A Quick PEE Break

One of the coolest things about doing development work is the opportunity it affords to invent and use acronyms. Our industry’s use of acronyms is kind of like the texting slang that today's teenagers use … both tend to require outsiders to use a decoder.

One of the acronyms that is often used in our industry, particularly among those who work in the area of economic growth and trade, is BEE which is short for Business Enabling Environment.

USAID’s Microlinks does a great job of describing what a business enabling environment is, and why it matters for economic growth and trade.

"The business enabling environment (BEE) includes norms and customs, laws, regulations, policies, international trade agreements and public infrastructure that either facilitate or hinder the movement of a product or service along its value chain. Burdensome and unpredictable regulation is costly both in terms of the time and money required for compliance as well as in opportunity cost. Reform of the BEE can result in substantial benefits for an economy including faster growth, less unemployment, more gains from trade, greater formalization, reduced poverty, less corruption and lower budget deficits."

In fact BEE is seen within the development community as such a critical enabler of growth and trade that the World Bank has set up an entire division to analyze, benchmark and improve the business enabling environments of the 189 countries that participate in its program.

The World Bank’s “Doing Business” project focuses on a number of regulatory and administrative areas that influence the relative ease or difficulty of doing business in any particular country. The effort tracks ten sub-indices related to a country’s business enabling environment and it provides an aggregate score based on a weighted average.

Want to know which country currently makes it the easiest to do business? According to the Doing Business team the answer is Singapore. (The US is ranked #4) Which country makes it the hardest? Chad. And the Doing Business portal doesn’t just tell you the answer, it goes to great lengths to explain why.

At this point you might be thinking "hey Drew, there’s got to be a point to this this whole thing about BEE right? … why don’t you get to it already?” 

Point taken, I just couldn’t figure out a better way to introduce the concept of PEE than first talking about BEE.

PEE is short for Project Enabling Environment. PEE is a concept that I have coined to describe how effectively a development contractor’s combination of systems, processes, management approach, home office resources, culture, etc… facilitate its project teams' efforts to deliver results.

The analogy is pretty clear right? Want your country to generate more jobs, more exports and more tax revenue? Make it faster, easier and more predictable to do business inside (and at) your borders.  Want your projects to generate better, more impactful, more sustainable results? Make it faster, easier and more predictable for your project teams to get things done.

And, just like BEE isn’t the only thing that matters for driving increased economic growth and trade, PEE isn’t the only thing that matters for driving more and better results. Neither offers a full solution, but both are a key part of their respective overall solutions.

The development community has had good success improving BEEs around the world by focusing on a few key things. The Ease of Doing Business Index boils most of it down to this:

1. Starting a business
2. Dealing with construction permits
3. Getting electricity 
4. Registering property 
5. Getting credit 
6. Protecting investors
7. Paying taxes 
8. Trading across borders 
9. Enforcing contracts 
10. Resolving insolvency

How would one go about cultivating a similar recognition of - and commitment to - improving the project enabling environment? Sharpen the focus and boil it down into a list of key things. The list might look something like this:

1. Setting Up A Project
2. Obtaining Required Approvals 
3. Allocating and Managing the Budget
4. Issuing Subcontracts and Purchase Orders 
5. Administering the Office
6. Hiring and Mobilizing Short & Long Term Staff 
7. Obtaining Computers, Software, Telecoms
8. Managing Logistics, Travel and Housing
9. Project Reporting / Monitoring & Evaluation
10. Managing Client Expectations

When you bring up the subject of PEE with the leadership of a USAID contractor they are always quick to point out that the complex web of federal procurement guidelines and USAID specific regulations creates some serious complications in terms of ensuring compliance. And of course they are right, the USAID/federal compliance environment can be a nightmare to deal with, especially for organizations that are not experienced with it.

While they are right  I don’t think the complexity of complying with USAID/USG rules and regulations  is an excuse for development contractors to ignore the effectiveness of their company’s PEE.

Think about it. The reason business enabling environments are challenging isn’t because countries set things up to frustrate business and discourage trade. (well, not always anyway) Challenging enabling environments are very often just the consequence of different agencies within a country each setting things up to comply with their specific requirements and preferences while failing to take into account how those choices impact the ease of doing business.

What we have learned now as a community through years of designing, implementing and evaluating BEE support programs is that a country can substantially improve its business enabling environment without changing the key regulatory objectives. It’s often simply a matter of streamlining processes, sharing information, integrating systems, training the workforce, automating workflows, establishing goals/targets and measuring results.

The same concept applies to a company’s PEE. Development contractors can absolutely improve their project enabling environments without compromising their compliance objectives. And they know it. The problem is that doing it requires focus, time, and financial investment … on activities that project teams in the field can’t write about in their weekly updates to USAID.

It’s a problem because development contractors perceive USAID as being oblivious to the idea that better project enabling environments lead to stronger development results and a more sustained impact. It is true that USAID generally doesn’t want to hear about anything, or pay for anything (directly or indirectly) that isn’t obviously linked to immediate programmatic results. Several different friends of mine that work in the home offices of the big development organizations have told me that their companies would really like to do more to streamline and automate their processes and systems, but that it’s just too tough to justify investments in something that USAID doesn’t care about.

Until USAID starts to recognize and appreciate the connection between PEE and Development Results, development contractors aren't going to move too far or too fast to improve their respective PEEs, even though many of them recognize its relevance and importance. There’s a clear opportunity here for USAID to take a few small steps to make it more of a priority and increase the return on US taxpayers’ investment.

Here’s what I recommend. In its next RFP, USAID should augment that decades' old requirement for offerors to describe their "Management Approach” with a new requirement to describe any innovations offerors have undertaken in the last 12 months to improve their project enabling environments.

- DS

Next Up … Unique Signatures Across the Industry.