, estimated annual resource allocation needs, and the financing strategy. Investment needs refer to the financial resources required for the plan (programs, lines of intervention, components, and so on). Annual resource allocation needs are based on the expected targets defined by the government in line with the plan’s implementation time frame and intervention strategy and projected financial capacity of the sector. The financing strategy defines the existing funding sources that can be used and the need for new financing options to leverage additional resources for the implementation of the plan.

Guidance:

The definition of results and cost-efficiency indicators is important to monitoring investments under the plan. The link between the investment plan and result indicators should be clearly established. Building on the discussion in step 6 and the monitoring system described in step 8, task teams should establish the quantitative link among investment, intervention cost, benefits, and results. 

The investment plan provides an overview of the plan’s expected results in the medium and long terms, taking into consideration the financial resources that would be allocated by the sector. Task teams should present the investment plan to key decision makers, such as the ministries of education, finance, and public works. During these discussions it will be important to review the projected investment scenarios and gather key recommendations from the decision makers to ensure the investment plan is realistic and will have the political support to be formally adopted as part of the overall plan. 

This is the opportunity to engage with donors and development partners to leverage the government’s efforts. This engagement is particularly relevant in low-income countries, which depend heavily on donor contributions and lending from IFIs. In our experience, the framework offered by the plan allows for contributions from different players to be articulated, which will draw the attention of the international community.

The discussion with decision makers is also applicable in post-disaster conditions. It is, however, common for the definition of the investment plan to be permanently subject to adjustment rather than being a single-step activity. This is so for two main reasons: on the one hand, access to new information about the impact of the disaster improves over time; on the other, an investment plan is needed early in the emergency phase to fund the recovery activities.

Output

The completion of activities under each module will result in one or more output(s).