This article aims to understand why development organizations tend to report project success rather than failure which blocks learning from project problems. Drawing on the case of a World Bank forestry project in Andhra Pradesh, India, the article analyses different interlinked sites of project learning activities facilitated by monitoring & evaluation, and investigates the way in which project information is used for project reporting. The results point to multi-layered blockages to project learning from problems. These include formats of indicators and project visits; the criteria used for project fund disbursement and staff career promotion within recipient governments and development organizations; and asymmetrical power relations, collusion and collaboration among project actors. The article calls for a critical need to restructure the existing organizational incentive structures within recipient governments and development organizations to cultivate a culture of learning from problems.