National Public Investment System of Mexico

Country
Investment Map Training Methodologies Projects Bank Legal Framework Processes Stakeholders Instruments Formulation Planning Cross-cutting Processes Budgeting Evaluation Cross-cutting Processes Ex-ante Evaluation Selection Execution Ex-post Evaluation Other Stakeholders Public Investment Policy Cycle Staturory Governing Body Federal Law on Budget and Responsibility of Mexico Investment Unit, Sub-secretariat of Expenditures, Ministry of Finance and Public Credit Entities and Agencies of the National Public Administration, State Governments and Municipalities Ministry of Finance and Public Credit Steering Financing Coordination Information Project Management Cycle

 

Stakeholders

Statutory Governing Body:

The National Public Investment System (SNIP) in México is run by the Secretariat of Finance and Public Credit (SHCP), through the different units that are part of it and participates in the different phases in the investment programs and projects’ life cycles and the public investment policy cycle. The Investment Unit of the SHCP controls the formulation and ex-post assessment process of investment programs and projects, and budget prioritization, selection and assigning for their execution. During the execution of the investment projects, the Investment Unit monitors the financial physical progress of the projects and prepares (monthly, two-monthly, quarterly and annual) reports that are submitted to Congress and the Intersecretarial Commission for Public Expenses, Financing and Withdrawal. Once the projects have been executed, it is also responsible for preparing the ex-post assessments of the investment projects (short, medium and long-term).

Related Entities:

The Intersecretarial Commission for Public Expenses, Financing and Withdrawal participates as the connected entity. Its main functions include program analysis of the projects prioritized by the Investment Unit to verify that they are in line with the national planning priorities and the priority criteria established in the Law on Federal Budget and Financial Responsibility. It also receives and analyzes quarterly physical-financial progress reports of the investment projects prepared by the Investment Unit. Another connected stakeholder is the Study Center for Preparation and Socioeconomic Assessment of Projects (CEPEP) which prepares the investment project formulation and ex-ante assessment methodologies in accordance with the established guidelines. The CEPEP also prepares and teaches the training programs to the public officials of the Federal Public Administration dependencies and entities.

Incorporated Entitiesntes:

Federal Public Administration (APF) dependencies and entities as well as State Governments and Municipalities formulate, assess, execute and operate investment projects. However, the APF reports the physical-financial progress of the Investment Unit, while the State Governments and Municipalities report on the resources executed in the projects financed with federal transfers to the SHCP.

 

Legal Framework

Public investment is mainly regulated by the Federal Law on Budget and Financial Responsibility and the Regulations of that law. This law establishes the processes and stakeholders who participate in the public investment planning, budgeting, execution, training, transparency, citizen participation and assessment functions in Mexico (including external financing and public-private participation projects). At the same time, it is supported for its execution by a series of guidelines that outline the specific procedures to be followed during each one of the stages of the projects’ life cycle. These guidelines are frequently modified to keep them in force in accordance with the country’s reality and needs. See the complete legal framework.

 

 

Methodologies

Through the CEPEP, the Secretariat of Finance and Public Credit develops and constantly updates methodological guides for the formulation and ex-ante assessment of public investment programs and projects. These methodologies can be consulted on the CEPEP website. Some methodologies are for general application and others consider specific topics to different sectors with important representativity in the country. Topics addressed are based upon the “Guidelines for cost-benefit analysis preparation and presentation of investment programs and projects", establishing the minimum compulsory requirements the investment projects must meet to be registered in the Investment Portfolio (Project Bank). In accordance with the dimensions of the projects, assessment indicators are to be included, such as the Net Present Value (NPV), Internal Return Rate (IRR), Immediate Production Rate (IPR), Equivalent Annual Cost (EAC) and Total Present Value Cost (PVC). Some projects also need to consider risk and environmental impact analysis. See the list of methodologies.

 

 

Public Investment Plans

In accordance with the effective legal regulations, the Secretariats are in charge of preparing their own planning documents, which are to be aligned with the priority goals of the National Development Plan (PND). In accordance with these stipulations, up to present the following sectoral programs have been published: 2019-2033 National Electricity System Development Program (PRODESEN), 2020-2024 Sectoral Communication and Transport Program, 2020-2024 Sectoral Energy Program, 2020-2024 Sectoral Environment and Natural Resource Program, 2020-2024 Sectoral Tourism Program and the 2020-2024 Istmo De Tehuantepec Development Program. These plans can be consulted on the Mexican government’s website for projects in Mexico.

 

 

Investment Project Bank

The Investment Unit manages the project bank called Investment Portfolio, where, by law, all investment projects (including those of external financing and PPA) have to be registered in their planning, assessment, execution and finalization stages. The investment portfolio is a system of restricted access for authorized officers only, however, there are platforms that feed on this system and make information available to the citizens on the investment projects, which are the following:

Cartera Pública: On this platform, files can be consulted of investment projects registered in the Investment Portfolio. The Public Portfolio contains general data of the project: name, portfolio key, total cost, current phase, general description, associated budget program, strategic indicator and expected benefits, georeferentiation, feasibility studies (according to the dimensions of each project, officer in charge of the project, finance calendar and assessment horizon, type of ex-ante assessment, profitability indicators, estimated maintenance and operation expenses, associated documents (assessments, opinions, etc.).

Obra Pública Abierta: Enables the geographical location of investment projects on a map, and access to all profiles. These profiles contain general information such as total investment amounts, amounts assigned per year, physical-financial progress of the project, estimated years of operation and operation and maintenance costs. This platform also enables citizens to draw up reports on inconsistencies between what has been reported on the platform and the real progress of the investment project.

Federative Entities: This platform, managed by the SHCP, shows the georeferenced location of the projects executed by the states and municipalities with federal financial contributions. The project files give information on total amounts, the finance calendar, the physical and financial progress of the project, and their georeferenced location. This platform currently contains registers of 160,000 investment projects.

 

 

Training

Through the CEPEP, the SHCP develops and teaches trainings to public officers in charge of the formulation, assessment, execution and operation of public investment projects and programs. On its website, the CEPEP gives detailed information on the courses. Its offer consists of a course-workshop on socioeconomic assessment of investment projects offered at the request of public entities, and the diploma course on socioeconomic assessment of investment projects (DESPI) taught each semester in coordination with the National Polytechnic Institute.

 

 

Project Management Cycle

The life cycle of the public investment projects starts in each of the APF’s entities and dependencies, as well as state governments and municipalities. Based on the identification of potential solutions to identified problems, the APF’s entities and dependencies formulate the investment programs and projects as per the effective methodologies and guidelines prepared by the Investment Unit in the CEPEP. Once these projects have been formulated, they are registered in the Investment Portfolio management by the Investment Unit where all public investment projects are registered and assessed. For projects to be registered each project needs to go through an ex-ante assessment. The characteristics of these assessments (level of complexity) will depend on the investment amount of each project.

The "Guidelines for the preparation and presentation of cost-benefit analysis of investment programs and projects” establish that projects of a value equal to or lower than 50 million Mexican pesos (MXN) must present a technical data sheet. Projects for projection infrastructure of between 50 and 500 million MXN must present a simplified cost-benefit analysis, and those over 500 million MXN a cost-benefit analysis. When the benefits of projects are not quantifiable or are difficult to be quantified, a simplified cost-efficiency analysis is to be submitted (investment projects of 50 to 500 million MXN) and a cost-efficiency analysis of projects over 500 million MXN. All the kinds of analysis must include in their cost projections the costs related to the operation, maintenance and other costs associated with the projects, in accordance with the their estimated duration.

The projects, with their respective ex-ante assessments are analyzed by the Investment Unit, and if they meet the methodological and regulatory requirements, they are submitted to a second analysis by the Intersectoral Commission for Public Expenses, Financing and Withdrawal (formed by representatives of the different State Secretariats). This commission selects and prioritizes the projects to be included into the Budget Bill on Expenses. These criteria mainly observe socioeconomic profitability, contribution to reducing extreme poverty, regional development, and concurrence with other investment programs and projects. After this analysis, projects can receive funding.

During the execution phase, the executory entities must monthly report on the physical-financial progress of the reports through the Investment Portfolio System. This system shares the reported information with the System for Public Portfolio and Open Public Works, on which the citizens can find data and documents related to the projects, as well as their physical-financial progress, or even report inconsistencies between what has been reported in the systems and the real execution of the projects. When the projects finish the execution stage, the entities responsible do the corresponding short-term (2 years) and medium-term (5 years) ex-post assessments in the Investment Unit. These assessments are publicly accessible and can be consulted on the website of the SHCP.

 

 

Public Investment Policy Cycle

Public investment planning in Mexico starts with the identification of the investment projects that may contribute to reaching the goals established in the PND. In accordance with the Federal Budget Law, in July at the latest, the entities and dependencies of the APF must register the investment projects (with their respective cost-benefit studies) in the Investment Portfolio System managed by the Public Investment Unit. Based on the budget limit established for public investment, the Investment Unit prepares a proposal with the projects and programs to be included in the expense budget and sends it to the Intersectoral Commission for Public Expense for approval in accordance with the selection and prioritization criteria established by the regulations in force.

Once the projects on the list have been approved by the Commission, the Investment Unit integrates it into the Expense Bill. As the main characteristics, the investment program projects the investment amounts at a multi-annual horizon of three years, broken down by the amounts that are expected to be invested annually and the total cost of the project (including operation and maintenance costs and other associated costs). The public investment budget also provides for projects of external finance and public-private participation. The expense budget project is sent to Congress for discussion and approval.

During the investment budget execution phase, the Public Investment Unit constantly monitors information the executory entities report in the Investment Portfolio System. This system is interrelated to other systems within the SHCP, and the information they produce is used by the Investment Unit to inform Congress and the Intersectoral Commission on the execution of the investment budget. Additionally, the Investment Unit annually informs on the results of public investment in the document “Public Accounts” which is sent to Congress and is available for consultation to the citizens. The execution of the investment budget and the physical-financial progress of the projects executed by the APG, the state governments, and municipalities can be consulted on the Budget Transparency platform.

 

Latest update: July 1, 2021