The purpose of this paper is to analyze project implementation units (PIUs) as a new organizational form of great importance in Latin American and Caribbean public administrations. Related to the execution of projects within the framework of credit operations with the participation of Multilateral Financial Institutions, PIUs adopt the modality of parallel public administrations, with norms, resources and capabilities that differ from those of regualr policy implementatin agencies. The paper describes the nature basic attributes, mandates and operative ways of PIUs. Two analytical constructs are used to explain the regularities in the design the projects htat they must implement: organizational isomorphism and policy transfer. The relationhsips of PIUs with the policy making level of governmetns and with the civil service are considered. The analysis tries to sustain the hyothesis that the very existence of PIUs, their effective role and the problems they confront are symptoms of the quality of the institutional framework and indicators of managerial capabilities. The fundaments for the creation of PIUs are two: a) their potential for an efficient project execution according to the terms of the loan contract, and b) the expected contribution for the establishement in public organizations of new ways to allocate and to manage resources, with higher effectiveness and accountability. As an institutional innovation, PIUs are thought to have impacts both onthe systems of rules and managerial practices and styles. The two purposes that PIUs must achieve generate multiple tensions and conflicts through the implementations process within the financing institutions and with the governmental organizations with which they must interact. Due to the demands of these two objectives, many inconsistencies arise, with contradictory claims on the participating agents and freqent incoherence in their behaviors. There is an extended consensus on these tensions as well as generealized doubts ont he long-term impacts of the capacity building contributions of PIUs. Issues related to the integrationof their operations with line agencies, in particular when the project implementation process reaches its conclusion, and to the effective transfer of capabilities, explicit incorporation to public sector reform strategies. In these strategies, more attentiton should be given to national and organizational capacities, to the quality of the public management institutinal framework of and to public service policies and regulations. The article discusses the character and scope of institutional analyses prepared during the phase of project design. It is also put into question the notion of institutional strengthening centered on the input side of formulation and implementation used to define and to make operational a regular comful approach should be to focus an organizational processes, on institutional and inter-organizational levels, with attention to the social and political dimensions of reform strategies