How to Read This Report
What This Report Is
This report is the official account of how Korea reformed the management of its public investment — the portion of the national budget spent building large infrastructure such as roads, railways, ports and dams. Written by Jay-Hyung Kim of the Public and Private Infrastructure Investment Management Center (PIMAC) at the Korea Development Institute, it is a retrospective reconstruction covering roughly fifty years of institutional evolution, from the Economic Planning Board’s first appraisals in 1962 to the integrated Preliminary Feasibility Study (PFS), Total Project Cost Management (TPCM) and performance-evaluation system in place by 2012.
The report was designed from the outset for one purpose — to share Korea’s success with developing countries. A purposeful text always makes choices about what to include and what to omit. The report frames Korea’s pre-1997 history as a “long and sound tradition,” yet its own pages record that the 1962–73 appraisal effort largely failed and that the system collapsed in 1994. The Companion turns those tensions into questions for the reader.
Read this report not as a reliable neutral description, but as a subject for critical analysis. There are still two good reasons to read it: first, it is a rare text written for readers who do not know the Korean context. Second, how Korea narrates its own reform — which moves it valorises, which costs it leaves in footnotes (the PPP crowding-out finding) or never quantifies (the budgetary savings from PFS) — is itself a legitimate object of study.
- Diagnose your country’s public investment management challenges using five problem types and identify the most relevant Korean institution or instrument — PFS, PIMAC, AHP, TPCM/RSF or the PPP framework.
- Explain the three eras of Korea’s public investment management (1962–1993 Economic Planning Board tradition; 1994–1998 breakdown; 1999–2012 crisis-driven reform) and the logic of each.
- Identify success-bias patterns in the report — the “long tradition” framing, the unquantified PFS savings, the crowding-out finding tucked into a footnote — and convert what the report does not say into critical questions.
- Draft a policy memo applying Korea’s public investment management reform critically to a specific developing-country context — choosing what to import, what to modify, and what to reject.
How This Companion Is Organised
The Companion is organised by reader problem type, not by report chapter order. Answer three questions in the 🔍 Diagnose tab and you will be routed to one of five problem types in the 📋 Type Guide. The 📚 Read the Report tab gives a compression of the report’s eight chapters into a six-chapter reading structure; the 🔬 Critical Reading tab equips you to question the report’s own framing.
Practitioner path: 🔍 Diagnose → 📋 Type Guide (your type) → confirm First Action
Course preparation path: 📚 Read the Report → 🔍 Diagnose → 📋 Type Guide (all types) → 🔬 Critical Reading
Critical reading path: 🔬 Critical Reading → Check Understanding → Scenario Writing → Further Reading
What Problem Am I Trying to Solve?
Diagnostic Tool — Find Your Type in Three Questions
Korean Experience Mapped to Your Problem Type
Type A Every Big Project Gets Approved
‘Every large project that reaches my desk arrives with a feasibility study saying it is viable. The ministry that wants the project is the ministry that did the study. Costs come in low, benefits high — always.’
Korea’s Experience with the Same Problem
Korea lived this exactly. Between 1994 and 1998, of 33 large projects that received feasibility studies, only one — Ulleung Airport — was ruled infeasible. The studies were run by the line ministries that wanted the projects, and the report says the study teams were ‘heavily under the influence of relevant line ministries or powerful politicians’ — they tended to underestimate costs and overestimate benefits, which together produced inflated B/C ratios. The Seoul–Busan high-speed railway is the emblem: its baseline cost rose from 5.5 trillion won to 18.5 trillion won, and a special committee found the feasibility team had knowingly underestimated the costs.
The structural fix came in 1999: the Preliminary Feasibility Study (PFS). Every new project with a total cost above 50 billion won is now screened by the budget ministry — through PIMAC at the Korea Development Institute — before the line ministry runs its own detailed feasibility study. The line ministry can still propose; it no longer screens its own proposals. Between 1999 and 2010, 184 of 466 projects — about 40% — failed the PFS.
The problem was never the quality of the cost-benefit arithmetic. It was that the ministry that wanted the project owned the study. Moving the screen to the budget ministry — proposer is not screener — is the single move that turned a 1-in-33 rejection rate into a 2-in-5 one.
Where to Read in the Report
| Priority | Section | Why read it |
|---|---|---|
| 🔴 Essential | Ch. 3 | The six ‘troubles’ — why pre-1997 feasibility studies almost never said no |
| 🔴 Essential | Ch. 5 §1.1 | The PFS — scope, threshold, the budget-ministry ownership |
| 🟡 Recommended | Table 5-4 | PFS results 2003–2010 — the rejection rate in numbers |
| ⚪ Optional | Table 2-1 | The 1994–1998 record — only 1 of 33 ruled infeasible |
A mandatory ex-ante screen run by the budget ministry rather than the line ministry needs no new engineering capacity — only a clear threshold rule (Korea’s is 50 billion won) and the authority to enforce it. The prerequisite is that the budget ministry actually controls disbursement; a screen with no budget consequence is theatre.
Before drafting any new appraisal manual, take the three largest projects in your pipeline and write one line for each: which institution carried out the feasibility study, and does that institution gain if the project goes ahead. Where the answer is ‘gains,’ you have located exactly where an independent screen is needed.
Type B Costs Explode After Approval
‘We approve a project at one cost, and three years later it costs double. There is no mechanism to control cost increases once construction has started.’
Korea’s Experience with the Same Problem
Korea’s answer is Total Project Cost Management (TPCM), introduced in 1994 and strengthened after the crisis. Under TPCM the budget ministry checks cost increases against the baseline throughout a project’s life; construction costs cannot be freely shifted between phases, and when the guidelines are violated the budget ministry can withhold budget allocation. To this Korea added the Re-assessment Study of Feasibility (RSF) in 1999 — a project under construction is re-checked whenever its total cost rises by more than 20%, excluding inflation and land cost — and the Re-assessment of Demand Forecast (RDF) in 2006.
The numbers show the discipline. Between 2002 and 2010, RSF re-assessed 175 projects and cut requested total project cost from 68.9 to 61.5 trillion won — a reduction of about 11%. TPCM also changed behaviour upstream: requests to increase total project cost fell from 26.4% of projects in 1996–1999 to 4.4% in 2000–2003. And the screen is selective — 96.7% of ‘minor design change’ requests were accepted, but only 43.2% of ‘substantial design change’ requests.
A re-assessment with no consequence changes nothing. RSF works because the budget ministry controls disbursement and a 20% cost increase automatically triggers a fresh feasibility check — the trigger is a rule, not a discretion.
Where to Read in the Report
| Priority | Section | Why read it |
|---|---|---|
| 🔴 Essential | Ch. 5 §2 | TPCM, RSF and RDF — how each is triggered and what it controls |
| 🔴 Essential | Box 5-4 | The exact 20% cost-increase trigger for RSF |
| 🟡 Recommended | Table 5-9 | RSF results — the 7.4 trillion won reduction, year by year |
| ⚪ Optional | Table 5-6 | Why minor design changes are accepted but substantial ones largely are not |
A cost-control trigger rule — a 20%-type threshold that forces a re-assessment — plus the budget ministry’s power to withhold funds is highly transferable and can be drafted in weeks. The one precondition is real budget authority; without it, the rule is ignored the first time a powerful ministry tests it.
Draft a one-page total-project-cost rule: which projects are covered, what cost increase triggers a mandatory re-assessment, and what the budget ministry may do when the trigger is hit. Circulate it to your largest line ministry — the drafting itself surfaces every objection you will face later.
Type C No One Screens the Project Independently
‘There is no neutral body to review whether a project is worth doing. The agency that designs the project also evaluates it, so final judgments on big projects are skewed toward feasible.’
Korea’s Experience with the Same Problem
The report names this as the second of its six ‘troubles’: before the reform there was no independent review process at all, and ‘without an independent review, final judgments on big projects were likely to be skewed to be feasible.’ Korea’s structural answer was to create one. The Public and Private Infrastructure Investment Management Center (PIMAC), housed inside the Korea Development Institute, conducts the PFS, RSF, RDF and Value for Money tests using multi-disciplinary teams of economists, transport researchers and civil engineers. Crucially it sits inside KDI, a think-tank with standing as a leading policy institution since 1971 — the credibility was borrowed from an institution that already had it.
The deeper move was the ownership split. The feasibility study no longer belongs to the line ministry that proposes a project; it belongs to the budget ministry that screens it. The report records that the line ministries resisted, and that the PFS ‘was established to settle the bargaining process that ensued.’ The reform was a negotiated transfer of authority, not a clean technocratic design — which is itself part of the lesson.
An independent reviewer is only as strong as its credibility and its protection. PIMAC worked because KDI was already trusted and because the budget ministry — which controls the money — stood behind its judgments. A reviewer with no track record and no political cover is ignored or captured.
Where to Read in the Report
| Priority | Section | Why read it |
|---|---|---|
| 🔴 Essential | Ch. 3 | Trouble two — no independent review, and what that produced |
| 🔴 Essential | Ch. 7 §3 | Making an independent review — why KDI’s judgments were taken seriously |
| 🟡 Recommended | Ch. 5 §1.1 | How PIMAC is organised — multi-disciplinary teams, the PFS Review Committee |
| ⚪ Optional | Ch. 7 §5 | Co-opting external analysts to blunt adversarial policy analysis |
The proposer/screener split is highly transferable and is the core move. The harder precondition is the independent institution itself — PIMAC worked because KDI already existed and was credible. Where no such institution exists, building one is a multi-year task that must precede, not follow, the screening mandate.
List the research institutions in your country that could credibly host an independent screening unit, and for each note who funds it and who has the power to dismiss its head. The shortlist — or its emptiness — is your real starting point, well before any methodology is chosen.
Type D Cannot Combine Economic and Social Value
‘Cost-benefit analysis gives me a B/C ratio, but how do I weigh balanced regional development against it? Without a rule, “social value” becomes a way to approve anything.’
Korea’s Experience with the Same Problem
This was the third of the report’s six ‘troubles’: economic value was quantifiable through cost-benefit analysis, but social values — policy consistency, environmental impact, balanced regional development — were not, and there were no rules for combining the two. The report says opaque ‘social values’ could push through projects that were not feasible. Korea’s answer was the Analytic Hierarchy Process (AHP), a multi-criteria decision method that combines quantitative and qualitative analyses under a hierarchical structure through pair-wise comparison.
In the PFS, AHP weights are set by project type — for construction projects, economic analysis carries 40–50%, policy analysis 25–35%, and balanced regional development 20–30% — and a project is judged feasible when its weighted sum exceeds 0.5. The 2009 guidelines added a ‘grey area’ of 0.45–0.55, within which researchers must take a cautious approach rather than treating 0.51 and 0.49 as a clean binary. Notably, AHP does not just track the B/C ratio: 71 projects with a B/C below 1 still passed, chiefly on balanced-regional-development grounds.
AHP’s value is not the arithmetic. It is that it forces analysts to put their weights and their reasoning on paper, where they can be audited — turning ‘social value’ from a cover for arbitrary approval into a documented, contestable judgment.
Where to Read in the Report
| Priority | Section | Why read it |
|---|---|---|
| 🔴 Essential | Ch. 5 §1.1 | AHP in the PFS — weights by project type, the 0.5 threshold |
| 🔴 Essential | Box 5-3 | The seven-step AHP method — conceptualising to concluding |
| 🟡 Recommended | Ch. 7 §4 | Why an explicit judgment model prevents arbitrary interpretation |
| ⚪ Optional | Appendix, Art. 38 | The legal text on comprehensive evaluation and AHP weight classes |
An explicit, documented multi-criteria rule is the only honest way to combine quantifiable and unquantifiable value, and the method itself is transferable. The risk is mechanical use — treating a 0.51 score as decisively different from 0.49 — which the grey area only partly cures. Trained evaluators and standard manuals are required, not just a spreadsheet.
For one contested project on your desk, write down the criteria you are actually weighing — economic return, regional equity, environmental cost, policy fit — and assign each an explicit weight that sums to one. The act of putting the weights on paper, not the arithmetic that follows, is the discipline AHP introduces.
Type E No Money, Huge Infrastructure Needs
‘The treasury cannot fund the infrastructure backlog. We want public-private partnerships, but every contract draft drifts toward government guarantees and growing fiscal exposure.’
Korea’s Experience with the Same Problem
Facing a serious shortage of infrastructure and limited fiscal room, Korea passed the Act on Promotion of Private Capital Investment in Social Overhead Capital in 1994, opening public-private partnerships through build-transfer-operate (BTO) and build-transfer-lease (BTL) schemes. The growth was dramatic: PPP investment rose from 0.5% of total social overhead capital investment in 1995 to 18.5% by 2008; by the end of 2010, 628 PPP projects had been accepted with cost estimates of 95.9 trillion won. A mandatory Value for Money test, conducted through PIMAC, acts as the PPP-side screen and suspended about 32% of BTO projects between 2005 and 2010.
But the report is honest, if quiet, about the price. The minimum revenue guarantee added to PPP contracts in 1999 created a fiscal burden large enough that the government later announced a 2% ceiling on PPP fiscal commitment. And a footnote concedes a 2007 study finding that PPP investment partly crowds out public investment. Korea’s sharper lesson, beyond the report’s framing: a contract that guarantees the operator a revenue floor is not really private finance — it is a delayed government loan with weaker accountability.
PPP frameworks are transferable; revenue guarantees are not. The core design choice is demand-risk allocation. The minute the government takes that risk back through a guarantee, the PPP stops being private finance and the fiscal discipline weakens.
Where to Read in the Report
| Priority | Section | Why read it |
|---|---|---|
| 🔴 Essential | Ch. 6 §1–2 | Why PPP, and the institutional arrangements — BTO, BTL, the PPP Act hierarchy |
| 🔴 Essential | Ch. 6 §3 | The Value for Money test — the three-phase PPP screen |
| 🟡 Recommended | Table 6-2 | VFM test results — the 32% turn-down rate for BTO projects |
| ⚪ Optional | Ch. 6 §4, fn. 15 | PPP growth to 18.5% of SOC investment — and the crowding-out footnote |
A PPP framework with a mandatory value-for-money screen is transferable. The minimum revenue guarantee is a cautionary tale, not a model. If your treasury insists on some guarantee, the Korean lesson is to keep it low, make it temporary, and publish the payout history annually so the fiscal cost stays visible.
Read the Value for Money test structure once. Then list every clause in your current PPP template that effectively shifts demand or revenue risk back to the state — revenue guarantees, termination payments, contingent equity, refinancing rights. That list is your negotiation agenda for the next contract round, and a one-page case for reform.
The Whole Terrain of the Report
1 Introduction — Why Korea Reformed How It Manages Public Money
1.1 Public investment management as a development question
The report opens after a shock. The financial crisis that hit Korea in late 1997 caused the worst recession of the post-war era, and the government responded with comprehensive structural reform of the corporate, financial and public sectors. In the fiscal and public sector the goal was to make spending performance-oriented and to manage public expenditure on the principle of value for money. Public investment management — the way a government appraises, costs, monitors and evaluates the large infrastructure projects it funds — was a central target, because the crisis exposed how badly the old system had performed.
The diagnosis was uncomfortable. The government found that large capital projects with negative social rates of return had been launched before the crisis — projects that should have been screened out at or before the pre-feasibility stage. Powerful political interests had been able to evade the approval process, or to hide a project inside the budget, because the appraisal and approval system was weak. Public investment management matters as a development question precisely here: when it fails, a developing country locks scarce capital into projects that never repay it.
1.2 Where Korea was before the reform
The report stresses a “long and sound tradition” of investment appraisal. The Economic Planning Board (EPB) began appraising projects in 1962 alongside the first Five-Year Economic Development Plan; the Investment Project Deliberative Committee was created in 1970; a dedicated Investment Appraisal Bureau followed in 1977. Yet the report’s own pages show how fragile this tradition was. An earlier attempt to build an appraisal system failed by 1973 — too few qualified experts, no usable methodology, no dedicated task force, and what the report calls government “complacency.”
The tradition then collapsed outright. In 1994 the EPB was merged into the new Ministry of Finance and Economy and the Review and Evaluation Bureau was disbanded; the Budget Office could not properly review feasibility studies for lack of expertise and time. The result is the single most telling number in the report: between 1994 and 1998, of 33 large projects that received feasibility studies, only one — Ulleung Airport — was ruled infeasible. Feasibility studies had become a tool for line ministries to secure budget. The Seoul–Busan high-speed railway (KTX) is the emblematic case: its baseline cost rose from 5.5 trillion won to 18.5 trillion won, and critics charged that the study team had knowingly underestimated costs to make the project look feasible.
1.3 Before and after — the development-stage comparison
The clearest way to see the reform is to compare the system on either side of 1999. The table below is reconstructed from Chapters 2, 3 and 5 of the report.
| Dimension | Pre-reform (1994–1998) | Post-reform (1999–2010) |
|---|---|---|
| Who runs the feasibility study | The line ministry that wants the project (self-screening) | The budget ministry, via PIMAC at KDI (independent) |
| Large projects ruled infeasible | 1 of 33 | 184 of 466 (about 40%) failed the PFS |
| Cost control during construction | None systematic | TPCM, plus RSF triggered by a 20% cost increase |
| Combining economic and social value | No rule; “social value” used opaquely | AHP — an explicit, documented multi-criteria model |
| Legal basis | Scattered enforcement decrees | National Finance Act (2006) consolidates the framework |
Korea’s reformed system is now itself an object of international study — the author wrote the Korea country report for the World Bank’s Public Investment Management: Global Synthesis, and PIMAC advises other governments on PFS design.
1.4 The three eras — the implicit periodisation
Holding three eras in mind while reading the later chapters is essential, because the same word — “appraisal,” “feasibility,” “ownership” — means different things in each.
| Era | Years | Dominant logic | Anchor events |
|---|---|---|---|
| The EPB tradition | 1962–1993 | Appraisal tied to the Five-Year Plans; technocratic but capacity-thin and never fully institutionalised | EPB appraisal (1962), Investment Appraisal Bureau (1977) |
| The breakdown | 1994–1998 | EPB dissolved; appraisal captured by line ministries; megaproject cost overruns | EPB merger (1994), KTX cost balloon, 1 of 33 rejected |
| Crisis-driven reform | 1999–2012 | Budget ministry takes ownership; an integrated ex-ante / intermediate / ex-post system is built | PFS, TPCM, RSF, RDF, AHP, MTEF, PPP |
The crisis was the enabler. Reforms that had been resisted for decades — above all moving feasibility screening away from the line ministries — became possible only when the 1997 crisis forced a wholesale budget restructuring and destroyed public trust in the old practices. The instruments mattered; the political window mattered more.
The report titles Chapter 2 a “long and sound tradition,” but its own account shows the 1962–73 appraisal effort largely failed and the system collapsed entirely in 1994. The “tradition” framing softens how fragile pre-crisis public investment management really was — and a critical reader should hold that softening through the rest of the read.
2 Policy Design — Diagnosing the Problem and Designing the Fix
2.1 The six “troubles” the reform had to fix
Chapter 3 of the report is unusually candid for an official document. It names six reasons why Korean public investment management failed before the crisis. First, feasibility studies on huge projects were heavily influenced by interest groups — line ministries, finance ministries, local governments and National Assembly politicians — and the line ministry directly in charge of a project was operating under a conflict of interest. Second, there was no independent review process at all, so final judgments on big projects were “likely to be skewed to be feasible.” Third, economic value was not isolated from social value: economic value was quantifiable through cost-benefit analysis, but social values — policy consistency, environmental impact, balanced regional development — were not, and there were no rules for combining the two, so opaque “social values” could push through projects that were not feasible.
Fourth, there was a lack of standardised guidelines and databases. Fifth, capital budgeting was frequently inconsistent with the Medium Term Expenditure Framework — project cycles and budget cycles were disjointed. Sixth, interest groups cared intensely about feasibility results at the ex-ante stage but nobody paid attention to how projects were actually carried out afterward. Each instrument the reform later introduced maps onto one of these six troubles.
2.2 From bottom-up to top-down budgeting
The reform also changed the budget process itself. Before 2004, budgeting relied excessively on a bottom-up approach: the budget ministry made rough estimates of the next year’s total but did not transmit them to line ministries, focused on microscopic control of individual line items, and determined the sector allocation and total size only at the last stage by aggregating individual programmes. Line ministries, given no spending ceiling, requested unrealistically large amounts, and massive cuts were inevitable.
In 2004, for fiscal year 2005, Korea introduced the Medium Term Expenditure Framework (MTEF) with top-down budgeting. The annual exercise now begins with a five-year fiscal discussion; the budget ministry transmits spending ceilings for 14 areas and 56 programmes to line ministries, which prepare their requests within those ceilings. When reviewing requests the ministry emphasises strategic alignment with policy directions rather than line-item control. This is the structural answer to trouble five.
2.3 Period-by-period objectives and strategy
| Period | Stated objective | Operative strategy |
|---|---|---|
| 1962–1993 | Appraise projects for the Five-Year Plans | EPB Investment Appraisal Bureau; discounted cash-flow analysis; sector manuals |
| 1994–1998 | (System undermined — no coherent objective) | EPB dissolved; line ministries screen their own projects |
| 1999–2003 | Restore screening and control cost | PFS by the budget ministry; PIMA established at KDI; TPCM strengthened; RSF introduced; Performance Monitoring System |
| 2004–2006 | Embed reform in the budget system | MTEF and top-down budgeting; Self-Assessment of Budgetary Programs; National Finance Act; RDF |
| 2007–2012 | Refine and extend | AHP “grey area” added; PFS extended to R&D and non-infrastructure projects; PPP scaled up |
2.4 Key legislation and instruments in chronological order
| Year | Statute / instrument | What it enabled |
|---|---|---|
| 1970 | EPB Directive No. 52 — Investment Project Deliberative Committee | First formal body to review the feasibility of investment projects |
| 1994 | Act on Promotion of Private Capital Investment in Social Overhead Capital | Opens the public-private partnership framework for infrastructure |
| 1999.04 | Enforcement Decree of the Budget and Accounts Act (amended) | Makes the Preliminary Feasibility Study mandatory for new large projects |
| 1999.07 | “Comprehensive Plan to Enhance Efficiency of Public Investment” | Cross-ministerial action plan; budget ministry takes ownership of PFS |
| 2006 | National Finance Act | Consolidates fiscal-related acts; provides the legal framework for PFS and TPCM |
| 2009 | Operating Guidelines for the Preliminary Feasibility Study (revised) | Introduces the AHP “grey area” (0.45–0.55) requiring caution near the decision threshold |
2.5 The core policy document — the 1999 Comprehensive Plan
The decisive document was the “Comprehensive Plan to Enhance Efficiency of Public Investment” of July 1999, drafted by a cross-ministerial task force jointly headed by the Ministry of Planning and Budget and the Ministry of Construction and Transport. Its key feature was intensified monitoring of the project implementation process by the budgeting agency. The budget ministry took ownership of the Preliminary Feasibility Study so that its results would be reflected in budget allocation. The line ministries — especially the construction ministry — resisted, and the report records that the PFS “was established to settle the bargaining process that ensued.” The reform began as a negotiated transfer of authority, not a clean technocratic design.
The report uses the words “tradition,” “troubles” and “framework,” but the single operational distinction running through Chapters 2 to 4 is simpler: who owns the feasibility study. Before 1999 the line ministry that wanted the project also screened it. After 1999 the budget ministry screens it. Almost every “trouble” the report lists sits on the pre-1999 side of that line. Hold that distinction through Chapter 3.
3 Implementation — The Instruments of Reform
3.1 The Preliminary Feasibility Study (PFS)
The Preliminary Feasibility Study is the centrepiece. It is an advance verification of feasibility for new large projects, supervised by the Ministry of Strategy and Finance, carried out to formulate budget and fund-management plans. Its stated purpose is to prevent budgetary waste by ensuring that new government-financed projects are implemented transparently and according to priorities set by an objective study. Every new project with a total cost of at least 50 billion won (with government support of at least 30 billion won) is subject to PFS; the National Finance Act later extended its scope from infrastructure to R&D and other non-investment financial projects.
PFS is conducted not by the line ministry but by PIMAC at the Korea Development Institute, using multi-disciplinary research teams of economists, transport researchers and civil engineers. The procedure is fixed: a line ministry submits candidate projects, the budget ministry selects them and requests the study, PIMAC organises a team and conducts the study, the PFS Review Committee oversees the process, and PIMAC submits a final report to the budget ministry. The study itself runs in three phases — background study, main analyses, and synthesis. The main analyses are an economic analysis (a cost-benefit analysis producing B/C ratio, NPV and IRR, using a 5.5% real social discount rate as of 2007), a policy analysis, and a balanced regional development analysis.
3.2 Synthesising the analyses — the AHP model
The hardest problem the reform faced was trouble three: economic value is quantifiable, social value is not, and there was no rule for combining them. Korea’s answer was the Analytic Hierarchy Process (AHP), a multi-criteria decision method developed by Thomas Saaty that combines quantitative and qualitative analyses under a hierarchical structure through pair-wise comparison. In PFS, weights are set by project type — for construction projects, economic analysis carries 40–50%, policy analysis 25–35%, and balanced regional development 20–30%. A project is judged feasible when its AHP weighted sum exceeds 0.5.
The 2009 guidelines added an important refinement: a “grey area” between 0.45 and 0.55, within which researchers must take a cautious approach rather than treating 0.51 and 0.49 as a clean binary. AHP is the report’s answer to opaque decision-making — it forces analysts to put their weights and their reasoning on paper, where they can be audited.
| PFS analysis component | What it measures | Method |
|---|---|---|
| Economic analysis | Ripple effects on the national economy; adequacy of investment | Cost-benefit analysis — B/C ratio, NPV, IRR; 5.5% real discount rate |
| Policy analysis | Consistency with higher-level policy; project risk; project-specific factors | Qualitative and quantitative scoring |
| Balanced regional development | Regional backwardness; regional economic impact | Regional backwardness index; multi-regional input-output model |
| Synthesis | Overall feasibility | AHP weighted sum; feasible if > 0.5 (grey area 0.45–0.55) |
3.3 Controlling cost — TPCM, RSF and RDF
PFS screens a project before it starts; three further instruments control it afterward. Total Project Cost Management (TPCM), introduced in 1994 and strengthened after the crisis, lets the budget ministry check cost increases against the baseline throughout the life of a project; construction projects running more than two years with total cost above 30 billion won (civil) or 10 billion won (architectural) are covered. The line ministry cannot freely change the total project cost, and the budget ministry can withhold budget allocation when the guidelines are violated.
The Re-assessment Study of Feasibility (RSF), introduced in 1999, re-affirms the feasibility of a project already under construction if its total project cost rises by more than 20% (excluding inflation and land-acquisition cost), or if it should have had a PFS but did not. The Re-assessment of Demand Forecast (RDF), introduced in 2006, re-checks demand forecasts when they are likely to fall by more than 30% from the previous stage. Since 2009 the Board of Audit and Inspection can also request an RSF. RSF and RDF deliberately use the same analytical methodology as PFS.
3.4 The implementation structure over time
| Year | Institutional move | Effect |
|---|---|---|
| 1962 | EPB begins investment appraisal | Appraisal tied to the Five-Year Plans |
| 1977 | Investment Appraisal Bureau established within the EPB | First dedicated appraisal capacity |
| 1994 | EPB dissolved; TPCM introduced | Appraisal capacity lost; systematic cost control begins |
| 1999 | PFS introduced; PIMA established at KDI; RSF introduced | Independent ex-ante screening plus mid-construction reassessment |
| 2003 | Performance Monitoring System launched; AHP officially adopted in PFS | Ex-post monitoring begins; explicit judgment model in use |
| 2004 | MTEF and top-down budgeting (fiscal year 2005) | Project cycle linked to the budget cycle |
| 2005 | Self-Assessment of Budgetary Programs introduced; PIMAC formed; In-Depth Evaluation begins | Self-assessment linked to budget allocation; deep program evaluation |
| 2006 | National Finance Act enacted; RDF introduced | Consolidated legal basis; demand re-forecasting added |
| 2009 | Board of Audit can request RSF; PFS “grey area” added | Stronger external oversight; more cautious AHP decision rule |
3.5 The three-tier performance management system
The ex-post side of the reform is a three-tier system, all housed in the budget ministry. The Performance Monitoring System (2003) requires line ministries to set goals and indicators and file annual performance reports. The Self-Assessment of Budgetary Programs (SABP) (2005), modelled on the United States Program Assessment Rating Tool, requires ministries to assess their own programmes against a checklist on a three-year cycle; results feed budget allocation — in 2007, programmes rated ineffective took a 53% budget cut against the previous year. The In-Depth Evaluation of Budgetary Programs applies scientific evaluation methods to selected programmes. The report is honest that this tier is the weakest: the Performance Monitoring System “has not been very successful,” with only lukewarm support from the budget ministry and reports not open to the public.
3.6 The cases the report puts in the margins
Box 5-3 sets out the seven-step AHP method in detail — conceptualising, structuring, weighting, scoring, synthesising, feedback, concluding. The most vivid implementation cases, though, are about what reform had to overcome. The Kim Dae-Jung administration, which took office in February 1998, organised a task force to reassess the feasibility of the Seoul–Busan high-speed railway, the largest single construction project in Korean history, whose baseline cost had risen from 5.5 to 18.5 trillion won. And the report quotes Koh’s 2008 study on how losing groups fight back: one way to challenge a PFS is to “perform adversarial policy analyses” — mobilising friendly analysts to dispute the result — which KDI countered by co-opting external experts into its own guideline-building so that few credible analysts would fully disagree with its methods.
The report repeatedly states that PFS “has saved taxpayers’ money” but never totals the figure. RSF cuts are quantified precisely — 7.4 trillion won between 2002 and 2010 — yet the PFS saving, the headline claim of the whole reform, is asserted rather than measured. Any honest summary should note the asymmetry.
4 Outcomes — What the Reform Delivered, and What It Cost
4.1 PFS results — the projects that were stopped
The clearest outcome is the rejection rate. Between 1999 and 2002, before AHP was officially adopted, 121 projects went through PFS and 66 — more than half — were judged non-feasible. From 2003, with AHP in use, 346 projects were reviewed and 228 (65.9%) were judged feasible. Across the whole 1999–2010 period, 466 projects were reviewed and 184 — about 40% — failed the PFS. Set against the pre-reform record of one rejection in 33, this is the headline transformation.
| Period | Projects reviewed | Judged feasible | Rejected |
|---|---|---|---|
| 1999–2002 (pre-AHP) | 121 | 55 (45.5%) | 66 (54.5%) |
| 2003–2010 (AHP in use) | 346 | 228 (65.9%) | 118 (34.1%) |
| Total 1999–2010 | 466 | 282 (60.5%) | 184 (39.5%) |
Source: Tables 5-3 and 5-4 of the report. Note that AHP did not simply track the cost-benefit ratio: 71 projects with a B/C below 1 still passed (chiefly on balanced-regional-development grounds), while a handful with B/C above 1 were rejected for environmental impact or funding difficulty.
4.2 TPCM and RSF results — controlling cost after approval
The cost-control instruments produced measurable savings. Under RSF, between 2002 and 2010, 175 projects were re-assessed: line ministries had requested a combined total project cost of 68.9 trillion won, and RSF results suggested adjusting that down to 61.5 trillion won — a reduction of 7.4 trillion won, about 11%. TPCM changed behaviour upstream too: requests to increase total project cost fell from 26.4% of projects in 1996–1999 to 4.4% in 2000–2003, and the acceptance rate of those requests fell from 42.1% to 22.7%. When increases were requested, the budget ministry accepted 96.7% of “minor design change” requests but only 43.2% of “substantial design change” requests — the discipline is selective, not blanket. RDF, by contrast, was barely used: only two were conducted after 2006, both leading to cost reductions.
| Instrument | Period | Outcome |
|---|---|---|
| PFS | 1999–2010 | 466 reviewed; 184 (about 40%) rejected |
| RSF | 2002–2010 | 175 re-assessed; total project cost cut from 68.9 to 61.5 trillion won |
| TPCM (requests to raise cost) | 1996–1999 → 2000–2003 | Requests fell from 26.4% to 4.4% of projects |
| RDF | 2006–2010 | Only 2 conducted; both reduced total cost |
4.3 Performance evaluation results
The ex-post tier produced thinner results. The Self-Assessment of Budgetary Programs did link to money: in 2007, programmes rated ineffective took a 53% budget cut against 2006. Of 384 programmes assessed in 2008, 11.5% were rated effective and 2.6% very effective, while about 27% were rated ineffective or very ineffective. The In-Depth Evaluation of Budgetary Programs evaluated 45 programmes between 2005 and 2009, but only about 20% of those evaluations could be subjected to empirical analysis because the necessary data simply did not exist.
4.4 Public-private partnership outcomes
The PPP programme scaled dramatically. When PPP projects were first introduced in 1995, 0.4 billion won was invested — just 0.5% of total social overhead capital investment. By 2008, 3.7 trillion won was invested in PPP/BTO projects, about 18.5% of total SOC investment. By the end of 2010, 628 PPP projects had been accepted with cost estimates of 95.9 trillion won. The Value for Money test acts as a PPP-side screen: between 2005 and 2010, 42 of 131 BTO projects — roughly 32% — were suspended through the test, mostly because of the conditions private bidders attached to unsolicited proposals.
4.5 Limitations the report acknowledges
The report is comparatively balanced about its weak points. The Performance Monitoring System “has not been very successful thus far,” with only lukewarm support from the budget ministry, little enthusiasm from line ministries, and performance reports kept from the public so that ministries have little incentive to take them seriously. The In-Depth Evaluation programme “still has a lot of trouble with implementing and feeding back results.” And in a footnote the report concedes that a 2007 study by Rhee and Lee found PPP investment has negative correlations with public investment — PPP highly likely to crowd out public investment, at least partially.
Three are stated, but unevenly. (a) The ex-post performance tier is openly admitted to be weak. (b) The PPP crowding-out finding is real but is placed in a footnote, not the outcomes text. (c) The minimum revenue guarantee added to PPP contracts in 1999 created a fiscal burden large enough that the government later announced a 2% ceiling on PPP fiscal commitment — but the cumulative cost is never quantified.
4.6 The key figure
184 of 466 projects — nearly 40% — failed the Preliminary Feasibility Study between 1999 and 2010. Before the reform, one of 33 large projects was ever rejected. The value of Korea’s reform is not the infrastructure that was built; it is the projects that were not built — the negative-return megaprojects that the old system would have waved through.
5 Lessons — Seven Success Factors and Transferability
5.1 The report’s seven key success factors
Chapter 7 of the report sets out seven factors it credits for the reform’s success. One, demand for better public investment management after the economic crisis — the 1997 crisis pushed national debt from under 10% of GDP to 26% by 2004 and destroyed public trust, so reform could no longer be ignored. Two, the leading role of the finance ministry — moving ownership of PFS, RSF and RDF to the budget ministry mitigated the information asymmetry between it and the line ministries. Three, making an independent review — PIMAC at KDI, drawing on KDI’s standing as a leading think-tank since 1971, produced explicit judgments that were taken seriously rather than treated as symbolic.
Four, presenting an explicit judgment model — AHP prevented the arbitrary interpretation of results and forced analysts to reveal their preferences. Five, publicising the analysis and decision-making — openness, plus co-opting external analysts into guideline-building, reduced the risk that losing groups could mount credible adversarial analyses. Six, providing standard guidelines and manuals — the same methodology and shared datasets across projects secured objectivity, consistency and transparency. Seven, an effective series of reforms sequenced along the project cycle — TPCM (1994) led to PFS (1999), which triggered RSF and the performance-evaluation scheme (2003) and then RDF (2006); each reform created the demand for the next.
5.2 Stage-by-stage success factors
▶ Phase 1 (1997–1999) — the crisis window
What worked: an external shock that made reform unavoidable; a clear decision to move ownership of feasibility screening to the budget ministry; the 1999 Comprehensive Plan as a cross-ministerial vehicle. What it required: the political cover of a national emergency — the line ministries resisted even then, and the PFS itself emerged from a bargaining process.
▶ Phase 2 (1999–2006) — building the instruments
What worked: an independent reviewer with an existing reputation (PIMAC at KDI); an explicit judgment model (AHP) that made “social value” auditable; standard guidelines and shared databases; the consolidation of the legal basis in the National Finance Act of 2006. What it required: a credible domestic research institution already in place — something Korea had and many countries do not.
▶ Phase 3 (2006–2012) — refinement and extension
What worked: integration with the MTEF budget process; extension of PFS to R&D and non-infrastructure projects; the AHP grey area that softened mechanical 0.5 cutoffs; the rapid scale-up of PPP. What it cost: the ex-post performance tier never matured, and the PPP framework still lacks a combined fiscal rule.
5.3 Transferability table
| Korean element | Transferability | Precondition / risk |
|---|---|---|
| Independent screening body (PIMAC / KDI model) | High | Needs a credible, politically protected research institution; KDI had a track record from 1971 |
| Ownership split — line ministry proposes, budget ministry screens | High | The screening body must sit with the institution that controls the budget |
| AHP explicit judgment model | Medium–High | Requires trained evaluators and standard manuals; mechanical 0.5 cutoffs are a known weakness |
| Standard guidelines and shared databases | High | Sector datasets take years to build — start with the largest sectors |
| TPCM / RSF cost-control triggers | High | Needs a clear trigger rule (e.g. a 20% increase) and the budget ministry’s power to withhold funds |
| National Finance Act-style legal consolidation | Medium–High | Consolidating scattered decrees into one act makes the reform durable across administrations |
| PPP framework with risk-sharing | Medium | Demand-risk allocation is the core; a minimum-revenue-guarantee-style mechanism is the part to avoid |
| The crisis-driven reform window | Low | Cannot be engineered — but reformers can prepare instruments to deploy when a window opens |
5.4 Six key success factors (the Companion’s synthesis)
Reading the report against its own omissions yields six factors that actually carry the story, distinct from the report’s seven-item list.
| # | Factor | Why it matters |
|---|---|---|
| 1 | The crisis was the enabler | Instruments resisted for decades passed within two years once the 1997 crisis forced budget restructuring |
| 2 | Ownership split — proposer is not screener | Moving the feasibility study to the budget ministry breaks the line ministry’s incentive to approve its own projects |
| 3 | An independent institution with a track record | PIMAC worked because KDI was already credible; “independent review” has no home without one |
| 4 | An explicit, documented judgment rule | AHP made “social value” auditable instead of a cover for arbitrary approval |
| 5 | Reform sequenced along the project cycle | TPCM → PFS → RSF / performance evaluation → RDF — each instrument created demand for the next |
| 6 | Legal consolidation | The National Finance Act (2006) gave the reform a durable statutory anchor |
5.5 Boundary conditions for transfer
Three conditions limit transfer of the Korean experience. A credible domestic research institution: without a KDI-equivalent, “independent review” has no institutional home and PFS becomes another captured process. Budget-ministry authority: the screening body must sit with the institution that controls the money, or its judgments become advisory and ignorable. A reform window: the 1997 crisis gave Korea political cover to override line-ministry resistance; in stable times that resistance — which the construction ministry showed even in 1999 — is far harder to overcome.
What travels reliably is the institutional architecture — an independent screener, the proposer/screener split, an explicit judgment model, standard guidelines, cost-control triggers, and legal consolidation. What does not travel is the crisis timing, and the assumption that a credible research institution already exists. Build the architecture deliberately; do not wait for a crisis to do it for you.
6 Conclusion — Overall Assessment and the Unfinished Agenda
6.1 Overall assessment
The aggregate outcome is real. After the 1997 crisis Korea built an integrated ex-ante / intermediate / ex-post quality-control system for public investment. The report’s own verdict is measured: the Preliminary Feasibility Study “seems successful in handling the pass-or-fail bottleneck of the entire project selection process”; the Total Project Cost Management system “also appears to be working well”; RSF and RDF “have forced the rebuilding of the project itself.” But the performance monitoring and evaluation system “is still in its early stages.” A balanced one-sentence summary would say: Korea moved from a system where one large project in 33 was ever rejected to one where about 40% fail the PFS — a genuine transformation of fiscal discipline — but the ex-post evaluation tier and the PPP fiscal-rule question remain unfinished.
6.2 Constraints and how Korea addressed them
| Constraint | Korean response | Honest verdict |
|---|---|---|
| Feasibility studies captured by line ministries | PFS by the budget ministry; independent review by PIMAC at KDI | Worked — the ownership split is the core lesson |
| Costs exploding mid-construction | TPCM, plus RSF with a 20% trigger and RDF | Worked — RSF cut 7.4 trillion won from requested cost, 2002–2010 |
| Economic and social value not combinable | AHP — an explicit multi-criteria judgment model | Worked, but mechanical 0.5 cutoffs are a known weakness the 2009 grey area only partly fixes |
| Scattered, weak legal basis | National Finance Act (2006) consolidates the framework | Made the reform durable across administrations |
| No attention to projects after approval | Three-tier performance management (monitoring, self-assessment, in-depth evaluation) | The weakest link — the report admits the monitoring system is “not very successful” |
| Fiscal limits on infrastructure | PPP Act, BTO and BTL schemes, Value for Money test | Scaled fast, but there is still no combined PPP–PIM fiscal rule |
6.3 The unfinished agenda
The report ends in 2012 with three open items. Performance management is still in its early stages: the report calls for greater use of program evaluation and of performance contracts between ministers and their senior managers. PPP has no fiscal rule: Korea “needs to find a new fiscal rule to monitor and control the PPP projects,” there is no combined treatment of PPP and traditional public investment, and PPP investment is still handled separately from the direct regulation of government expenditure. The budget ministry’s own role should change: it should focus less on input control and more on outputs and outcomes, and strengthen its capacity for policy analysis and long-term forecasting.
6.4 What Korea’s public investment management story really teaches
The report’s preferred reading is a sequence of well-designed instruments — PFS, TPCM, AHP, RSF. The stronger reading is that each instrument worked because it did one of two things: it shifted ownership, or it made judgment explicit and auditable. PFS works not because cost-benefit analysis is clever but because the ministry that wants the project no longer screens it. AHP works not because the mathematics is sophisticated but because it forces analysts to put their weights on paper. Institutions and rules that change who decides, and that make the decision visible, are what carry the reform; the analytical techniques are downstream of them.
If you have one week back in your office, do not commission another feasibility study. Ask one question about the largest project in your pipeline: who screens the project that the line ministry wants to build? If the answer is “the same line ministry,” you have found the reform. Everything else — AHP, TPCM, shared databases, performance evaluation — is downstream of that single ownership split.
6.5 First action — concrete and specific
This week, take the three largest projects currently in your pipeline and write, for each, a single line: which institution carried out the feasibility study, and does that institution gain or lose if the project goes ahead? Wherever the answer is “gains,” you have located exactly where an independent screener is needed. That one page is the seed of a Preliminary Feasibility Study unit — and it costs nothing but an afternoon.
This Companion is a learning aid produced for the Ministry of Strategy and Finance · KDI School of Public Policy and Management, KSP Knowledge Sharing Program — Public Investment Management Reform in Korea: Efforts for Enhancing Efficiency and Sustainability of Public Expenditure (2012). Use alongside the original report.
What This Report Does Not Say
1 Success Bias — What the Report Says and What It Leaves Out
The purpose of this report is "to share Korea’s success with developing countries." Look for the traces that purpose has left in the text. A purposeful text always makes choices about what to include and what to omit. A report having success bias does not mean it lies — it means it selects. Reading well is reading what is selected against.
| What the report says | What the report does not say |
|---|---|
| "Korea has a long tradition of sound and sustainable public investment management" | The Economic Planning Board, the institutional core of that tradition, was dissolved in 1994 and PIM discipline broke down until the 1997 crisis forced it back. How "continuous" is a tradition that collapsed for half a decade? |
| "The PFS rejected 184 of 466 projects — a 39.5% rejection rate" | How many economically sound projects were also screened out because AHP policy weights pushed them below 0.5? The report shows the case exists but never counts the cost of wrongful rejection. |
| "Private capital rose from 0.5% to 18.5% of SOC investment" | A single footnote (note 15) admits PPP investment is "highly likely to crowd out" public investment. Why is the one finding that questions the headline number left in a footnote? |
| "The Minimum Revenue Guarantee attracted private investors to infrastructure" | The MRG transferred demand risk back onto the budget and was abolished for new projects. What did the guarantee cost the Treasury before it was abolished? No number is given. |
| "A performance management system was established to monitor public spending" | The report itself states the system "has not been very successful thus far." If the monitoring layer does not work, how secure are the efficiency gains the report attributes to the whole system? |
Find Success Bias for Yourself
For each pattern below, find one quotation from the report, write it down, and write the question that hides behind it.
| Pattern of statement | What to look for in the report |
|---|---|
| Achievement stated, cost omitted | Find a sentence with "successfully" or "efficiency gains". Then ask what the system cost to run, how many staff and review-months each PFS consumed, and where — if anywhere — that cost appears. |
| A number without its denominator | The 39.5% rejection rate is presented as a triumph. Ask: rejected against what baseline of project quality, and with how many false rejections? A high rejection rate can signal good screening or an over-strict filter. |
| Counter-evidence placed in a footnote | Note 15 on PPP crowding-out is the clearest example. Read the footnotes after the main text; they often carry the finding that re-frames the chapter. |
| "It was decided" without naming the decider | Passive constructions hide political agency. Re-read the 1999 reform account asking who actually pushed the change through, against what resistance from line ministries. |
| "Lessons for developing countries" prescriptions | Chapter 8 recommends transferring Korea's institutions. Read each recommendation against the report's own admissions — the unsuccessful PMS, the MRG reversal — and decide whether it should be reproduced as-is. |
2 Check Your Understanding
Answer the questions below to check your grasp of the report and this Companion.
3 Scenario Writing — What Would You Have Done?
This scenario presents an implementation barrier encountered in the field. The goal is to engage with real-world complexity, not textbook solutions. Read the questions below and write your response freely. Nothing you write is saved or shared.
Scenario
You are Amara Okonkwo, a 36-year-old analyst in the Public Investment Unit of the Budget Office of a lower-middle-income country. Your unit was created two years ago, explicitly modelled on Korea’s PFS arrangement: the line ministries propose, your unit screens. The arrangement is new, contested, and not yet protected by law.
This week a flagship project lands on your desk: a 400-kilometre expressway and rail corridor through the country’s long-neglected interior. The Ministry of Transport has submitted its own feasibility study showing a benefit-cost ratio of 1.8. Your team rebuilds the demand forecast from independent traffic data and the ratio collapses to about 0.6 — the corridor cannot pay for itself for at least a generation. But the interior is genuinely poor, genuinely under-served, and the regional-equity case is real. The President has named the corridor in three public speeches. The Minister of Transport has let it be known that an unfavourable screening result will be read as your unit obstructing development.
Your director asks for your recommendation by Friday. You can endorse the project, reject it on the economic numbers, or try to find a third path. Whatever you write, the credibility of the two-year-old screening function — not just this one corridor — is now attached to your answer. What do you recommend?
Core Tensions in This Scenario
| Conflicting Values | Fundamental question |
|---|---|
| Independent screening vs. political mandate | A screening unit only has value if it can return an unwelcome answer. But a two-year-old unit with no legal protection may not survive doing so. How does an institution build the authority to say no before it is strong enough to say no safely? |
| Economic efficiency vs. regional equity | The benefit-cost ratio says 0.6. The equity case for the neglected interior is real and the report’s own AHP method exists precisely to carry such non-economic value. Without an AHP-style instrument, where does regional equity legitimately enter Amara’s recommendation — and where would it just be cover for a bad project? |
| Trusting the proposer’s study vs. independent reassessment | The Ministry of Transport’s study shows 1.8; Amara’s shows 0.6. Korea’s answer was institutional — the proposer never screens its own work. But re-doing every forecast is slow and provocative. When is independent reassessment worth the inter-agency conflict it creates? |
Connection to Korean Experience
Amara’s position is the position Korea built the PFS to occupy — but with two of Korea’s advantages missing. Korea separated the proposer from the screener and, crucially, anchored that separation in the 1999 legislation and a permanent home at KDI’s PIMAC, so that an individual analyst returning an unwelcome result was protected by an institution. Amara’s unit has the design but not yet the legal armour. Korea also had AHP: a structured way to fold regional-development value into the feasibility decision, so that "the interior is poor" did not have to be either ignored or smuggled in. Amara has neither the law nor the AHP weights. The report recommends transferring Korea’s institutions to developing countries; what it does not dwell on is the order of operations — that the screening function and the legislation that protects it have to mature together, and that until they do, every individual screening decision is also a fight about whether the institution gets to exist.
Re-read the scenario above and write down — on paper or in a document — how you would act if you were Amara Okonkwo. There is no right answer. Draw on your own experience and home-country context; aim for 50–100 words.
Questions to consider — ① The President has named the corridor in three speeches — which part of that is a legitimate political priority the screening unit should respect, and which part is pressure it exists precisely to withstand? ② Your independent forecast gives 0.6 against the ministry’s 1.8 — before you recommend rejection, what would you need to check in your own model to be sure the gap is real and not method choice? ③ Is a phased or scaled-down version of the corridor an honest third path, or a way to avoid saying no? ④ Have you seen a screening or audit body face this kind of test at home? What did it do, and what did that cost or buy it?
4 Assignments
- a.Summarise the chosen passage in 3–5 sentences. Quote one original sentence and identify exactly where that material sits relative to the report's main argument — a footnote, a single conceded paragraph, a chapter it never reaches.
- b.Is the underlying issue specific to Korea, or could it occur in a similar form in your own country? Compare against one specific case.
- c.Why do you think the report places this material at the margin rather than in the main outcomes discussion? What would change in the reader's overall impression if it were moved into the main text?
- a.Choose one Korean institution or instrument that corresponds to your type, and evaluate its transferability along three dimensions: legal basis, governance, technical capacity.
- b.What must absolutely be modified before transfer, and what can be imported substantially as-is?
- c.Write the "First Action" in one sentence. It must specify a responsible person, a deadline, and one success metric.
- ①Current diagnosis — which of the five problem types applies, with evidence from the report and from country data
- ②Two or three Korean institutions or instruments worth learning from — why these, with transferability assessment
- ③Transfer conditions and required modifications — what to change from the Korean original, and why
- ④Roadmap — what to do in years 1–2, 3–5, with the sequence justified
- ⑤Limits of this report — what cannot be learned from it, and where you would look to supplement
5 Further Reading
- Rajaram, A., Le, T.M., Biletska, N. & Brumby, J. (2010). A Diagnostic Framework for Assessing Public Investment Management. World Bank Policy Research Working Paper 5397. The standard eight-stage framework for diagnosing a country’s PIM system. Reading it alongside this report shows which stages Korea built well and which — performance feedback — it admits it did not.
- World Bank (2014). Public Investment Management: A Global Synthesis. Cross-country evidence on what does and does not transfer. A useful corrective to reading any single national case, including Korea’s, as a template.
- International Monetary Fund (2018). Public Investment Management Assessment (PIMA) — Framework and methodology. The IMF’s institutional-assessment tool. Maps cleanly onto the PFS / TPCM / RSF structure described here and gives a vocabulary for comparing your own country.
- Kim, J.-H. et al. (2011). Public-Private Partnership Infrastructure Projects: Case Studies from the Republic of Korea. Asian Development Bank. The detailed PPP record behind this report’s summary — including the Minimum Revenue Guarantee experience the report references but does not fully cost.
- Rhee, C.-Y. & Lee, H. (2007), on PPP and public investment crowding-out. The empirical study cited in footnote 15 of this report. Reading the source makes clear how strong the crowding-out finding is, and why relegating it to a footnote is itself a choice worth questioning.
- KDI Public and Private Infrastructure Investment Management Center (PIMAC) — General Guidelines for Preliminary Feasibility Studies. The actual methodology manual: how demand is forecast, how AHP weights are set by project type. Essential for anyone assessing whether the method, not just the institution, can be transferred.
- OECD (2012). Recommendation of the Council on Principles for Public Governance of Public-Private Partnerships. Frames PPP as a governance problem rather than a financing trick. Read against this report’s PPP chapter, it sharpens the question of what fiscal risk a guarantee actually moves and to whom.
This Companion is a learning aid produced for the Ministry of Strategy and Finance · KDI School of Public Policy and Management, KSP Knowledge Sharing Program — Public Investment Management Reform in Korea: Efforts for Enhancing Efficiency and Sustainability of Public Expenditure (2012). Use alongside the original report.