OPERATIONS MANUAL CHALLENGE FUND - mhupa...

OPERATIONS MANUAL

CHALLENGE FUND

Prepared By

HSMI AND Project Management Unit

CBUD Project

Contents

1. Purpose and Overview............................................................................................................................... 3

1.1 Background .............................................................................................................................................. 3

1.2 Objectives of Challenge Fund ............................................................................................................ 3

1.3 Purpose of Operations Manual ......................................................................................................... 4

1.4 Components of Challenge Fund ........................................................................................................ 4

1.5 Scope of Challenge Fund ................................................................................................................... 5

2.0 Management Structures for Challenge Fund ........................................................................................ 6

2.1 Role of MoHUPA ................................................................................................................................ 7

2.2 Role of Steering Committee .............................................................................................................. 7

2.3 Role of Expert Panel .......................................................................................................................... 8

2.4 Role of Core Management Unit at HSMI ........................................................................................... 9

3.0 Financing and Financial Management System for Challenge Fund ..................................................... 13

3.1 Fund Flow Mechanism ..................................................................................................................... 14

3.1.1 Payment Mechanism for Challenge Fund (DIFD)......................................................................... 14

3.1.2 Challenge Fund Bank Account Operations (DFID Funding) ......................................................... 14

3.2 Payment Mechanism for Challenge Fund (WB) .............................................................................. 15

3.3 Reimbursement (WB & DFID) .......................................................................................................... 16

3.4 Audit (WB & DFID) ........................................................................................................................... 16

3.5 Sustainability of CF Activities and expenditure on CF set-up ........................................................... 16

4.0 OPERATIONS OF THE CHALLENGE FUND ............................................................................................. 17

4.1 Steps for Challenge Fund ................................................................................................................. 18

Annexure 1 -List of SNPUPR and CBUD cities .............................................................................................. 23

Template-I : Documenting Identified Best Practice .................................................................................... 24

Template II : Template for Preparing Proposal for Replication of Best Practice ....................................... 26

Template III :Draft for Project Sheet ........................................................................................................... 35

Operations Manual for Challenge Fund

1. Purpose and Overview

1.1 Background

Capacity Building for Urban Development (CBUD) Project aims to help in addressing the major constraints

to urban development and specifically focuses on the capacity building requirements for successful urban

management and poverty reduction. The main objective of the project is to assist in the following:

Assist selected states and urban local bodies to operationalize institutionalize urban reform

agenda;

Strengthen policy, institutional reform and improve procedures; and

Improve skills in the areas of governance, planning, service delivery and municipal financial

management.

One of the support areas under the project is aimed at fostering knowledge and information exchange and

learning amongst urban local bodies. Establishment of Challenge Fund for Urban Poverty Alleviation is one

of the key tasks to promote the implementation and replication of best practise in the area of urban

poverty reduction. The Challenge Fund is intended to promote the implementation and replication of best

practise in the area of urban poverty reduction.

Challenge fund envisages technical assistance and financial support to ULBs for replicating good practices.

The focus is to encourage ULBs to adopt good practices which have already been recognised elsewhere in

the overall context of reform processes. The idea is to ensure that more ULBs adopt innovative good

practices and make them continuously sustainable.

The Challenge Fund is jointly proposed under the World Bank supported ‘Capacity Building for Urban

Development (CBUD)’ project and the DFID supported ‘Support to National Policies for Urban Poverty

Reduction (SNPUPR)’ project. The Challenge Fund will be operational till June 2016, even though DIFD

funding will be upto June 2014.

1.2 Objectives of Challenge Fund

The aim of Challenge Fund is to support urban local bodies to take up pro-poor development projects

within the thematic areas and create a competitive environment amongst the urban local bodies in

addressing the challenges of urban poverty alleviation in transparent, cost effective and responsive

manner. It is designed to provide urban local bodies the opportunity to innovate and adopt

approaches/practices to respond to urban poverty alleviation.

The broad objective of challenge fund is to promote a sense of competition amongst the urban local bodies

in addressing the challenge of urban poverty alleviation in a transparent, cost effective and responsive

manner. It is designed to provide urban local bodies the opportunity to adopt innovative approaches to

respond to urban poverty alleviation. In this context, Challenge Fund has been designed as a new type of

vehicle: it de-emphasises the effort spent on screening and identification of innovative ideas, and places

greater weight on the process and incentives for replication of proven, successful ideas. The idea is to

ensure that more ULBs adopt innovative good practices with the following basic objectives:

To support taking up initiatives to scale up/replicate good practices within the broad area of Urban

poverty alleviation

To encourage and provide incentives for innovations or innovative ideas carried out/proposed by

urban local bodies within the broad thematic areas including exploring options of involving private

sector/NGO for promoting innovations in the areas of urban poverty alleviation

To create a competitive environment for accessing the fund.

In doing so, the programme aims to support ULBs who have limited access to technical and financial

support and incentives to adopt and implement good practices.

1.3 Purpose of Operations Manual

The Operations Manual lays down the institutional framework and the procedures for availing financial and

technical support from the Challenge Fund. Moreover, this Operations Manual focuses on procedures to

access funding support from the challenge fund. The Manual outlines the entire process of the project

development cycle from identification of the good practices to replication of good practices and the role of

various stakeholders at each stage of this development.

1.4 Components of Challenge Fund

Challenge Fund constitutes an important part of an effort that aims to (a) identify good practices that have

demonstrated impact and efficacy, and (b) rapidly transfer them to other cities where they can be

replicated. Besides supporting innovations under Challenge fund, cities that propose credible

implementation plans for replication will be provided technical and financial support under the Challenge

Fund to meet the costs of implementation.

Identification of Good Practices in Urban Poverty Alleviation: A set of good practices/innovations

particularly on urban poverty alleviation, livelihood, service delivery etc. will be selected from

amongst the initiatives that have already been awarded under various award programs of

government of India or any other similar initiative and innovations particularly on urban poverty

alleviation, livelihood, service delivery that justify merit for inclusion under challenge fund. While

choosing good practices/innovations, emphasis will be given to those initiatives that are aligned

with the concepts/themes of Rajiv Awaas Yojana/SJSRY and other MoHUPA programmes. Good

practices/Innovations will be finalized in close consultation and agreement with the Ministry.

Replication of Good Practices: Cities will be challenged to replicate the good practices/innovations

that have been identified as mentioned above. Establishing the corpus of Challenge Fund for

Replication will be communicated extensively and given wide publicity. Cities that propose credible

implementation plans for replication will be provided technical and financial support under the

Challenge Fund to meet the costs of implementation.

1.5 Scope of Challenge Fund

It is essential that the Challenge Fund is implemented within a given time frame, within allocated budget

and achieve desired outputs in a qualitative and sustainable way. To begin with, Challenge Fund is to be

used in 20 selected cities that are presently under Component ll of CBUD and another 20 cities that are

within the purview of the on-going DFID supported project known as “Support to National Policies for

Urban Poverty Reduction (SNPUPR)” project. It may be opened up to other ULBs at a later stage. A list of

40 cities from which the Challenge Fund has to be administered is contained in Annex- l.

2.0 Management Structures for Challenge Fund

Organisational framework for administration of Challenge Fund gives a flavour of how this fund is to be

administered. Challenge Fund is institutionally positioned as a flagship initiative of the Ministry of Housing

and Urban Poverty Alleviation. The Challenge Fund will be accountable to the Ministry of Housing and

Urban Poverty Alleviation (MoHUPA). The Challenge fund is housed in the Human Settlement Management

Institute (HSMI). Following two additional committees will be established to help guide specific parts of the

Challenge Fund’s operations:

A steering committee chaired by Project Director will provide oversight for implementation, recognizing

best practices as well as for defining the road map for replication. The Steering Committee will meet bi-

annually to review & approve ULB proposals for replication funding & progress of implementation.

An Expert panel will be constituted to evaluate and short list the best practices and identify cities for

replication including recommending the selected ULB proposals to the steering committee for approval.

For the first year, the panel will meet every quarter to appraise and examine proposals from ULBs.

Subsequently the expert panel will be convened by Coordinator HSMI whenever required. The

proposed structure for Challenge Fund is depicted below for clarifying synergy and interrelationships

amongst them.

The Core Management Unit at HSMI will be responsible for overall management of the fund. This core

Management Unit will consist of one coordinator and two professionals to be provided by HSMI. This core

team will effectively manage and sustain the challenge fund program and implement knowledge

management activities and network between participating cities. The core team would support organizing

workshops including communicating the shortlisted/selected good practices for replication to the identified

ULBs. HSMI in addition to providing dedicated professionals will also procure the services of a Financial

Management Specialist for the project period to support the core unit in realization of CF objectives. HSMI

will also provide support staff, work stations and any other appropriate support required to function and

operationalize the Challenge fund. HSMI would also be responsible for preparing case studies and

dissemination of case studies of good practices including preparing progress reports.

MoHUPA Steering Committee

Expert Panel

Core Management Unit at HSMI Headed by

Coordinator CF

Headed by

Coordinator

2.1 Role of MoHUPA

Challenge Fund is a flagship initiative of MoHUPA for identification of existing innovative practices in urban

poverty alleviation and its replication. MoHUPA therefore has an important role in promoting this initiative

and also in its oversight for any midway correction in pursing and promoting the Challenge Fund objectives.

Because of the crucial role of MoHUPA, a high power Steering Committee is located in this Ministry.

Chaired by the Project Director, MoHUPA, the Steering Committee will oversee and guide the use of

Challenge Fund in replication of innovative good practices. Through this Committee MoHUPA will finally

approve identification of good practices, its replication and will monitor and review the progress of

implementation of good practices in the Replication phase of the Challenge Fund.

2.2 Role of Steering Committee

Accomplishment of the Challenge Fund objectives requires a strong leadership and oversight at senior level

in MoHUPA. Challenge Fund is to be positioned as a flagship initiative of this Ministry and therefore, its

promotion, monitoring and review will require sustained support of the Ministry. A steering committee

chaired by Project Director-CBUD/SNPUPR will provide oversight for implementation, recognizing best

practices as well as for defining the road map for replication. This Steering Committee would meet at least

once every quarter and play the following roles:

Oversee all operations, interact with key stakeholders, and ensure coordination among various

stakeholders

Enunciate the vision and key objectives of the Challenge Fund.

Give approval to the recommendations of the Expert Committee for replication funding to selected

ULB

Provide sanction to implementation plans for replication

Review the CF Management core team decisions on a six monthly basis and offer specific guidance

from time to time.

Review the proposed annual and quarterly work plan of the Challenge Fund Core Management

Unit.

Monitor the performance of the Fund and the Core Management Unit on a quarterly basis.

Outline the project identification and support guidelines/parameters from time to time.

Provide oversight for identification of good practices, replication of these in the ULBs and also

ensure that the Challenge Fund is able to meet its objectives.

Define a road map for replication and provide an enabling framework and review progress against

time goals, will pursue sanctions, and will ensure smooth flow of funds for implementation.

The Chairman of project Management Board of CBUD and SNPUPR project will provide final approval of

steering committee’s decision on replication funding. Following is the proposed composition of Steering

Committee. Composition of the Steering Committee is as below:

Proposed Composition for Steering Committee for Challenge Fund

1 Project Director CBUD/SNPUPR, MoHUPA Chairman

2 Joint Secretary (UPA) Member

4 Director Finance (MoHUPA) Member

5 Director Ministry of Urban Development, Nodal officer CBUD Member

6 Executive Director, HSMI Member

7 Representative DFID Member

8 Representative WB Member

9 Coordinator Challenge Fund (CMU-HSMI) Member

10 Director (RAY) Member Secretary

2.3 Role of Expert Panel

In addition to the high powered Steering Committee, an Expert Panel will be created for giving expert

advice on identification and replication of good practices. Expert Panel will consist of small team of core

members, and if required, some experts can be included as special invitees for particular round of

evaluation based on nature of proposals received from ULBs. The expenditure towards travel (economic

class), boarding and lodging of non-officials for attending the meetings of the expert panel will be borne by

HSMI from Challenge fund administrative expenses. The non-official members will also be paid honorarium

upto Rs. 5000/ per meeting. The non-official cannot depute any other person on their behalf. Expert Panel

will be supported by the core team at HSMI.

The panel will choose one person as its chairman amongst themselves. Coordinator CF Management Team

at HSMI will be the Member Secretary of the Expert Panel. Beside them, the Expert Committee will have

following Members:

One representative with expertise on Urban Poverty Alleviation and with prior experience of being

a member of committee felicitating awards

One representative from non-governmental organization/institution from within India that is

dedicated to urban poverty Alleviation

Two from amongst individuals with strong knowledge and experience on urban poverty alleviation

programs

The following is the composition of expert panel:

Proposed Composition for Expert Panel for Challenge Fund

1 Chetan Vaidya Member

2 Ms. Poornima Chikermanee Member

3 Dr. Amodh Kumar Member

4 Coordinator Core Team, HSMI Member Secretary

5 Director (RAY) Member

6 Director (JNNURM) Member

7 DS, Urban Poverty Alleviation Member

Expert Panel will carry out following functions:

Finalize the criteria for selection of Best Practices amongst the existing practices for replication

Finalize broad theme areas for replication

Review the existing good practices and invite presentations from the ULBs, if required.

Select pool of best practices for replication

Review the proposals of cities for replication

Select the cities for replication of best practices

Recommend the best practices for replication to the steering committee

2.4 Role of Core Management Unit at HSMI

Human Settlements Management Institute (HSMI) has been recommended as the administrator of the

fund. Initial funding under Challenge Fund has been located in HSMI ( under a dedicated Challenge Fund

Account) that is to be judiciously used for identification of good practices and its replication after selecting

the most appropriate urban local bodies for this purpose.

HSMI will designate one of its senior faculty members as the Coordinator of Challenge Fund and also

provide two full-time staff allocated to the Challenge Fund to serve as (i) Urban Development Specialist and

(ii) Social Development Specialist. One of them will be responsible for developing and disseminating good

practices including preparing progress reports on Challenge Fund. HSMI would be supported in terms of

overhead, flow of funds and other appropriate costs allocated to them through the Challenge Fund budget.

The regional office network of HUDCO may be used where necessary for networking with the ULBs

and monitoring of projects. The proportionate time cost of the designated staff may be booked

under the administrative expenses of the Challenge Fund.

The core Management Unit at HSMI will ensure implementation of Challenge Fund within the allocated

budget and achievement of desired outputs in a qualitative and sustainable manner. HSMI Core Team in

effectively managing and sustaining the Challenge Fund will develop a set of criteria for identification of

good practices and also for selecting eligible ULB for replication of the identified good practices. It will also

implement knowledge management activities in the participating cities. After identifying good practices,

Coordinator of the Core Management Unit will present them to the Expert Panel. Likewise, in the

replication phase, Core Management Unit will disseminate the identified good practices through public

relations and communication campaign for motivating the ULBs for replication. It will identify the ULBs that

have the motivation and the required institutional capacity to replicate. As mentioned earlier, Core

Management Unit will provide technical support in identification of good practices, identification of the

ULBs that qualify for replication of the identified good practices, monitoring of implementation of good

practices in the replication phase, and preparation of technical and other reports relating to Challenge

Fund. Core Management Unit of the Challenge Fund will work closely with the World Bank supported CBUD

Project and the DFID supported SNPUPR project, Project Management Units.

The Core Management Unit of the HSMI will play central role in identification and replication of good

practices. For this it will examine good urban poverty alleviation practices that have been already

documented by reputed organizations such as NIUA, CRISIL, AIILSG, UNCHS, HUDCO and others. Having

identified good practices, it will submit them to the Expert Panel for review. The Core Management Unit

would lead the Challenge Fund Program and facilitate ULBs to participate and adopt relevant good

practices. Beside this the core team will:

Collaborate with ULBs to develop implementation plans and structure grant funding;

Regularly monitor the development of each one of the challenge Fund- supported projects. In this

activity, the core team would use their team resources to prepare comprehensive project

monitoring reports.

Share with the Steering Committee and Expert Committee information on plans, proposals,

progress, problems, etc.

Operate the challenge fund bank accounts, including advising MOHUPA and CBUD PMU on

disbursement of funds.

Put together a project specific “Project sheet”, which would not only specify the quantum of

financial and other support from the Challenge Fund, but also the “terms and conditions” of the

support (Draft Project Sheet Template annexed).

Develop a Memorandum of Agreement (MOA) to be entered between the selected ULB and

MOHUPA for replication and ensure signing of the same.

Based on satisfactory compilation of project-specific terms and conditions the core team will

recommend for disbursement against sanctioned Challenge fund support

Assist in audit as per World Bank and DFID’s guidelines to ensure the appropriate utilization of the

challenge Fund.

Support in organizing workshops and conferences on specific issues and the costs of attending

these conferences can be covered under the CF budget.

Design, develop and produce print and web-based collateral and outreach materials

The role of Core Management Unit will be crucial for taking the Challenge Fund forward and for effective

programme management and administration of the Challenge Fund in following aspects:

Program Management

Responsible for the overall management of the project activities in consultation with MOHUPA and

will ensure that all project inputs are organized and delivered on time.

Ensure that disclosure of project related documents is fully consistent with Government of India,

World Bank and DFID policies/disclosure requirements. The disclosure requirements have to meet

the minimum standards mentioned in the project Memorandum agreed with the Ministry for

SNPUPR project

Explore all potential opportunities for scaling up the fund and mobilising funds from other donors/

agencies/private sector/individuals with an objective of the enhancing the fund pool.

Provide vision and direction to the fund by suitably advising the core team in making decisions.

Assist in other tasks assigned to it by the core team and MOHUPA within the ambit of the contract.

Update the operations manual based on learnings from implementation and as may be required,

on a periodic basis.

Project Management

List good practices/initiatives that has been recognized under various national and international

programs particularly that are aligned with the concepts/themes of Rajiv Awas

Yojana/SJSRY/NULM/BSUP and other MoHUPA programs

Support the expert panel in developing the criteria for shortlisting innovative /good practices that

have been implemented by ULBs.

Develop a pool of final good practices for ULBs to choose for replication.

Develop criteria for the prioritization of the cities for the replication of good practices.

Develop forms and formats for the application that will be used by ULBs to express their interest in

replication of good practices

Develop communication mechanism/notification inviting applications from ULBs for the replication

of good practices

Carry out desk and field appraisal of proposals and recommend to the expert panel for acceptance

or rejection.

Support ULBs in procuring technical support in replicating good practice.

Undertake periodic visits to selected cities for assessment of their intention, ability and capacity to

access the technical support under challenge fund including documenting/validating (if required)

and monitoring the replication process.

Support in organizing presentation workshops for the evaluation of applications by ULBs.

Publicize and communicate extensively about challenge fund including identification and

replication of good practices through newspapers, websites and newsletters including through

partner institutions.

Fund Management

Assess the cost of implementation of innovative good practices by selected ULBs and suggest

mechanisms for the cost-effective use of resources allocated.

Prepare detailed budget for the fund and its submission for remittance of funds.

Prepare schedules for the project activities and budget allocation, quarterly status analysis of funds

and expenditure reports, and technical reports budget estimates, including ensuring previously

disbursed funds are fully utilized before further funds are released.

Ensure timely and certified UCs along with physical and financial progress from ULBs as per GFR

19A and regulated as per GOI guidelines.

Monitoring and Feedback

Develop criteria for monitoring and evaluation of innovative practices that are being implemented

by ULBs so that mid-term corrections are made, if required.

Monitor physical and financial progress including fund flow for the project and its components for

the timely utilization of allocated resources in an effective way.

Prepare half yearly CF evaluation report, assessing the impact of CF and identify difficulties faced

and provide suggestions for further streamlining of the process of implementation of CF.

Capacity Building and Handholding

Educate the ULBs about the Replication Program, share the benefits of participation, and inform

them about the steps they must take to participate

Provide relevant training and workshops to orient urban local bodies on identification and

replication of good practices.

Take on initiatives for capacity building of applicants during preparation of proposals and after

sanction of project

Support ULBs in devising an effective implementation plan to replicate chosen good practice and

provide appropriate skills to cities/ULBs to improve their capability to implement identified

innovative practices including mechanisms to improve institutional capacity.

3.0 Financing and Financial Management System for Challenge Fund

The Total budget provided for Challenge Fund is $11.4 Million (INR 57 Crores). It comprises of $5 Million

(Rs.25 crores) credit funding from World Bank The balance of $6.4 Million (Rs.32crores) is by way of funding

from DFID. The Fund will be utilised as follows;

Components % of budget

Replication/innovation support to cities 85 (75 per cent to replication and 25 per cent for innovation)

Administration 15

Total 100%

As the most important focus area, the replication component accounts for 85% of the total program budget

for Challenge Fund. The remaining 15% of the budget is accounted for by administrative charges, goods and

other expenses. The Fund will be utilised as under:

Components % of budget

WB component DFID component (In Crore)

Total

Administrative Expenses

TA - Prof. services 85%

Goods-other charges 15%

Administrative expenses 15%

TA- Prof. services 85%

Replication/Innovation support

85% 21.25 27.20

48.45

Administration Support 15% 3.75 4.80 8.55

Total 100% 21.25 3.75 4.80 27.20 57.00

A separate dedicated account for challenge fund has been opened at HSMI for the purpose. A steering

Committee of Challenge Fund with support from Core Team will supervise and manage the challenge fund.

HSMI would procure services of a separate Financial Management Specialist for the project period for

managing this account. This specialist will work closely with the Finance Department of HSMI to ensure all

financial compliances with regard to the fund. HSMI will use the administrative support funds for providing

all administrative services to manage the Challenge fund. These will be paid through DFID/WB funding

mechanism. HSMI will prepare a draft tentative budget for professional and operational expenses every

year and place it before the steering committee for approval.

3.1 Fund Flow Mechanism

3.1.1 Payment Mechanism for Challenge Fund (DIFD)

The DFID funds amounting to INR 32 crores under challenge fund will be transferred by MoHUPA to HSMI in

appropriate tranches limited to its sanctioned budget funding by issuance of cheques from PAO- MoHUPA.

This funding will be for the specific purposes under Challenge Fund. DFID funding envisages release of

Funding from the MoHUPA to HSMI as the Challenge Fund administrator on specified terms and conditions

as indicated in the SNPUPR Project Memorandum and as per standard terms and conditions of GOI for

release of grants. The component will also provide funding for the administration of the Challenge Fund.

The mechanism to be followed is outlined in the diagram given below:

3.1.2 Challenge Fund Bank Account Operations (DFID Funding)

The sanctions for payment from CF under the DFID funding shall be accorded by the Executive Director

HSMI on recommendation by the Coordinator, CF, and concurrence by the Finance Department, HSMI

.The dedicated bank account for CF shall be operated jointly by the Executive Director ,HSMI and

Coordinator, CF and all cheques shall be signed by both.

Payments from HSMI to the ULBs during a year will figure in the Utilization Certificates(UCs) submitted

by HSMI to MoHUPA during that year for further release of required grant but submission of UCs for

the total amount of funds released to HSMI or submission of UCs from ULBs will not be a pre-condition

for release of further instalments by the MoHUPA to HSMI. However the payments made by HSMI to

ULBs must be accounted for by the ULBs by submitting UCs to HSMI within 30 days of the completion of

the assigned task in order to become eligible for release of further funds from HSMI to ULBs. Release of

next tranche to the ULB will be on submission of a UC that is equivalent at least to 60% of funds

released.

No funds other than Challenge Fund shall be kept in the designated CF Bank account.

A set of three signatories will be nominated. Primary signatories will be Executive Director (HMSI),

Coordinator, CF and Chief of Finances and Accounts, HSMI. The third signatory will only act as a link

Grant released by HSMI and amount paid included in UC sent to MoHUPA

ULB submits proposal to Core Team at HSMI Committee

Core Team scrutinises proposal and submits recommendations to Steering Committee

Agreement entered between selected ULB and HSMI.

ULB submits request for release of funds to HSMI

core unit at HSMI

Steering Committee reviews and approves the proposal

Next Tranche released by HSMI

on submission of certified UC by

ULB with required supporting

papers and progress report which

is vetted by HSMI core unit

Procurement finalised by Ministry with assistance from CBUD PMU and Contract Issued

ULB submits proposal through

CFCU to MoHUPA

MoHUPA scrutinises proposal

through -CMU at HSMI

PSC approves

proposal

Outputs certified by ULBs and verified by HSMI

Invoice submitted by HSMI to MoHUPA

Payment by MoHUPA after review of output through

CBUD PMU

MoHUPA includes expenditure in IUFR and submits claims to WB for reimbursement through

CAAA

officer and will be authorised to sign the cheques only if any of the other two signatories is on leave

and payment needs to be made urgently.

At the time of issuing cheques it shall be ensured that expenditure for which payment is being made

has been duly sanctioned by the competent authority.

The signatories while issuing cheques shall also ensure that activity for which expenditure has been

sanctioned is within the approved activities under Challenge Fund.

3.2 Payment Mechanism for Challenge Fund (WB)

The World Bank Fund Flow mechanism will be the same as provided for in CBUD Financial Management

Manual (FMM). The WB funding for Challenge Fund amounting to USD 5million under CBUD project will be

utilised in accordance with procedure laid down in the F MM following the existing PAO system in

MoHUPA. The component will also provide funding for the administration of the Challenge Fund.

The design of the project under WB funding envisages centralized payments. There would be no fund flows

envisaged to downstream entities like ULBs. The procurement will be of Services and Goods as provided

for in PAD. As the contract would be issued by MOHUPA the payments also would be made by the Ministry

at the central level. The initiation of payment would be done from HSMI. HSMI would send an invoice along

with a certificate from ULBs regarding satisfactory output along with HSMI verification to the Ministry

which will be assessed by the CBUD PMU. Thereafter, the Ministry would process the payments through

PAO. The expenditure would be made by the Ministry centrally using the Central Government Pay and

Accounts Office. This will ensure applicability of budget controls and mainstream project accounting. The

funds would not be transferred by the Ministry to the Administrator (HSMI) or the beneficiary (ULB). Even

though the Ministry can pay the amount of Invoices for procurements, the IDA (WB) would reimburse

based on the actual expenditure incurred by the Ministry which would be reported as part of IUFR.

CF Management Unit at HSMI, as the Challenge Fund Administrator, would submit the quarterly IUFRs on

challenge Fund within 30 days of the end of each quarter to PMU CBUD incorporating the figures relating to

World Bank Funded procurement of TAs and goods for which separate accounts will be maintained in HSMI

The HSMI submitted IUFRs will be consolidated into MoHUPA IUFRs by the CBUD PMU. The process to be

followed by the Ministry is outlined in the diagram given below:

3.3 Reimbursement (WB & DFID)

MOHUPA will submit quarterly expenditure information on Challenge Fund to the Bank through quarterly

IUFRs and send the IUFRs to CAAA for claiming reimbursement for the expenditure/application of Funds.

Similarly MoHUPA will submit quarterly expenditure claims to CAAA on account of funds released to HSMI

for claiming reimbursement from DFID.

3.4 Audit (WB & DFID)

Internal Audit of Challenge Fund would be conducted by the CBUD Internal Auditor on quarterly basis

separately for WB component and DFID component. Statutory Audit by C&AG will take place as per TOR

agreed upon between the C&AG and the Bank for WB component and as per instructions in force for

conduct of statutory audit of Funds with respect to DFID component. Statutory audit of DFID component

will be conducted by C&AG or in case of delays, by an independent auditor along with the audit of other

components of financial aid. The audits will be funded through DFID/CBUD project separately and therefore

will not have any financial implications for HSMI.

3.5 Sustainability of CF Activities and expenditure on CF set-up

The setting up of Challenge Fund and replication of good practices and innovations in ULBs is intended to

be a long term activity to be sustained over a long period of time for durable benefits and not a short term

initiative for the duration of the CBUD project alone. Therefore MoHUPA will consider setting up of an

institutional arrangement either within HSMI or in the proposed Apex Institute or otherwise for continuing

the CF activity beyond the duration of the CBUD project and make suitable arrangement for budgetary

support for the purpose.

3.6 Responsibility for separate accounting of DFID funds and WB funding

HSMI will be responsible for maintaining accounts for the expenditure incurred out of DFID funding and WB

funding separately along with original Invoices and supporting vouchers for DFID funded and WB funded

expenditure reported in IUFRs as the originals thereof will go to the PAO, MoHUPA.

4.0 OPERATIONS OF THE CHALLENGE FUND

This chapter outlines the process that Challenge Fund would adopt for identifying and assisting in

implementation of the projects taken up under the Challenge Fund. The following broad approach will be

followed in operationalizing the challenge fund.

A set of innovations both from ULBs and Private Sector can be chosen by the expert panel that

justify merit for support under the Challenge Fund

A set of good practices will be chosen by an expert panel, from amongst the initiatives that have

been awarded and innovations that have already been implemented by various cities. While

choosing good practices, emphasis will be given to those initiatives that are aligned with the

concepts/themes of Rajiv Awas Yojana and other MoHUPA programs, so that the Challenge Fund

supplements other initiatives of the Ministry. One of the tasks of this Challenge Fund Core

Management Unit at HSMI will be to support the expert committee on developing the criteria for

identification of good practices. Final Identification of the practices will be done in close

consultation and agreement of the Ministry under the oversight of the steering committee.

The identification/selection of themes on the good practices may require to be validated through

presentations by the concerned ULBs to the expert committee for their replicability and merit as

good practices.

Cities will be challenged to replicate, scale up or improve the good practices that have been

identified. The opening of the corpus of Challenge Fund for replication will be communicated

extensively and given wide publicity by various methods. It shall be advertised in at least three

daily newspapers, two of which shall be in the local vernacular and notification will also be placed

on the official website of MoHUPA, HSMI and other partnering institutions.

Cities that propose credible implementation plans for replication will be provided financial support

under the Challenge Fund to meet the costs of implementation. A thorough appraisal of the

proposals will be undertaken by the expert committee supported by challenge fund PMU to assess

the costs of implementation. Civil society organizations and Community based organizations may

also be admitted under the Challenge Fund if they associate with the ULBs for implementing the

projects.

In future, an award programme will identify new good practices & innovations that can be

recognised and taken up for replication so that a pipeline of good practices is available for

replication throughout the life of the Challenge Fund. However this can be looked at after the mid-

term review of the Challenge Fund implementation.

4.1 Steps for Challenge Fund

Based on the broad approach, steps for process management of Challenge Fund are mentioned below:

Step I: Identification and Selection of Good Practices

List good practices/initiatives/innovations that has been recognized under various national and

international programs particularly that are aligned with the concepts/themes of Rajiv Awas

Yojana/SJSRY/NULM/BSUP and other MoHUPA programs,

Clearly outline themes and scope of the projects to be supported under Challenge Fund;

Finalize the number of ULBs to be benefited/served under the challenge fund;

Develop the criteria for shortlisting of innovative good/good practices that have been implemented

by ULBs.

Scrutinize the good practices based on the themes and based upon the criteria developed for

shortlisting

Shortlist the good practices for replication based on the above criteria

Validate, if necessary, through a presentation to the Expert Committee by the concerned ULB that

has already implemented good practice.

The practice should clearly demonstrate and provide evidence for labelling it as a good practice.

Projects that demonstrate a capability for magnitude of impact as well as those whose strategic

frameworks can become models for replication should be shortlisted.

Expert Committee to closely look at the merit of calling the initiative as really a good practice that

could be identified for replication.

Finalize good practices in close consultation with and agreement of the Ministry for ULBs to choose for

replication. Selection may take into account the need for some early successes in the Challenge Fund and

therefore take in to account likelihood of selecting good practices that can be easily replicated and also

can provide some early success stories. Identify at least ten to fifteen good practices from the pool of

initiatives already implemented to be chosen for replication. To be considered under the pool of best

practices, the practice should have operational track record of at least 12 months or longer, and be able

to furnish demonstrable and quantifiable results.

Step II: Communicating the Selected Best Practices to ULBs

Educate the ULBs about the Replication Program, share the benefits of participation, and inform

them about the steps they must take to participate

Develop communication mechanism & template for inviting applications from ULBs for the

replication of good practices

Publish case-studies to help publicize the successful transfer of best practices

Publicity Campaign for providing information about the identified good practices; in the print and

electronic media; and

Create an interactive website for dissemination of identified innovative good practices.

National event to “showcase” identified good practices

Step III: Inviting Proposals from ULBs

Advertise the Replication programme and request Letter of Interest (LoI) from the participating

ULBs.

Disseminate the template/form for the LoI, including posting it on the Challenge Fund website.

The LOI will ask cities to identify which of the five good practices selected are most appealing to

them.

The LOI must be approved and supported by the Commissioner/Mayor of the ULB.

Support ULBs in devising an effective business plan by matching the right good practice to meet

that city’s needs and capabilities.

Call ULBs to make presentations to the Expert Panel on their implementation Plan; if required.

The implementation plan for replication will be appraised by the Challenge fund core team based on a

defined process. This will involve a desk level exercise; a field appraisal /validation can be undertaken, if

required. If the core committee seeks further information or clarifications on the project, the ULB would

submit the same and the project would come up for review at the meeting subsequent to the submission

of all required information/clarifications.

Step IV: Selection of Proposals for Replication

Develop criteria for the prioritization of the cities for the replication of good practices. This will

include:

The extent of beneficial impact of the project to the citizens of the city/town including the citizens

need for the project expressed in the ULB’s interaction with the public, etc.

The Council’s approval/resolution for not only implementing the project, but also of accepting

terms and timelines of the project;

The ULB’s willingness to implement the good practice under challenge fund;

The quantum of estimated project funds required/sought;

Time frame that would be required to implement the project by ULBs.

Match the right good practice to meet that city’s needs and capabilities.

Identify the number of ULBs from among the submissions.

Enthusiasm for the theme and a commitment to the goals of the project should drive the decision-

making process.

The ULBs that have been selected for replication should be informed and alerted that they will

enter into a several months of intensive collaboration with the core team and challenge fund SU.

Based on this, shortlist of cities for replication will be prepared. The maximum support per entity/ULB

would be limited to US$500,000.00 (2.5 crore). The project duration shall be for maximum of eighteen

months from the day of approval of proposal by the steering committee. In case the proposed concept is

of a longer duration, it should be broken into phases with specific milestones to be achieved under each

phase should be clearly laid down. The initial phase or pilot, to be carried out within the maximum time-

period of 18 months, shall be funded through the CF and, based on the performance in this initial phase,

further funding can be provided. However further funding is not guaranteed and if made available, will

be in the form of a new project and shall go through the same project selection cycle. Core Management

Unit will also help the selected ULBs to construct detail implementation plans that will serve as the basis

for agreements for funding. The initial rounds of Challenge Fund replication will be restricted to selected

40 ULBs. However, the projects selected for replication should not result in loss of assets and livelihood

and comply with the environmental and resettlement safeguards guidelines. In case enough proposals

from identified ULBs are not received during first two rounds, the steering committee may take a decision

to open challenge fund facility to include other ULBs.

Step V: Signing of an MOA

Once a particular ULB has been selected for replication of good practice, the ULB will sign a

Memorandum of Agreement (MoA) with HSMI. Draft template of MoA along with generic terms and

conditions are at template IV.

MoA will contain the type of support provided through challenge fund including required timeline for

completion of the good practice preferred by the ULB concerned.

The agreement will contain stipulations with respect to responsibilities of the ULBs concerned for

ensuring timely implementation of the identified initiative preferred by the ULB for replication.

MoA will also specify responsibilities of the Core Management Unit of Challenge fund.

MoA will have to be approved by the ULB concerned.

This approval will be expedited by the ULB concerned for its timely signing and implementation.

It needs to be noted that the required timelines will vary for different initiatives; the nature and

complexities involved in the good practices will be the prime factor that will determine the required

timeline for its implementation and completion. In view of this, the actual time within which a

particular initiative will have to be implemented and completed will be decided once the ULB has opted

for a particular good practice. The time period for its implementation and completion will be included

in the MoA that will be signed between the ULB concerned and the HSMI.

The disbursement schedule with specific deliverables and conditionality, if any, will be included in the

MOA.

Step VI: Replication of Good Practices

Identify and provide appropriate technical and financial assistance to replicate good practice. The

assistance could be in terms of :

Building an implementation team, including area experts, project manager,

Purchase of goods and services relevant to the project including hardware/software,

Funding to ULBs that want to collaborate with an external party (NGOs, Institutions, Pvt. co.),

Organize relevant workshops, including training activities for implementing team

Augmenting of staffing during the implementation period

The grant may not be used, however, as general budget support to cover existing ULB operations

that are unrelated to implementing the Replication Program. This investment should not be used to

finance part of any trunk infrastructure but should be site/practice specific. Site specific

construction cost can be covered under DFID component of CF funding.

Any support to be procured by ULB under DFID funding can be done with freedom to the ULBs as

per their respective state government procurement norms. However, technical assistance

procured under World Bank funding have to follow WB procurement guidelines and will be

procured centrally by MoHUPA through CBUD-PMU mechanism. No portion of the grant funding

will be released without prior verification of the achievement of the agreed upon milestones, and

will be subject to the approval of Core Team and CF SMU.

Procurement of any goods or services will follow standard DFID/World Bank processes and

guidelines/rules.

Challenge Fund will continue to support the ULB replicators with technical assistance throughout

the implementation process.

After the exact package is outlined in the approved implementation plan, it can also be amended overtime

by CMU based on the ULBs/requirements need during the implementation process. However, any

amendments with financial implication should be approved by the steering committee.

Step VII: Monitoring Progress

Develop criteria for monitoring and evaluation of practices that are being implemented by ULBs so

that mid-term corrections are made, if required. However, each replication grant recipient will be

monitored with respect to grant agreements outlined in MOA between HSMI and relevant ULB.

The core management unit will also prepare quarterly work plans on the proposed activities for the

upcoming quarter, and reporting on the status of all activities executed during the quarter including

physical and financial reports for the quarter that is ending and also compile the annual report

summarizing the progress for entire year.

CF Core Unit will prepare annual reports on the actual use of funds within 90 days after the fiscal

year in which the payments were received. The Annual Report should contain detailed information

on how the CF has met the goals and objectives as stated in CF concept note. The Report should

provide information on beneficiaries, amount disbursed and similar details on other forms of

assistance.

Develop and monitor fund flow and physical progress of the project and its components for the

timely utilization of allocated resources in an effective way.

Prepare yearly CF Evaluation Report, assessing the impact of CF and identify difficulties faced and

provide suggestions for further streamlining of the process of implementation of CF.

Summarising the Steps for CF

1. Identification and selection of good practices

for replication/innovation

2. Communicating the selected best practices

to ULBs

3. Inviting proposals from ULBs including

detailed implementation plan

4. Selection of proposals for replication

5. Signing of an MOA

6. Replication/implementation of good

practices (Release of payments as per

agreed milestones in MOA)

7. Monitoring progress

8. Feedback and evaluation

Publicize and communicate extensively about

challenge fund including identification and

replication of good practices through newspapers,

websites and newsletters including through

partner institutions.

Provide relevant training and workshops to orient

urban local bodies on identification and replication

of good practices.

Step VIII: Feedback and Evaluation

Carry out sample-based impact assessment studies

once every two years; this will enable core team

and the Ministry to measure improvements;

External evaluation studies (selective or

comprehensive) commissioned to measure impact

of the CF on urban poverty reduction in ULBs.

Annexure 1 -List of SNPUPR and CBUD cities

Sl No State CBUD SNPUPR

1. 1 Andhra Pradesh Repalli (Guntur) Hyderabad

2. 2 Assam Guwahati

3. 3 Bihar Patna Gaya-Bodh Gaya

4. 4 Chhattisgarh Raipur

5. 5 Himachal Pradesh Shimla

6. 6 Goa Panaji

7. 7 Gujarat Bharuch

8. 8 Jharkhand Ranchi

9. 9 J&K Jammu Leh

10. 10 Haryana Yamuna nagar

11. 11 Karnataka Gulbarga Mysore

12. 12 Kerala Kollam

13. 13 Madhya Pradesh Dewas, Chindwara Ujjain Bhopal

14. 14 Maharashtra Sholapur Nagpur Nanded-Waghala Thane

15. 15 Meghalaya Shilong

16. 16 Mizoram Aizwal

17. 17 Orissa Bhawani Patna Bhubaneshwar

18. 18 Punjab Amritsar

19. 19 Rajasthan Udaipur Jaipur, Ajmer-Pushkar

20. 20 Sikkim Gangtok

21. 21 Uttar Pradesh Varanasi Farukhabad

Rae Bareli

22. 22 Uttaranchal Haridwar

23. 23 Tamil Nadu Madurai

24. 24 West Bengal Silliguri Murshidabad

Total 20 20

Template-I: Documenting Identified Best Practice

Best Practices: Format for Uploading

Title of the Practice: This title should capture the keywords that describe the Practice.

Goal: Describe the aims of the practice which are followed. What are the underlying principles or concepts

in about 100 words.

The Context: Describe any particular contextual features or challenging issues that have had to be

addressed in designing and implementing the Practice in about 150 words.

Target Group: Describe the beneficiaries in about 100 words.

The Practice: Describe the Practice and its implementation. Include anything about this practice that may

be unique in the Housing and Urban Poverty Alleviation. Please also identify any constraints or limitations

in about 400 words.

History and Evidence of Success: Provide evidence of success such as performance against targets and

benchmarks, review results. What do these results indicate? Describe in about 200 words.

Resources: Please identify the resources required to implement the practice in about 100 words.

Problems Encountered: Please identify the problems encountered and to implement the practice in about

50 words.

Impact: Describe the impact of using the best practice in 100 words

Outcome: Describe the outcome of using the best practice in 100 words

Pictures: Please add one or two pictures associated with the practice and its implementation.

Notes: Optional. Please add any other information that you deem important to the reader such as changes

that may have been introduced after the practices has been introduced in about 150 words.

Contact Details

Name of the Director: Name of the Organisation: Address: City: Pin Code: State: Work Phone with STD Code: Fax: Website: E-mail: Name of the person for contact: Designation: Tel: Mobile: Email:

Best Practices may be sent to us at [email protected] and [email protected]

mailto:[email protected]

Template II : Template for Preparing Proposal for Replication of Best Practice

under Challenge Fund (CF)

1. Name of the Project

2. Thematic area under CF

3. Amount of assistance requested under CF

4. Name of agency applying for assistance and its details e.g. type, constitution, existence in years, address and experience in habitat development etc.

5. Name of partner agency, if any. (Its details e.g. type, constitution, address and experience in executing similar projects or project development)

6. Beneficiaries’ profile and number of beneficiaries

7. Justification of the project

8. Commitment by ULB for undertaking the project (Copy of resolution to be enclosed)

Yes / No

9. Project Details a) Location (give details) b) Components of project: c) Project cost

i) Item-wise cost of various components ii) O&M cost iii) Operational Cost

d) Details of land (area, status of possession and ownership or other rights of the agency over the land e) Access to site and current status of infrastructure facilities f) Status of approvals

Technical

Administrative

Financial g) Project implementation period h) Phasing of expenditure

10. Means of the project cost Challenge Fund assistance Own contribution, if any Other funds, if any

11. Project implementation methodology

12. System proposed for operation & maintenance and availability of funds for

sustainability.

It is declared that we have read and understood the Challenge Fund guidelines and are agreeable to follow/undertake various provisions of guidelines if the above project is considered and approved by the Ministry of HUPA. It is also certified that necessary technical approvals to execute the proposal is available. The assets so created shall not be sold/alienated. It is certified that necessary basic technical capability to execute the proposal is available and in case any

specialized requirement of technical and oversight inputs are required; these will be included as a part

of overall proposal.

It is also certified that all the information provided in the proposal is correct to the best of my knowledge.

Authorised signatory

Name : …………………………………

Designation:…………………………. Date :

Place :

Encl. : Documents to be enclosed along with the grant form:

1. Duly filled Institutional profile format. 2. Documents evidencing agency’s byelaws etc. In case of partner agency, similar documents of the

partner agency may also be provided. 3. Resolution/order (as applicable) for taking up proposed project and for obtaining financial assistance

under CF for the proposed activity and also for executing necessary documents like MOA etc. by authorizing its Chief Executive etc. including affixation of common seal.

4. Details of revenue stream and details of projects undertaken in the past 3 years. 5. Detailed Project Report as per format.

GUIDELINES FOR PREPARING PROJECT PROPOSAL

The aim of the funding is to encourage and support ULB’s to implement and innovate in the identified

best practices by the Ministry of Housing and Poverty Alleviation (MoHUPA). Support under Challenge

Fund is available for projects located in one of the 40 urban local bodies identified under CBUD and

SNPUPR project of MoHUPA. The Fund also specifies activity areas that are eligible for funding. The

duration of the project is required to be between 6 months to 18 months.

Format for the Detailed Project Report

Project Summary

Project - objective/scope, need & justification

Targeted/intended beneficiaries of project, identification, base line surveys

Project details in term of project cost, details & availability of land e.g. land area, land owing agency and status of possession etc. its location ,approach, available infrastructural facilities, area suitability for development, status of various approvals, detailed drawings/plans/elevations/sections etc.(copies of approved drawings)wherever applicable

Cost estimates, time for completion of project, investment schedule/capital phasing /bar chart

Fund requirement & its availability

Methodology for execution and monitoring of project.

In case partner agency is involved then the roles and responsibilities of the agency and the monitoring mechanism to be detailed out.

Details regarding operation & maintenance and upkeep of assets created and fund requirements/ availability for O&M etc.

Credible implementation and sustainability plan.

Challenge Fund Application Format

Organisational Details:

Name of the Organisation (If your organisation is known by any other name, please put this in brackets after the legal name of your organisation)

Address

Postcode

Phone number

Email address

Web address

Contact details (the key person implementing the project).

Contact name Phone number

Mobile Email address

Organisational Capacities: Suggested contents are :

Organizational Vision and Objectives Organizational Profile (Staff strength) – technical/non-technical/contractual staff Pro poor initiatives taken by ULB. Institutional capacity to implement: (1) Networking of RWAs/SHGs and NGOs enlisted with ULBs (2) Number of development projects handled during the last 3 years. (3) Major Govt. schemes being implemented by the ULB in the past 3 years.

Annual Receipts and Expenditure for Last 3 Years - Please give details of Annual receipts and expenditure for the last 3 years duly audited by local authority.

Year Total Gross Receipts Total Gross Expenditure Total

Year 1

Year 2

Year 3

Project Details:

Name of Project

Funding Required

Proposed project start date

About the project

Suggested contents are :

Thematic Area under Challenge Fund/ Relevance to the broad agenda of MoHUPA Justification of the project Target Group of intended beneficiaries: While specifying the target group, please indicate number of beneficiaries to be covered under the project. In case the number of beneficiaries to be covered differ from activity to activity, please indicate the number of beneficiaries to be covered under each activity separately Commitment by ULB for undertaking the project (e.g. Copy of resolution from council/standing committee Project implementation methodology Project implementation period Outputs: Outputs must be indicated in measurable terms. Outputs relate to the end result of the activities that you propose to undertake. Project Area (in detail) Provide specific geographical details of the area to be covered and not merely the name of the ULB.

Activities & Sub-Activities: Provide a list of activities and sub activities for each component of the

project

Sl.No. Activity Sub-Activity Responsibility Start End

FINANCIALS (Please follow the formats given. Make sure that all details are provided so that based on

specific details provided economic and financial appraisal of the proposal can be done )

Expenditure

This has 3 components:

i) Capital expenditure (Civil Construction/Equipment/Implements/Ancillary costs) ii) Activity/Sub Activity Costs iii) Other Operational Costs

I. Capital Costs (Civil Construction/Equipment / Implements / Ancillary Costs ): Please list here any civil work to be done or equipment or implements that you propose to buy. Please also include all costs related to execution of the project, procurement and installation of the equipment and manpower requirement etc.

Description Cost (Rs) Comments

I. TOTAL:

II. Activity / Sub-Activity / Costs:

Please provide costs for carrying out Activities / Sub Activities mentioned in the proposal. (If the activity involves procurement of capital goods-, but the cost of the same has already been mentioned in item (i) above, then do not mention it here again as it will amount to double counting.)

Activity Sub Activity Cost (Rs) Basis

III. Other operational Costs including the following (This should be calculated as percentage of project

costs and will be subject to maximum ceiling of 15 percent):

The Operational costs mean running expenses of the project office and may include manpower cost,

communication expenses, local conveyance, and stationery & postage etc

IV. SUMMARY OF TOTAL EXPENDITURE (Here please sum up all the expenses from i) to iii) and provide

the total expenditure of the project.

Rs.

I. Capital Costs

II. Activity Cost

III. Other Operational Costs

A. TOTAL EXPENDITURE:

FUND FLOW BY QUARTER In this chart please provide six-monthly funds flow. The chart- will show expenses indicated in items (i) to (iii) broken up into –six-monthly expenses spanning the life of the project

1st

Six Months 2nd

Six Months 3rd

Six Months

OUTFLOW Q1 Q2 Q3 Q4 Q5 Q6 Total

EXP. ITEMS:

I. Capital Costs

II. Activity Cost

III. Other operational Costs

A. TOTAL EXPENDITURE:

TOTAL OUTFLOW (A):

Innovative / Challenging elements in the project (as applicable):

Sustainability, Replicability & Withdrawal Strategy:

It is also important to prove that the Programme can be sustained even after withdrawal of funding from Challenge Fund. Moreover, the proposed project must be replicable in other areas/cities so that benefits accruing from the project can be extended to other similarly placed people

Any partnerships to make the project more effective. If yes provide details:

In case it is proposed to partner with any other agency/NGO/CBO etc. for any component of the project, detailed work plan and costing may be provided.

Involvement of Community / Other Stakeholders:

Please indicate who the other stakeholders in the community are and how you propose to involve them. A brief plan may be given.

Limitations & Risks:

All projects have limitations and risks. Limitations and risks will not lead to automatic disqualification for funding under CF as the fund is also given for experiments. Each proposal will be considered by the Expert Committee on merits. Therefore, clearly spell out the limitations and risks.

Project Merits

In this paragraph, briefly mention the overall merits of the project justifying its qualification for funding under Challenge Fund.

Explanatory Note – : Financials

Based on the -six-monthly fund flow requirements, following procedure will regulate the inflow of funding to the ULBs under Challenge Fund: A) On acceptance of the proposal, ULB will raise an invoice to HSMI for mobilization advance

equivalent to 50% of the amount required for the – project if the duration of the project is upto 12 months. If the duration of the project is more than 12 months the release will be as per the requirement as envisaged under activity plan. HSMI will release the amount to ULBs after due diligence and inspection if necessary.

B) ULB will submit a provisional utilization certificate after incurring at least 70% of the expenditure out of the released advance and submit progress report and request for release of next instalment by raising an invoice for the balance 50% amount.

C) If the duration of the project is upto 12 months ULB will submit final UC supported by documents within one month of the end of the project. Completion of the project certification along with duly audited accounts is required to substantiate expenditure incurred on the project.

After completion of the project the ULB will furnish the completion certificate and final UC along with all the supporting documents and duly audited accounts within one month thereof. The project utilization will be subject to statutory audits and final inspection for assessing the impacts of the project.

General Instructions

1. The project proposal(s) shall be prepared in English language. 2. Please strictly follow the instructions and ensure that proposal is prepared as per prescribed formats

provided and all the supporting documents are enclosed 3. Please submit two hard copies of the proposal along with all the supporting documents. 4. Please ensure that all pages of the proposal as well as the supporting documents are signed &

stamped by the authorized signatory. 5. The proposal as well as the documents should be put in one single envelope and marked “Proposal

for Innovative Challenge Fund”. 6. The proposal is also open to further discussions. Modifications if any suggested by the Expert

Committee during discussions will need to be incorporated. 7. In addition to the hard copies please also submit soft copy of the proposal either in CD/DVD or sent

through email at:

The Coordinator Core Management Unit, Challenge Fund HSMI, HUDCO House Lodi Road New Delhi: 110 003 Phone: 011-24308623 Fax: 011-24365292

Email: [email protected]

mailto:[email protected]

Template III: Draft Project Sheet

Title of the Practice for Replication

Brief background of Practice

Name of ULB where it is being Replicated

Address of ULB

Nodal Person from ULB (contact details)

Name of person handling the practice at HSMI (contact details)

Date of Approval of proposal by Steering Committee

Date of commencing Replication

Date of completion

Broad Activities for Replication

Project Deliverables as per agreed proposal

Beneficiaries of the project

Total cost of the Project (Component wise)

Total committed funding for the project (From CF and From ULB)

Milestones for the payment and progress of the project

Broad Roles and Responsibilities

Broad Reporting Requirements

Key Conditions of the Grant

Duration of Project:

Activities not eligible for funding under project grant:

Reporting and submission of certificates to HSMI

Timelines for next tranche

Accounting and Auditing processes

Template IV: Memorandum of Understanding

MEMORANDUM OF UNDERSTANDING

(To be drawn on Non-Judicial stamp paper of required value for agreement)

Whereas Ministry of Housing and Urban Poverty Alleviation in order to encourage, revitalize and

strengthen governance and to stimulate efforts to improve service delivery of urban local bodies has

established an innovative fund named as “Challenge Fund. The fund is designed to provide urban local

bodies the opportunity to innovate and adopt approaches/practices to responding to urban poverty

alleviation.

Whereas the aim is to support urban local bodies to take up pro-poor development projects within the

thematic areas and create a competitive environment amongst the urban local bodies in addressing the

challenges of urban poverty alleviation in transparent, cost effective and responsive manner. The idea is

not only to generate innovations but also to support urban local bodies in replicating and sustaining best

practices on a continuous basis.

Whereas the Challenge Fund has been jointly proposed under the World Bank supported Capacity

Building for Urban Development (CBUD) project and the DFID, Dept. for International Development, UK

supported Support to National Policies for Urban Poverty Reduction (SNPUPR) project.

Whereas, the Human Settlement Management Institute, a research and training wing of Housing &

Urban Development Corporation Ltd. is designated an administrator by Ministry to ensure

implementation of Challenge Fund within the allocated budget and achievement of desired outputs in a

qualitative and sustainable manner.

Whereas the project is expected to contribute to GOI’s overarching objective of supporting city

personnel who have limited access to externally developed ideas with both financial and technical

support and incentives to adopt and implement good practices. Once successful, it will help to lower the

barriers in adopting proven methods, and support cities to better manage commonly faced urban

poverty challenges.

Whereas this MOU is entered into for clarifying and defining roles and responsibilities of each of the

parties to this MOU to enable and facilitate smooth implementation of the Challenge Fund.

Whereas ------------------- Corporation/Council’s proposal has been approved for receiving technical and

financial support for replication/innovation of----------------------------------------------------- ---------------------

practices in their city under the Challenge fund supported jointly by DFID and World Bank.

The roles and responsibilities of each of parties to this MOU are as follows:

Human Settlement Management Institute, Research & Training Wing of HUDCO being Administrator of ‘Challenge Fund’ (Part I) Shall provide enabling framework, funds for implementation of the projects sanctioned and review

progress against time goals for implementation of projects under Challenge Fund with active

support of the State Governments.

Shall oversee implementation of the replication of selected best practice in the ULB through Core

Management Unit of Challenge Fund

Will suggest mechanisms for the cost-effective use of resources allocated including support in

procuring necessary technical skills in identified areas including support in improving their capacity

to implement identified innovative practices including mechanisms to improve institutional capacity.

Will recommend disbursement against sanctioned Challenge fund support based on appropriate

utilization of funds.

Will undertake periodic visits to selected cities for assessment of their ability and capacity to

implement projects under challenge fund including documenting and monitoring the replication

process.

Shall prepare schedules for the project activities and budget allocation, quarterly status analysis of

funds and expenditure reports, and technical reports budget estimates, including ensuring

previously disbursed funds are fully utilized before further funds are released.

Shall ensure timely and certified UCs along with physical and financial progress from ULBs as per

GFR 19A and regulated as per GOI guidelines.

Shall monitor physical and financial progress including fund flow for the project and its components

for the timely utilization of allocated resources in an effective way.

Will provide relevant training and workshops to orient urban local bodies on identification and

replication of good practices.

Monitor the performance of the Fund and the projects and inform Steering Committee.

Municipal Corporation/Council (Part II) Shall appoint nodal officer to facilitate regular interaction with HSMI and Ministry

The Urban Local Body will ensure that the project is implemented in a technically sound manner

using the state of the art practices for sustainability of the project in a transparent and accountable

framework following the state government rules and regulations. Whenever a specialist agency is

appointed as implementing agency by the agency (i.e. when the agency is not taking up the work on

its own), the same shall be appointed as per the criteria stipulated in the GOI regulations/State

Government rules.

The Urban Local Body will ensure all necessary statutory approvals as required/applicable as per

prevailing bye-laws. The Urban Local Body shall confirm that it has passed/obtained all the

necessary Resolutions/Approvals under the Law and the State Government approval

Prepare detailed imp0lementaion and disbursement schedule of the approved project fund and

timely submission to core Management Unit for remittance of funds.

Ensure timely and certified UCs along with physical and financial progress from ULBs as per GFR 19A

and regulated as per GOI guidelines including submission of income and expenditure accounts.

Shall prepare quarterly status analysis of funds and expenditure reports, and technical reports

budget estimates, including ensuring previously disbursed funds are fully utilized before further

funds are released.

Shall utilize the financial support only for the purpose for which it has been sanctioned and strictly

as per the details given in the approved proposal (Annex1: Sanction Letter).

Shall submit utilization certificate in the prescribed form (Annexure-II) duly supported with the

details of expenditure in the form of Income and Expenditure Accounts etc.

Will provide all necessary support, information and cooperation to HSMI core unit during

implementation and for monitoring of project activities agreed under Challenge Fund support.

Now all the parties to the MoU have carefully gone through the contents of Memorandum of

Understanding and have signed and put their seals of approval on the aforesaid of MoU and agreed to

abide by the roles and responsibilities as laid down herein in totality.

In witness hereof all the parties have put their hands on these present of Memorandum of

Understanding on ----- this day of------ this month of ------------ this year.

Signatories

For Urban Local Body

Commission/Executive Officer

For

HUDCO / Human Settlement Management Institute

Executive Director (Training)

Witness

1)------------------------------------

2)--------------------------------------

Part A

(To be drawn on Non-Judicial stamp paper of required value for agreement)

HOUSING AND URBAN DEVELOPMENT CORPORATION LIMITED

HUDCO HOUSE, LODHI ROAD, NEW DELHI – 110 003

SANCTION LETTER-CUM- AGREEMENT FOR FINANCIAL ASSISTANCE UNDER CHALLENGE FUND

No. HUDCO/ Dated:

To

………………………..

………………………..

………………………..

………………………..

Sub : Financial Assistance under HSMI-HUDCO-MoHUPA Challenge Fund Activities for …………

(Amount sanctioned …………….)

Dear Sir,

In response to your application dated………………….(Application), Housing and Urban Development Corporation Limited (HUDCO) having its registered office at HUDCO Bhawan, India Habitat Centre, Lodhi Road, New Delhi-110 003 through its Research & Training Wing namely Human Settlement Management Institute (HSMI), HUDCO House, Lodhi Road, New Dlehi-110 003, hereinafter referred to as HUDCO/HSMI agrees to sanction to…………………………………………………………………………………… (Name and address of applicant) ………………………………………………………………………………………………….. constituted under ,,,,,,,,,,…..

hereinafter referred to as the Agency, a financial assistance of an amount of Rs………………

(Rs.………………………………………………….only) for meeting the expenditure on items under project

proposal of Challenge Fund stated in the proposal which is annexed hereto as Annexure-I. It

may clearly be understood that this financial assistance/support is made by the HUDCO/HSMI

in the capacity of Administrator (as appointed by Ministry of Housing and Urban Poverty

Alleviation (MoHUPA) vide its Office Memorandum dated 30th March, 2012 of the “Challenge

Fund” set up by MoHUPA in collaboration with World Bank and Dept. for International

Development (DFID), UK, under the following terms and conditions as agreed upon:

1.

2.

2. The release of financial assistance is subject to the following conditions :-

a) The Financial Assistance shall be utilized only for the purpose for which it has been sanctioned and strictly as per the details given in the proposal as per the Operational Manual of Challenge Fund (Annexure I).

b) Financial Assistance shall be released in instalments except as HUDCO may otherwise agree. The first instalment of the project cost, shall be released after compliance of conditions of sanction, if any, and upon the execution of this Agreement. The subsequent instalment/s shall be released after agency has utilized 70% of earlier released instalment/s to satisfaction of HUDCO/HSMI and MoHUPA that the funds already released have been fully utilized for the purpose for which it has been sanctioned and released and submitted utilization certificate in the prescribed form (Annexure-III) duly supported with the details of expenditure in the form of Income and Expenditure Accounts etc. Utilisation Certificate shall be duly certified by the CA Firm or chartered Accountant of the agency.

c) The financial assistance/installment released shall be utilized within a period of 6 months from the date of release and in case the same is not utilized within stipulated period then the agency shall inform the same to HUDCO/HSMI and MoHUPA along with reasons for the same along with the likely period during which the utilization will be made. Based on the approvals of MoHUPA, HUDCO/HSMI will take a decision which will be binding on the agency. However, in case even within the extended period the amount released is not utilized, the agency shall refund the same to HUDCO/HSMI.

d) If the agency is found to have misutilized the funds for the purpose other than for which it has been sanctioned, the agency will immediately refund/repay to HUDCO/HSMI the funds equal to unauthorized expenditure or mis-application of the fund. The decision of HUDCO/HSMI and MoHUPA as to what constitutes the misutilisation/improper utilization of expenditure will be final and binding on agency.

e) In the event the total funds advanced under this agreement are not utilized for the authorized purposes, then the difference between the total funds advanced and the funds so expended will be immediately refunded by the agency to HUDCO/HSMI.

f) Financial assistance released by HUDCO/HSMI shall be kept in a separate designated account for utilization toward the implementation of project and shall not form part of their general financial operations.

g) The agency will submit to HUDCO/HSMI and MoHUPA progress reports regularly in the form and substance satisfactory to HUDCO. The progress reports, inter alia, containing physical, technical and financial progress indicating the details of expenditure as per approved project etc. will have to be furnished quarterly within 15 days of expiry of a particular calendar quarter.

h) HUDCO/HSMI and MoHUPA and/or their nominees/representatives shall have right to (i) inspect the activity/site/works under implementation with financial assistance of HUDCO/HSMI and MoHUPA to ensure that the desired progress as & when felt necessary and (ii) inspect the books of accounts and other related documents concerning the utilization of the financial assistance. The agency shall provide all necessary facilities for conducting such inspections and render such explanations and elucidation as may be required by HUDCO/HSMI and MoHUPA and allow taking of any copies or extracts therefrom.

i) HUDCO/HSMI may revoke this agreement upon a written notice to the agency if in the judgment of HUDCO/HSMI and MoHUPA, the agency is utilizing the financial assistance/funds in violation of the terms and conditions of the agreement. On receipt of such notice the

agency shall immediately refund to HUDCO/HSMI all the financial assistance/funds provided by HUDCO

j) In the event agency fails to refund the amount/s as stipulated at (c), (d), (e) and (i) above, HUDCO/HSMI and MoHUPA would be entitled to recover the same by taking legal recourse as available to it under the applicable laws of the land.

k) Whenever a specialist agency is appointed as implementing agency by the agency (i.e. when the agency is not taking up the work on its own), the same shall be appointed as per the criteria stipulated in the GOI regulation/ State Government rules.

l) The agency undertakes that it has already obtained/shall obtain all necessary statutory approvals as required/applicable as per prevailing bye-laws

m) The agency declares and confirms that it has passed/obtained all the necessary Resolutions/Approvals under the Law.

n) The agency will acknowledge the financial assistance by placing a prominent sign board or plaque at a conspicuous place indicating that this activity has been set up with the financial assistance under Challenge Fund project being administered by HUDCO/HSMI.

o) The agency will maintain the account of assets acquired out of the financial assistance from HUDCO and undertake that the assets created shall not be alienated or sold in any way without the written permission of HUDCO/HSMI and MoHUPA.

p) The agency shall make the land for the project available, wherever required, and take all necessary actions for completion of project. It shall be ensured that the land is in physical possession of the agency and free from any encumbrance and encroachment etc.

q) The agency shall put in place the mandatory facilities for barrier free access by Physically Disabled Persons and ensure that due representation is given to the socially disadvantaged communities, poors, slum-dwellers, women etc.

r) The agency hereby undertakes the responsibility for operation and maintenance of facilities for which financial assistance has been provided and shall submit report regularly to HUDCO/HSMI and MoHUPA.

s) HUDCO/HSMI and MoHUPA shall have right to review/restrict the financial assistance at any stage and HUDCO’s decision in this regard shall be final and binding on the agency.

t) The agency shall submit a certificate from a structural engineer that all structural designs were carried out based on the soil test report, local conditions etc., based on relevant IS codes so as to take care of structural stability, earthquake resistance, wind velocity and other loads etc. and to ensure that proposed building is structurally safe for the intended purposes.

u) The agency shall provide all trunk infrastructure facilities required for the project.

v) The agency hereby undertakes to bear any cost overrun due to any reason from its own sources.

w) The agency shall also carry out impact assessment and statutory audits after completion of the project and submit a report to HUDCO/HSMI in suitable timeframe and wherever HUDCO/HSMI desires render all assistance to HUDCO/HSMI or external agency nominated by HUDCO/HSMI to carry out impact assessment/evaluation studies to critically assess the fulfilment of project objectives as well as to carry out the social audit of implementation process.

3) Additional conditions of sanction to be complied with by the applicant agency are given

below : …………………………………………………………………………………………………………………………………………

……

4) This Agreement is sent to you in duplicate. You may sign this agreement in the space provided below duly indicating the date on which it is executed and return the original. The duplicate copy may, however, after execution, be retained by you for your record.

Yours faithfully,

For and on behalf of HUDCO/HSMI Signature

Authorised Officer of HUDCO/HSMI/ Executive Director (Training)

Encl: Annexures – I (Proposal), II (Operational Guidelines) & III (Utilisation Certificate)

ACCEPTED

Signed and sealed by Shri__________,

Designation___________ & Shri_________,

Designation___________

for and on behalf of M/s_______________

and the common seal of the Agency is affixed in the

presence of Shri____________

Designation_________ and Shri____________

who have also signed these presents in token

thereof

(to be filled up as per resolution of agency)

(Affixation of common seal should be in accordance with the Provisions of the concerned Statute/Articles/Bye-Laws, etc. of the Borrower.)

(Signature)

Dated

Common Seal

(Signature) (Signature)

Dated

Part B

UTILIZATION CERTIFICATE

This is to certify that the _____________________(Name of the Agency) has incurred an expenditure of Rs. ___________________ lakhs during the period from ____________ to_______________ out of the financial assistance given by HUDCO/HSMI under Challenge Fund for the purpose for which it was released towards ________________________(name of proposal) as contained in the proposal and as per the guidelines enclosed with the sanction letter cum agreement signed between _____________________(Name of the Agency) and HUDCO/HSMI. It is also certified that for the said assistance a designated account has been also maintained and the details of the account are also enclosed herewith.

To be signed by:

Chief Executive of the Agency

And

Statutory Auditors/Chartered Accountant of agency

Date

Encl. :

OPERATIONS MANUAL CHALLENGE FUND - mhupa...

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