Document of The World Bank Public Disclosure Authorized
Report No: 30742-LE
IMPLEMENTATION COMPLETION REPORT (SCL-40650 TF-29352)
ON A
LOAN
Public Disclosure Authorized IN THE AMOUNT OF US$42.00 MILLION
TO THE
LEBANESE REPUBLIC
FOR A
NATIONAL ROADS PROJECT Public Disclosure Authorized February 8, 2005 Public Disclosure Authorized CURRENCY EQUIVALENTS (Exchange Rate Effective January 5, 2005) Currency Unit = Lebanese Pound (LL) LL 1 = US$ 0.000667 US$ 1 = LL 1,500
FISCAL YEAR January 1 to December 31
ABBREVIATIONS AND ACRONYMS
ARS = Archiving and Retrieval System CDR = Council for Development and Reconstruction CEGP = Conseil Executif des Grands Projets COA = Court of Accounts DMS = Document Management System DOR = Directorate of Roads EDL = Electicite du Liban EIRR = Economic Internal Rate of Return EU = European Union GIS = Geographic Information System ICR = Implementation Completion Report LL = Lebanese Pound MPW = Ministry of Public Works MPWT = Ministry of Public Works and Transport NPV = Net Present Value NRP = National Roads Project PIU = Program Implementation Unit RDOR = Regional Directorates of Roads ROW = Rights-of-Way RRP = Road Rehabilitation Program RUCS = Road User Charges Study SAR = Staff Appraisal Report TA = Technical Assistance VOCs = Vehicle Operating Costs
Vice President: Christiaan J. Poortman Country Director Joseph P. Saba Sector Manager Hedi Larbi Task Team Leader/Task Manager: Mohammed D.F. Feghoul
LEBANON LB-NATIONAL ROADS
CONTENTS
Page No. 1. Project Data 1 2. Principal Performance Ratings 1 3. Assessment of Development Objective and Design, and of Quality at Entry 3 4. Achievement of Objective and Outputs 5 5. Major Factors Affecting Implementation and Outcome 10 6. Sustainability 11 7. Bank and Borrower Performance 12 8. Lessons Learned 15 9. Partner Comments 17 10. Additional Information 20 Annex 1. Key Performance Indicators/Log Frame Matrix 21 Annex 2. Project Costs and Financing 22 Annex 3. Economic Costs and Benefits 24 Annex 4. Bank Inputs 26 Annex 5. Ratings for Achievement of Objectives/Outputs of Components 29 Annex 6. Ratings of Bank and Borrower Performance 30 Annex 7. List of Supporting Documents 30 Annex 8. Borrower's Contribution to the ICR 31 Annex 9. Background Information on the Road Rehabilitation Component 41
Project ID: P038674 Project Name: LB-NATIONAL ROADS Team Leader: Mohammed D. E. Feghoul TL Unit: MNSIF ICR Type: Core ICR Report Date: March 8, 2005
1. Project Data Name: LB-NATIONAL ROADS L/C/TF Number: SCL-40650; TF-29352 Country/Department: LEBANESE REPUBLIC Region: Middle East and North Africa Region Sector/subsector: Roads and highways (91%); Central government administration (9%) Theme: Public expenditure, financial management and procurement (P); Infrastructure services for private sector development (P)
KEY DATES Original Revised/Actual PCD: 08/05/1994 Effective: 11/11/1996 04/02/1997 Appraisal: 01/12/1996 MTR: 06/01/2000 06/11/2000 Approval: 07/11/1996 Closing: 06/30/2003 09/30/2004
Borrower/Implementing Agency: GOVERNMENT/MINISTRY OF PUBLIC WORKS Other Partners:
STAFF Current At Appraisal Vice President: Christiaan J. Poortman Kemal Dervis Country Director: Joseph P. Saba Inder K. Sud Sector Manager: Hedi Larbi Alastair J. McKechnie Team Leader at ICR: Mohammed D. E. Feghoul George Tharakan ICR Primary Author: Jim Reichert
2. Principal Performance Ratings
(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability: L Institutional Development Impact: M Bank Performance: S Borrower Performance: U
QAG (if available) ICR Quality at Entry: S Project at Risk at Any Time: Yes 3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective:
The original objectives of the National Roads Project (NRP), as stated in the Staff Appraisal Report (SAR), and which were consistent with the CAS, were to: (a) implement a pilot road rehabilitation program in support of an overall Road Rehabilitation Program; (b) strengthen institutional capacity for maintenance and development of the national road network; and (c) reduce reliance on the Government's budget by requiring users to pay for the provision of roads.
Lebanon’s road network is the main mode of internal transport throughout the country for passengers and goods. The country has only one civilian airport at Beirut, and no functioning rail services or rivers of significant size. Roads also serve as the main transportation link with the hinterland and neighboring countries. During the years of conflict between 1975 and 1990, the road network suffered from neglect, which resulted in a large backlog of maintenance. As such, the NRP’s physical objective (a) was appropriate, timely and consistent with Government needs and objectives. The institutional development objective (b) was also responsive to Borrower needs, especially as it sought to rebuild capacity lost in the sector during the prolonged period of conflict through the transfer of modern technology and methods for managing road networks. While the financial objective (c) complemented objectives (a) and (b), it was far more complex, and ultimately proved too ambitious and not realistic given the range of policy and institutional changes it required and the Government’s limited tax revenue, 18.5 percent of which was derived from fuel taxes in 2003.
3.2 Revised Objective: While the project’s development objectives were not formally revised, they were retrofitted in 1997 as part of the Bankwide initiative to introduce a new system of project documentation (the Project Document System). Under this exercise, the project team was asked to better distinguish between development objectives and project outputs utilizing a new template and more refined definitions of objectives, outcomes, and outputs.
As a result of this exercise, the three original objectives became project outputs, while the development objective sought:
improved capacity of the road administration to undertake the rehabilitation of the main road network.
However, since the legal documents were not amended, this Implementation Completion Report (ICR) should be read utilizing the original objectives.
3.3 Original Components:
3.3.1 As originally approved, the Project included three components that were designed to meet the project's objectives: Road Rehabilitation Pilot Program (US$61.5 million): Rehabilitate about 400 km of international, primary and secondary roads distributed among the country’s four Governorates.
- 2 - Technical Assistance for Program Implementation and Institutional Development (US$4.8 million): To support a Program Implementation Unit (PIU), carry out a Road User Charges Study, assist in the implementation of the Statement of Road Sector Policy, and strengthen the capacity of the Directorate of Roads (DOR) to develop and implement the Government’s Road Rehabilitation Program. Equipment for Road Administration and Laboratory (US$1.5 million): Procurement of laboratory, traffic counting and axle-load control equipment, as well as vehicles, computers and office equipment.
3.4 Revised Components:
At the time of effectiveness, the Government informed the Bank that the European Union (EU) was preparing an Investment Planning Project, which had a US$5.40 million grant component to provide technical assistance (TA) to the road sector. While the scope of the NRP had been finalized and was in place, the EU had not specified how its funds would be used to support the sector. Since it was financially prudent for the Government to make use of the grant, it was agreed that the EU monies would be used to finance technical assistance to strengthen the capacity of the DOR, but that the services would be carried out as a integral part of the NRP, according to terms of reference prepared in consultation with the Bank, and under supervision of the Project Team. This also freed Bank funds to finance works.
A second revision occurred as a result of the mid-term review in June 2000. Based on the experience of the first packages of road works, the design standards turned out to be difficult to apply, given conditions on the ground. The project team realized that the full 400 km of roads could not be completed within the remaining budget, and that initial standards would need to be modified for subsequent packages. However, reaching agreement with working counterparts on refined standards that were more reflective of local conditions took nearly a year to conclude. During the second half of 2001, an optimization exercise was undertaken, which revisited the designs of the ten roads remaining to be rehabilitated in an effort to contain expenditures using more cost-effective standards. In 2003, the Bank Team and counterparts concluded that due to time constraints, only a total of 275 km of roads, or about 70 percent of the original target of 400 km, could realistically be rehabilitated before the project's closing date.
The Legal Agreement was not formally amended for either revision.
3.5 Quality at Entry:
Quality at Entry is rated as satisfactory.
Although measures of quality at entry have evolved substantially since the NRP was prepared, the ratings for project objectives and outcomes are made using standards prevailing at the time of this ICR, and not those at the time of Loan approval.
The concept of the NRP was appropriate because: (i) of the critical role of the national road network played in the country’s economic and social development; (ii) nearly two-thirds of the road network required rehabilitation at the time of the NRP’s preparation; and (iii) expenditures on roads were the largest component of the Government’s budget, after civil service salaries. A major goal of the project was to advance reforms to achieve greater efficiencies in the road sector. These reforms, set out in the Statement of Road Sector Policy, ultimately did not receive authorization during the project's life. However, the reforms would have had significant and potentially long-term fiscal impacts for the country. The Bank
- 3 - team recognized the risks associated with the proposed reforms, but included them in the NRP's design, which was bold and forward looking. At the time of project approval, the Government was willing to give its support, but this never materialized. Although the reforms were not enacted, their inclusion in the project’s design was warranted.
At the time of project launch, anticipated risks were associated with weak implementation capacity at the DOR, and the need to secure financing for the Government’s overall Road Rehabilitation Program (RRP). The first was significant, and would likely have derailed the project without the skills and experience that were made available through the PIU. The need to secure financing for the RRP was also accurately identified, but not sufficiently mitigated, as the establishment of a Road Fund and the imposition of road user charges never materialized.
While the Bank team could not foresee all of the problems and modifications that would be required as a result of the challenging features of the local terrain where rehabilitative works were undertaken (topography, condition of utility networks, limited space), they did build in a practical measure for addressing potential shortcomings. By designing the NRP’s road component as a pilot program, some lessons learned during implementation of the first set of works were applied to subsequent road packages.
During project preparation, it was agreed that procurement would be undertaken according to Bank guidelines, and a legal opinion and assurances from the Ministry of Justice that procurement under the NRP would be carried out according to Bank procedures were obtained. However, the Court of Accounts (COA) refused to allow the Ministry of Public Works (MPW) to work in accordance with the Loan Agreement, as backed by the legal opinion. The COA was adamant that works be procured according to Lebanese procurement laws, and was unwilling to relinquish its ex ante control over contracts. This resulted in some substantial delays. It is worth noting that the NRP was the first project to be implemented by a line ministry in Lebanon after the end of hostilities. As such, the Bank team could have done more to better understand the local process for procuring works and services, and to ensure that the COA would permit the MPW to abide by all provisions in the Loan Agreement.
On the other hand, an effective and functional financial management system to track, monitor and record project-related expenditures was established prior to disbursements. A qualified firm was hired to set-up the system, which included a software program with more capacity than what is typically required to ensure proper accounting and financial control of World Bank projects. This was because the PIU wanted to lay the groundwork for managing the Government's larger Road Rehabilitation Program at the conclusion of the NRP. A qualified financial accountant was hired and remained with the project throughout its implementation. An auditing firm was hired and in place immediately after project launch.
In terms of safeguards, the NRP was rated as a Category B project, since all works were to take place within existing rights-of-way (ROW) and there would not be any resettlement of inhabitants or economic activities. Only minor expropriations were anticipated. As a dated covenant, an environmental unit was to be established within the PIU, and a full-time Environmental Specialist appointed to monitor environmental impacts of the project within six months of the expected date of effectiveness. Specific guidelines and measures for mitigating potentially adverse environmental impacts were also developed. The environmental preparations were thorough, and during an audit of the project, senior environmental staff from the Bank praised it as best practice.
However, contrary to expectations at the time of project approval, expropriation of land for minor widening and geometric adjustment for safety did entail some cases of involuntary resettlement, and some issues of compensation did arise. These issues were the subject of a very detailed inventory and social assessment,
- 4 - which did not reveal any major social issues or risks. As part of the assessment, an ex-post resettlement action plan was developed after a census was completed and specific guidelines for compensating owners had been developed. Two Expropriation Officers were added as staff at the PIU to oversee and facilitate the resolution of expropriation issues. Overall, the residential or economic disturbances were generally compensated in accordance with Lebanese law and procedures, and in compliance with OD 4.30. The process went reasonably well, with the exception of three areas: (a) greater public consultation and information should have been provided; (b) a small number of possible anomalies were noted in the expropriation process; and (c) there was some inconsistency between Lebanese Law and Bank safeguard policies over the expropriation of up to 25 percent of a plot's original area without compensation for the land itself. Given that the sizes of the ROW that were expropriated were limited, none of these issues appear to have had a significant impact on those giving up property. However, the early appointment of expropriation officers to the PIU might have helped to identify some of these difficulties sooner.
4. Achievement of Objective and Outputs 4.1 Outcome/achievement of objective:
It is important to note that the NRP was designed to be responsive to the post-conflict conditions that prevailed in Lebanon at the time of preparation. The country had only recently emerged from a prolonged civil war, and the NRP's focus was on reconstruction activities, including rehabilitating roads and re-establishing capacity to administer Lebanon's network of roads. During the course of implementation, Lebanon transitioned from a post-conflict reconstruction mode to one that focussed on more sustainable development. The project's initiatives on reforms, operations and maintenance, institutional development, and financial self-sufficiency emphasized a development operation with higher priority placed on developmental aspects. However, the Government continued to implement the project in a reconstructive mode with an emphasis on physical road rehabilitation. At that juncture, project priorities should have been reassessed and the continued validity of NRP objectives and components reconfirmed, or adjusted to fit changing priorities. Had the project been restructured, it may have benefitted from a scaling down of the institutional objectives. In evaluating the project, this critical transition from post-conflict rehabilitation to development should be kept in mind, as it might help to put some of the project’s problems into perspective, and provide additional insight into Bank and Borrower performance.
The NRP’s overall outcome is rated as satisfactory.
The objectives of the NRP were sound and well formulated (since the NRP is being evaluated based on its original objectives, please refer to Section 4.2 for additional details). Although the number of kilometers of road rehabilitated under the project’s pilot program was reduced, the NRP’s physical objective was substantially achieved. For those roads that were rehabilitated, economic rates of return ranged from 16 percent to 167 percent. The institutional development objectives were also largely attained through continued exposure to new methodologies and systems for preparing road maintenance programs, and reactivation of the Road Laboratory through the introduction of specialized equipment to monitor road conditions and count traffic. However, the sectoral reforms proposed were overly optimistic, and the project was not able to deliver its objective of reducing reliance on the Government’s budget for road maintenance activities. To do so would have required substantially wider political support than was demonstrated throughout implementation.
4.2 Outputs by components:
Component A - Road Rehabilitation Pilot Program. The output of the this component is rated satisfactory.
- 5 - Although the total number of kilometers of roads rehabilitated was less than envisaged, the output of this component should be viewed as a success, since significant early obstacles were overcome, and this part of the project was designed as a pilot program to permit “learning by doing.” It promoted a new way of planning, preparing and procuring road projects, and afforded a valuable learning opportunity. For the first time, the DOR was exposed to efficient and cost effective procurement practices, and entered into contracts with private parties to undertake larger road works that were based on detailed designs and subjected to close supervision. Throughout implementation, the DOR developed a number of new skills, including methods for assessing the environmental and social aspects of a road project, conducting expropriations, and implementing proactive and early intervention in supervising works. As a part of the learning process, implementation manuals defining steps for preparing and implementing road projects were designed. The development of these manuals benefited from the works on the ground and the complications encountered early on. Additionally, subsequent road packages under the NRP successfully captured lessons learned from the first projects, and incorporated appropriate modifications in their designs. Finally, the overall quality of roads rehabilitated under the pilot program was highly satisfactory.
Please refer to Annex 9 for background information on the output of this component.
Component B.1 - Technical Assistance for Project Implementation. The output of this component is rated satisfactory.
Support was provided to establish a PIU within the MPW to coordinate and implement all NRP-related activities. Responsibilities included planning and programming road works under the pilot program, carrying out a detailed road user charges study, overseeing the production of other necessary studies and evaluations, and acquiring needed equipment. The PIU was also charged with undertaking all procurement activities, monitoring outputs, and producing regular progress reports.
The PIU was fully staffed throughout implementation and generally fulfilled its responsibilities. There were key changes at the Director position, which caused some disruption and affected the quality of work. Although the PIU should have been more proactive in anticipating and addressing implementation problems, it greatly facilitated implementation of the NRP.
Component B.2 - Road User Charges Study. The output of this component is rated satisfactory.
The purpose of the Road User Charges Study (RUCS) was to support the development of a road user charges system for Lebanon, which was within the framework of its Statement of Road Sector Policy. The output of the RUCS was to form the basis for altering the manner in which road maintenance and rehabilitation in Lebanon was financed. The RUCS did deliver a good analysis of prevailing revenue instruments, an adequate assessment of maintenance costs, and a detailed profile of traffic by vehicle category. However, while the RUCS was successfully carried out and provided much useful information, the study would have been more practical if it had addressed the need for a Road Fund and explained the manner in which such a Fund would have worked in the Lebanese context. More specific suggestions about how the existing system of road user charges might be improved to support a Road Fund would also have helped to build support for the proposed changes.
Component B.3 - Technical Assistance to Implement the Statement of Road Sector Policy. The output of this component is rated unsatisfactory.
The Government’s Statement of Road Sector Policy, which was approved by the Council of Ministers on
- 6 - May 9, 1996, contained five objectives, including to: (a) develop the road network in ways that promote regional and socially balanced development of the country; (b) preserve the existing road network; (c) reduce the road sector's reliance on the Government's recurrent budget; (d) strengthen institutional capacity in the road sector; and (e) develop capacity of the road sector to mobilize resources to finance road improvements. Under the NRP, objectives (a) and (b) were fully achieved, since roads were rehabilitated within each of the country’s four muhafazats, an act which also served to safeguard the existing network. While technologies and tools to effectively plan and manage road programs were deployed and made functional, more needs to be done to mainstream the use of these new systems to ensure that they are fully utilized as planned, and hence, objective (d) was only partially attained. However, the two objectives that formed the core of the Government’s strategy for sector reform, and which would have had a profound impact on road financing, (c) and (e), were not attained.
At the completion of the RUCS, the Government, with support from the NRP, was to have prepared draft legislation to implement road user charges and establish the institutional changes necessary to create a Road Fund. Subject to the approval of Parliament, revenues from users, in the form of surcharges on motor fuels and vehicle license fees, were to be deposited into the Road Fund. Proceeds would have been used solely to rehabilitate, improve and maintain the road network. The proportions to be allocated to those entities with responsibility for managing road assets, as well as for each type of classified road, were to be determined as part of the RUCS.
By the mid-term review, it was evident that resistance to the idea of a Road Fund would necessitate a more gradual approach. To accommodate a less aggressive path, it was proposed that rather than seek to establish a full-fledged Road Fund, DOR’s annual budget allocations should be deposited into a temporary Treasury Special Account at the Ministry of Finance. The MPW would appoint an Advisory Committee to manage the funds, and all work financed through the Special Account would be subject to selective technical and financial audits to show that the work had actually been done and carried out according to specification. It was thought that this would afford an opportunity for the system to prove itself, however, even the more gradual approach was not fully supported by the DOR, and the measure failed.
The initiative to establish a Road Fund with dedicated revenues generated from users was not successful, primarily because of political resistance and an inability to overcome long-established practices. Because of the Government’s limited revenue base, which is largely dependent on gasoline taxes and customs duties, there was a general reluctance to earmark those funds for special purposes. In addition, there was fear that establishing such an agreement for road works would create a precedence for other ministries to ask for similar arrangements. While it was prudent and forward looking to include this initiative as part of the NRP, it was overly ambitious, especially in light of the Government’s limited fiscal base and complex political environment that has, and continues to, pervade the country. In the end, it appears that the reforms proposed under the NRP were taken as far as they could be. At the same time, there is a need for the Government to provide reliable financing to fund road maintenance needs, which continue to grow. Although a Road Fund was never established under the NRP, the knowledge and tools for doing so were made available to the DOR.
Component B.4 - Technical Assistance for Institutional Development. The output of this component is rated satisfactory.
By the end of the conflict, institutional capacity to administer the country’s road network had been severely depleted, both in terms of technological expertise and managerial competence. By mid-1995, more than half of the DOR’s approximately 500 authorized positions were still vacant. This loss of capacity to plan and implement large road programs combined with a chronic lack of funding had reduced DOR’s role to
- 7 - routine (patching) and limited periodic maintenance. While helping to address the backlog of road maintenance was important, the NRP sought to strengthen the DOR’s road administration to develop and implement an effective strategy for managing Lebanon’s road infrastructure. It was felt that this could best be achieved by introducing a new manner of planning and programming road maintenance activities that involved contemporary techniques in data collection and current methods for identifying, evaluating, and prioritizing road projects.
Several initiatives were carried out under this component, the most promising of which was a new procurement process. Prior to the NRP, money for works was appropriated annually to the DOR’s budget, and road maintenance was typically procured using “on-request” contracts. These contracts, which were based on agreed unit prices, covered a designated area (part, or all of a district), and had a duration of one year. Under this system, where works were not predefined, competition was limited and questions were raised about the nature of the work (e.g., was a particular retaining wall really needed?), its quality, and whether the work was undertaken according to specification. The on-request system allowed resources to be directed from the country’s most heavily used roads to local and internal roads. Under the NRP, the on-request procurement process was replaced with a system of fully specified and appropriately packaged road works that benefit from increased competition and more rigorous quality control. To facilitate this process, a contract management system was developed and is presently in use. However, given the pressures to divert funds to local roads, much remains to be done to ensure that the system will be fully deployed.
Numerous other key activities to strengthen the institutional capacity of the MPW to manage the road network in a more effective manner in terms of planning, budgeting, programming, designing, constructing, supervising, maintaining and conducting environmental assessments, were achieved. Over a three-year period, and as detailed in the PAD, the EU Grant was used to finance a number of tasks, including: (i) producing detailed technical guidelines for implementing road programs, which involve technical procedures for assessing the condition of road assets - traffic counts, roughness surveys, and information technology procedures - procedures can be accessed through a website, which has links to related additional information; and (ii) developing a GIS-based (Geographical Information System) road management system, including hardware, software, and other necessary equipment. The system has the capacity to produce detailed reports on network conditions, including traffic counts, road roughness, road geometrics and compliance with axle load limits. It permits updates and revisions to existing road maintenance strategies, enables the production of multi-year rehabilitation programs, and develops prioritized lists of road works. At project close, the system was being used to prepare rehabilitation works under the RRP.
Of note was the development of a Document Management System, which automates the document workflow process, including the approval process of contracts from the bid stage through completion, and an Archiving and Retrieval System, which is used to index and archive road expropriation plans, files and compensation decisions. Both systems facilitate transparency and the storage and retrieval of important documents and records.
Component C - Equipment for Road Administration and Laboratory. The output of this component is rated satisfactory.
To properly prepare annual road maintenance and development programs, and to perform the tests required to assess the quality of works achieved or to be executed, a well-equipped laboratory with key pieces of equipment and properly trained staff are necessary. To reinforce and complement the new techniques acquired by the DOR, equipment and tools were made available to the road laboratory within the MPW to strengthen its ability to plan, program and prioritize road maintenance programs (database system,
- 8 - software, HDM). Equipment provided under the NRP included: (i) machines to measure road roughness; (ii) falling weight deflectometer; (iii) traffic counting equipment; (iv) skid resistance machinery; and (v) weighing scales and mobile weigh bridges. The Road Lab is utilized to test core road samples for compliance with prevailing standards, and, from time to time, the equipment is used to survey road conditions and update key databases. A success was the development and adoption of new specifications for an improved asphalt mix, which is being used today.
Standard office equipment, including computers, software and fax machines, were also purchased for the PIU and the DOR.
4.3 Net Present Value/Economic rate of return:
During project appraisal, economic evaluations were carried out on the initial road packages (1, 1A, 2, 2A, 3 and 4A), which constituted 37.5 percent of the works component in terms of kilometers to be rehabilitated. At the project's close, three batches of works consisting of fourteen packages of roads had been completed. No economic evaluation was conducted for the Technical Assistance component, which comprised 6.5 percent of total project cost.
Ex-post economic evaluations were carried out on the packages initially proposed, as well as for all road works completed under the project. The following table provides lengths, costs, net present values (NPVs) and economic internal rates of return (EIRRs) for all road works. Comparisons of estimated and actual figures for the initial road packages are also provided. Underlying assumptions about capital costs, traffic counts, growth rates in traffic, and vehicle operating costs are provided in Annex 3.
Estimated Actual Est. Cost Actual Cost NPV NPV EIRR 1 2 Package / Road Length Length at SAR at ICR at SAR / at ICR at ICR (at SAR) (at ICR) (US$ mil.) (US$ mil.) (US$ mil.) (US$ mil.) (%) 1 Tripoli-Seer (PRI004) 29.39 31.50 4.47 8.10 44.50 19.72 110.2 1A Seer-Sfeereh (PRI004A) 10.17 10.00 1.55 5.12 5.99 1.78 21.0 2 Rayfoun-Bikfaya (PRI1023) 23.50 17.38 0.20 0.66 6.52 2.01 101.1 2A Bikfaya-Tarchich (PRI025) 27.05 24.90 4.05 7.67 27.10 6.25 63.3 3 Sour-Jwaya-Tebnine (PRI061) 30.99 27.80 4.56 5.76 15.40 6.22 33.9 4 Zebdol-Saghbine (PRI055) 25.30 5.03 3.45 25.6 4A Masnaa-Rachaya (INT005) 29.00 28.50 4.37 6.74 27.28 0.80 15.3 5 Al Abdeh-Halba (PRI001) 9.86 0.87 8.25 119.6 5A Al Abdeh-Beit Ayoub-Fneideq (PRI003A) 23.24 6.75 10.72 132.3 7 Aaley-Rechmaya (PRI049) 12.00 0.60 0.68 29.7 7A Jamhour-Bsous-Souk El Gharb (SEC037) 8.50 1.38 2.38 68.6 8 Wadi Ez Zeini-Chheem (PRI054) 14.10 3.58 3.70 57.9 9 Saida-Roum-Jezzine (PRI055) 10.00 1.52 6.88 157.8 13 Al Qasr-Hermel (SEC081) 13.30 1.75 3.50 166.3 Totals: 256.38 55.53 NOTES: /1 Packages 6, 6A, 10, 11 and 12 were planned, but not executed. /2 Using a discount rate of 12 percent.
The lower actual NPVs were due, primarily, to cost overruns, which are attributable to a number of challenging conditions at the project sites. Another contributing factor was the actual average growth rate for traffic (two percent), which was about half the rate used in the economic evaluation during appraisal (four percent from 1995 to 2004, then three percent thereafter).
4.4 Financial rate of return:
- 9 - Not applicable.
4.5 Institutional development impact:
The NRP's institutional impact is rated as moderate.
While the majority of NRP financing was spent on road rehabilitation, it was the potential for effecting meaningful change to the structure and operations of the DOR that was considered one of the project’s most important components. As a result of the NRP, the DOR’s ability to administer and maintain the country’s road network has been improved. However, while the capacity at the central road department was enhanced, the extent to which this knowledge filtered down to the regional and district levels was insufficient.
Prior to the project, the Government emphasized new road construction, rather than proper road maintenance, which amounted to nothing more than the application of a thin overlay, regardless of residual pavement strength. Through technical assistance under the NRP, an appreciation of the importance of preserving existing roads, and a thorough knowledge of the steps needed to prepare and undertake all types of road maintenance, as well as the level of effort that goes into developing rehabilitation programs, was conveyed to key DOR staff. A more transparent system of procurement was introduced, and there is new respect of the need for careful planning and preparation using up-to-date techniques. Vital equipment and the technical skills to use that equipment have also been placed in the hands of the DOR. Overall, the NRP had a positive impact on the DOR’s ability to more effectively use its human and financial resources.
5. Major Factors Affecting Implementation and Outcome 5.1 Factors outside the control of government or implementing agency:
One factor that was largely outside of the Government’s control was the increase in the price of oil during project implementation. This contributed to an increase in the price of bitumen, which slightly elevated the project's overall cost.
5.2 Factors generally subject to government control:
The lack of a diverse revenue base and the general reluctance to earmark funds for special purposes, which virtually precluded any attempt to dedicate a portion of those funds to establish a Road Fund were factors generally within Government control. With Parliament controlling the structure of the road budget and allocation of monies to each district, which varied from year-to-year, the DOR’s ability to efficiently plan maintenance activities and manage the road network was hindered.
The shortage of counterpart funds between 2001 and 2003 had an adverse impact on the progress of works, and was a contributing factor in the need to extend the NRP’s closing date, once at the beginning of 2002, and again in early 2004. Not only did this have a negative impact on the first packages of works, it also delayed signing of contracts for subsequent road works.
Coordination among the owners of the various utility networks was difficult, and their non-responsive attitude during road works was troublesome. As part of their modus operandi, and prior to authorizing any works, the DOR would approach utility owners (water, sewerage, electricity and telephone) and inquire about their plans for stretches of road that were scheduled for rehabilitation. In the end, the DOR was often obliged to undertake road works without the benefit of input or cost sharing from these key entities.
- 10 - The value of the changes that were proposed as part of the Statement of Road Sector Policy, especially the establishment of a dedicated Road Fund and the imposition of user charges to finance road maintenance and rehabilitation activities, were not actively promoted. The Government could have been more proactive in raising awareness of the benefits the proposed changes would bring, and in building consensus for the reforms. This was done during preparation, but should have been repeated at the project’s mid-term, when it became known that a more gradual approach was needed.
5.3 Factors generally subject to implementing agency control:
Early on, staff at the DOR felt that they were being bypassed by their more qualified colleagues at the PIU, who were paid higher salaries. As a result, DOR staff feared for their jobs, which created undue tension, generated resistance, and complicated implementation. It wasn’t until late in the project’s second year, after work had advanced to the point where the NRP’s work program necessitated daily interaction with DOR staff, that things slowly improved. The PIU could have done more to lessen tensions and gain quicker acceptance though more regular interaction with DOR staff to explain the NRP’s objectives and components, as well as the roles of the key entities involved.
5.4 Costs and financing:
Total project cost at appraisal was estimated to be US$67.80 million, including US$12.90 million for physical and price contingencies. An additional amount of US$7.20 million was set aside by the Government to expropriate needed ROWs. At the time of project closing, total actual costs amounted to US$73.17 million. To rehabilitate 256 km of road, 1,047,532 square meters of property were appropriated at a final cost of around US$14.70 million. Of this amount, US$3.20 million was financed by the Government to acquire property for works that will be executed after the project’s closing. Actual costs to support the PIU and build the DOR's capacity increased substantially over amounts estimated at appraisal. This was due to the inclusion of design and supervision costs as support to the PIU, and the need to hire more staff for a longer period than originally anticipated to build DOR's capacity. Extending the project twice also contributed to the elevated costs. About US$1.04 million of the Bank Loan was cancelled, but this did not have an impact on the project’s outcome.
6. Sustainability 6.1 Rationale for sustainability rating:
Overall, the prospects for sustaining the achievements generated under the project are good, and as such, the sustainability rating is “likely.”
Sustaining the improvements to roads that were rehabilitated under the project will depend upon regular and adequate funding for maintenance activities. The delays in launching the NRP’s initial package of road works, which resulted in the need to reconstruct, rather than resurface roads, was a strong demonstration effect of the value of regularly undertaking routine and periodic maintenance. It is felt that this will serve as incentive for financing maintenance activities in the future.
The procurement process used under the NRP, whereby the MPW is not obliged to seek the COA’s ex ante approval, will be maintained after the project closes on September 30, 2004. As a result, many of the new systems, particularly the Document Management System and Archiving and Retrieval System, are being used as a regular part of the DOR’s work, and the skills required to operate this technology have been transferred to staff and technicians other than those involved in the NRP.
- 11 - On the institutional side, the full array of methodologies, equipment and skills that were attained under the NRP were successfully put to use during three distinct periods: (i) at project launch, to validate roads targeted for rehabilitation; (ii) during the optimization exercise, when it became apparent that not all of the works as designed could be completed (this proved to be highly beneficial in developing subsequent road packages); and (iii) presently, as the DOR goes about preparing the RRP, which will last the better part of the next ten years. During implementation of the RRP, the DOR will need to continually utilize these tools to assess and reassess road conditions, re-evaluate strategies, and revalidate road priorities. Such regular use of acquired abilities bodes well for sustaining the gains achieved under the NRP.
The methodologies and procedures that were devised under the NRP for implementing road programs have been safeguarded in the form of technical guidelines that are available at the DOR. These documents provide an inventory of the country’s road assets, guidance on how to undertake road construction according to Lebanese standards, and step-by-step instructions for assessing road conditions, preparing programs of rehabilitation, and carrying out associated environmental assessments and expropriations. These guidelines can also be accessed through an internal website.
Although reliance on the Government’s budget to finance road maintenance activities was not reduced under the NRP, the DOR was exposed to the knowledge and tools necessary to establish a Road Fund. It is likely that the persistent need to adequately maintain the country’s road network, coupled with fiscal constraints, will compel the Government to designate a more reliable source of funding for road maintenance, and many of the techniques that were introduced under the NRP may prove useful.
6.2 Transition arrangement to regular operations:
There are few transitional arrangements necessary for the road works, which have been satisfactorily completed. The maintenance of these assets is within the capacity and experience of DOR staff.
Arrangements for mainstreaming the systems, equipment and tools obtained under the NRP, and for preserving gains in institutional capacity at the DOR was secured with a December 12, 2004 Cabinet Decision, which formally integrated the PIU as a permanent unit of the DOR. This will ensure that the PIU maintains its involvement in preparing the RRP, which will provide additional opportunities to further disseminate the valuable knowledge and experience acquired under the NRP. Integration of the PIU will also contribute to ever increasing amounts of works under defined contracts, which should force greater accountability and generate savings.
7. Bank and Borrower Performance Bank 7.1 Lending:
The Bank’s performance during preparation was satisfactory.
The Bank team preparing the project properly identified risks and designed an operation that appropriately promoted the notion of “learning by doing.” This was especially important at the time of preparation, given that the country had recently emerged from 17 years of conflict, and building in flexibility to respond to sensitive political and economic conditions on the ground was indispensable.
Significant effort was made to expose the Government to international best practice in establishing and administering Road Funds. This included the participation of leading international experts in a two-day
- 12 - workshop that was held in Beirut.
The Bank team is to be commended for the financial management system that was established at the PIU. It is an example of best practice.
Although procurement arrangements had been agreed with the implementing agency during preparation and a legal opinion obtained, the Court of Accounts refused to allow the Ministry of Public Works to work in accordance with the Loan Agreement, which resulted in some substantial delays during implementation. Because the NRP was the first project to be implemented by a line ministry ex-post conflict, the Bank team could have done more during preparation to ensure that the Court of Accounts would abide by the procurement arrangements detailed in the Loan Agreement.
As originally designed, the project was not to have required any expropriation of land, however, the acquisition of property did become necessary. Given that many of the roads targeted for rehabilitation under the NRP passed through built-up areas, the Bank team might have better anticipated potential problems by promoting public consultations with local communities as part of project preparation (public consultations did take place, but only after designs had been completed).
7.2 Supervision:
The Bank’s performance during the supervision period was marginally satisfactory.
During implementation, the Bank team provided consistently good advice and guidance to Government counterparts. This is substantiated by the biannual supervision missions, which were regularly undertaken, and the comprehensive Aide Mémoires that were produced, which consistently described the situation that prevailed on the ground at the time of each mission, adequately reported on implementation progress, and detailed key actions to be taken.
It is evident that problems, once identified, were proactively addressed, and recommendations followed-up, as per the following examples: · After the performance of the supervision consultants and contractors had continued to deteriorate, Bank missions advocated the importance of: (i) setting monitoring and performance indicators to evaluate the progress and quality of contractors’ work; (ii) following revised design modifications to avoid variation orders; and (iii) improving the content of progress reports by focusing on trouble shooting and issues requiring immediate attention. While it took some time and the addition of four engineers to effect the proposed changes, there was a marked improvement in the quality of reports and the performance of consultants and contractors once the measures were executed. · When it became apparent that numerous contractors were simultaneously launching works on several sections, which caused serious traffic disruptions and hazards, the Bank team successfully lobbied for the completion of works on opened road sections prior to commencing further works on other sections. · Once the first phase of road projects had been completed and it was apparent that the full 400 km of proposed roads could not be rehabilitated, a major design optimization exercise was undertaken. Drawing on lessons learned from the first road package, this resulted in changes to designs that had not been practical, and the satisfactory completion of two-thirds of the works component. Had this task not been undertaken, it is likely that far fewer roads would have been
- 13 - rehabilitated. · As the performance of the PIU continued to deteriorate over the better part of a year, recommendations were made to evaluate the performance of each member. This resulted in the release of three members, including the Team Leader, who had been under performing for some time, and a more competent and proactive PIU.
On the negative side, the Bank team should have recognized the need to formally restructure the project at its mid-term. The NRP would have benefited from an assessment of the Government’s commitment to the reforms proposed in the Statement of Road Sector Policy, and their willingness to consider a more gradual approach. The Bank team also could have supported the PIU to overcome resistance among key Government officials to the notion of establishing a Road Fund, especially after the mid-term review.
7.3 Overall Bank performance:
Based on the Bank’s performance during preparation and implementation, its overall performance is rated marginally satisfactory.
By the project’s mid-term, the Bank should have recognized that the reforms sought under the project were too ambitious, and the project should have been restructured. The Bank should have ascertained the Government’s commitment to move forward with scaled down and more realistic institutional development objectives, such as a reorganization of the Directorate of Roads, instead of the initial objective of establishing a Road Fund.
Borrower 7.4 Preparation:
The Borrower’s performance during preparation was highly satisfactory.
Throughout preparation, the MPW was fully committed to the project and played a positive and important role in its development. Government counterparts were convinced of the need for the NRP and were very responsive to needs and requirements. They viewed the Bank’s support with pride, and saw Bank involvement as a vote of confidence in their abilities to develop and implement an overall road rehabilitation program. This resulted in good collaboration and the regular participation of senior level officials. Counterparts provided documents, information and data in a timely manner, were actively involved in project design, and provided input to the drafting of terms of reference for necessary preparation studies.
7.5 Government implementation performance:
The Government’s performance during implementation was unsatisfactory.
The Government’s performance during implementation, on the other hand, was often lacking and unresponsive. In an effort to support the initiatives included in the Government’s Statement of Road Sector Policy, a Road User Charges Study was undertaken. However, at the mid-term review, it was recognized that, while its policies remained valid, the pace of implementing recommendations was too quick for Lebanon’s fragile fiscal and political context. As such, the Bank devised a less assertive method with interim steps and a more gradual approach to establishing a viable scheme for financing road maintenance. However, the Government was not responsive, and the progress that had been achieved stalled.
7.6 Implementing Agency:
- 14 - The Implementing Agency’s performance was unsatisfactory.
The PIU’s performance during implementation can be assessed in three distinct phases. The first, immediately after launch, was characterized by numerous problems, but a strong commitment to resolve difficulties and achieve results. Issues outside of the PIU’s control, including missing the budget cycle and the COA’s refusal to abide by procurement procedures defined in the Loan Agreement, encumbered implementation, but initiative was there.
There was then a prolonged period of weak and ineffective project management over a particular two-year period, which brought complacency, and a reactive, rather than proactive, attitude toward problems. This manifested itself in the form of drawn out disagreements about design standards, with the DOR insisting on unjustified and costly road rehabilitation criteria, and inadequate supervision of works and consultants, which encouraged interference by local authorities and the addition of unplanned works. The resolution of site difficulties was drawn out by ineffective communication between supervising consultants and contractors. Compounding matters further were diluted monthly progress reports that did not offer solutions for resolving site difficulties or elaborate on options to guide PIU management. There was also insufficient coordination with public utilities for the relocation of both underground and surface networks. On the whole, these issues caused substantial delays and cost overruns in implementing the road component.
By mid-2001, the situation had deteriorated to such an extent that the Bank threatened to suspend disbursements if certain conditions were not met. This prompted the Government to appoint new management for the PIU, and its overall effectiveness improved. Eventually, all of the specified conditions were realized, and the PIU’s performance improved from early 2002 until the project closed in September 2004.
With the exception of the optimization exercise in 2002, and the latter phases of the project, the PIU did a poor job of regularly utilizing all of the equipment secured under the NRP to carry out surveys of road conditions, take traffic counts, or seriously assess the level of compliance with axle load limits on the road network. Bank missions had to constantly remind and encourage PIU staff to utilize the newly acquired equipment, given ever changing traffic patterns and volumes.
On the positive side, procurement under the project, once it got started, was exemplary, and the financial management system that was established at the PIU is an example of best practice.
7.7 Overall Borrower performance:
Although the Borrower performed admirably during preparation, and overcame significant obstacles early on in implementation, this was not enough to offset its poor execution throughout most of the more critical implementation phase. The extended periods of deficient performance delayed the resolution of difficulties at project sites, increased the cost of works, and were significant factors in the need to extend the project’s closing date twice. As such, the Borrower’s overall performance was marginally unsatisfactory.
8. Lessons Learned Importance of Maintaining In-House Technical Expertise.When implementing large road rehabilitation programs, especially those with roads passing through densely populated areas, or which have substantial geotechnical and topographical challenges, it is critical that the implementing agency have sufficient
- 15 - in-house capacity to prepare, design and supervise works. This is in addition to consultants that might be contracted to prepare and supervise works. It is also vital that staff regularly conduct road site visits to ensure satisfactory quality. Such capacity is needed to thoroughly review and confirm the quality of designs prior to implementation, effectively interact with contractors and consultants, and react to changing conditions on the ground during construction. Such capacity empowers the Client to proactively respond to problems as they emerge, to devise innovative solutions, and to make appropriate amendments in real time.
Focus on Assessing Local Conditions, Rather Than Detailed Designs. For complex road rehabilitation programs, greater emphasis should be placed on assessing the conditions at individual project sites, rather than trying to finalize detailed designs. This is especially true for engineering firms that utilize computers to generate generic designs. While such an approach may suffice for new Greenfield roads, it is not suitable for existing roads, which require designs that are tailored to local conditions.
Need to Introduce Innovative Tools Early. The delivery of diagnostic mechanisms and tools to strengthen a road administration’s capacity to evaluate road programs should be developed in the early stages of project implementation for their potential demonstration effect. Even if not perfected, the use of innovative tools, when implemented accordingly, demonstrates their value and usefulness, and increases the likelihood that their use will be mainstreamed.
Commitment and Ownership for Effective Reform. Bank funding for ambitious and far-reaching reforms is most effective when undertaken to support and deepen on going restructuring schemes that are Government-initiated (commitment is secured), and responsibility for implementing stated reforms is at the highest (ministerial) level (ownership is established). The use of Statements or Letters of Sector Policy may not be sufficient indication of a Government's long-term commitment, and the justification of components based solely on such Statements may not warrant financing. In addition, it is not always realistic to expect to implement extensive sectoral reforms under a single investment project. This requires on going long-term support, flexibility and adaptation to effect change, and programmatic economic and sector work, or a series of successive projects (Adaptable Program Loan), might be better instruments. Further, sustained efforts to communicate the goals and benefits of stated reforms to key officials and garner their support should be considered.
Gaining Acceptance of Implementation Units. When resorting to special units to manage projects, they should always to located within the agency/entity that will ultimately be responsible for sustaining the project after the closing date. A first priority should be to try and gain the host agency’s acceptance by keeping key individuals of the affected entity informed about the unit’s activities through regular briefings. Also, host agency staff should be encouraged to regularly contribute to the project to the extent possible as early as possible. To better sustain the gains achieved, consideration should be given to mainstreaming the unit into the host agency's operations upon project completion.
Project Implementation in Post Conflict Environments. Operations developed in post-conflict situations should be open to corrections amid emerging realities on the ground. Such projects should be reassessed and adjusted at their mid-terms to reconfirm the validity of objectives and components. While this is important for all operations, it is more so for projects in countries emerging from conflict, since changes in priorities can be stark. During implementation, it is not uncommon for the emphasis to shift from reconstruction to development initiatives. When that happens, it is important to agree on achievable development objectives, and to restructure the project accordingly.
Procurement in Post-Conflict Situations. Project teams should also be aware that re-establishing a credible procurement process in post-conflict environments is a necessary and critical first-step for most
- 16 - governments, and that it may take considerable time before a local system is harmonized and functional. In the interim, there may be resistance to the Bank's procurement requirements, which may not be fully understood or be at odds with local procedures, from entities not directly involved in the project. As such, the need to thoroughly understand the local process for procuring works, goods and services, and for reaching agreement on procurement matters with key entities before Board approval, warrants serious consideration.
9. Partner Comments (a) Borrower/implementing agency:
- 17 - - 18 - - 19 - (b) Cofinanciers:
Not applicable. (c) Other partners (NGOs/private sector):
Not applicable.
10. Additional Information A list of pertinent documents and information can be found in Annex 7.
- 20 - Annex 1. Key Performance Indicators/Log Frame Matrix
Outcome / Impact Indicators: 1 Indicator/Matrix Projected in last PSR Actual/Latest Estimate (i) percentage of the NRP network in good 35% 32% condition increases from 20 percent to 35 percent by the end of the project.
(ii) implementation of 400 km of pilot 100% (revised target of 275 km) 93% of revised target (275 km), and 64% of rehabilitation works by the Year 2002; original target (400 km).
(iii) preparation of first annual road works 100% preparation of annual road works 100% program using appropriate pavement program using PMS management system by the Year 2000; and
(iv) reduce reliance on Government's budget 100% 0% for RRP and maintenance by development of management and financing mechanism to implement road sector policy.
Output Indicators: 1 Indicator/Matrix Projected in last PSR Actual/Latest Estimate -pilot program in support of the Road 100% 100% Rehabilitation Program (RRP) implemented (development of prequalification documents, TOR's for detailed engineering design, road works, establishing evaluation criteria, and guidelines for quality control/assurance
- institutional capacity for maintenance and 100% 100% development of the National Road Network strengthened by (i) DOR's reorganization; (ii) Road Management System; (iii) Increasing Capacity of Central Laboratory; iv) EIA guidelines;(v) traffic/axle load programs
- implementation of road user charges study 100% of action plan to evaluate overall RRP 100%; study completed and endorsed by the by the Year 1998 completed Council of Ministers
1 End of project Please note that in the Staff Appraisal Report, outcome indicator (iv) implementing the road user charges study (which should be an output), and the output indicator relating to reduced reliance on the Government's budget for RRP and maintenance (which should be an outcome), were inadvertently reversed. This has been corrected in the table above.
- 21 - Annex 2. Project Costs and Financing
Project Cost by Component (in US$ million equivalent) Appraisal Actual/Latest Percentage of Estimate Estimate Appraisal Component US$ million US$ million 1. Road Works 49.00 58.09 118.6 2. Technical Assistance Support to PIU 0.90 2.39 265.6 Road User Charges Study 0.40 0.30 75 Statement of Road Sector Policy 0.20 0.02 10 Strengthening Capacity of DOR 3.00 11.44 381.3 3. Equipment 1.40 0.93 66.4 Total Baseline Cost 54.90 73.17 Physical Contingencies 7.40 0.00 Price Contingencies 5.50 0.00 Total Project Costs 67.80 73.17 Total Financing Required 67.80 73.17
Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent) 1 Procurement Method Expenditure Category ICB 2 N.B.F. Total Cost NCB Other 1. Works 61.50 0.00 0.00 0.00 61.50 (36.90) (0.00) (0.00) (0.00) (36.90) 2. Goods 0.50 0.00 1.00 0.00 1.50 (0.50) (0.00) (1.00) (0.00) (1.50) 3. Services 0.00 0.00 4.80 0.00 4.80 (0.00) (0.00) (3.60) (0.00) (3.60) 4. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) 5. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) 6. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) Total 62.00 0.00 5.80 0.00 67.80 (37.40) (0.00) (4.60) (0.00) (42.00)
- 22 - Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent) 1 Procurement Method Expenditure Category ICB 2 N.B.F. Total Cost NCB Other 1. Works 58.09 0.00 0.00 0.00 58.09 (32.59) (0.00) (0.00) (0.00) (32.59) 2. Goods 0.93 0.00 0.00 0.00 0.93 (0.82) (0.00) (0.00) (0.00) (0.82) 3. Services 0.00 0.00 7.55 6.60 14.15 (0.00) (0.00) (7.55) (0.00) (7.55) 4. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) 5. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) 6. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) Total 59.02 0.00 7.55 6.60 73.17 (33.41) (0.00) (7.55) (0.00) (40.96)
1/ Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies. 2/ Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units.
Project Financing by Component (in US$ million equivalent) Percentage of Appraisal Component Appraisal Estimate Actual/Latest Estimate Bank Govt. CoF. Bank Govt. CoF. Bank Govt. CoF. 1. Road Works 36.90 24.60 32.59 25.50 88.3 103.7 2. Technical Assistance Support to PIU 0.70 0.30 2.39 341.4 0.0 User Charges Study 0.30 0.10 0.30 100.0 0.0 Road Sector Policy 0.10 0.10 0.02 20.0 0.0 DOR Capacity 2.20 1.00 4.84 6.60 220.0 0.0 3. Equipment 1.50 0.82 0.11 54.7
- 23 - Annex 3. Economic Costs and Benefits During project appraisal, economic evaluations were carried out on the initial road packages (1, 1A, 2, 2A, 3 and 4A), which constituted 37.5 percent of the works component in terms of kilometers to be rehabilitated. At the project's close, three batches of works consisting of fourteen packages of roads had been completed. No economic evaluation was conducted for the Technical Assistance component, which comprised 6.5 percent of total project cost.
Ex-post economic evaluations were carried out on the five packages initially proposed, as well as for all road works. Using "with project" and "without project" scenarios, economic rates of return were calculated on the basis of savings in vehicle operating costs (VOCs) for passenger cars, vans, small and large buses, and light, medium and heavy trucks. Actual capital costs, the construction period over which each of the roads was reconstructed or rehabilitated, and average daily traffic counts were also incorporated into the analysis. VOCs were recalculated in HDM-IV using updated unit costs in 2003 terms.
The analysis period covered twenty years, beginning in 1999 and ending in 2018, and average daily traffic figures for vehicles were based on the MPWH's 2002 traffic counts back-dated to 1998. An annual average growth rate of two percent in traffic was assumed on all roads. A discount rate of twelve percent was used during appraisal and to update the evaluations. The results of the HDM-IV model and the cost and benefit streams with net present values (NPVs) and economic internal rates of return (EIRRs) can be found in the Project Files.
The following table provides lengths, costs, NPVs and EIRRs for all road works. Comparisons of estimated and actual figures for the initial road packages are also provided.
Estimated Actual Est. Cost Actual Cost NPV NPV EIRR 1 Package / Road Length Length at SAR at ICR at SAR /2 at ICR at ICR (at SAR) (at ICR) (US$ mil.) (US$ mil.) (US$ mil.) (US$ mil.) (%) 1 Tripoli-Seer (PRI004) 29.39 31.50 4.47 8.10 44.50 19.72 110.2 1A Seer-Sfeereh (PRI004A) 10.17 10.00 1.55 5.12 5.99 1.78 21.0 2 Rayfoun-Bikfaya (PRI1023) 23.50 17.38 0.20 0.66 6.52 2.01 101.1 2A Bikfaya-Tarchich (PRI025) 27.05 24.90 4.05 7.67 27.10 6.25 63.3 3 Sour-Jwaya-Tebnine (PRI061) 30.99 27.80 4.56 5.76 15.40 6.22 33.9 4 Zebdol-Saghbine (PRI055) 25.30 5.03 3.45 25.6 4A Masnaa-Rachaya (INT005) 29.00 28.50 4.37 6.74 27.28 0.80 15.3 5 Al Abdeh-Halba (PRI001) 9.86 0.87 8.25 119.6 5A Al Abdeh-Beit Ayoub-Fneideq (PRI003A) 23.24 6.75 10.72 132.3 7 Aaley-Rechmaya (PRI049) 12.00 0.60 0.68 29.7 7A Jamhour-Bsous-Souk El Gharb (SEC037) 8.50 1.38 2.38 68.6 8 Wadi Ez Zeini-Chheem (PRI054) 14.10 3.58 3.70 57.9 9 Saida-Roum-Jezzine (PRI055) 10.00 1.52 6.88 157.8 13 Al Qasr-Hermel (SEC081) 13.30 1.75 3.50 166.3 Totals: 256.38 55.53 NOTES: /1 Packages 6, 6A, 10, 11 and 12 were planned, but not executed. /2 Using a discount rate of 12 percent.
Although actual NPVs were less than anticipated, the favorable EIRRs would indicate that each of the initial road packages generated benefits, or are expected to generate benefits, that exceeded the cost of capital (using a discount rate of twelve percent). The lower actual NPVs were due, primarily, to cost overruns, which are attributable to a number of challenging conditions at the project sites. Another contributing factor was the actual average growth rate for traffic (two percent), which was about half the
- 24 - rate used in the economic evaluation during appraisal (four percent from 1995 to 2004, then three percent thereafter).
Many of the roads that were rehabilitated under the NRP passed through mountainous areas that were built up and heavily populated. As a result, space to undertake needed repairs along the roadways was severely constrained, and numerous localized design changes were necessary. This required the application of the most cost effective solutions to overcome difficulties on the ground in order to adequately address the unique features of the local terrain. It also led to numerous legitimate claims for additional compensation from contractors undertaking the works, which on average were 19 percent above agreed amounts. The delays in launching road works led to additional deterioration to those roads targeted for rehabilitation. This led to an increase in costs as reconstruction, rather than resurfacing, was needed on some roads. At the same time, works could not commence at many sites without causing damage to existing assets, including older retaining walls, which were in a state of disrepair or had fallen down. In addition, the condition of utility networks, including electric, water and sewer lines, was unknown until a site was excavated. Often, the poor condition of utilities necessitated repairs, which had to be financed from NRP funds. Complicating matters further were unrealistic expectations of owners along the ROW where works were undertaken. In some instances, the project had to accommodate demands from property owners for compensation in the form of free asphalting of private property (driveways and parking lots) before they would permit works to continue. The following table provides estimated and actual capital costs per kilometer to rehabilitate the initial road packages.
Estimated Actual Difference Increase in Road Capital Cost/KM Capital Cost/KM between Capital (at SAR) (at ICR) Est./Actual Cost/KM Zagharta-Tripoli (PRI004) $152,000 $232,000 $80,000 53% Kesrouan-El-Metn (PRI023) $92,000 $196,000 $104,000 113% Sour-Bent Jbail (PRI061) $147,000 $211,000 $64,000 43% Rachaiya-Bekaa-Gharbia-Rachaiya (INT005) $151,000 $241,000 $90,000 60% Averages: $154,000 $200,000 $46,000 30%
The Government’s decision in late 2002 to close most of the country’s main quarries, due to environmental concerns, also contributed to delays and extra costs by seriously disrupting the supply of aggregate inputs. Increases in the cost of steel and concrete also served to elevate costs. This led to extensions of contract durations, and a significant increase in the cost of some inputs. Between 1999 and 2003, the price for a bitumen wearing course increased by nearly two-thirds, while the cost of concrete and steel increased 43 percent and 80 percent, respectively. It is estimated that the closure of quarries added approximately US$4.6 million, or around seven percent, to the overall cost of works under the NRP. The average costs of some inputs in 1999, 2001 and 2003, which roughly corresponds to project launch, mid-term and completion, are shown in the following table.
Average Cost of Key Inputs 1999 2001 2003 Bitumen Wearing Course (US$/ton) 51.00 68.67 82.61 Concrete (US$/m3) /A 31.60 31.20 45.20 Steel (US$/ton) 30.00 32.40 54.00 /A Includes average annual costs of aggregates, cement and sand.
- 25 - Annex 4. Bank Inputs (a) Missions: Stage of Project Cycle No. of Persons and Specialty Performance Rating (e.g. 2 Economists, 1 FMS, etc.) Implementation Development Month/Year Count Specialty Progress Objective Identification/Preparation 04/25/1994 4 HIGHWAY ENGINEER (1); TRANSPORT ECONOMIST (1); FINANCIAL OFFICER (1); INVESTMENT OFFICER (1) 11/26/1994 6 HIGHWAY ENGINEER (1); TRANSPORT ECONOMIST (1); FINANCIAL OFFICER (1); ENGINEER (1); CONSULTANTS (2)
Appraisal/Negotiation 08/15/1995 5 ENGINEER (1); PROJECT FINANCE SPECIALIST (1); ECONOMIST (1);LAWYER (1); HDM SPECIALIST (1) 04/19/1996 8 ECONOMIST (1); ENGINEER (1); COUNSEL (1); FINANCIAL ANALYST (1); FINANCIAL OFFICER (1); PROCUREMENT SPECIALIST (1); DISBURSEMENTS SPECIALIST (1); POLICY ANALYST (1) Supervision
07/07/1997 1 HIGHWAY ENGINEER (1) S S 11/26/1997 1 HIGHWAY ENGINEER (1) S S 04/24/1998 3 TASK MANAGER S S ECONOMIST (1); HIGHWAY ENGINEER (2) 10/18/1998 2 HIGHWAY ENGINEER (1); S S FINANCIAL ANALYST (1) 03/27/1999 2 ECONOMIST TEAM LEADER S S (1); HYGWAY ENGINEER (1) 11/06/1999 4 HIGHWAY ENGINEER (1); S S TRANSPORTATION ENGINEER (1); FINANCIAL ANALYST (1); FINANCIAL MANAGEMENT (1) 11/18/2000 5 FIN. MGT SPEC./TTL (1); U S HIGHWAY ENGINEER (1); TRANSPORT PLANNER (1); FINANCIAL MANAGEMENT (1); PROCUREMENT SPEC (1) 05/27/2001 5 HIGHWAY ENGINEER (1); U S
- 26 - TRANSPORT PLANNER (1); FIN. MGT SPEC./TTL (1); PROCUREMENT SPEC. (1); FIN. MGT SPEC. (1) 11/24/2001 5 HIGHWAY ENGINEER, TTL S S (1); FINANCIAL MNGT SP. (1); PROCUREMENT SPECIALIST (1); LEAD FINANCIAL SP. (1); SR. SOCIAL SCIENTIST (1) 05/18/2002 3 SR. MUNICIPAL ENGINEER S S (1); SR. TRANSPORT ENGINEER (1); SR. FM SPECIALIST (1) 11/01/2002 3 SR. MUN. EGR/TTL (1); SR. S S TRANSPORT ENGINEER (1); SR. FM SPECIALIST (1) 03/09/2003 2 SR. MUN. EGR/TTL (1); SR. S S FM SPECIALIST (1) 10/20/2003 2 SR. MUNICIPAL ENG. TTL (1); S S SR. FINANCIAL MNGT SP (1)
ICR 07/15/2004 2 SR. MUNICIPAL ENG. S S TTL (1); FINANCIAL ANALYST (1).
(b) Staff:
Stage of Project Cycle Actual/Latest Estimate No. Staff weeks US$ ('000) Identification/Preparation 357 Appraisal/Negotiation 103 Supervision 791 ICR 25 Total 1,237
- 27 - Annex 5. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating Macro policies H SU M N NA Sector Policies H SU M N NA Physical H SU M N NA Financial H SU M N NA Institutional Development H SU M N NA Environmental H SU M N NA
Social Poverty Reduction H SU M N NA Gender H SU M N NA Other (Please specify) H SU M N NA Private sector development H SU M N NA Public sector management H SU M N NA Other (Please specify) H SU M N NA
- 28 - Annex 6. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)
6.1 Bank performance Rating Lending HS S U HU Supervision HS S U HU Overall HS S U HU
6.2 Borrower performance Rating Preparation HS S U HU Government implementation performance HS S U HU Implementation agency performance HS S U HU Overall HS S U HU
- 29 - Annex 7. List of Supporting Documents Project Documentation
1. Preparation of National Roads Project (NRP)
1.1 Staff Appraisal Report (SAR) 1.2 Working Papers 1.2.1 Description of Road Sector 1.2.2 Road Rehabilitation Program at Appraisal 1.2.3 Terms of Reference for TA to the Directorate of Roads 1.2.4 Draft Legislation for the Road Fund 1.3 Diagnostic Report of the Directorate of Roads (Bernard Feauveau) 1.4 Road Rehabilitation Program (RRP)
2. Procurement
2.1 Guidelines for Procuring Detailed Engineering Designs 2.2 Guidelines for Procuring Road Works 2.3 Guidelines for Procuring Construction Supervision Services 2.4 Guidelines for Procuring Equipment and Software
3. Terms of References
3.1 Road Rehabilitation Program (RRP) 3.2 Road Users Charge Study (RUCS) 3.3 Performance Based Contract (PBC) 3.4 Updating of Road Rehabilitation Program (URRP) 3.5 Road Sector Policy 3.6 Detailed Engineering Design 3.7 Supervision of Works 3.8 Individual Consultancy Services Contract 3.9 External Auditing 3.10 Financial and Management System 3.11 Archiving System 3.12 Document Management System 3.13 Preparation of Resettlement Action Plan and Social Assessment Report
4. Studies and Reports
4.1 Guidelines for Utilizing the Tools Developed for the Directorate of Roads
5. Financial Model to Calculate Economic Costs/Benefits for ICR
6. Photos
- 30 - Additional Annex 8. Borrower's Contribution to the ICR
A. INTRODUCTION
The prolonged civil war in Lebanon, which lasted from 1975 to 1990, badly affected the Lebanese road network. The inventory of road network carried out between April and July of 1995 revealed that 18 percent of the network was categorized as being in good condition, 47 percent in fair condition and 35 percent in poor or critical condition. On the other hand, the Directorate of Roads (DOR) at the Ministry of Public Works and Transport (MPWT) suffered depletion in its institutional capacity to meet the country’s road rehabilitation and maintenance requirements.
B. LOAN/PROJECT OBJECTIVES
The main objectives of the NRP were: i. Implementing a pilot road rehabilitation program as an essential step towards the implementation of the overall Road Rehabilitation Program (RRP); ii. Strengthening the Institutional capacity of the DOR for maintenance and development of the national road network; and iii. Reducing reliance on the government’s budget by requiring users to pay for maintaining and rehabilitating the national road network.
C. PROJECT COMPONENTS
The NRP was comprised of three main components:
Component A: Road Rehabilitation Works. A three-year pilot program to rehabilitate about 400 km of International, Primary, and Secondary roads distributed among the four regions (Muhafazats) by which appropriate design standards and implementation procedures were established for the overall RRP. The Pilot Program was divided into twelve construction packages spread equally over three years. During the first year of the Pilot Program, about 150 km of road links were to be rehabilitated.
Component B: Technical Assistance. TA was provided to: (i) support MPWT’s Program Implementation Unit to oversee all activities related to the implementation of the project; (ii) carry out a detailed Road User Charges Study; and (iii) strengthen DOR’s capacity to develop and implement the RRP, including preparation of standards documents, manuals, procedures and guidelines.
Component C: Equipment. Procurement of urgently needed equipment, such as road laboratory equipment, pavement deflection measurement equipment, skid resistance and roughness measurement equipment, axle load measurement equipment, traffic counters, office technology equipment, and vehicles.
D. PROJECT MANAGEMENT
A program Implementation Unit (PIU) was established at the MPWT in September 1996 to oversee all project activities. The PIU team consisted of the following staff: (i) Pavement Design and Quality Control Specialist; (ii) Procurement Specialist; (iii) Traffic and Safety Engineer; (iv) Road
- 31 - Construction Engineers; (v) Systems Analyst; (vi) Environmental Specialist; (vii) Finance Controller; (viii) Assistant GIS Analyst; and (ix) Computer Engineer.
In addition to overseeing the activities related to implementation of the NRP, other PIU objectives focused on assisting the DOR in: (i) preparing for the implementation of the Road Rehabilitation Program; (ii) preparing for the institutional and financial reform of the road sector; (iii) defining appropriate organizational structure for the road sector institutions and establishing their operating procedures; and (iv) developing the road sector capacity to mobilize resources to finance the rehabilitation and improvement of the road network. In view of these objectives, a series of integrated tasks were performed by the PIU team members in line with the objectives.
E. PROJECT EXECUTION
E.1 Pilot Road Rehabilitation Program
Road Distribution: Out of the 400 km total length of the originally targeted road links, 256 km were rehabilitated under the NRP. The completed road projects, which were distributed among the four Muhafazats, covered a wide variety terrain and geographical conditions ranging from plains to rolling terrain and heavily irrigated areas, to snowy mountainous spots. Although, this distribution of roads allowed for various types of natural conditions, unexpected conditions hindered the progress of works, as will be explained later. Table 1 shows the distribution of the projects by Muhafaza.
Table 1 – Projects Distribution by Muhafaza
Pack. No. Road Name Road Muhafazat Road Length Road Length Classification Rehabilitated Planned (in KM) (in KM) Pack. C1 Tripoli - Seer Primary 004 North 25.10 Sfeerh-Hawrah Primary 004a North 6.55 Pack. C1a Seer-Sfeereh Primary 004a North 10.00 Pack. C2 Rayfoun - Bikfaya Primary 023 Mount Lebanon 17.00 Bikfaya-Tarchich Primary 025 Mount Lebanon 25.15 Pack. C3 Sour-Jwaya-Tebine Primary 061 South 27.80 Pack. C4 Zebdol-Saghbine Primary 055 Bekaa 25.30 Pack. C4a Masnaa-Rachaya International 005 Bekaa 28.50 Pack. C5 Abdeh-Halba Primary 001 North 9.90 Al Abdeh-Beit Ayoub-Fneideq Primary 003 North 23.20 14.40 Pack. C6 Aamsheet-Mayfouq Primary 017 Mount Lebanon 23.90 Pack. C6a Mayfouq-Tannourine-Tahta Primary 017 Mount Leb / North 14.60 Pack. C7 Aley-Rechmaya Primary 049 Mount Lebanon 12.00 Jamhour-Souk al Gharb Secondary 037 Mount Lebanon 8.50 Pack C8 Wadi Zeini-Daraya Primary 054 Mount Lebanon 14.10 Pack. C9 Saida-Jezzine Primary 055 South 10.00 17.80 Pack. C10 Rachaya-Marjeyoun International 005 Bekaa / South 31.00 Pack. C11 Jib Jannine-Qaroun Primary 062 Bekaa 15.40 Pack. C12 Ablah-Beit Shama Primary 064 Bekaa 10.60 Ali Nahri-Faour Secondary 075 Bekaa 15.90 Pack. C13 Qasr-Hermel Secondary 081 Bekaa 13.30 Totals: 256.40 143.60 *NB: Package C10 is shared between two Muhafazats, South and Bekaa, with 7.0 km in Bekaa and 24.0 km in the South. Package C6a is shared between Mount Lebanon and North Muhafazats where approximately 5.0 km is in Mount Lebanon and 7.6 km is in the North.
- 32 - Recognizing the fact that a total length of 143.60 km was dropped from the program, the Council of Ministers approved the local financing needed to proceed with the implementation of these remaining packages.
Pavement Conditions: Pavement conditions differ from one road to another, depending on location and political importance. For instance, some locations have repeatedly received multiple layers of asphalt for no apparent reason or due to noticeable road damage (original pavement was in good condition), while other roads have nearly the same number of layers with no effort to repair pavement failures, which still exist. The number of layers often varies between three and seven with a minimum thickness of 10 cm to 25 cm. Another case encountered a thin layer of asphalt on the top of a 20 cm aggregate base course, which itself was on top of another thin layer of asphalt (2 cm to 3cm thickness) lay above a thin layer of aggregate (5 cm to 10 cm), in most cases Macadam (Boulders). Most of the roads that were widened follow no specific regulation or specifications. For instance, in widened areas, almost all cases show that the asphalt layer has been put on top of soil immediately with complete absence to any aggregate base course material. Widening may vary from 0 cm to 100 cm. In other cases, thin asphalt layers have been noticed on top of existing macadam, which was common in the 1940’s and 1950’s.
Concrete Structures: Most roads lack complete drainage systems and means for stabilizing slopes, and this is the main source of defects causing damage to pavement layers. In some cases, limited portions or section of drainage channels were built by the MPWT, or other Government agencies that share some responsibility for road rehabilitation in specific areas of Lebanon (i.e. Displacement Fund, Municipalities, etc.), with dimensions that cannot accommodate the volume of water running through. Complicating the situation is the alignment of these concrete channels, which match the wavy profiles of the roads.
On the other hand, most of the existing retaining walls, which were built a long time ago, are made of cut stone with no bonding mortar. As such, there was no possibility whatsoever to excavate beside due to the absence of real foundations. Rarely were stone retaining walls in good condition. Most buckled or were partially damaged. The condition of most of these walls varied from fair to critical.
Most of the concrete and stone culverts are no longer in service due to the damage that water flows caused, or because public domains did not exist to drain the water beyond these culverts. Where culverts are still in use total rehabilitation or replacement is required.
Underground Utilities: The lack of accurate information regarding the existing underground utilities, the involvement of various agencies in sharing responsibilities of installation and maintenance of these utilities, and the chaos that ruled for quite some in the past led local habitants to assume responsibility for managing these utilities. Because the management of these resources did not follow specific rules and regulations, it was almost impossible to predict the volume of work that would be required to replace or relocate these underground utilities, or to prevent them from possible damage during road rehabilitation. The existing conditions of these utilities, which ranged from fair to critical, caused severe and rapid deterioration to the existing pavements, especially because of the lack of proper and timely maintenance. On the other hand, the lack of proper planning of such utilities created the impression that whatever existed was useless and had to be replaced.
- 33 - Road Alignment: Going back to the history of the Lebanese road network, the following can be observed: (i) roads were originally too narrow, given the shape and the ground levels in most cases and widened in a disorderly fashion just to allow for more space on either side; (ii) road profiles and alignments were not improved, except for very limited sections scattered here and there; and (iii) physically, road profiles and alignments in the absence of any previous rehabilitation works were totally out of any standards or engineering practice whatsoever. In addition, the mountainous nature of the country obliged the MPWT and other agencies to follow the easiest path, which was often circuitous to create or construct roads without regard for safety or the hazards of black spots created as a result.
Safety Measures: Roads users can barely notify the presence of safety means except in very limited sections of the network. The existing safety barriers are made of concrete and designed according to an old type of the ministry’s work samples - blocks of concrete having 50 cm height, and 30 cm x 30 cm bases laid on top and directly on the walls without any anchoring or foundations. Other means of safety, such as warning signs, guardrails, bumpers, etc., are randomly installed with no consideration for standards or regulations. The nonexistence of street lightening at road intersections creates hazardous spots at night, especially given that road marking are not adopted or widely in use.
E.2 Technical Assistance to DOR
Background: The prolonged seventeen-year conflict in Lebanon and the consequent neglect of road maintenance have resulted in a considerable backlog of maintenance, as well as in a marked deterioration of institutional capacity in the road sector. The Directorate of Roads within the Directorate General of Highways and Buildings of the MPW is responsible for construction and maintenance of the classified roads.1/ The classified road network (6,313 km) comprises four categories: international roads (523 km); primary roads (1,652 km); secondary roads (1,327 km); and local roads (2,811 km). Responsibility for construction of major highways was shared by the Conseil Executif des Grands Projets (CEGP), a semi autonomous agency overseen by the MPW, and the Council for Development and Reconstruction (CDR). CEGP was responsible for the construction of the expressway system (for example the coastal highway and the Beirut-Syrian border expressway). CDR, which implemented some major road reconstruction and improvement during the 1980's, is presently in charge of most of investment projects including major highways around the city of Beirut and the surrounding areas.
DOR's organizational structure includes four divisions at the central level and four directorates at the regional Muhafazat level. The regional directorates of roads (RDOR), which are responsible for implementing road works in their respective Muhafazat, include the RDOR Mount Lebanon, RDOR South Lebanon, RDOR North Lebanon, and RDOR Bekaa. The four divisions at the central level are the Planning and Programming Division, responsible for planning and programming of works, the Studies Division, responsible for project preparation and tendering, the Construction Division, responsible for executing routine maintenance works by force Account, and the Maintenance Division, responsible of operating DOR's asphalt plants, workshops and equipment, road safety, and road laboratory.
Before the war, MPW was a well-organized ministry with sound experience in managing and implementing projects. During the war years, institutional capacity for administering the road network was severely depleted. As of June 30, 1995 more than half of DOR's approximately 500 authorized positions were vacant.
Achievements/Outcomes – Technical Assistance and Consulting Services:
Road Rehabilitation Program: The objective of the project was to prepare a five-year program,
- 34 - including a first priority program, for rehabilitating and maintaining the classified road network, and to prepare an overall road maintenance strategy. As part of the project, a limited axle load analysis was prepared, setting out the need to implement strict axle load controls within the boundaries of the country. A series of pavement, operating cost and traffic surveys were carried out in order to prepare the input data for the HDM modeling exercise.
Road Users Charge Study: The aim of the study was to develop a system of road user charging for Lebanon, which meets the requirements of the statement of Road Sector Policy and which can be implemented. The study was to examine current charges imposed on road users, the short- and long-term financial needs of the road sector, and the principle of equity in allocating costs and setting charges for the users of different vehicle classes. Due to difficulties in implanting the Road Sector Policy, which this study was a part, no further development was noted in this direction.
Updating the Road Rehabilitation Program (RRP): The objective of updating the Road Rehabilitation Program is to: (i) preserve the capital investment spent in road construction through identifying priority programs that could freeze further deterioration of the network and improve its condition; (ii) develop the road network to an acceptable level of service through proper engineering design that would address all rehabilitation requirements based on well defined maintenance strategy; (iii) reduce vehicle operating cost by improving the network condition; (iv) manage available funds in the most cost effective manner through proper planning and programming of works using state-of-the-art in carrying out the economic evaluation of the network and determining the rate of return from the investment; and (v) improve connectivity between different regions through constructing new links to connect deprived villages with the network and improve accessibility to all regions.
The study, which was concluded in January 2003, provided optimum budgets for various types of rehabilitation strategies, and indicated the need to establish a priority list of road sections or links to be rehabilitated within a nine-year program at the most economical cost to the Government of Lebanon, and using the most appropriate rehabilitation strategies to suit the conditions of the roads and the environments of each section.
Supply of Laboratory and Office Equipment: The Central Laboratory needed many essential pieces of equipment in order to perform all testing required to maintain the quality required of works completed or to be executed. Essential equipment that was supplied to the laboratory included:
- Skid Resistance Machine; - Roughness Machine; - Falling Weight Deflectometer; - Traffic Counters; - Weighing Bridges; and - Other apparatus for various usages.
In addition, different types of office equipment for the use of the PIU and Ministry were obtained. At present, traffic counters, the falling weight Deflectometer and the roughness machine are being used on a regular basis.
Document Management System: The PIU assisted the MPWT in establishing an automated Document Management System (DMS). The objective of the DMS is to automate the document workflow process by developing a system that tracks all documents in the Directorate of Roads. The planned phases of the DMS were installed and links to the Regional directorates completed on February 1, 2000. The
- 35 - MPWT began implementing the second phase of the DMS, which includes maintaining and updating the system.
Financial Management System: The PIU’s Financial Management System was developed to satisfy the following targets: (i) financial management of the National Roads Project; (ii) compliance with World Bank financial requirements, including Project Monitoring Reports; and (iii) financial management of multi-projects of different natures and financiers.
Archiving and Retrieving System: The PIU proposed the design of a computerized Document Archiving and Retrieval System (ARS) that facilitates the scanning, indexing and retrieval of roads expropriate plans and decrees, expropriation files, annexation and compensation decisions and other documents related to the Alignment Section under the Directorate of Roads. Implementation of the ARS was completed in June 2001. The PIU assisted in the ARS’s rollout to the Ministry, which was financed by the MPWT and will include all expropriation data and document files.
Networking: Basic computer equipment and training have already been introduced to MPWT’s head office and the Regional Directorates and the other buildings have an access to the head office’s information through remote access server. The following activities were completed: (i) updating of the ministry’s local area network (LAN); (ii) setup of the software and hardware configuration for newly arrived equipment to the ministry head office (servers, desktop clients, printers, hubs, switches etc.); and (iii) building an intranet in the MPWT and across the regional directorates connected with Cisco routers and switches. The MPWT network serves more than 100 employees in print and file sharing.
Internet connectivity allows internal MPWT client computer network to access the Internet by installing a proxy server. The utilization of the Internet has increased, and MPWT users became more aware of the Internet and its resources. The MPWT subscribes to an Internet Service Provider in order to have access to a high bandwidth Internet connection to facilitate the communication between the main office and branches of the ministry (using leased lines, etc.).
The installation of an email server and subscription to an email service provider enables MPWT employees to have their own email addresses, which facilitates communications among employees and minimizes paper work.
The use of antivirus software protects the MPWT’s internal server and client computers against new viruses by utilizing Sophos anti-virus on all computers within the MPWT.
Accident Record Module: The PIU has established and developed an Accident Record Module for the traffic emergency unit in Ministry of Interior. The system records all information related to the accidents including the road name where the accident took place. The PIU computer specialist Installed and configured the accident record module within the head office of the Traffic Emergency Unit and certify that the system is fully functional.
Geographical Information System (GIS): An objective of the MPWT is full utilization of the GIS system to track data and store geographical information in order to easily share information with other ministries. The system that it is fully operational and has served the MPWT on various occasions, and specifically in presenting the conditions of the road network from statistical points of view to allow decision makers to approach problems with a complete set of tools.
Strategic Collaboration with the Ministry of Power and Water Regarding Budget Allocations
- 36 - Related to Underground Utilities: The PIU with sincere effort from the Ministry and in order not to charge to budget of the project additional cost related to infrastructures utilities, has succeeded in obtaining from the budget of the Ministry of Power and Water additional amounts for the rehabilitation and allocation of different type of utilities, such as sewer network and water lines. A total of L.P. 1.4 billion has been, or will be, allocated to the NRP’s Special Account. The MPWT has obtained additional funds from the Council of Ministers to compensate for various works executed under the NRP.
Establishing an Internal Audit Committee: The MPWT, as per Decision No 517/1 dated November 15, 2001, formed the Internal Audit Committee chaired by the Director of Roads and with membership of both PIU and MSC-PW personnel. Due to the heavy volume of work, only one meeting occurred in which the work plan of the DOR was discussed, along with other issues related to quality control, testing and inspection.
Day-to-Day Technical Assistance: The MPWT has assigned counterpart personnel to work with the PIU to coordinate works. Daily and weekly contact with MPW personnel has been arranged to closely follow-up the progress of works at each site. The results were very optimistic and positive. Decisions are being shared with MPWT personnel at all levels.
Data Collection: The PIU, jointly with MPWT personnel, launched several data collection campaigns between 1999 and 2002. The outcome of these surveys was used in the study of the RRP along with other information that has been delivered to the Council for Development and Reconstruction for various projects were under design or assessment. The main activities were included: (i) axle load surveys; (ii) traffic counts; (iii) roughness surveys; (iv) pavement condition surveys; and (v) road structures surveys.
Environmental Unit: The PIU prepared an operational manual illustrating the organizational structure and procedures for the Environmental Unit at the DOR. The operational manual describes the role and structure of the Unit, required staff and resources, and procedures for conducting environmental assessments and managing road projects at the DOR. Staff was allocated to the Environmental Unit per Decision 89 dated May 28, 1998.
Expropriation and Resettlement Report: The PIU prepared an expropriation and resettlement report in order to give a clear and indicative overview of both the expropriation impacts and the actions and measures taken by the PIU to mitigate those impacts and to rectify any adverse issues raised during the expropriation process under the NRP.
Road Sector Policy Issued by "Ian Heggie": Issuance of the road sector policy consisted of: (i) revisiting the key road sector issues; (ii) assessing the DOR institutional capacity and organizational structure; (iii) reviewing the final report of the Road Users Charges Study; and (iv) finalizing an action plan for the implementation of the Road Sector Policy, including the establishment of a Road Fund.
Issuance of On Request Specifications for Safety Devices on Bridges and Roads: The PIU prepared a full manual describing the special technical conditions for all types of safety devices on bridges and roads together with the necessary schematic presentations.
Issuance of Manual of Traffic Controls for Construction and Maintenance Work Zones: The PIU prepared a manual that explains all possible traffic control strategies during construction and maintenance works together with the necessary schematic presentations.
F. LESSONS LEARNED
- 37 - F.1 Project Preparation and Procurement
Contract Conditions: The nature of the rehabilitation works was dynamic and constituted many interacting variables, as well as extensive coordination with the numerous parties involved in the works. These parties included utility owners, municipalities, landowners, and traffic police, etc. The involvement of so many key players who are well versed in the contractual constraints was detrimental to the NRP, since it encouraged contractors to lodge numerous claims. The following points should be considered as lessons learned in formulating contracts.
Expropriation: The expropriation process was widely used by landowners to object to the expropriation decrees that were issued. Many aspects caused landowners’ objections, such as:
- Miscalculations of the number of trees to be expropriated in a given lot; - Evaluation and cost estimate of the content of the lot; - Miscalculations of the area of a lot, due to the absence of official surveys (not surveyed lands); - Expropriated areas or lands not needed for road construction; - Delays in receiving compensation by land owners (involvement of the Ministry of Finance); - Shares among the number of people in single lot where sometimes shareholders would be out of the country or had passed away; - Unsettled financial obligations (taxes, levies, etc.) due the Ministry of Finance (no compensation was proceeded unless a Financial Release Certificate was presented); - The value of taxes due exceeded the amount of the compensation itself; - Legal disputes between share holders of a lot; and - Remaining amount of compensation to be paid to landowners at the time of removal or demolition for all affected structures (usually 25 percent of the total amount to be withheld in the possession of the Ministry of Finance until all structures or trees had been removed).
Once agreement had been finalized, land owners had no right to stop works or activities in the area designated area for expropriation. Nonetheless, landowners did apply pressure to prevent the start of works before they were fully satisfied. This means that it could take some three to four years before actions settle down and works can begin on expropriated property.
Mapping of Underground Utilities: Although the mapping of underground utilities was mentioned in contracts as part of contractors’ obligations, this proved to be a burden to the contractor. The physical work of mapping involves well-organized and well-equipped teams, a design office, and proper management. The outcome of this type of work entails unforeseen cost that should be allowed for in contracts, according to the regulations and specification of the concerned ministry.
Relocation of Electric Poles: A major intrusion of other agencies was the involvement of the Ministry of Power and Water represented by the Electricite du Liban (EDL). Nearly every road had electric poles on both sides, which had to be relocated. As part of EDL’s policy, relocation of an old type of pole was not allowed, and, according to current specifications, superior poles had to be installed. Further, the cost estimate of pole relocation or replacement was to be overseen by EDL, which entailed additional and unforeseen costs, which had to be borne by the project. In all cases, a ten percent supervision fee was due EDL whether they did the job or assigned one of their approved subcontractors to do it. Other complications included objections from inhabitants with nearby property over the placement of new poles. Alternatives, when they existed, were invariably costly and consequently, entailed additional costs.
- 38 - Soil Investigation: Another issue that affected the NRP was soil investigations. Often, increased costs during construction resulted from increased excavation, which resulted in increases in volumes of concrete for retaining walls, as well as subsequent increases in the volumes of embankment or borrow materials and aggregate base courses. Thorough soil investigation must be conducted to ensure that all pertinent components are well-designed and to acceptable tolerance levels. Although, an accurate soil investigation is required, increases in the volume of retaining walls may occur due to circumstances that take place prior to commencement of construction, such as failure in existing walls, or changes by local habitants to road side conditions.
Dumping Sites: Dumping sites designated by the contractor as part of his obligation under the contract, are not common. It is difficult to identify specific locations that fulfill environmental requirements, and there is always the potential for difficult and prolonged bargaining with landowners and local authorities to utilize a site once it has been identified. An official dump should be adopted and used for surplus materials, as well as for left over debris from the project. Such dumps should be controlled by outside authorities to ensure that environmental procedures are adhered within a dump.
Construction Supervision: It is advisable that the designer of a project also be assigned as the construction supervisor with responsibility for overseeing works. The reason for this is the large volume of modifications and changes to the original designs that are required during the construction period.
F.2 Project Execution and Monitoring
Implementation Management: Once works begin, close coordination between the supervising consultant, the contractor, and the concerned ministry should be a priority. Day-to-day follow up of all activities is crucial to quick resolution of any problems that may arise. This close coordination benefits all parties to the project. Public relations should also be maintained during this period due to the nature of the rehabilitation works that affect countless numbers of people. The ministry should elaborate an approach for dealing with local inhabitants and concerned other authorities. Public consultation is useful before commencement, and close coordination with the local municipalities can help to prevent hindrances.
Involvement and Coordination with Other Ministries: During the period of project execution, it was clearly evident that closer coordination of the work by other involved ministries and public authorities would have been beneficial prior to the project’s launch. Negotiations should have included detailed a explanation of the nature of the project and its related activities in order to prevent any duplication of works, minimize delays, and permit concerned entities to: (i) revise their programs/budgets; (ii) redefine their working schedule activities; and (iii) reallocate resources to undertake complementary activities, or activities not under the project’s mandate.
G. SUMMARY
In summary, the Government of Lebanon fulfilled most of its obligations under the Loan Agreement. Additional financing of around 18 percent of the value of the Government share in the NRP’s civil works had to be added to the project to cover the expense of unforeseen infrastructure works and to respond to the publics needs in specific areas. These funds came from other ministries budgets (i.e. Ministry of Power and Water, Reserved fiscal budget of the Government). In addition, the Government had to provide additional compensation to settle expropriation matters and the variation in land prices, which increased from 33 percent of the value of construction works to 45 percent of the same value.
MPWT personnel at all levels were committed to the NRP. Coordination meetings took place at
- 39 - various levels of the Government to enhance the project’s performance and achieve the desired objectives of the Loan Agreement.
- 40 - Additional Annex 9. Background Information on the Road Rehabilitation Component
Under the NRP, a pilot program to rehabilitate 400 km of road throughout the country’s four muhafazats (Governorates) was launched. As originally planned, the overall pilot program had three phases, each with four road packages. However, during implementation, a number of complications contributed to delays and additional costs, which ultimately resulted in the rehabilitation of just 256 km of roads. By the time of the ICR mission, at least two road packages had been completed in each muhafazat. The total number of road projects by muhafazat, as well as lengths of road rehabilitated and lengths of road planned, but not rehabilitated, is provided in the table below.
Muhafazat No. of Road Length Road Length Not Total Planned at 1 2 Projects / Rehabilitated (km) Rehabilitated (km) / Appraisal (km) North 5 74.60 23.00 97.75 Mount Lebanon 5 76.80 29.90 106.65 South 2 37.80 41.80 79.60 Bekaa 3 67.10 48.90 116.00 Totals: 15 256.30 143.60 400.00 /1 Number of projects implemented. /2 Lengths of road that were planned for rehabilitation at appraisal, but not implemented.
The main reasons for the delays in launching the road works were monetary constraints due to the Government's fiscal deficit, which contributed to delays as counterpart allocations varied from year-to-year, and a lack of timely counterpart funds. By effectiveness in February 1997, the Government’s budget cycle had just concluded and as such, counterpart funds for the NRP could not be included in the budget. As a result, the NRP only had access to Bank funds, and was limited to pursuing those activities that were 100 percent Bank-financed. When the entire amount of the Government’s US$33.0 million contribution to the NRP, which included expropriation costs, was made available in February 1998, the COA exercised its ex ante control over contracts, which led to additional delays. The PIU’s procurement process became mired down, and implementation of the first package of road works came to a standstill. Throughout 1998, the project team, through the NRP, was able to demonstrate to the COA the value of using World Bank procurement procedures, which benefited the subsequent packages of road works. In 1999, a bylaw was passed permitting projects that are financed by international donors to procure works, goods and services according to their own guidelines, and not be subject to ex ante review by the COA. This was a major achievement that remains in force today and benefits the Bank and other donor financed projects throughout Lebanon.
Other delays included the: (i) poor quality of engineering designs, many of which applied a systematic approach to road widening, regardless of constraints on the ground or the consequences of doing so before imposing desired standards; (ii) unexpected need to expropriate land, partly as a result of the poor engineering designs, which resulted in protracted negotiations with landowners (no works could proceed until the amount of land to be expropriated had been agreed); and (iii) persistent lack of counterpart funds between 2001 and 2003, which was due to low Government revenues and resulted in delays in payments to contractors by as much as six months. In 2001, there were no recorded counterpart payments to contractors. These issues combined to significantly slow the pace of works.
Furthermore, weak oversight by the supervising engineers and the inadequate allocation of PIU staff time to monitor works permitted local interference and the addition of unplanned works. Unfounded changes to approved road packages led to a succession of variation orders, which resulted in contractor claims for
- 41 - increased budgets and extended durations. Significant variations involved substituting more expensive reconstruction to the initially designed 5-cm pavement overlay, imposition of a 1.5-meter shoulder on both sides of the road (at the expense of major retaining walls) and which created additional expropriations, and expensive easement of curves.
In spite of a reduction of one-third in the total number of kilometers rehabilitated, the cost of the road component exceeded its original estimate by nearly twenty percent. At appraisal, the estimated average cost per km was US$154,000, including contingencies. This estimate was based on previous bids for road works of similar nature and magnitude. The actual average cost turned out to be about US$200,000 per km. Cost overruns, which were attributed to a number of challenging conditions at many of the project sites, are described in Annex 3.
- 42 - - 43 -