Document of The World Bank
FOR OFFICIAL USE ONLY Public Disclosure Authorized ReportNo. 9035
PROJECT COMPLETION REPORT
REPUBLIC OF CYPRUS Public Disclosure Authorized
THIRD HIGHWAY PROJECT (LOAN 2128-CY)
SEPTEMBER 28, 1990 Public Disclosure Authorized
Infrastructure Operations Division Country Department IV Public Disclosure Authorized Europe, Middle East and North Africa Regional Office
This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwisebe disclosedwithout World Bank authorization. EXCHANGE RATES
Name of Currency (Abbreviation): Cyprus Pound (CE)
At appraisal (1982,: CE 1.00 = USs 2.32 At completion (1989): CE 1.00 = US$ 2.20
ABBREVIATIONS
MCW = Ministry of Communication and Works PWD = Public Works Department of MCW
KFAED 5 Kuwait Fund for Arab Economic Development RRI = Rural Roads Improvement Program RMMS = Road Maintenance Management System HDM3 = Highway Design and Maintenance Standards Model TRRL = Transport and Road Research Laboratory
FISCAL YEAR OF BORROWER
January 1 - December 31 FOR OMCIAL USE ONLY THE WORLD SANK Washington.D.C. 20433 U.S.A.
Offlceof DOewtmGewal OpesatEonsfvahaMtwn
September 28, 1990
MEMORANDUMTO THE EXECUTIVE DIRECTORS AND THE PRESIDENT
SUBJECT: Project Complation Report on Cyprus Third Highway Proiect (Loan 2128-CY)
Attached, for information,is a copy of a report entitled "Project CompletionReport on Cyprus Third Highway Project (Loan 2128-CY)" prepared by the Europe, Middle East and North Africa Regional Office with Part II of the report contributed by the Borrower. No audit of this project has been made by the Operations Zvaluation Department at this time.
Attachment
Thisdocument has a restricteddistribution and may be usd by recipientsonly in the performance of their offcial duties Its contentsmay not otherwisebe disclosedwithout World Bank authorization. FOR OFFICIALUSE ONLY
REPUBLIC OF CYPRUS THIRD HIGHWAY PROJECT (Loan 2128-CYI PROJECT COMPLETION REPORT
Table of Contents
Pace No.
Preface ...... i Eval.uation Summary ......
PART I PROJECT REVIEW FROM BANK'S PERSPECTIVE
Project Identity .1......
Background .1......
Proiect Obiectives and Descriltion Project Objectives ...... 2 Project Description. 2
Project Design and Organization ...... 3
Proiect Implementation Loan Effectiveness and Project Start-up ...... 3 Implementation Schedule ...... 4 Procurement ...... 4 Project Costs ...... 4 Disbursements ...... 4 Loan Allocation ...... 5
Proiect Results Project Objectives ...... 5 Physical Results ...... 5 Economic Results ...... 5 Impact of Project ...... 6
Project Sustainability ...... 6
Bank Performance. 7
Borrower Performance .8...... a
Project Relationship ...... 9
Consulting Services ...... 9
Project Documentation and Data .9
This documenthas a restricted distribution and may be used by recipients only in the performance of their official duties.Its contents may not otherwisebe disclosedwithout World Bank authorization. TABLE OF CONTENTS-(Cont'd)
Page No.
PART II PROJECT REVIEW FROM BORROWER'S PERSPECTIVE . . .10
PART III STATISTICAL INFORMATION
Related Bank Loans and/or Credits ...... 13
Project Timetable ...... 14
Loan Disbursements ...... 15
Project Implementation ...... 16
Proiect Costs and Financing Project Costs ...... 17 Project Financing ...... 18
Project Results Direct Benefits ...... 19 Economic Impact ...... 20 Studies ...... 21
Status of Covenants ...... 22
Missions ...... 23
Staff Input ...... 24
ANNEXES
Annex A .*.*...... 25 PROJECT COMPLETION REPORT
REPUBLIC OF CYPRUS
THIRD HIGHWAY PROJECT
(LOAN 2128-CYI
PREFACE
This is the Project Completion Report (PCR) for the Third Highway Project in Cyprus, for which Loan 2128-CY in the am3unt of US$12.2 million was approved on April 20, 1982. The loan was closed on June 30, 1989, two years behind schedule. The project implementation included all the components contemplatea in thn SAR and Loan Agreement plus the rehabilitation of the Nicosia-Limassol Highway (not originally contemplated). There were two separate cancellations of funds. The first cancelation was made effective in the amount of US$968,633.09 as of October 20, 1989. The last disbursement was made on December 1, 1989. On January 10, 1990 the Bank informed the Borrower that the unclaimed balance in the amount of US$964,159.47 was being canceled retroactively to the date of the last disbursement. The total amount of this last cancelation was composed of US$0.4 million worth of disbursement applications that were not received in time for processing and a balance of US$0.56 million due to civil works execution that was delayed beyond the end of 1989. The components contemplated in SAR for construction with KFAED financing, were executed with upgraded design standards as justified by revised traffic counts data.
The PCR was prepared by the Infrastructure Operations Division of the Europe Department (Preface, Evaluation Summary, Part I and III), and the Borrower (Part II).
Preparation of this PCR was started during the Bank's final supervision mission of the project in October 1989, and is based, inter alia, on the Staff Appraisal Report; the Loan Agreement; supervision reports; correspondence between the Bank and the Borrower; and internal Bank memoranda. PROJECT COMPLETION REPORT
REPUBLIC OF CYPRUS
THIRD HIGHWAY PROJECT
(LOAN 2128-CY)
EVALUATION SUMMARY
1. Obiectives
1.01 The objectives of this project were oriented to support the overall transport policy objectives of the Government (para 4.01), and addressed in a timely fashion the need to attend to the rural roads netwcrk, to help expand the main highways network and to improve the maintenance of the existing highway network. Also, they were realistically attainable and consistent with the degree of technical capacity and competence of the professional staff of MCW/PWD, who received additional training through the project.
2. ImDlementation Experience
2.01 The project had a very slow start-up period due to delays in contractor prequalification and in preparing the civil works bidding documents. These delays accounted for one of the two additional years, required to complete the project. The second year was required for the execution of the rural roads improvement program (which could not be executed at the speed considered at appraisal) and for the rehabilitation of the Nicosia-Limassol Highway (not initially included in the project).
2.02 Procurement continues to require too much time in Cyprus. Other than this drawback, project procurement wis implemented without any major problems. Project cost estimates were reasonably accurate. The project's cost overruns were due to the upgraded design standards with which the Limassol By-pass and the Ypsonas-Erimi Link were constructed, which were justified.
2.03 The decision to implement the project through a project unit, specifically created to manage the project and coordinate interventions of diverse MCW/PWD units has proven to be a wise one.
3. Results
3.01 The project objectives of supporting regional development, improving traffic conditions, strengthening PWD and ensuring adequate maintenance to existing road network, were satisfactorily attained (para 6.01). The objective of ensuring adequate maintenance for the existing highway network began to be reached towards the end of this project and the influence of the Fourth Highway Project in this accomplishment was substantial. The project was successful in promoting institutional development. - iv -
3.02 The execution of the rural road impro"ement program reached 88 percent of the project's physical target, defined in the SAR to be "approximately 200 km" (para 6.02). All the necessary equipment (financed through the loan) for the vehicle inspection facilities was acquired and five out of six centers are operating. The last one (in Paphos) is expected to be opened by the end of 1990.
3.03 All components of the project are estimated to remain economically justified, with the project economic return reestimated to be 20% compared to 17% at appraisal (para 6.04).
3.04 In addition to physical results, the grvatest 'mpact of the prcoject has been in the area of promoting the development of institutional capability previously non existing, or existing at a lesser extent and in the implementation of a rational maintenance management system (para 6.07).
4. Sustainability
4.01 The almost trouble free implementation of the ongoing Fourth Highway Project, (as was the case of the Third) is a clear indication of the sustainability of this project. The continued commitment of Government and Executing Agency are essential if the benefits attained are to continue and increase (paras 7.01).
4.02 To this effect the continued Bank presence through the follow on Fourth Highway Project and the Transport Sector Development Project will go a long way in supporting the institutionalization of adequate technical/economic criteria for road investment selection and the provision of adequate maintenance funding (para 7.03).
5. Overall Assessment
5.01 In the Region's opinion the Third Highway Project has been a successful one.
6. Findings and Lessons
6.01 The importance of securing in a timely fashion the required land has once more been demonstrated with the delays in constructing the vehicle inspection station at Paphos.
6.02 The good results of this project are linked with the continued Bank lending in the sector through "piggy-backed projects" with similar/congruent objectives and components.
6.03 The creation of the Project Unit has proven to have been instrumental in the project's success. The coordinating role played by the unit has been successful and has obviated many problems that might otherwise have hindered the project. 6.04 Project success is due to a large part to the commitment of the Authorities to the goals of the Project. REPVBLIC OF CYPRUS THIRD HIGHWAY PROJECT (LOAN 2128-CY)
PROJECT COMPLETION REPORT
PART I: PROJECT REVIEW FROM BANiK'SPERSPECTIVE
1. Proiect Identity
Name : Third Highway Project Loan Number : 2128-CY RVP Unit : EMENA Region Country : Cyprus Sector : Transport Subsector : Highways
2. Backaround
2.01 The economic growth of Cyprus (7.5 percent per annum between 1960 and 1973) was brought to a temporary halt by the events of 1974 that de facto divided the country. After an initial drop of the GNP by some 19 percent and a jump of the unemployment rate to nearly 25 percent, Government policy to reactivate the economy in the area under its control proved highly successful and the economy recovered rapidly (prasently the GNP yearly growth stands at about 6.0% percent and full employment conditions prevail, with some labor snortages reported).
2.02 Bank lending to Cyprus began in 1963 with loans going mostly for infrastructure (power, sewerage, highways and ports). The events of 1974 had substantial impact on some of the Bank-financed projects. In particular, the construction of the Nicosia-Morphou highway (first Bank involvement in this subsector) had to be suspended and the unutilized balance (about US$3.6 million) was transferred to the Se-condHighway Project, which included the construction of the new Nicosia-Limassol highway as well as traffic studies and a training program.
2.03 In 1979, the Government requested Bank assistance for a rural road improvement program to sustain agricultural and mineral development in the south, improve a;cessibility to areas remote from Nicosia and Limassol, and ensure a balanced development of the road network. The project was prepared by the Government with the help of consultants under the Second Highway Project. 3. Proiect Obiectives and Descrintion
3.01 Prpiect Obiectivee. The main objectives of the project were to:
(i) support regional agricultural and mineral development in several less accessible rural areas in southern Cyprus and to increase the provision of social services, through the betterment of rural roads;
(ii) improve traffic conditions to and from Limassol port and ease congestion on Limassol town streets by construction of the Limassol Bypass;
(iii) strengthen the operations and administration of the PWD and Inland Transport Department, and in particular to improve their capability to implement and monitor the proiect components, by providing them with technical assistance, equipment and training; and,
(iv) ensure adequate maintenance of the existing highway network.
3.02 Proiect Descriotion. The project provided for:
(i) a three-year time slice (about 200 km) of a program fir the improvement of priority rural roads, to be completed by end of 1986, including minor realignment where needed as well as widening, reconstruction and strengthening of aged or deformed pavements on existing rural roads;
(ii) construction, with supervision, of the first two lanes of a new Limassol bypass (about 10 km) and two-lane connecting link (about 9 km) via Ypsonas to the Limassol-Paphos road. The bypass would connect two Bank-assisted projects, namely Limassol port (Loan 1549-CY) and new Nicosia-Limassol highway (Loan 1344-CY);
(iii) provision of testing and examination equipment for use in four vehicle inspection centers;
(iv) provision of equipment for highway maintenance needed for the increased maintenance operations to remedy backlog ir highway maintenance;
(v) technical assistance to help meet project objectives (approximately 60 man-months over a three year period) by augmenting and strengthening the existing and management capability of PWD; and
(vi) a training program for MCW staff to be implemented through short- term courses on technical and operational aspects at the Higher Technical Institute of Nicosia as well as overseas. 4. Project DesOgn and Organization
4.01 The Third Highway Project was designed to support the Governments overall transport policy objectives to support activities leading to higher productivity and exports, by providing essential infrastructure justifiable in the context of the present status of the island. Since Cyprus has no railway system, highways are of critical importance. Level of motorization is relatively high (about 24 vehicles per 100 inhabitants), and in general traffic on the arterial routes has increased by about 7 percent per annum . er the last years, with growth rates even higher in certain arteries and urban areas. The road network while generally adequate, requIred improvements not only tc satisfy traffic pattern alterations that resulted from ;he changes in the econ-my since 1974, but also to improve access to certain remote areas not adequately served. In this respect the rural road improvement program adds a new dimension to the overall highway planning.
4.02 The project concept and design was appropriate and timely in order to ensure that adequate priority was given to the new rural roads improvements program (RRI) that might have, otherwise, taken longer to be implemented. The construction of the Limassol By-pass was also timely in addressing the need (created by the changed traffic patterns) to complete the main network connection between the Nicosia-Limassol Highway (constructed under Loan 1344- CY) and the Limass.l port as well as the by-pass extension towards Erimi. Since the traffic growth estimates on the basis of which these two facilities were originally designed were underestimated, the Limaesol By-pass and the Ypsonas-Erimi Link were constructed as full four-lane facilities after additional economic analysis proved their upgrading to be economically justified.
4.03 The institutional goals and technical assistance scope were also appropriate and have attained good success. In the later years of the project progress was also achieved towards the project's road maintenance goals.
4.04 The rehabilitation of the Nicosia-Limassol Highway (financed with proceeds of the Loan) was added to the project after Loan Agreement modification of August 1, 1986. This project wmdification was accepted by the Bank in order to enhance the serviceability of the island's most important highway, which had deteriorated more rapidly than expected, primarily due to higher than designed traffic volumes and axle loads.
4.05 The Public Works Department (PWD) of the Ministry of Communications and Works (MCW) was responsible for the implementation of the project. In retrospect, the selected alternative to implement the project through a project unit, specifically created to manage the project, coordJnate the interventions of the diverse MCW/PWD units involved in actual project execution and to channel the benefits of the technical assistance, has proven to be a wise one.
5. Proiect Im*lementation
5.01 Loan Effectiveness and Proiect Start-un. Although Loan 2128-CY became effective relatively promptly (five months after Board date), project start- - 4 -
up was rather slow due primarily to delays in contractor's prequalification and preparation of bidding documents for civil works contracting.
5.02 ImDlementation Schedule. The project was originally scheduled to be completed by June 30, 1987, but most of the Bank-financed project components were only completed by December 1988. The first one year closing date extension was required due to overall project execution delays. An additional year was required to implement the last tranche of rural roads and the rehabilitation of the Nicosia-Limassol highway. During this second additional year, the upgrading of the Ypsonas-Erimi link (KFAED financing) to a full four-lane divided facility with split level intersectlons, was carried-out. One of the vehicle inspections facilities (at Paphos) is still pending construction due to delays in obtaining adequate land. Completion of this facility is expected by the end of 1990. The main reasons for the initial overall project delays were:
(a) lengthy contractor prequalification process;
(b) lengthy civil works bidding documents preparation;
(c) slow bidding process and the customary time-consuming process on the part of the Main Tender Board in determining the successful bidder;
5.03 In addition to the obvious implementation delays that the project encountered, the estimated project execution schedule was probably somewhat optimistic. This was implicitly acknowledged in the SAR of the Fourth Highway Project (appraised during the early years of implementation of the Third), whose implementation schedule considered a six-years project execution (as opposed to only four years for the Third).
5.04 Procurement. Except for the already mentioned procurement delays, no major procedural problems were encountered. Once agreement was reached regarding the Bank's bidding procedures, procurement proceeded somewhat faster, although the time taken at the Main Tender Board level has not improved.
5.05 Proiect Costs. The estimated cost of the Third Highway Project at appraisal was about US$48.0 million. The final cost is about US$50.2 million as shown in Table 5A in Part III. The increase in total cost of about 4 percent was due to the improved standards of construction of the Limassol By- pass and the Erimi-Ypsonas Link. The cost increase of these standard-improved components was partially offset by the saving attained with the reduced construction of the RRI program (initially contemplated at 200 km. of which only 175.7 were constructed), as well as smaller than contemplated equipment .Costs.
5.06 Disbursements. Estimated disbursements of the Loan 2128-CY are given in Table 3 in Part III. Disbursements were delayed due to project start-up delays and slow project implementation. The original closing date was June .30, 1987; efter two extension the final closing became June 30, 1989. In October 20,1989 the Borrower requested the cancellation of approximately US$0.9 million not necessary for project completion. Disbursements against commitments were made until December 1, 1989 and an outstanding balance of approximately US$1.0 million was cancelled retroactively to the date of the last disbursement. The total amount of this last cancelation was composed of US$0.4 million worth of disbursement applications that were not received in time to be processed and a balance of US$0.56 million due to civil works execution that was delayed beyond the end of 1989.
5.07 Loan Allocation. The original and revised allocation and actual disbursements for the Loan 2128-CY are shown in Table 5 Part III. The original allocations were revised in 1986 to reflect changes in project composition, --i.e. the inclusion of the Nicosia-Limassol Highway rehabilitation works and the reduced amount of kilometers in RRI program.
6. Proiect Results
6.01 Proiect Objectives. Overall, the project was successful in meeting its principal objectives of supporting regional development through the RRI program (although the initial project target for this component was not reached); of improving traffic conditions to and from Limassol port and easing congestion on Limassol town; of promoting the technical development of PWD; and in the last years of the loan, also of improving the level of maintenance of the existing highway network.
6.02 Physical Results. The physical target of the RRI program was not fully reached, only 176 km. of rural roads were improved (88 percent of the target of about 200 km.). This nevertheless had no detrimental effect on the project because the execution of the Fourth Highway Project (that overlapped by more than three years with this one), also has a RRI component that has continued to be successful. The other project target that was not attained by closing date, namely the construction of vehicle inspection stations, will be completed by end of 1990.
6.03 On the other hand the rehabilitation of the Nicosia-Limassol Highway that was not contemplated in the original project design added to the benefits obtained through the project. The decision to implement this work during the execution of this project, appears to have been a sound one since a postponement of the rehabilitation would have caused the reconstruction costs to be much higher.
6.04 Economic Results. The weighted average economic return for the project is now estimated to be 20%, compared to 17% at appraisal, and the project is considered economically justified.
6.05 At appraisal, the economic return for the first year of the rural roads improvement program (56.5 km) was estimated to be 16%. A total of 175.7 km were eventually improved during 1985-89 under the program at a cost of 12.0 million Cyprus Pounds. Traffic levels on the improved roads generally ranged from 300-3000 vpd, with one suburban section carrying about 5800 vpd. The program is now estimated to have a weighted average economic return of 25%, with all except one of the 25 sections having an economic return greater than 10% (Table 6B in Part III). The increase in the reeatimated economic return is due to higher levels of traffic than were assumed at appraisal. 6.06 At appraisal, traffic on the Limassol By-pass and Ypsonas-Erimi link was forecast to reach 4500-7000 vpd in 1985. Traffic in fact grew to 8000- 20000 vpd in 1989, due primarily to the rapid growth of tourist traffic in the Limassol area, as well as to the growth of traffic at the port of Limassol. It was therefore decided during project implementation to construct both road sections to four-lane standard, rather than two-lane standard as anticipated at appraisal. The final cost of the four-lane facilities is now estimated to be 10.7 million Cyprus Pounds. The economic return for both sections in reestimated to be 15%, compared to 22% eptimated at appraisal. The moderate decrease in the estimated economic return is due to the additional cost of constructing the facility to four lane standard. However, this reestimated rate of return does not capture all the benefits due to the better level of service resulting from the construction to four-lane standard.
6.07 Imoact of Prolect. In addition to the physical results, which will have a significant impact in the economic development of the country, the greatest impact of this project has probably been in promoting the development of institutional capability which was previously non existent, or existed to a lesser extent, and in providing the technical tools and the methodology necessary for the implementation of a rational maintenance management system (RMMS). This system has been very successful and is fully operational. In the preparation of the feasibility studies for the initial tranches of the RRI program, PWD had to rely on the assistance of outside consultants; starting with the latter tranches of this component, all the feasibility studies for this type of work are now adequately prepared in-house.
6.08 The project has also been instrumental in promoting within PWD the practice to approach roal investments with rational economic/technical criteria, and in subste;.tiallyexpanding MCW/PWD's capability to prepare, in- house, the terms of reference and proposal-invitation documents for studies as well as the bidding documents and technical specifications for civil works and equipment procurement.
6.09 The greatest benefit derived from the project is the substantial progress in institutionalization of rational criteria in the selection of road investments and adequate road maintenance budget allocation.
7. Proiect Sustainability
7.01 As indicated, the Project has had significant benefits in the following:
(a) drawing adequate attention to the need to improve the rural road network and increasing the availability of funds for this purpose;
(b) strengthening PWD's technical capability
(c) increasing the coverage of the primary network with road investments selected through adequate technical/economic criteria, and promoting the establishment of these criteria as the only ones used in the selection of road investments; and, (d) promoting an increase in the budget allocated for mnaintenanceof the exiting road network and providing PWD with the necessary tools and methodology to carry-out a rational maintenance program.
7.02 The success encountered by this project was largely due to the Government's and the Executing Agency's commitment to the project's objectives. The continued commitment of Government and Executing Agency are essential if the benefits attained through this project are to continue and increase.
7.03 The Fourth Highway Project (Loan 2684-CY) and the Transport Sector Development Project (Loan 2906-CY) presently under implementation, share with this project similar objectives. This extended Bank participation in the sector and the continuity of project objectives, should have a major impact in the institutionalization of adequate technical/economic criteria for road investment and the provision of adequate road maintenance budget allocations.
8. Bank Performance
8.01 Through the Third Highway Project, the Bank has made positive contributions to the physical development of the sector and to the institutional development of the Agency in charge.
8.02 Bank performance has been satisfactory. Project preparation was timely and thorough. Although discussions of contractors' prequalification and bidding documents were started well in advance of Loan Negotiations, the delays encountered in this respect were caused by what appears to have been difficulties on the part of the Executing Agency to adapt to the Bank's procurement practices. However, once this obstacle was resolved project execution developed almost problem free.
8.03 The timeliness of Bank's response to the requests made by Borrower and Executing Agency was satisfactory as was the periodicity with which the Supervision missions were scheduled, with the possible exception of 1989 when only one mission could be programed. The three changes in Task Management that the project underwent do not appear to have had any ill effects on the project, and Task Management transition appears to have been smooth. On the other hand, the procurement delays that this project suffered throughout its implementation continue to exist in the ongoing projects, in spite of specific project objectives to address this issue (Loan 2906-CY).
8.04 In retrospect the following lessons may be learnt from the experience of this project:
(a) the contemplated implementation schedule was possibly too optimistic; this lesson has been applied in preparing the Fourth Highway Project, whose implementation schedule was set at BiX years (two more than this project's);
(b) the clearly valuable impact and the benefits obtained through this project (outside of its physical results), cannot be objectively assessed without due regard to the influence that the other two, ongoing projects, had in their attainment. In this regard the lesson, once again, is the importance of the Bank's continued involvement in a sector and the benefit accruing through "piggy-backed" projects;
(C) the project experiencr substantiates, once again, the importance that firm commitment to project objectives, on the part of the Borrower/Executing Agency have for the success of a project;
(d) although the delay in constructing the vehicle inspection facility did not have any serious detrimental effect in the project's overall impact/benefits, it nevertheless highlights the importance that timely land acquisition has in preventing major project delays.
9. Borrower Performance
9.01 Table 7 Part III contains the review of the compliance with Loan Agreement covenants by the Borrower (Government) and the executing agency (PWD). Except for the delays in producing the annual highway maintenance program (complied with only after 1984) and in submitting the Audited Report for fiscal year 1989, performance has been good.
9.02 Project execution was particularly problem free. There were some delays during project preparation and appraisal, but cooperation and support were adequate.
9.03 The project unit was created in a timely fashion and staffed with qualified personnel and, within the confines of its authority, performed satisfactorily throughout. project implementation.
9.04 With the exception of the delays in increasing the budgetary road maintenance allocations (this goal began to be attained only after 1985), the Government's and PWD's commitment to the project's goals were very strong throughout project implementation.
9.05 In general the time needed for the procurement process still continues to be too long, particularly the time required by the Main Tender Board to make its award recommendation. This remains so in spite of the procedures review that was included and carried out under the Transport Sector Project (Loan 2906-CY). In this regard the Executing Agency is clearly not at fault since the delay takes place outside its area of jurisdiction.
9.06 The main lessons that can be learnt by the Borrower and the Executing Agency from the experience of this project are:
(a) the large economic benefits derived from the RRI program, and the importance to retairn, and hopefully increase, the in-house technical capability to prepare and evaluate the yearly proposals for this program; hence, the relevance of a focused and continued training program for the technical staff;
(b) the importance of the timely acquisition of land required for project implementation in order to prevent construction delays; - 9 -
(c) the need to accelerate Tender Board procedures.
10. Proiect Relationship
10.01 Bank relationship with Government and PWD on the project has been good.
11. Consulting Services
11.01 Consultant services required for the preparation of this project were financed through the Second Highway Project (Loan 1344-CY). Similarly, through this the Third Highway Project several studies, required for the preparation of future projects, were financed. Table 6C of Part III presents a summary of the studies financed through the project.
11.02 The two major studies required by the legal documents of the project were fully implemented and have met with satisfactory results. The study to improve rural bus service has been instrumental in the creation of new improved companies; although the program of company creation is still under way, it has already yielded some very tangible benefits. The study for the preparation of a highway maintenance and rehabilitation p.ogram was also successfully completed and the RMMS is presently fully operational with updated road data.
12. Proiect Documentation and Data
12.01 The Loan Agreement was adequate and appropriate for achieving project objectives. The Appraisal Report provided the Bank and the Executing Agency with adequate information and with a useful framework for managing, monitoring and reviewing the project implementation. - 10 -
PART II
PROJECT REVIEW FROM BORROWER'S PERSPECTIVE
The following paragraphs (Part II of the PCR) have been transcribed, without modification from the letter of the Ministry of Pubic Works.
We refer to your letter of March 9, 1989 and the attached office memorandum concerning the above subject, and we present herebelow Part II of the PCR.
2. We confirm the adequacy and accuracy of the factual information contained in Part III of the PCR.
The missing figures in paragraph 2. Background, of Part I of tne PCR are 6% and 2.3% for the present GNP annual growth and the present level of unemployment respectively.
3. The Bank's staff members have contributed significantly to the identification, preparation, appraisal, negotiation, and implementation/supervision of the Project by focusing attention on issues and procedures of importance both at senior and less levels of the Administration. This was done with tact and by exemplifying cases of action taken in similar circumstances as set out in the Bank's guidelines. Such advice could have been pedantic and irritating but, because of the way it was offered and the obvious competence and experience of almost all of those who have been here, was pertinent and helpful. The effectiveness of the relationship between the Government and the Bank is demonstrated by current acceptance of the importance of the following:
a) Project appraisal and cost/benefit analysis before committing Government to major investments. The use of such measures as economic internal rates of return (EIRR's), net present values of benefits and cost streams (NPV's), first year rates of return and the sensitivity tests of results is now in general use whereas before it was not. It is also recognised that over concentration on these measures without a careful consideration of the issues which need to be studied and the nature of the evaluations themselves has its own dangers. Of particular importance is this respect would be traffic growth estimates especially those relating to diversion of traffic and generation of new traffic because of a proposed investment.
b) Engagement of Consulting firms. The disciplines insisted upon by the Bank have ensured that consideration of technical competence is of paramount importance in the selection of consultants. The methodology which is now adopted for the commissioning of Consultants is that described in the "Guidelines for the use of Consultants by World Bank Borrowers and by The World Bank as Executive Agency". Government personnel have gained considerable experience in all stages of the procedures including those of invita:ion, efvaluation and awards. As a result of the review and approval by the Bank of the proposed terms of - 11 -
reference for projects, important modifications have been made which have contributed to the success of the assignment.
As a result of the Bank's policy to encourage the setting up and promote the development of domestic consulting firms, a number of local firms have entered into association with foreign firms. This has led to the transfer of skill to the benefit of local firms. The experience thus gained by local firms will help them to undertake in future assignments by themselves. c) The procurement of civil works is now carried out using, the Bank Guidelines and the sample Bidding Documents used by the IBRD. Initially valuable guidance was obtained from the World Bank through its missions to Cyprus and directly Washington. This assistance has helped us refine our documents to a point which, from our recent experience, the problems that arise during post-tendering period are minimal. d) Procurement of goods is now accomplished by using detailed bidding documents which have been developed on the basis of "sample bidding documents" which were prepared jointly by the Asian Development Bank, the Inter-American Development Bank and the World Bank and resulting from broad international experience. These documents have helped the Government to award contracts to lowest evaluated bidders, and not on price quotation alone. This has led to the securing of better quality equipment. e) Road maintenance was little appreciated before the Bank's involvement with us. The value of easier communications was already appreciated but the methodical maintaining of the road network is now increasingly understood. A good example of this is the experience of the Nicosia- Limassol arterial highway. This was a road which was under-designed at the outset, was subjected to a massive traffic growth of more than 10% per annum from its opening and suffered from a poor road pavement resulting in the need for a partial reconstruction and replacement of the asphaltic layers after only a few years. Observed deterioration of road surface is now the basis for centrally programmed maintenance effort with the newly established Maintenance Section using the Road Maintenance Management System (RMMS) the introduction of which was the result of a maintenance study carried out by foreign consultants. This study was indicated by the Bank and made the Government aware that adequate funding for maintenance was justified. The annual allocation for road maintenance has increased in such a way so as to remedy in phased manner the backlog in road maintenance from previous years. f) The environmental inipactof road developments and construction was particularly highlighted in the study of road access to Tillyria and in subsequent work. The effects on flora and fauna and the changes in land use in ecologically and socially sensitive areas was recognised. For the first time the impacts of development on land use, water and air quality, the landscape, soil erosion and the risk of fire damage and the obliteration'of antiquities were noted and attempt made to - 12 -
quantify the costS of minimising adverse effecte. Tourisn. is now an important part of the island's economy and tourist related employment is well over the 20,000 jobs estimated at that time. To avoid destruction of the very environment which attracts tourist and which should remain a national heritage is now a common awareness. Th- cost of minimising spillage of spoiled material on mountain slopes are increasingly considered when making contractual arrangements with construction companies.
g) Training of personnel in the Ministry of Communications and Works so that they appreciate the new technologies available and their use and limitations. Sixty MCW personnel attended overseas courses in various professional skills whilst many others have undergone local training at the Nicosia Higher Technical Institute.
h) Road safety and the costs to the community of poor driver performance and geometrically substandard roads and highway especially in view of the growing vehicle population of the island and more intensive use of cars, trucks and buses.
4. Adherence to Bank guidelines and target dates during the implementation of Projects was one of the Government's main concerns. We have for the greater part of the project cycles matched the schedules set with the Bank. The project duration was, however, in two cases extended by one year due to lengthy procurement procedures. Advice from the Bank through the various supervision missions to Cyprus and the subsequent aide-memoires were an invaluable assistance to the Government when taking accelerated action as necessary to avoid bottlenecks and delays.
s. No small part of the successes of the Third Highway Project for Cyprus has been the tactful reminding by the Bank Mission members of the importance of proper reporting as part of the administration and management of the projects. As a matter of self discipline we now regularly produce monthly reports of general progress and regular reports on particular road projects. This has helped at &'l levels of the Administration. The availability of succinct Aide-Memoires every six months or so are invaluable. - 13 -
PART III
STATISTICAL INFORMATION
1. Reglted Bank Loans and/or Credits. In addition to this Loan the Bank has financed the following related projects, four for highways and two for porti
Year of Loan Purpose Anoroval Status
Hiahwav Proiects
First Highway Construction of Nicosia- May 1973 Suspendedl' 904-CY Morphou highway and access roads.
Second Highway Construction of Nicosia- Nov. 1976 Completed 1344-CY Limassol highway.
Fourth Highway Road rehabilitation and April 1986 Ongoing 2684-CY strengthening, slice of maintenance program and improvement of Larnaca- Kophinou and Larnaca- Nicosia highways.
Transport Sector Construction of Dhekelia- Feb. 1988 Ongoing Development Aradhippou-LIA highway, road 2906-CY improvement and pavement strengthening.
Port Proiects
Cyprus Ports Development of new deep- June 1969 Completed 628-CY water port at Limassol
Second Ports Expansion of port facilities March 1978 Completed 1540-CY at Limassol and Larnaca.
I/ Comt1ai vm hiemqWd by evems of iWy 1974 after .Iy ow -i of wrk. ad the Bank agreedto It Goveral' .qucat for the rfaUocaio ,,iliks to do d pojed (Last 134C7. of US$3.6 - 14 -
2. Proiect Timetable
Date Date Date Item Planned Revised Actual
Identification 1/79 3/8/79
Preparation 3/80 - 2/27/80
Preappraisal 3/80 12/80 3/81
Appraisal 5/80 7/81 10/17/811'
Loan Negotiations 3/82 - 3/5/82
Board Approval 5/82 4/20/82
Loan Signature 6/82 - 6/8/82
Loan Effectiveness 8/82 10/82 9/15/82
Loan Closing 6/30/87 6/30/88 6/30/89
Loan Completion 12/30/86 5/31/89 10/31/891
Comments:
1/ Slower than expected project preparation. 21 Most components were completed by this date but, the Ayia By-pass road (RRI program) was completed in January 1990, and the Vehicle Inspection facility at Paphos will be completed only by the end of 1990. - 15 -
3. Loan Disbursements
Cumulative Estimated and Actual Disbursements (USS million)
1983 1984 1985 1986 1987 1988 1989
Appraisal Estimate 2.2 5.8 8.1 11.3 12.2 12.2 :2.2 Actual 0.3 1.0 2.5 3.2 5.3 7.6 10.3 Actual as of % of Estimate 13.6 17.2 30.9 28.3 43.4 62.3 84.4
Date of Final Disbursement: December 1, 1989
Cumulative Disbursements:
CWULAT IVE D 1SSURSBEENTS 13 -
12 -
11-
J 7 -
3 -
1983 1984 1985 1986 1987 1988 1989
A E A S A o SAP EST IMATE 7ACTUJAL - 16 -
4. Proiejt Imolementation
Appraisal Actual (or Indicgtor.a' Estimates PCR Estimates
1. Rural Roads Improvements 50 km/year 29 km/yeary
Comments:
1/ In the SAR no specific project implementation performance indicator is given. Nevertheless, for the construction if the RRI component it is reasonable to assume a uniform rate of implementation, which yields 50 km. of RR1 per year. ai Considering a total implementation time of 6 years. If allowance is made for the initial delay of one year, che implementation rate over an execution time of 5 years would be 35 km. per year, that still is substantially lower than the implicit SAR target. - 17 -
5. Project Costs and Financing
A. Proiect Costs
Appraisal Estimates ActuaA Local Foreign Total Local Foreign Total Costs c C Exchance Costs Costs (USS M) (US$ M)
Comtponent Rural Road Improvement!' (SAR:200 km; Cons: 375.7 km) 20.8 13.7 34.5 15.6 9.1 24.7
Paving Worksy ------2.3 1.7 4.0
Limassol Bypaus (10 km) and Ypsonae-Erimi Link (9 km) 6.8 3.4 10.2 17.2 5.7 22.93'
Vehicle Examination Equipment 0.0 0.7 0.7 0.0 0.3 0.3F
Technical Assistance 0.1 0.5 0.0 0.0 1.7 1.7
Training of MCW staff 0.1 0.3 0.4 0.0 0.2 0.2
Highway Maintenance Equipment 0.0 1.6 1.6 0.0 0.8 0.8
Charges 0.0 0.2 0.2 0.0 0.2 0.2
Total Cost 27.8 20.4 48.2 35.1 19.7 54.8
Comments:
1/ The SAR contemplated the construction of 200 km, but only 175.7 km were constructed. The unit price implicit in the SAR was USS 172,200 per km, and the average actual unit price of these program was only approximately USS 136,000 per km.
2/ Rehabilitation of the Nicosia-Limassol Highway
3/ Cost overrun due to improved construction standards (4-lane facilities)
4/ All Vehicle Examination equipment has been received, but the installation of the equipment for the Paphos center will have to wait until end of 1990 to be install- after the facility has been constructed. - 18 -
B. Proiect Financina
Planned (Loan fiourcu Agreement). Revised Final (US$ 000) (Us$ 000) % (US$ 000) E
IBRD 1. Civil Works 10,462 7,012 6,191 la. Paving Works 2,404 90 1,703 75 2. Vehicle Exam. Equip. 668 601 90 282 42 3. Consulting Services 556 1,703 306 1,685 303 4. Training of Staff 334 300 90 225 67 5. Charges 180 180 100 180 100
Co-Pinancing Institutions (Kuwait Fund) 1. Rural Roads 3,193 2,962 93 2,885 90 2. Limassol Bypass 3,405 4,638 136 5,726 168 3. Maintenance Equip. 1,702 660 39 777 46
Domestic (Government) 1. Rural Roads Improv. 20,288 14,780 15,636 la. Paving Works --- 1,967 82 2,335 89 2. Limasol Bypass 7,236 9,856 136 17,205 238
TOTAL 48,024 47,063 98 54,830 114 - 19 -
6. Proiect Results
A. Direct Benefits
Appraisal Actual at Indicators Estimates Closing Date
Improvement of Rural Roads 200 km 175.7 km
Professional / Technical Jobs Generated --- 137
Unskilled/ Semi- okill Jobs Generated --- 844
Daily vehicles Benefiting from RRI Program --- 10,594
Daily vehicles Benefiting from the Limassol By- pass and Ypsonas-Erimi link 12,908 23,790
Staff that Received Training --- 52
Comments:
In the SAR the only direct-benefit indicator given is the number of kilometers of rural roads to be improved. Additional direct-benefit indicators have been obtained by direct counting and estimations made by PWD that, although cannot be compared with the expected ones at appraisal, nevertheless give an indication of benefits obtained through the project. - 20 -
B. Economic Benefits
Appraisal Actual Estimate (At Final Development)
Economic Rate of Return
Limassol By-pass 21 15
Ypsonas-Erimi Link 27 15
RRI program 16 25
Project (weighted 17 20 average)
Note:
The economic return for the project was reestimated using actual or estimated final construction costs, the most recent available traffic counts, and current vehicle operating cost estimates. Traffic counts were carried out shortly before construction of each of the 25 sections of the rural roads improvement program, as well as after construction for five of the rural road sections and the Limassol By-pass and Ypsonas-Erimi link. A comparison of the before and after rural road traffic counts revealed little change beyond what would be expected from normal traffic growth, so that the pre-construction counts were used in the reevaluation for the remaining rural roads, after adjusting them to the opening date assuming and average growth rate of 4.5% p.a. Land costs were estimated to add 20% to the cost of construction of the Limassol By-pass and Ypsonas-Erimi link. The tax component of construction costs is small, and was disregarded. Costs and benefits were adjusted to 1989 levels using a Cyprus construction cost index. Vehicle operating cost (including time costs) were derived by the Public Works Department from HDM3 and TRRL data, and are considered reasonable. Roughness was generally assumed tL be 6000 mm/km before rural road improvements, and 2000 mm/km following improvement. Roughness was assumed to be 3500 mm/km on parallel existing roads before construction of the Limassol By-pass and Ypsonas-Erimi link, and 1500 mm/km on the new roads. Improvements were evaluated over a 20 year period, with future traffic assumed to grow 4.5% p.a. Details of the calculation are shown on Annex A. - 21 -
C. Studies
Purpose as Define at Impact of Studies Acoraisat Status Study
1. Public Service Passenger Seebelow Completed(1986) Confirmed Goverrynentpolicy Carrying Vehicles on the formation of rural regionaL bus companies. This was the preliminary work for the main study below Formation of Rural Rationalization of the Completed(1988) Five new coffpanies formed, Regional Rural Bus public transport system two near formation Companies servicing rural roads completion and several others Identified 2. ImprovedRoad Establishment of a rational Completed(1989) Periodic maintenance of road Maintenance road maintenancemanagement network is nowcarried out system on the basis of priorities established using the RMMS system 3. Limassol Traffic Not contemplated at CompLeted(1987) A numberof junctions Management Appraisal identified in the study are now being redesigned 4. Feasibility studies for Not contemplated at Completed (1989) Timely preparation of future preparation of future Appraisal projects projects (several roads) 5. Deflection Survey on the Not contemplated at Completed(1988) Allowed adequate design for Nicosia-Limassol Highway AppraisaL the rehabilitation of this highway - 22 -
7. Status of Covenants
Deadline for Covenant Subject Compliance Status
(3.01) EstablishProject Unit Complied (3.02) Employmentof Consultants for Parts Throughout the Project Comptied A and F of the Project (3.03) a Insurance of Goods Throughout the Project Complied (3.03) b Usageof equipment exclusively for Throughout the Project Complied Project (3.04) Furnishdocumentation to Bank, Throughoutthe Project Complied maintainadequate records, enable sitevisits, advice Bank of contractsaward and prepare Completion Report (3.05) Timely acquisition of land needed Throughout the Project Complied for the Project (3.06) RRI schemesselected according to Throughout the Project Complied agreed methodologyand with previous agreementof Bank/KFAED (3.07) Carryout a trainingprogram Throughoutthe Project Complied (4.02) Maintainadequate financial records Throughoutthe Project Cotplied and havethem audited / yearly (4.03) Forwardto Bank annualhighway Yearly Clmptiedstarting with maintenance program 1985, but not previously - 23 -
8. Use of Bank Resources
A. Missions
Stage of Month/ Nilberof Days Specialtzation PerformanceRating Typesof ProiectCvcle Year Persons in Field Reoresented StAtusY Problems
ThrouohAworaisal Identification 3/79 Preparation 2/80 Preappraisal 3/81 Appraisal 10/81 3 2v 20 Engineer Economist Financial Analyst
Supervision Supervision 1 10/82 2 13/7 Y Engineer 1 Economist Supervision 2 4/83 2 6 ' Engineer I Economist
Supervision 3 10/83 1 7 3/ Engineer 1
Supervision 4 6/84 1 8 3/ Engineer 1 Supervision 5 10/84 2 9 1' Engineer 1 Economist Supervision 6 4/85 3 11 F Engineers 1 Economist Supervision 7 8/85 3 l 10 A' Engineers 1 Economist Supervision 8 4/86 1 8 Y Economist 1 Supervision 9 8/86 2 15 2' Engineer 1 Economist
Supervision 10 10/86 1 17 tl Economist 1
Supervision 11 3/87 2 16 7/ Engineer 1 Economist Supervision 12 6/87 2 26 Y' Engineer 1 Economist Supervision13 4/88 1 5 ' Engineer 2 Supervision 14 12/88 1 12 2' Engineer 1 Supervision 15 10/89 2 20/10 2' Engineer 1 Economist 1/ 1 - Problem free or m;nor problems 2 - Moderateproblems 3 - Majorproblems 2/ Includingone consultant 3/ Includingsupervision of Loans1344-CY and 1540-CY 7/ Including supervision of Loans 1344-CYand 1540-CYand preparationof proposedFourth Highway Project Partialsupervision and preparationof proposedFourth Highway Project Including identificationof proposedTransport Sector Project Including supervision of Loan 2684-CYand preparation of proposed Transport Sector Project Including supervision of Loan 2684-CY Including supervision of Loans 2684-CYand 2906-CY - 24 -
B. STAFF INPUT (BW)
Processina Stage Inowt
Preparation 3.3
Appraisal 20.1
Negotiations 6.3
Supervision 63.1
Total 92.8 - 25 - Annex A
Details of the Economic Reevaluation
Cost Estimated Distance (pounds Traffic Economic Road Section (km.) 000) (AADT) Return (%)
RURAL ROAD BETTERMENT: 1st year (completed 4/85-12/85): Kalokhorio-Gourri 7.7 452 374 13 Polis-Pomos & Stroumbi-Polemi 10.8 562 927 30 Liopetri-Paralimni 9.0 363 1380 25 Kykkos-Kambos 5.0 282 264 21 Parekklisha & Ayia Phyla 13.7 691 2000 51 Paraklisha Bypass 1.6 102 1199 34 Kellia-Troulli 6.6 224 745 11
2nd year (completed 10/86-10/88): Aredhiou-Kal. & Gourri-Pharma 12.4 1,172 1538 30 Athalassa-Yeri 3.0 188 3148 100 Avgoru-Ormidhia 2.5 94 1174 23 Polemi-Psalti-Kannaviou 9.1 809 561 15 Pomos-Pakhyammos 4.6 308 366 7 Zoopiyi-Agros 13.9 1,001 324 15
3rd year (completed 1/88-8/88): Moni-Monagroulli-Asgata 6.0 423 249-1236 19 Palodhia-Zoopiyi 16.0 1,080 331-629 12 Tsadha-Khoulou 12.0 918 510-627 25 Liopetri-Laru/Fam. 8.0 506 753 20 Paliometokho S. & N. 2.5 243 1692 37 Kambia-Kapedhes 4.0 280 367 19 Mathiatis-Lythrodhontas 4.0 333 997 22 Peristerona-Plat./Agro.-Mitse 15.0 1,161 835-1148 17
4th year (completed 1/89-12/89): Lania-Road 0.8 115 364 22 Eylenjia-Athalassa 2.2 262 5817 100 Anayia By-pass 5.3 427 2500 27
subtotal or weighted average 175.7 11,996 n.a. 25 (Appraisal) (200) (18,720) n.a. (16)
LIMASSOL BYPASS: 9.2 5,729 19984 15 (Appraisal Estimnate) (10) (2,200) n.a. (21)
YPSONAS-ERIMI LINK: 9.1 4,931 8315 15 (Appraisal Estimate) (9) (2,200) n.a. (21)
TOTAL OR WEIGHTED AVERAGE 175.7 22,656 n.a. 20 (Appraisal Estimate) (219) (23,120) n.a. (17)