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Technical Assistance Consultant’s Report

Project Number: 41076-01 February 2011

Republic of the : Road Sector Improvement Project (Financed by the Japan Special Fund)

Volume 1: Executive Summary

Prepared by Katahira & Engineers International

In association with Schema Konsult, Inc. and DCCD Engineering Corporation

For the Ministry of Public Works and Transport, Lao PDR and

This consultant’s report does not necessarily reflect the views of ADB or the Governments concerned, and ADB and the Governments cannot be held liable for its contents. All the views expressed herein may not be incorporated into the proposed project’s design.

Republic of the Philippines DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS OFFICE OF THE SECRETARY PORT AREA,

ASSET PRESERVATION COMPONENT UNDER TRANCHE 1, PHASE I ROAD SECTOR INSTITUTIONAL DEVELOPMENT AND INVESTMENT PROGRAM (RSIDIP)

EXECUTIVE SUMMARY

in association KATAHIRA & ENGINEERS with SCHEMA KONSULT, DCCD ENGINEERING INTERNATIONAL INC. CORPORATION Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

TABLE OF CONTENTS

Page

EXECUTIVE SUMMARY

1. BACKGROUND OF THE PROJECT ...... ES-1

2. OBJECTIVES OF THE PPTA...... ES-1

3. SCOPE OF THE STUDY ...... ES-2

4. SELECTION OF ROAD SECTIONS FOR DESIGN IN TRANCHE 1 ...... ES-3

5. PROJECT DESCRIPTION ...... ES-8 5.1 Contract Package 1 ...... ES-8 5.1.1 Lot 1.1: Bauang- Road...... ES-8 5.1.2 Lot 1.2 : -Bugallon Road...... ES-10 5.2 Contract Package 2...... ES-12 5.2.1 Lot 2.1a : Palo-- Road ...... ES-12 5.2.2 Lot 2.1b : Daang Maharlika Road (Liloan-Naval Highway).... ES-14 5.2.3 Lot 2.2 : - Road ...... ES-14 5.2.4 Lot 2.3 : North, 1st District (Manjayod-La Libertad)...... ES-17 5.2.5 Lot 2.4 : Dumaguete North Road, 1st District (La Libertad-Vallehermoso) ...... ES-17 5.3 Contract Package 3 5.3.1 Lot 3.1 : - City Road ...... ES-20 5.3.2 Lot 3.2 : - de Oro City- Road ( Oriental)...... ES-22 5.3.3 Lot 3.3 : Butuan- City-Iligan Road ( del Norte)...... ES-22 5.3.4 Lot 3.4 : - Road ...... ES-25

6. BRIEF PROFILE OF THE PROJECT AREAS ...... ES-27 6.1 Lot 1.1 : Bauang-Baguio Road (Provinces of and )...... ES-27 6.2 Lot 1.2 : Olongapo-Bugallon Road ( and Provinces) ...... ES-28 6.3 Lot 2.1a : Palo-Carigara-Ormoc Road ( Province) ...... ES-29 6.4 Lot 2.1b : Daang Maharlika Road (Liloan-Naval Highway) (Leyte Province) ...... ES-30 6.5 Lot 2.2 : Iloilo-Capiz Road (Old Route), (Provinces of Iloilo and Capiz)...... ES-30 6.6 Lot 2.3 : Dumaguete North Road, 1st District (- La-Libertad), (Province of Oriental)...... ES-31

KEI in association with SKI and DCCD i Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

6.7 Lot 2.4 : Dumaguete North Road, 1st District (La Libertad- Vallehermoso), (Province of )...... ES 31 6.8 Lot 3.1 : Dipolog-Oroquieta City Road (Provinces of del Norte and ) ...... ES 32 6.9 Lot 3.2 : Butuan-Cagayan de Oro-Iligan Road (Province of ) ...... ES-33 6.10 Lot 3.3 : Butuan-Cagayan de Oro-Iligan Road (Province of ) ...... ES-33 6.11 Lot 3.4 : Bukidnon-Cotabato Road (Provinces of Bukidnon and North Cotabato) ...... ES-34

7. PAVEMENT DESIGN OF PHASE 1 OF THE PROJECT ...... ES-37 7.1 Introduction ...... ES-37 7.2 Design Approach for the Selected Road Sections...... ES-37 7.2.1 Base Data for Design ...... ES-37 7.2.2 Design Considerations...... ES-39 7.2.3 Design Methodology...... ES-39 7.2.4 Design Plans and Typical Road Sections ...... ES-40 7.3 Maintenance Options Considered ...... ES-40 7.4 Recommended Maintenance Schemes ...... ES-44

8. COST ESTMATION BY ROAD SECTION...... ES-45 8.1 Updated Unit Rates...... ES-45 8.2 Updated Unit Rates for Periodic Road Maintenance ...... ES-47 8.3 Cost Estimates by Road Section...... ES-47

9. PROPOSED IMPLEMENTATION SCHEDULE ...... ES-47

10. ECONOMIC EVALUATION METHODOLOGY AND RESULTS...... ES-49 10.1 Economic Evaluation Model ...... ES-49 10.2 Economic Applications...... ES-50 10.2.1 Traffic Projection...... ES-50 10.2.2 Basic Vehicle Operating Cost Estimates ...... ES-50 10.2.3 Cost Benefit Analysis ...... ES-50 10.2.4 Economic and Shadow Pricing ...... ES-51 10.3 Economic Evaluation Results ...... ES-52 10.4 Sensitivity and Risk Analysis ...... ES-52 10.5 Benefit Distribution Analysis...... ES-53

11. SUMMARY RESULT OF ANALYSIS OF EXISTING FINANCIAL MANAGEMENT SYSTEM OF DPWH ...... ES-54 11.1 The Present Financial Management System ...... ES-54 11.2 Result of Analysis ...... ES-56 11.3 Recommendations ...... ES-59

12. INSTITUTIONAL CAPACITY BUILDING (ICB) OF DPWH ...... ES-60 12.1 Objectives of Analysis ...... ES-60

KEI in association with SKI and DCCD ii Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

12.2 Methodology...... ES-61 12.3 Status of ICB Efforts in DPWH ...... ES-61 12.4 Proposed ICB Component of the Project...... ES-63 12.4.1 Identification Process...... ES-63 12.4.2 Proposed ICB Projects...... ES-64

13. RESETTLEMENT FRAMEWORK FOR TRANCHES 2 AND 3...... ES-69 13.1 Summary of Findings and Recommendation ...... ES-69 13.2 Project Impacts...... ES-70 13.3 Impact on Gender and Other Vulnerable Groups ...... ES-70

14. ENVIRONMENTAL ISSUES AND MEASURES ...... ES-71 14.1 Introduction ...... ES-71 14.2 Methodology...... ES-71 14.3 Screening Environmental Impacts and Mitigation Measures ...... ES-72 14.4 Environmental Monitoring Plan ...... ES-73

KEI in association with SKI and DCCD iii Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

EXECUTIVE SUMMARY

1. BACKGROUND OF THE PROJECT 1. The Government of the Philippines requested the Asian Development Bank (ADB) during its 2007 Country Programming Mission for a Project Preparatory Technical Assistance (PPTA) to provide funds for a Road Sector Improvement Project (hereinafter referred to as RSIP). The PPTA was included in ADB’s Country Operations Business Plan (2007-2008), and in ADB’s pipeline for non- lending products and services for 2008. 2. The request was based on an outline concept paper for the RSIP, prepared by the Department of Public Works and Highways (DPWH) in July 2007. The concept paper envisaged a US$500M project, including a technical and financial assistance package comprising preventive maintenance and/or rehabilitation of selected national roads, as well as institutional capacity building components in support of its mandate and development objectives. 3. The National Economic Development Authority (NEDA) favourably reviewed the DPWH concept paper for the PPTA on 12 December 2007. ADB dispatched a Mission which undertook the fact-finding activities on 10-14 March 2008. 4. The PPTA will have a total cost of US$800,000. The Government of the Philippines requested ADB to provide US$660,000 equivalent counterpart amount. In turn, ADB requested that the PPTA should be financed on a grant basis by the Japan Special Fund, funded by the Government of Japan. The Government of the Philippines financed the remaining US$140,000 by providing the necessary office accommodation and services, remuneration, etc, mostly in kind. The Philippine Government was advised that the approval of the PPTA does not commit ADB to finance any ensuing project. 5. On 2 July 2008, ADB officially approved PPTA to the Government of the Philippines. Katahira & Engineers International (KEI) was selected in 29 August 2008 for undertaking the PPTA Project. KEI is being assisted by the national consulting firms SCHEMA Konsult and DCCD Engineering Corporation. The work started last 29 September 2008 and scheduled to be completed in June 2009.

2. OBJECTIVES OF THE PPTA 1. The PPTA is making preliminary preparations for a project (RSIP) that will have the purpose of improving the Philippines national road network by carrying out periodic road maintenance/asset preservation, rehabilitation/improvement of selected national roads, and improve DPWH’s institutional capability. 2. This is in accordance with ADB’s general transport strategy for the Philippines, aiming to promote pro-poor economic growth and support Government’s priority investment program in general. Not the least, the project would serve to maximize benefits from previous ADB financed projects focused on maintaining and improving existing Philippine road network. 3. The PPTA is the first step in the Road Sector Improvement Project as a whole, the main purposes are to: (i) select, design and evaluate suitable road projects for asset preservation to be implemented in the first Tranche during the years 2010-2011; and (ii) select and tentatively evaluate other priority projects

KEI in association with SKI and DCCD ES-1 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

for the intended, subsequent Tranches 2 and 3. The more precise designs and evaluations for the Tranches 2 and 3 are planned to be undertaken in parallel with the implementations of Tranches 1 and 2, respectively. As used here, “evaluation” includes the assessments of a variety of economic and social benefits of the projects, as well as possible environmental impacts, effects for ethnic minorities, possible needs for land acquisition and resettlement, etc. 4. The RSIP project is intended to be divided in three Tranches (Phases): Tranche 1: maintenance projects for asset preservation only, to be implemented in 2010- 2011. Tranche 2: maintenance projects including road improvements and rehabilitation, for possible implementation in 2012-2014. Tranche 3: also including projects for road improvements and rehabilitation, for possible implementation in 2015-2017. The contents and financing of each Tranche will be agreed separately between ADB and the Government of the Philippines. 5. Most of the work in the PPTA concerns the selection, design and evaluation of road sections for asset preservation in Tranche 1. Tranches 2 and 3 are further away in time and not yet formally committed. Some more open and approximate estimates were provided for tentative assessments for Tranches 2 and 3. 6. The other purpose of the PPTA is to assess the status of institutional capacity building (ICB) efforts in DPWH, including ongoing projects by different development partners, and recommend priorities for the continuation of ICB as part of the Project. The implementation of these priorities, if agreed with DPWH, could follow the implementations of the respective Tranches. Proposed issues to be tackled in the ICB are listed in Chapter 6 of the main report.

3. SCOPE OF THE STUDY

1. In agreement with its objectives and the Terms of Reference, the PPTA include the following activities by the Study Team: a. Preparation of the project design for the RSIP with a cost of US$500 Million in three tranches costing about US$50 Million, US$200 Million and US$250 Million, respectively; b. Preparation of Phase 1 (Tranche 1) of the project; c. Preparatation of the overall design for the second and third phases of the Project; d. Preparation of a draft report and recommendation to the ADB President; e. Definition of project implementation arrangements including institutional and management aspects; f. Assessment of financial management of the DPWH; g. Review of status of financing of road maintenance and Government financial forecasts and Philippine Road Sector development; h. Assessment of DPWH institutional capacity building efforts; i. Review of ADB’s and other Development Partner’s experiences in the Philippine Road Sector development; and

KEI in association with SKI and DCCD ES-2 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

j. Preparation of a draft Transport Sector Roadmap for future transport sector operations in the Philippines.

4. SELECTION OF ROAD SECTIONS FOR DESIGN IN TRANCHE 1

1. In accordance with the Terms of Reference (TOR), which in turn is based on a previous concept paper by DPWH, the road sections to be selected for Phase 1 of the project should: (1) provide maximum economic return for the investment; (2) cause minimum negative environmental and social impacts; (3) be suitable for asset preservation without requiring significant repairs, improvements or rehabilitation; (4) be reasonably well distributed between , and ; and (5) result in a total cost of work in the order of US$50 million in Phase 1. 2. DPWH provided a long list of 28 candidate road sections for Asset Preservation, distributed within different regions of the country. The DPWH likewise provided the Consultant initial HDM-4 calculations for the same road sections which were used by the Consultant as basis for the first selection according to criteria (1) and (3) above, i.e., based on the results concerning preliminary estimated economic return and improvements and/or rehabilitation costs, respectively. 3. Maximum economic return means that the total benefits should exceed the total costs by as many percentage as possible. The benefits include reduced vehicle operating costs and time costs, as well as savings in maintenance costs and repairs during the remaining lifetime for the road. It could also include indirect benefits due to (for example) economic development or increased in the area of the road. 4. The costs include materials, equipment, labour and supervision for the works, plus damages caused by indirect environmental or social impacts (if any). Such impacts are less likely for the asset preservation work in Phase 1 since this work should not affect either the road width or the road alignment. Only the work as such, and later perhaps an increasing traffic volume, could then have such effects. The costs for significant improvements, repairs or rehabiliation (i.e. other works than just the asset preservation) should be as low as possible. However, it could only be entirely avoided for a few sections, according to the estimates on which the HDM-4 calculations were based. 5. After discussions with representatives from DPWH and ADB, the Consultant set the maximum for such costs to twenty (20) percent of the total costs for the maintenance work on each individual road section. For some sections, the costs for repairs/rehabilitation based on initial HDM-4 calculations had to be adjusted after the result of Consultants inspections. 6. Based on the above evaluations and criteria, as well as a roughly estimated total cost and the distribution within the country, a total of 8 road sections were tentatively selected and subsequently inspected. After the inspections and their results, the proposed final selection was discussed and approved by DPWH’s

KEI in association with SKI and DCCD ES-3 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

Technical Work Group and by the Inter-Agency Steering Committee for the project. The selected 8 road sections and the comparison of Consultant’s findings and the previous HDM-4 results are shown in Table ES-1. 7. Although the selection was intended to be considered as ”final” and will be used as such for the design, it is based on approximate HDM-4 results and visual (although thorough) inspections. The final costs for the work on each section, and the total cost for all road projects were estimated based on the design results. To insure about the risk for large deviations, two other road sections have also been inspected and were kept as ”spare”. 8. Out of the 28 long list of road sections for asset preservation, 11 were originally shortlisted under Tranche 1 (including one section from Dumaguete North Road) but later reduced to 8, after combining two road sections for Butuan-Cagayan de Oro City-Iligan Road and two road sections for Bauang- Baguio road and deleting the section from Dumaguete North Road. That would leave 18 remaining road sections in the long list. Out of those 18 road sections, however, 5 were excluded due to the resulting low rates of return. Another 3 sections that appeard to be suitable for asset preservation (which remains to be certified, however), were set aside in case more funds would be made available for Phase/Tranche 1. Thus, only 10 road sections for asset preservation were left as candidates for Tranches 2 and 3, where they would have to compete with other 22 road sections requiring improvement or rehabilitation. 9. Table ES-2 shows the long list of road sections for asset preservation distributed to Tranche 1 for priority projects and the remaining to Tranches 2 and 3. On the other hand, Table ES-3 shows the longlist of road sections proposed for improvement or rehabilitation. 10. However, in the later part of negotiation with ADB, after cost estimates were distributed by Tranche, three (3) additional roads were accommodated for Tranche 1 under the ”Design-and-Build” scheme in view of the availability of excess programmed funds for Tranche 1 due to reduction of scope of civil works, since a significant length of sections (distributed among the 8 roads) were later found out to be already improved by the Regional and Disrict Engineering Offices of the DPWH. The additional three (3) road sections for asset preservation under Tranche 1 are: 1) Dumaguete North Road (Manjuyod-La Libertad Section); 2) Dumaguete North Road (La Libertad-Vallehermoso Section); and 3) Butuan-Cagayan de Oro City-Iligan Road (Agusan del Norte Section), which was later separated from the whole Butuan-Cagayan de Oro City-Iligan Road project. Therefore, the remaining roads for asset preservation as candidates for Tranches 2 and 3 were again reduced to 7 roads. The total 11 road sections under Tranche 1 was divided into three (3) contract packages.

11. The map showing the location of road projects under Tranche 1 is presented in Figure ES1-1.

KEI in association with SKI and DCCD ES-4 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

Table ES-2 PROPOSED ASSET PRESERVATION PROJECTS

HDM-4 Recommendation Total Length Projects Region Province NPV/C Costs (PM) Ranking Remarks (km) Asphalt Overlay Reconstruction Good (km) (km) (km)

TRANCHE 1

Bauang-Baguio Road I La Union 21.84 12.83 4.99 4.02 18.25 134.30 6 1 CP-1 Bauang-Baguio Road CAR Benguet 17.21 15.58 - 1.63 3.65 78.77 18

2 Olongapo-Bugallon Road III Zambales 140.96 91.42 8.34 41.20 7.51 946.21 13 CP-2

3 Palo-Carigara-Ormoc Road VIII Leyte 22.89 20.77 - 2.12 3.97 100.81 17 CP-3 Daang Maharlika Road (Liloan-Naval Highway) 4 VIII Leyte 14.86 10.92 - 3.94 2.18 60.64 23 (Under Eastern Nautical Highway)

5 Iloilo-Capiz (Old Route) VI Iloilo 11.82 8.80 2.11 0.90 29.83 126.86 2 CP-4

Butuan-Cagayan del Oro City-Iligan Road X Misamis Oriental 21.19 17.11 3.47 0.61 51.95 375.89 1 CP-5 6 Butuan-Cagayan del Oro City-Iligan Road * Design XIII Agusan del Norte 16.16 9.84 5.55 0.77 12.26 212.17 10 (Agusan del Norte 1st Leg. District) and Built

7 Bukidnon-Cotabato Road XIII Cotabato 47.61 34.90 - 12.71 8.72 193.87 12 CP-6

8 Dipolog-Oroquieta City road IX 49.15 17.75 - 31.40 8.88 100.43 11 CP-7

Dumaguete North Road VII Negros Oriental 50.71 16.31 25.56 8.84 15.16 509.30 7

CP-8 9 Dumaguete North Road VII Negros Oriental 6.25 2.94 3.31 - 13.83 73.73 9 (Design and Built) Dumaguete North Road (Jct. - VII Negros Oriental 57.63 13.44 4.23 39.96 7.37 20 Negros)

T O T A L 478.27 272.61 57.56 148.10 183.56 2,912.98

TRANCHES 2 & 3

1 Bigaa-Plaridel via & Rd III Bulacan 22.08 10.00 3.11 8.97 14.98 123.08 8

2 Circumferential Road VII Siquijor 71.80 51.32 13.88 6.60 5.99 503.26 21

3 - Road IX Zamboanga del Norte 28.00 17.70 6.51 3.79 5.67 204.28 15

Daang Maharlika, (Sta. Elena- - 4 V 123.88 35.89 11.62 76.37 5.33 386.80 16 Pambuhan) (Lone District)

5 Dipolog-Sindangan-Liloy Road IX Zamboanga del Norte 82.05 70.83 7.84 3.38 3.02 478.09 19

6 Famy-Infanta-Dinahican Port Road IV-A 37.05 12.11 13.04 11.90 2.60 252.01 21

7 Manila- (Malvar-Lipa Road) IV-A Batangas 25.24 8.91 5.81 10.52 29.79 343.38 3

8 Iloilo-Capiz (Old Route) VI Iloilo 30.74 21.05 1.98 7.71 27.03 185.02 4

9 Palico-Balayan-Batangas Road IV-A Batangas 53.32 18.39 7.79 27.14 21.62 275.63 5

10 Toledo-Pinamungahan Road VII 26.74 24.61 1.91 0.22 2.41 160.60 22

11 - Road III 24.43 8.88 11.42 4.13 1.21 274.40 24

12 Ormoc-- Bdry. Road VIII Leyte 23.21 7.31 3.17 12.73 1.12 100.37 25

13 -Isabel-Merida-Ormoc Road VIII Leyte 77.76 24.15 0.76 52.85 0.96 137.32 26

14 Liloy-Ipil IX Zamboanga Del Norte 30.73 18.68 7.84 4.21 0.94 204.29 27

15 Ormoc-Baybay-Southern Leyte Bdry. Road VIII Leyte 67.16 31.50 - 35.66 0.85 159.29 28

T O T A L 724.19 361.33 96.68 266.18 123.52 3,787.82

KEI in association with SKI and DCCD ES-5 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

Table ES-3 LONGLIST OF PROPOSED ROAD IMPROVEMENT PROJECTS

Length Projects Province (km)

1 - Road 42.00

2 Circumferential Road 34.00

3 Caticlan - Malay - Libertad - Nabas Road 97.40

4 - - Road Leyte 67.10

Loay Interior Road, Loay-Carmen-Trinidad Road and Jct. Dat- 5 62.28 am-Pilar-Alicia Road

6 Wright - Taft - - Road 220.19

7 Sto. Niño - Buluang Road 45.50

8 San Nicolas - Natividad San Quintin - Umingan - Road Pangasinan / Nueva Ecija 23.50

9 Guinhulngan - - Road Negros Oriental 37.90

10 Bacolod - Murcia DS - Benedicto - San Carlos City Negros Occidental 82.00

11 -Bani - Alaminos Road Pangasinan 55.00

12 San Carlos - Dumaguete Road Negros Occ. / Negros Or. 44.00

13 Circumferential Road Guimaras 38.78

14 West Coast Road Albay 42.09

15 Sto. Rosario - Matag - ob - Palompon Road Leyte 23.71

Ilocos Sur / Benguet / 16 Cervantes - Mangkayan - Abatan Road 83.00 Mt. Province

17 Mulanay - San Francisco Road Quezon 24.10

18 - Road Camarines Norte 22.00

19 Malinta - Baleno - - / Milagros - Road 112.00

20 Toledo - - San Remegio Road Cebu 67.10

21 Mindanao East - West Lateral (Sta. Filomena - Ticlaan Section) Iligan / Bukidnon 75.00

22 - Bais - Dawis - Panyabonan Road Negros Oriental 30.00

TOTAL 1,328.65

KEI in association with SKI and DCCD ES-6 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

Figureigure ES1-1: Location of Roads under Tranche 1

KEI in association with SKI and DCCD ES-7 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

5. PROJECT DESCRIPTION

1. The brief description of the 8 road sections subjected for detailed design under the PPTA and the 3 roads to be included in ”Design-and-Build” scheme, all under Tranche 1, are presented below:

5.1 Contract Package 1

5.1.1 Lot 1.1: Bauang-Baguio Road Bauang-Baguio Road (2nd DEO, La Union and Benguet District)- km 258.92 to km 298.07, (Length = 39.15 kms inclusive of bridges) 2. The 39.15 kms road project, including exception sections, is located in the Province of La Union, in Region 1, and Benguet province, in Cordillera Administrative Region (Figure ES1-2). The road starts at Jct. Manila North Road in Bauang, La Union at km 258.92 and ends in Sablan, Benguet at km 298.07. The road traverses in a south-easterly direction passing the of Bauang, Naguilian, Burgos and Sablan. The first 15 km of the existing road project from Bauang passes through a flat terrain along Naguilian River with elevation ranging from 16 to 40m. The rest of the project road passes through a hilly to mountainous terrain with a gradual increase of elevation from 134 m to 1,472 m in Baguio. 3. The existing pavement comprises of predominantly asphalt concrete overlay surfacing on PCC pavement of 6.10 m width generally in bad to fair condition and needs mostly overlay and reconstruction of some badly damaged stretches. The 2nd District Engineering Office of Benguet informed that improvement of the road section from km 266.00 to km 274.50 is being implemented by their office and therefore considered exception to this project. The project road will consist of 30.90 km AC overlay, 80 m reconstruction at km 228.7 and exception of 8.17 km. Scope of Civil Works Asset Preservation: 50 mm thick AC Overlay; Length = 30.90 km, Width = 6.10 m Improvement of Shoulder, pavement markings, repair of distressed PCCP and miscellaneous works as needed Reconstruction: 50 mm thick AC overlay, 200 mm PCCP, 200 mm Aggregate Subbase; Length = 80 meters.

KEI in association with SKI and DCCD ES-8 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

Figure ES1-2

KEI in association with SKI and DCCD ES-9 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

5.1.2 Lot 1.2: Olongapo-Bugallon Road

Olongapo-Bugallon Road (Ist and 2nd DEO, Zambales) – km 126.341 to km 267.30 (Length = 140.96 kms including bridges) 4. The 140.96 km road project is located in , Region III particularly in the Province of Zambales (Figure ES1-3). The road starts in the roundabout of Kalaklan, Olongapo at km 126.341 traversing Zambales coastal in a northerly direction and ends at km 267.30 at the provincial boundary of Zambales and Pangasinan. It is situated along the western shores of Luzon Island and passes through flat terrain with elevations ranging from 7 m to 54 m. 5. The first 11.20 km road section is with PCCP surfacing with AC overlay in some isolated areas and the remaining sections comprise asphalt concrete surfacing with short sections of PCCP particularly at the proper. The road carriageway width from the start at km 155 is 6.70 m with auxiliary lane in the Olongapo City center and the remaining section with 6.10 m width. The project road is under 1st and 2nd District Engineering Office of Zambales. It comprises of 65.55 km for overlay and an exception of 75.41 km. Scope of Civil Works Asset Preservation: 50 mm thick AC Overlay; Length = 54.24km, Width = 6.10 m 100 mm thick AC overlay; Length = 2.94 km, Width = 6.70 m - 6.10 m 125 mm thick AC Overlay; Length = 8.37 km, Width = 6.70 m - 6.10 m Improvement of Shoulder, pavement markings, repair of distressed PCCP and miscellaneous works as needed.

KEI in association with SKI and DCCD ES-10 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

Figure ES1-3

KEI in association with SKI and DCCD ES-11 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

5.2 Contract Package 2

5.2.1 Lot 2.1a: Palo-Carigara-Ormoc Road

(1st DEO, Leyte, Region VIII) – km 915.19 to km 938.07, (Length= 22.88 kms inclusive of bridges) 6. The 22.88 km road project is located in , Region VIII, in the Province of Leyte under the 1st District Engineering Office (Figure ES1-4). The road starts at km 915.19 in Palo town T-junction with Daang Maharlika highway, traversing in a westerly direction passing the town of Santa Fe and ends at km 938.07 in municipality. The terrain of the project area is relatively flat to gently rolling with elevations ranging from 15 to 68 m. The existing pavement from start to km 916.10 is PCCP overlaid with 50mm AC in bad condition. From km 916.10 to km 931.56, it is PCCP surfacing and about a kilometer of the road section needs reconstruction. The road section from km 931.56 to km 933.15 was overlaid in 2006 observed to be in good condition and considered exception in the project. The remaining section from km 933.15 to km 938.079 is PCCP that requires AC overlay. Pavement width is 6.10 m in general. The project road will consist of 20.30 km AC overlay, 960 m reconstruction at km 919.0 and an exception of 1.62 km. Scope of Civil Works Asset Preservation: 50 mm thick AC Overlay; Length = 20.30 km, Width = 6.10 m Improvement of Shoulder, pavement markings, repair of distressed PCCP and miscellaneous works as needed Reconstruction: 50 mm thick AC overlay, 200 mm PCCP, 200 mm Aggregate Subbase; Length = 960 meters.

KEI in association with SKI and DCCD ES-12 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

Figure ES1-4

KEI in association with SKI and DCCD ES-13 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

5.2.2 Lot 2.1b: Daang Maharlika Road (Liloan-Naval Highway) (1st DEO, Leyte, Region VIII) – km 915.19 to km 934.36, (Length= 14.86 kms inclusive of bridges) 7. The 14.86 km road project is situated in Eastern Visayas, Region VIII in Leyte Province under the 1st District Engineering Office (Figure ES1-5). The road section starts at km 919.50 about 300 meters after the T-junction in Palo traversing in a due south direction passing the town of Tanauan and ends at km 934.36 in Tolosa at the boundary of Leyte 1st DEO. The existing pavement is entirely PCCP of 6.70 m width. The road passes through a flat terrain with elevations ranging from 3 to 36m except the last 1.85km where it is abutted by hill and in rolling terrain. Scope of Civil Works Asset Preservation: 80 mm thick AC Overlay; Length = 14.86 kms, Width = 6.70 m Improvement of Shoulder, pavement markings, repair of distressed PCCP and miscellaneous works as needed.

5.2.3 Lot 2.2: Iloilo-Capiz Road

(2nd DEO, Iloilo) – km 18.36 to km 55.96, (Length = 37.60 kms inclusive of bridges) 8. The 37.60 km road project is situated in , Region VI in Iloilo Province under 2nd District Engineering Office (Figure ES1-6). The road starts in the DEO’s boundary at km 18.36 in Sta Barbara town traversing in a north direction passing the towns of Cabatuan, Janiuay, Badiangan and Lambunan, and ends at km 55.96 in Calinog town. The road passes through a flat terrain with elevations ranging from 6 to 59 m. The first 5.50 kms was widened from 2-lane to a 4-lane road in 2006. The remaining section still has 2-lanes AC pavement except a short section of PCCP from km 45.69 to km 46.98 where reblocking is on-going and being implemented by the 2nd DEO. 9. It was later found that the section from Km 6.520 to Km 18.356 was under the on-going project, thus, this was treated as exception. Only the section from Km 18.356 to Km 55.630 was included in the design with some stretches under exception. The project road will consist of 26.01 km AC overlay, 1.00 km reconstruction starting at km 22.50 and an exception of 11.26 km. Scope of Civil Works Asset Preservation: 50 mm thick AC Overlay; Length = 7.32 km, Width = 6.10 m 80 mm thick AC Overlay; Length = 15.20 km, Width = 6.10 m 100 mm thick AC Overlay; Length = 3.49 km, Width = 6.10 m Improvement of Shoulder, pavement markings, repair of distressed ACP/PCCP and miscellaneous works as needed.

Reconstruction: 100 mm thick AC overlay, 200 mm PCCP, 200 mm Aggregate Subbase; Length = 1000 meters.

KEI in association with SKI and DCCD ES-14 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

Figure ES1-5

KEI in association with SKI and DCCD ES-15 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

Figure ES1-6

KEI in association with SKI and DCCD ES-16 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

5.2.4 Lot 2.3: Dumaguete North Road, 1st District (Manjuyod - La Libertad)

(1st DEO, Negros Or.) – km 50.742 to km 108.967, (Length = 58.23 kms inclusive of bridges)

10. The 58.23 km road project is located in Island, Region VIII, in the Province of Negros Oriental under the 1st District Engineering Office (Figure ES1-7). The road starts at km 50.742 of the district engineering boundary in the town of Manjuyod, traversing in a northerly direction passing about four (4) towns and ends at km 108.967 in La Libertad municipality before approaching Pisong Bridge. The terrain of the project area is relatively flat to gently rolling along the coastal of Tanon Strait. 11. The existing 2-lane pavement comprises of 27.50 km PCCP with 6.10- 6.70m width and 30.73 km ACP having 6.10 m width. The DPWH’s 1st Engineering District has about 8.49 km on-going/scheduled road sections for improvement and which is considered an exception. The conceptual design of the project road will consist of 25.68 km AC overlay, 20.16 km reconstruction and an exception of 12.39 km. Scope of Civil Works (Per Conceptual Design) Asset Preservation: 50-100 mm thick AC Overlay; Length = 25.68 km, Width = 6.70 m Improvement of Shoulder, pavement markings, repair of distressed ACP/PCCP and miscellaneous works as needed Reconstruction: 230 mm PCCP, 200 mm Aggregate Subbase; Length = 20.16 km, width 6.70m

5.2.5 Lot 2.4: Dumaguete North Road, 1st District (La Libertad - Vallehermoso)

(1st DEO, Negros Or.) – km 108.967 to km 150.523, (Length = 41.56 kms inclusive of bridges)

12. The 41.56 km road project is located in Central Visayas Island, Region VII, in the Province of Negros Oriental under the 1st District Engineering Office (Figure ES1-8). The road section is the continuity of Lot 2.3 at km 108.967 passing La Libertad and towns and ends at km 150.523 the provincial boundary in Vallehermoso municipality. It traverses in a north- easterly direction with relatively flat to gently rolling terrain. 13. The existing surfacing consists of about 35.60 km PCCP with varying width of 6.10m-6.70m and about 5.96 km ACP of 6.10m width. The DPWH’s 1st Engineering District has about 1.80 km on-going/scheduled road sections for improvement and which is considered exception. The conceptual design of the project road will consist of 16.88 km AC overlay, 22.87 km reconstruction and exception of 1.80 km.

KEI in association with SKI and DCCD ES-17 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

Figure ES1-7

KEI in association with SKI and DCCD ES-18 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

Figure ES1-8

KEI in association with SKI and DCCD ES-19 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

Scope of Civil Works (Per Conceptual Design) Asset Preservation: 50-100 mm thick AC Overlay; Length = 16.88 km, Width = 6.70 m Improvement of Shoulder, pavement markings, repair of distressed ACP/PCCP and miscellaneous works as needed. Reconstruction: 230 mm PCCP, 200 mm Aggregate Subbase; Length = 22.87 km, width 6.70m

5.3 Contract Package 3

5.3.1 Lot 3.1: Dipolog-Oroquieta City Road

Dipolog-Oroquieta City Road (Ist and 3rd DEO, Zamboanga Del Norte, Region IX) – km 1798.00 to km 1847.89 (Length = 49.89 kms including bridges) 14. The 49.890 km road project is situated in the Island of Mindanao, Region IX, in Zamboanga del Norte Province under 1st and 3rd District Engineering Offices. The road section starts at km 1798 in municipality, 1st DEO passing the towns of Pinan and Polanco, Dipolog city, and ends at km 1847.89 in town, 2nd DEO (Figure ES1-9). The project area consists mostly of rolling terrain with lowlands along its western coast. Elevations along the project road vary from 2 to 113 m. The existing pavement is entirely AC surfacing of 6.10 m width in fair to bad condition. The project road will consist of 20.68 km AC overlay and exception of 29.21 km. Scope of Civil Works Asset Preservation: 50 mm thick AC Overlay; Length = 6.90 km, Width = 6.10 m 80 mm thick AC Overlay; Length = 13.78 km, Width = 6.10 m Improvement of Shoulder, pavement markings, repair of distressed ACP and miscellaneous works as needed.

KEI in association with SKI and DCCD ES-20 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

Figure ES1-9

KEI in association with SKI and DCCD ES-21 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

5.3.2 Lot 3.2: Butuan-Cagayan de Oro City-Iligan Road (Misamis Oriental)

Butuan-Cagayan de Oro City-Iligan Road (Ist DEO, Cagayan de Oro) Km 1423.55 – Km1444.75 (Length = 21.19 kms including bridges) 15. The 21.19 kms road project is situated in the Island of Mindanao, Region X, particularly in Cagayan de Oro City (Figure ES1-10). The project road is located in a narrow coastal plain along the with elevations ranging from 2 to 18 m. The road section is under the Cagayan de Oro City Engineering Office that starts at km 1423.55 and ends at km 1444.75. 16. The existing pavement is a four-lane PCC dual carriageway and some section of the inner lane with AC overlay. It is an undivided 2-lane each direction road except the section from km 1439.2 to km 1442.5 where a raised median island with varying width is installed. The project road will consist of 19.69 km AC overlay and exception of 1.50 km. Two options are to be considered which are re-blocking or by using geotextile with AC overlay. The latter option has lower construction cost and connotes higher time saving as compared to re-blocking. The rest of the stretch is to be overlaid after resealing of joints. Scope of Civil Works Asset Preservation: 50 mm thick AC Overlay; Length = 2.33 km, Width = 6.70 m x 2 80 mm thick AC Overlay; Length = 11.14 km, Width = 6.70 m x 2 100 mm thick AC overlay; Length = 6.22 km, Width = 6.70 m x 2 Improvement of Shoulder, pavement markings, repair of distressed PCCP and miscellaneous works as needed

5.3.3 Lot 3.3: Butuan-Cagayan del Oro City-Iligan Road (Agusan del Norte) Butuan-Cagayan de Oro City-Iligan Road (Agusan del Norte) (Butuan City, Region) Km 1232.91 – Km 1265.00 (Length = 32.09 kms including bridges, with exceptions) 17. The 32.09 kms project road is situated in the island of Mindanao, Region XIII (CARAGA region) (Figure ES1-11). It starts at km 1232.91 in Butuan city junction with the Pan-Philippine Highway, now known as the Philippine-Japan Friendship Highway passing the towns of Buenavista and , then ends at km 1265.00 in Aclan, Carmen. 18. The first road section of about 15.54 kms with varying travel width from 6.10m to 12.60m, is envisaged as a 4-lane concrete pavement undivided dual carriageway in the city proper of Butuan. There are on-going road construction in this first section under the Butuan City Engineering District and therefore considered the first section as exception in the project. The remaining concrete surfacing in the outskirt of Butuan up to Carmen municipality under Agusan del Norte District Engineering Office is a 2-lane, 6.10m width carriageway and considered for AC overlay. The alignment traverses a westerly direction

KEI in association with SKI and DCCD ES-22 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

Figure ES1-10

KEI in association with SKI and DCCD ES-23 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

Figure ES1-11

KEI in association with SKI and DCCD ES-24 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

in a relatively flat terrain. The project road will consist of 16.42 km AC overlay and exception of 15.67 km. Scope of Civil Works Asset Preservation: 80 mm thick AC Overlay; Length = 16.42 km, Width = 6.70 m Improvement of Shoulder, pavement markings, repair of distressed PCCP and miscellaneous works as needed

5.3.4 Lot 3.4: Bukidnon-Cotabato Road (2nd DEO, Cotabato Cotabato, Region XII) Km 1608+000 – Km1655+610. (Length = 47.61 kms including bridges) 19. Road slip was observed at km 1608.600 which affect the shoulders on both sides of the road, but will eventually damage a portion of the pavement if not given attention. A portion of about 200 meters need reconstruction of the said area including the slope protection and the headwall of the drainage structure crossing the road. According to the DEO, proposal regarding the slip portion was already submitted to the DPWH Central Office through the regional office. Later, this was confirmed by the Regional Director of Region XII in his letter dated February 19, 2009 that the stretch between Km 1608.300 to Km 1608.800 is proposed for rehabilitation this CY 2009, thus, this was considered an exception to the project. 20. The 47.610 km road project is situated in the Island of Mindanao, Region XII, in North Cotabato province under the 1st District Engineering Office passing the municipalities of Carmen and (Figure ES1-12). It starts at km 1608.00 in Carmen town adjoining and ends at km 1655.61 in the T-junction connecting the -Cotabato Rd (Jct -Cotabato Sect) in Kabacan. It traverses in a south-westerly direction from the start up to km 1630.00 then turns in south-easterly direction up to the end. Terrain is rolling to hilly with elevations varies from 274 to 372m. The existing pavement in the first 4 kms is asphalt concrete and the rest is PCCP surfacing with some sections overlaid with AC. The pavement width is 6.70 m except for the 3 km of 4-lane between km 1644.00 and km 1647.00, having a 13.40 m width. The project road will consist of 38.11 km AC overlay and exception of 9.50 km. Scope of Civil Works Asset Preservation: 50 mm thick AC Overlay; Length = 35.28 km, Width = 6.70 m 50 mm thick AC Overlay; Length = 2.83 km, Width = 13.40 m Improvement of Shoulder, pavement markings, repair of distressed ACP/PCCP and miscellaneous works as needed.

KEI in association with SKI and DCCD ES-25 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

Figure ES1-12

KEI in association with SKI and DCCD ES-26 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

6. BRIEF PROFILE OF THE PROJECT AREAS 1. For reference in the analysis, the provincial socio-economic profiles of the different project areas of each road project under Tranche 1 on provincial level are briefly discussed below. The basic information on population and income class of each municipality within the road influence areas are summarized in Table ES-4.

6.1 Lot 1.1 : Bauang-Baguio Road (Provinces of La Union and Benguet)

2. La Union is located in the Region in Luzon. Its capital is San Fernando City and borders to the north, Benguet to the east, and Pangasinan to the south. To the west of La Union is the South Sea. La Union has a total land area of 1,504.0 sq. km. and is subdivided into 19 municipalities and 1 city, La Union, the province’ capital and seat of government. Like most of the region, the province is squeezed in by the Cordillera mountain range to the east and the to the west. Yet, unlike other portions of Luzon and the Philippines' two other island groupings, the Visayas and Mindanao, La Union experiences a rather arid and prolonged dry season with little precipitation to be expected between the months of November and May. 3. As of census year 2007, the province was recorded to have a total population of 720,972. Ninety-three percent of the population is Ilocano and is overwhelmingly Roman Catholic. There are communities of Pangasinense in the south, Igorots in the Cordillera foothills, and Chinese in the city. La Union is highly literate, with San Fernando City as the administrative, educational, and financial center of the region. 4. The economy is diversified with service, manufacturing, and agricultural industries spread throughout the province. The Port of San Fernando operates as an increasingly active shipping point, and the former American airbase Wallace Air Station, having been converted into a business and industrial area, helps to facilitate such commercial activity. Tourism to the province is driven by airlines and passenger coach bus lines like regionally owned Farinas Transit Company and . Tourists often flock to the beaches of Bauang, or to the more secluded ones further north for snorkeling, surfing or other water sports; the more northerly beaches near San Juan specifically cater to both local surfers as well as portions of the world surfing circuit. 5. Benguet is a landlocked province of the Philippines in the Cordillera Administrative Region in Luzon. Its capital is La Trinidad and borders, clockwise from the south, Pangasinan, La Union, Ilocos Sur, , , and . Baguio City, a popular tourist destination in the country, is located in the interior of the province, however, the city is independent of the province. 6. Cordillerano, or Cordilleran, is an unofficial and relatively recent term for the people of the hill tribes of Luzon, who are residing in the Cordillera and Caraballo mountains. This term is an attempt at political correctness, since a current term, Igorot, has caused controversy due to its perceived negative stigma and by the ignorance of individuals who didn't really explore and study the area, which is incorrectly connected to backwardness and inferiority.

KEI in association with SKI and DCCD ES-27 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

7. Based on the May 2000 census, Benguet has a total population of 330,129, which makes it the most populous province in the region. This figure is up by 16,296 from 313,833 persons recorded in the 1995 census, giving an annual growth rate of 1.09% during the 5-year period—much, much lower than the national average of 2.43%. If this growth rate were maintained, Benguet would double its population in approximately 64 years. The province registered at 63,123 households, an increase of 4,588 households over the 1990 figure. This gave an average household size of 5.2 persons, a little higher than the national average of 4.99. Benguet is the homeland of several tribes, collectively referred to as the Igorot. Two of them, the Ibaloi in the southeast and the Kankana-ey in the northwest, are the dominant tribes of Benguet. In the 2000 census, 43% of the household population was Kankana-ey. About 29.2% were Ibaloi and 13.4% were Ilocano. Other ethnic groups included Ikalahan (3.7%) and Tagalog (2.4%). 8. , , and tourism are the major industries in Benguet. Because of its temperate and high altitude, Benguet is an ideal place for producing . Benguet is often called the Salad Bowl of the Philippines. In February 2007, Benguet suffered crop damage due to freezing temperatures in the area, reaching as low as 5 Celsius and even lower in some areas, and important crops like cabbages were damaged. Major crops include potatoes, Baguio beans, peas, strawberries, cabbage, lettuce, and carrots. Other agricultural-related activities are monggo processing, preservation, peanut brittle manufacturing, broom making, basket weaving, and flower growing. Apisang (scientific name: Pittosporum resiniferum), a plant endemic to the Philippines, is also being grown in Kapangan and Kibungan towns as a potential alternative source of fuel and energy, rivaling the overhyped jatropha biofuel plant. 9. Mining is another major industry of Benguet, which is one of the country's leading producers. Other mineral deposits are silver, copper, pyrite, and limestone. Silversmithing is a large industry in Benguet, and many entrepreneurs sell silver works at lower prices in Baguio City, compared to Manila. In 2006 alone revenues from mining reached a stunning four billion pesos, and yet this figure comes from just two - Lepanto Consolidated Mining Corporation and Philex Mines - of the many mining firms operating in the province. Nevertheless, the province's mining vigor has never translated into better quality of life of the Benguet people, simply because a bulk of the mining firm's taxes are not paid directly to the province. The two mining corporations, like many others around the country, have principal offices in the City of , a set-up that makes Makati the prime mining tax beneficiary. The presence of Baguio City in Benguet draws a large number of tourists from the lowlands. Often, people who go to Baguio also explore the province, especially the strawberry and plantations in La Trinidad.

6.2 Lot 1.2 : Olongapo-Bugallon Road (Zambales Province) 10. The project area covers the Provinces of Zambales. 11. Zambales is located in the Central Luzon region. Its capital is Iba. Zambales borders Pangasinan to the north, and to the east, and Bataan to the south. The province lies between the South China Sea and the . With a land area of 3,700 km, Zambales is the second

KEI in association with SKI and DCCD ES-28 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

largest among the seven provinces of Central Luzon. It has a population density of 170 people per square kilometer, one of the lowest in the country. The province is noted for its mangoes, which are abundant from January to April. 12. The Aetas of were the earliest inhabitants of what is now the province of Zambales. They were later displaced by the Sambal, an Austronesian people after whom the province is named. Many Sambal still believe in superstitions and mysteries that have been handed down through the generations. The Sambal, the Tagalogs, the Ilocanos, and the Kapampangans today constitute the four largest ethnic groups in Zambales; these identities may and do, however, overlap with one another due to intermarriage and other factors. Most of the people of southern Zambales are migrants from different parts of the country owing to the influx of job opportunities brought on by the U.S Subic Naval Base (San Antonio and Subic) during the American regime of the country. Many people found jobs and permanently settled there. The presence of the Americans greatly influenced the inhabitants, from their tastes in food, clothing, and style. 13. Zambales is a rich source of nickel and chromite. Zambales hosts 173 kilometers of beaches, with coral reefs, dive spots, surfing areas, hotels and day-use beach huts. The province is approximately a 3 to 4 hour drive from Manila, though this can vary greatly with traffic. The "Fiesta Poon Bato," (literal translation is Feast of the Sacred Stone) held in January, is a religious festival that attracts over half a million people each year. The festival venerates Ina Poon Bato (literal translation is Mother of the Sacred Stone) also known as Nuestra Senora de la Paz y Buen Viaje (Our Lady of Peace and Good Voyage), the oldest known image of the Virgin Mother in Asia. The Barrio of Poon Bato located in the , that is host to the image and the fiesta, was completely destroyed during the 1991 Mt. Pinatubo eruption. The icon was saved and moved, along with the barrio inhabitants, to nearby Loob Bunga Resettlement Area. The " Festival" is held in the provincial capital of Iba every April, and the "Domorokdok" (Sambal word for Dance) Festival is held each May in Botolan. These include street dancing, agricultural shows, competitions like sand castle building and "bikini open" beauty pageants.

6.3 Lot 2.1a : Palo-Carigara-Ormoc Road (Leyte Province)

14. The project area of the project road covers the whole Province of Leyte. Leyte is located in the Eastern Visayas region with a total land area of 5,901.5 sq. km. Its capital is City and occupies the northern three-quarters of the island of Leyte. Leyte is located west of Samar, north of Southern Leyte and south of . To the west of Leyte across the is the province of Cebu. 15. The total population of the province as of census year 2007 is 1,544,251. The people of Leyte are divided into two main groups, primarily by language. In the west and south are the Cebuanos, while in the north and east are the Waray-Waray. The Cebuanos have ties with Cebu, the most populous province in the Visayas; the Warays are more tied to Leyte and Samar.

KEI in association with SKI and DCCD ES-29 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

16. Leyte is subdivided into 40 municipalities and three cities, two of which are administratively independent of the province. The municipalities are clustered into 6 congressional districts. Ormoc City is an independent component city, while the capital Tacloban was declared a highly-urbanized city in 2008. Both cities govern themselves independently of the province and their residents do not vote for elective provincial officials. Baybay attained cityhood in 2007 but reverted to its municipal status when the Supreme Court declared its city charter unconstitutional in 2008; however, Baybay would regain its city status following the reversal of the Supreme Court decision dated December 22, 2009. 17. The economy of Leyte depends on agriculture. is farmed in the lower flatter areas specifically those around Tacloban, while farming, for coconut oil is the main cash crop of the more mountainous areas. Fishing is also a major source of livelihood among residents. The province is the site of the largest geothermal plant in Asia, making it one of the resource-rich provinces of the Philippines.

6.4 Lot 2.1b : Daang Maharlika Road (Liloan-Naval Highway) (Leyte Province)

18. The project road serves as a connecting link to Palo-Carigara-Ormoc road located at the south-eastern part of the Province of Leyte. Thus, the project area of the road project also covers the Province of Leyte. 19. The socio-economic profile of the Province of Leyte is as discussed above for Palo-Carigara-Ormoc road project.

6.5 Lot 2.2 : Iloilo-Capiz Road (Old Route) (Provinces of Iloilo and Capiz)

20. Iloilo province is located in the Western Visayas region. Iloilo occupies the southeast portion of Island and is bordered by to the west and Capiz and the Jintotolo Channel to the north. Just off Iloilo's southeast coast is the island of Guimaras, once part of Iloilo but now a province in its own right. Across the Panay Gulf and Guimaras Strait is Negros Occidental. Iloilo's capital is . The Province of Iloilo is the largest marshland in Western Visayas after the Sanderbans. The province is divided into two distinct geographic regions; the highlands of the Madia-as on the western border and the lowland plains which account for a larger portion of the province. Small islands east of its northernmost tip also dot the Visayan Sea - of these, Pan de Azucar and Sicogon are well-known. Iloilo is subdivided into 42 municipalities, 1 component city, and 1 highly urbanized city of Iloilo. 21. As of census year 2007, the province has a total population of 1,691,878. People from Iloilo are called Ilonggos. There are two local languages spoken in the province: Hiligaynon sometimes called Ilonggo, and Kinaray-a. Hiligaynon and variants of it are spoken in Iloilo city and a few towns of the province. Spanish is strictly a local language, at least in a historical way, but the number of natural Spanish speakers have declined strongly after WWII, and due to this, there are today many Ilonggos who do not consider it a local language. 22. Spanish architecture can be seen in old buildings in downtown Iloilo. Chinese Merchants and Indonesians were trading with the Ilonggos long before the Spaniards came. The ruling Spanish government encouraged these foreign merchants to trade in Iloilo but they were not given privileges like ownership of

KEI in association with SKI and DCCD ES-30 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

land. The Mestizo a class eventually was born from the intermarriages of the locals and Chinese merchants, Spanish with the local Melayu people. They later emerged as the ruling class of the Ilonggos. 23. Capiz province is located in the Western Visayas region. Its capital is Roxas City and is located at the northeastern portion of Panay Island, bordering Aklan and Antique to the west, and Iloilo to the south. Capiz faces the Sibuyan Sea to the north. It is known for its mother-of-pearl shells that have the same name and are used for decoration, making lampshades, trays, window doors, etc. Capiz is known for a popular local myth of Aswang, a generic name for ghouls, monsters and witches. 24. Dubbed as the “Seafood Capital of the Philippines”, Capiz boasts of its 80- kilometer coastline and wide expanse of swampy lands easily converted into fishponds. It holds one of the richest fishing grounds and a major contributor in the aquamarine industry of the Philippines. Four big telecommunication companies offer telegraph, telex and telephone services. There are 33 banking institutions and 116 intermediaries operating in the province. 25. Farming and fishing are the primary sources of income of the people. The combined natural bounty of land and sea sustain a vibrant food industry. Primary agricultural raw products are rice, corn, coconut, , and cut flower. Apart from a surplus of agricultural products, Capiz is also a major supplier of prawn and milk fish of the country. Other agro-industrial harvests include blue marlin, squid, oysters, shrimp, seaweed, squid and angel wings. Rich fish ponds attract investors to venture into prawn culture, prawn feed manufacture, seaweed farming and the distribution and processing of other marine products. A robust workforce of 445,246 operates with a literacy rate of 90.5%. The agricultural sector ensures the province as one of the wealthiest in the Western Visayas Region although progress is impeded by corruption. 26. Its relatively unexplored caves are said to have high deposits of mineral resources such as limestone, gold and metal.

6.6 Lot 2.3 : Dumaguete North Road, 1st Disrict (Manjuyod-La Libertad) (Province of Negros Oriental)

6.7 Lot 2.4 : Dumaguete North Road, 1st District (La Libertad-Vallehermoso) (Province of Negros Oriental)

27. Negros Oriental (also called "Eastern Negros") is a located in the Central Visayas region. It occupies the south-eastern half of the island of Negros, with Negros Occidental comprising the north-western half. It also includes — a popular dive site for both local and foreign tourists. Negros Oriental faces Cebu to the east across the Tañon Strait and Siquijor to the south east. The primary spoken language is Cebuano, and the predominant religious denomination is Roman Catholicism. Dumaguete City is the capital, seat of government, and most populous city. A chain of rugged mountains separates Negros Oriental from Negros Occidental. Unlike its sister province, which belongs to the Western Visayas region, Negros Oriental belongs to the Central Visayas region. Negros Oriental faces Cebu to the east across the Tañon Strait and Siquijor to the south-east. The Sea borders it to the south.

KEI in association with SKI and DCCD ES-31 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

28. Negros Oriental's total population as of the 2000 census was 1,126,061, making it the 20th most populous province in the country. 34.5% of the population is concentrated in the six most populous component LGUs of Dumaguete City, Bayawan City, City, Bais City, City, and Guihulngan. The province's average population density is 208 persons per km², lower than the national average of 276 persons per km². Population growth per year is about 2.11%, higher than the national average of 1.92%. 29. With its vast fertile land resources, Negros Oriental's major industry is agriculture. The primary crops are sugarcane, corn, coconut and rice. In the coastal area, fishing is the main source of income. People are also involved in cattle ranches, fish ponds and logging. There are also mineral deposits like gold, silver and copper. Negros Oriental is emerging as a technological center in Central Philippines with its growing business process outsourcing (BPO) and other technology-related industries. Negros Oriental is also becoming a notable tourist destination in the Visayas.

6.8 Lot 3.1 : Dipolog-Oroquieta City Road (Provinces of Zamboanga del Norte and Misamis Occidental)

30. Zamboanga del Norte is located in the region in Mindanao. Its capital is Dipolog City and the province borders and to the south and Misamis Occidental to the east. The lies to the northwest of Zamboanga del Norte. Zamboanga del Norte is the Largest province of Zamboanga Peninsula in terms of land area. 31. Zamboanga del Norte has a population of 823,130 according to the 2000 census. Its population density is 124/km². It is ranked 27th among the provinces both in terms of population and population density. The main language spoken is Cebuano. Zamboangueño/, English and Tagalog are also spoken, indicative of a high level of literacy. The original and native Subanon language lives on, especially in the highlands. Zamboanga del Norte is subdivided into 25 municipalities and 2 cities. These are further subdivided into 691 barangays, and clustered into 3 congressional districts. 32. About half of the province's land area is devoted to agriculture. Corn, coconut, and rice are the major crops. The province being rich in marine and mineral sources, its fish production has accelerated through the development of fishponds. Commercial fishing has likewise steadily increased through the years, with the yellow fin tuna as the primary species. In 2006, a study by National Statistics Coordination Board (NSCB), found Zamboanga del Norte Province to be the Philippines's poorest with a incidence rate of 64.6% in 2003, an increase from 47% in year 2000 statistical figures. 33. Misamis Occidental is located in the region. Its capital is Oroquieta City. The province borders Zamboanga del Norte and Zamboanga del Sur to the west and is separated from del Norte by .

KEI in association with SKI and DCCD ES-32 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

34. The dense population along the coast consists mainly of migrants from Cebu and Bohol, thus the major dialects are Cebuano and Boholano. The native Subanons live in the interior uplands. As of 2007, the total population of Misamis Occidental province is 531,680 with an average population density of 258.7 per sq. Km. 35. The province economy depends firstly on fishing, secondly on , thirdly on rice. The province has 169 kilometers of coastline fronting the rich fishing grounds of Panguil and Iligan bays. It also has the biggest area of brackish-water fishponds in the region. City is a fishing port on famous for seafoods. Coconut is the chief crop. This is processed into oil, desiccated coconut, and coir, most of which are shipped to Cebu. Coconut processing is the main industry in Oroquieta City. Other crops grown are rice, corn, abaca, , cacao and rubber.

6.9 Lot 3.2 : Butuan-Cagayan de Oro-Iligan Road (Province of Misamis Oriental)

6.10 Lot 3.3 : Butuan-Cagayan de Oro – Iligan Road (Province of Agusan del Norte)

36. The Province of Misamis Oriental is one of the five (5) provinces of Northern Mindanao situated along the northern coast of the resource-rich Mindanao Island. It is bounded on the north by Macajalar Bay, on the west by Iligan Bay; on the east by Agusan del Norte; and on the south and southwest by the provinces of Bukidnon and respectively. 37. The province has two (2) cities: its capital, the charter city of Cagayan de Oro and its component city of . It has 24 municipalities: 14 on the eastern side and 10 on the western side. The farthest municipality on the western side is and on the eastern side is Magsaysay. Misamis Oriental has a total of 422 barangays. 38. The province has a total land area of 3,102.90 square kilometers. Claveria, the only land-locked municipality, has the largest area at 894.90 square kilometers while the smallest municipality is with an area of 30.00 square kilometers. 39. The province is generally classified into forestland (47% of land area) and 53% are alienable and disposable lands. But as of 1996, DENR-10 reported that forestland now occupies only an area of 6,243 hectares. 40. For censal Year 2000, the province registered the largest population at 1.126 million people among the five (5) provinces of Northern Mindanao, with more or less 41% recorded as Cagayan de Oro’s population. The residents of the province are a mixture of Maranaw, Spanish, American and Chinese blood. 41. In 2000, Misamis Oriental has an average annual family income and expenditure of PhP89,640.00 and PhP70,989.00 respectively. Being the region’s educational center, one of the major assets of the province is its human resource. Highly educated and trainable labor force composed of young professionals, technical people and skilled workforce are readily available in the area.

KEI in association with SKI and DCCD ES-33 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

42. Misamis Oriental is self-sufficient in some agricultural crops. Almost half (43%) of the province's total land area is planted to various crops like industrial and non-food, cereal, fruit and vegetable and rootcrops. The top five (5) agricultural products are coconut, banana, corn, rice, papaya and . The province is also one of the country's major producers of coconut. This explains the presence of coco-based processing plants in the province such as Pilipinas Kao, Inc., Fiesta Brands, IndoPhil Oil Mills, Limketkai and Sons Milling Corporation, Pacific Activated Carbon Company. The hog population remains the highest among the livestock, comprising 72.25%, in 2002 while poultry production is showing an increasing trend brought about by the entry of leading multi-national food processors promoting contract-growing schemes. 43. Agusan del Norte is located in the Caraga region in Mindanao. Its capital is and it borders del Norte to the north, to the east, to the south, and Misamis Oriental to the west. It faces , part of the , to the northwest. 44. The population of Agusan del Norte (excluding Butuan City) was 314,027 at the 2007 census, making it the country's 64th most populous province. The population density is 115 per km². Agusan del Norte is divided into 10 municipalities and one component city. The highly-urbanized city of Butuan, being geographically located in Agusan del Norte, is traditionally grouped with the province, although it is governed independently from it. 45. The economy of Agusan del Norte is dominantly agricultural, and it is the nation's leading producer of rice. The province of Agusan del Norte is said to have many beautiful beaches such as in the town of Carmen, Buenavista, Nasipit, Cabadbaran City and all other towns in the province. It also has the majestic Mount Hilong-Hilong in Cabadbaran, one of the tallest in Agusan del Norte.

6.11 Lot 3.4 : Bukidnon-Cotabato Road (Provinces of Bukidnon and North Cotabato)

46. Bukidnon is a landlocked province located in the Northern Mindanao region. Its capital is City. The province borders, clockwise starting from the north, Misamis Oriental, Agusan del Sur, , Cotabato, , and Lanao del Norte. There are no seaports in the province, although there is an airport in Malaybalay City. The airport is currently closed. To get to Bukidnon, one must travel by land from Cagayan de Oro City in Misamis Oriental Province. 47. Bukidnon is a landlocked plateau in North Central Mindanao. It is bounded on the north by Misamis Oriental and Cagayan de Oro City; on the south by North Cotabato, and ; on the east by Agusan del Sur and Davao del Norte; and west by Lanao del Sur. It lies between parallels 7°25' and 8°38' North latitude and meridians 124°03' and 125°16' East longitude. Malaybalay City, the capital town, is about 850 kilometers by air from Manila and 91 kilometers by road from Cagayan de Oro City. It has two important landmarks, Mt. Kitanglad and . Mt. Kitanglad is 2,955 meters above sea level. Pulangi River, on the other hand, traverses through the northeastern and southern part of the province towards the Rio Grande of Mindanao.

KEI in association with SKI and DCCD ES-34 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

48. The province's total land area is 829,378 hectares (8,293.78 square kilometers). It accounts for 59% of Northern Mindanao. Thirty-eight percent (38%) is alienable and disposable. The rest is classified timberland. It also accounts for 80 percent (80%) or 34 million metric tons of the region’s nonmetallic mineral deposits which include high grade white and red clay, gold, chromite, copper, serpentine, manganese, quartz and limestone deposits can also be found in the province. 49. Based on the National Statistics Office (NSO) Census last 2000, Bukidnon has a total population of 1,060,415. Males slightly edge the females with 546,234, accounting for about 52% of the province’s total population while females, with 514,181, account about 48%. It is expected that by 2010, the province of Bukidnon will have a total population of 1,344,301. 50. Bukidnon is an agricultural economy, it is a major producer of rice, , , coffee, rubber, , , flowers, cassava, and other and vegetables. Bukidnon is considered by to be the food basket of Mindanao. It is the major producer of rice and corn in the region. Plantations in the province also produce , and sugarcane. As one of the major anchors in crop production, Bukidnon is moving forward towards establishing its position as a principal trader of rice, corn, sugar, potato, tomato and many other commercial and industrial crops. As the second largest producer of corn in the country, it reached a total production of 481,370 Mt. In year 2000, vast tracks of cornfields, rice paddles and sugar plantations are distributed all over the province. It is also a major producer of chickens, hogs and cattle. Almost all large firms operating in the province are into production or processing of these agricultural products. 51. Del Monte Philippines, Inc. (DMPI), Lapanday Diversified Products Corp. and Mt. Kitanglad Agri-Development Corporation are engaged in pineapple production. Dole Philippines (Skyland) and Mt. Kitanglad Agri-Ventures, Inc. are into banana production. DMPI is also engaged in cattle fattening. Bukidnon Sugar Milling Corporation (BUSCO) and Crystal Sugar Milling are into sugar milling and refining. Phil-Agro Industrial Corporation is in starch production. Menzi Agricultural Development is in cacao production. Agaropyta Phils. Inc., Bukidnon Greens Inc., FP Obrero Farms and ARDEM, Inc. are in cutflower production. Food manufacturing giants, San Miguel Foods Corp. (SMFI-PFC), Monterey Farms Corp., Swift Foods, Inc. have intensified their contract breeding and growing operations in the province. Valencia Rubbertex, Inc., an 80-20 Japanese-Filipino joint venture produces rubber boots and rubber shoes for Japan. 52. Bukidnon has already assumed its role as producer and supplier of fresh fruits and vegetables. These produce are either sold in domestic markets or exported to Japan and other neighboring countries. Fresh pineapples, banana, sugarcane and cutflower grown over the years are among its exports. New agri- business industries are still growing. Even export of rubber boots and shoes, an infant industry in the province is increasing tremendously. A wide variety of resource-based handicrafts is extensively produced from , and wood. San Fernando is known for its rattan furniture. Bamboo baskets, wood wares and carvings, mats and other handmade products are ideal souvenir items.

KEI in association with SKI and DCCD ES-35 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

53. North Cotabato, is a landlocked province located in the region in Mindanao. Its capital is City and borders Lanao del Sur and Bukidnon to the north, Davao del Norte and Davao City to the east, Davao del Sur and to the southeast, and to the south and west. It lies on the eastern part of Region XII and is strategically located in the central part of Mindanao. It is bounded on the north by the provinces of Lanao del Sur and Bukidnon, on the east by Davao City and Davao del Norte, on the west by Maguindanao and on the southeast by Sultan Kudarat and Davao del Sur. North Cotabato is strategically linked to the major "Arterial Road System" that traverses and connects the province to Davao City - SOCCSKSARGEN - Cotabato Corridor. The Cotabato via Kabacan - - , Bukidnon Sayre Highway meanwhile serves as its link to the Cagayan de Oro-Iligan City Corridor. 54. North Cotabato, with an area of 656,590 hectares representing 45.06% of the whole regional area, stretches west from Mt. Apo, which separates it from Davao, to the Piapayungan Range on its boundary with Lanao. In the midst of these uplands is the basin of the Pulangi or , the second longest in the Philippines at 300 km, which rises in Bukidnon and flows south to Maguindanao and . The province’s fertile plains are traversed by tributaries of this great river. do not pass through North Cotabato and rainfall is evenly distributed throughout the year. 55. The first Visayan settlers reached the town of in 1913, and since then, Christian migrants have moved and lived in Cotabato, cohabitating the province with the local indigenous groups. 71% of Cotabato’s population are migrants from Luzon and the Visayas, while the remaining 18% belong to the indigenous communities Manobo, T'boli, and Maguindanao. The major languages spoken are Hiligaynon or Ilonggo (43%), Cebuano (31%), Maguindanao (16%), and Ilocano (10%), but a local spanish based creole, chavacano, is spoken. 56. Over the last nine years, North Cotabato has graduated from being a basket case to one of the Philippines most vibrant economies. In 1998, Cotabato was listed as the 5th poorest province in the country. Early in 2006, the National Statistics Coordination Board ranked it 39th among the countries more progressive provinces based on the results of its most recent survey on poverty incidence. 57. The province, since 2004, has become Region XII’s favorite investment area. The province registered a total of P397.49 million worth of investments in 2004, ranking second (2nd) only to City. This meant a 113% leap in investments, the biggest in the region as of February 2005 according to DTI-12. The Cotabato Province Investment Promotion Center (CPIPC) has recorded total investments made in the province from 2000 to 2004 at P901 million. Leading investments is the continuously expanding banana industry with DOLE-Stanfilco standing as the biggest player, having a total investment of P200 Million. Lapanday Global Fruits in Dallag, Arakan has a P50 million investment, while new player AJMR promises to put in P3 billion. 58. This influx of investments has consequently opened more job opportunities for our workers in the province. Dole-Stanfilco opened 6,346 jobs for residents of , , and Kidapawan City, while Lapanday has provided employment to 167 local residents. Some 3,000 jobs will meanwhile be

KEI in association with SKI and DCCD ES-36 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

generated by AJMR’s operation. New jobs generated by these investments from 200 to 2004 reached 68,595 new, and making Cotabato the leading province in job generation in the region, according to DOLE-12. 59. These developments have also ushered in added benefits- improvement of road networks, conversion of grasslands into productive areas, increase of micro-business establishments in the investment areas thus improving the quality of life of residents, and increased real property tax collection. It has also affected the age-long insurgency problem in areas like Makilala and Arakan, where the availability of a more stable source of income and better living conditions have somehow weakened the influence of Communist guerillas. Much of this phenomenon could be credited to the rediscovery of the New Cotabato by both local and foreign investors. While the province has had its share of bad publicity due to wars in the past, Cotabato is making a mark as a province that can offer a positive investment climate and sound business opportunities.

7. PAVEMENT DESIGN OF PHASE 1 OF THE PROJECT

7.1 Introduction 1. In accordance with the Terms of Reference (TOR) of the Technical Assistance (TA), the Consultants study team selected and designed eight (8) national road sections for specific periodic maintenance works and three (3) national roads for ”design-and-build’ scheme based on maximum economic return and minimum negative environmental and social impacts. The road sections were selected from the long list provided by the DPWH. Periodic maintenance, as defined in the concept paper prepared by DPWH, involves asphalt overlay and re-blocking of cracked concrete pavement.

7.2 Design Approach for the Selected Road Sections

7.2.1 Base Data for Design 2. On the basis of the updated traffic data provided by Planning Service of DPWH, the pavement investigation conducted by independent Geotechnical companies hired by the Consultant and other relevant surveys, the Consultants have designed the most cost-effective type of periodic maintenance works following the HDM-4 guidelines in Table ES-4.

KEI in association with SKI and DCCD ES-37 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

Table ES-4: Classification and Description of Road Works in HDM-4

Works Work Class Works Type Works Activity Category

Routine (Pavement) Patching, edge-repair, crack sealing, spot- or Surface regraveling, shoulders repair, etc. Routine Maintenance Drainage Culvert repairs, clearing side drains, etc. Routine Miscellaneous Vegetation control, line-markings, signs, etc. Preventive Treatment Load transfer, dowel retrofit, joint sealing, etc.

Asset Resurfacing Surface dressing, slurry , regraveling, slab Preservation replacement, diamond grinding, etc. Periodic Maintenance Asphalt concrete overlay, mill and replace, Rehabilitation bonded concrete overlay, un-bonded concrete overlay

Reconstruction Partial reconstruction, full pavement reconstruction

Special Emergency Clearing debris, repairing washout/ subsidence, traffic accident removal, etc. Widening Partial widening, lane addition

Realignment Horizontal and vertical geometric Improvement improvements, junction improvements Network Off-carriageway Shoulders addition, shoulders upgrading, lane Development addition, side drain improvement, etc. Upgrading Upgrading by changing the surface type Construction New Section Dualization of an existing section, new section (link)

3. It was concluded that the most cost-effective approach for asset preservation was to optimize the use of existing pavement structures by adding layer (AC overlay) to increase its structural strength and to remedy functional deficiency. This approach requires the evaluation of the existing pavement and determining (a) the section for reconstruction and (b) the overlay section. 4. As part of the Philippine Government’s assistance to the TA, the Planning Services extended their full assistance in gathering related documents and the respective District Engineering offices furnished the Consultants substantial data of the existing roads which was reflected in the contract drawing. 5. The Consultants hired the services of Renardet S.A Consulting Engineers for the roughness survey at 100 meters interval on both direction of the travelway which was completed on March 12, 2009. The roughness index has been used in the economic evaluation of each road. Pavement investigation at 500 meters interval involving measurement of pavement layer thicknesses, determination of subgrade CBR and taking core samples of ACP/PCCP for strength test was carried out by three (3) independent geotechnical companies to complement available information already provided by the DPWH. The investigation was completed on March 7, 2009 and the results were used in the pavement analysis. The traffic data obtained from DPWH’s Planning Services have been used to estimate the amount of traffic and the cumulative number of equivalent standard axles that will pass through the road over the 10 years design life. 6. All the data collected was tabulated and analyzed for each project road to depict the variation in conditions along the project roads. Homogenous sections within which the various parameters are relatively uniform have been identified and defined the specific pavement treatment.

KEI in association with SKI and DCCD ES-38 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

7. A separate report for roughness survey, pavement investigation and pavement design will be submitted to the Bureau of Design (BOD), DPWH and the ADB.

7.2.2 Design Considerations 8. Two major types of pavement common in the Philippines are: (1) Rigid Pavement, usually consisting of a prepared roadbed/subgrade underlying a layer of subbase and a concrete pavement slab, and (2) Flexible Pavement, generally consisting of a prepared roadbed/subgrade underlying layers of subbase, base and a bituminous surface course (see Figure ES7-1 below).

Figure ES7-1: Two Types of Pavement in the Philippines

9. The essential difference between the two types of pavement is the manner in which they distribute the load over the subgrade. Rigid Pavement, because of concrete rigidity and stiffness, tends to distribute the load over a relatively wide area of subgrade. Flexible pavement, inherently built with weaker and less stiff material, does not spread load as well as concrete. It usually requires more layers and greater thickness for optimally transmitting load to the subgrade. 10. The major factor in the design of rigid pavement is the structural strength of concrete. For this reason, minor variations in subgrade strength have little influence upon the structural capacity of the pavement. Rigid pavement carries loads primarily by flexure of pavement slab and reaction of the subgrade. In flexible pavement, the major factor in the design is the combined strength of the different layers. It carries loads by spreading stresses through successive layers of decreasingly selected materials until the stresses have alternated to levels which can be tolerated by the in-situ soil.

7.2.3 Design Methodology 11. The detailed design methodology and pavement design for the eight (8) road sections which forms part of the pavement design report mentioned in paragraph 112 will be submitted separately.

KEI in association with SKI and DCCD ES-39 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

7.2.4 Design Plans and Typical Road Sections 12. The asset preservation plans is presented in a straight line diagram showing the existing road conditions and the proposed periodic maintenance as shown in Figure ES7-2 while the typical road section for reconstruction and rehabilitation of the existing pavement is shown in Figure ES7-3. The plans was presented and discussed with the Bureau of Design and the Technical Working Group of the DPWH on Dec.16, 2008, and found acceptable. The arrangement of the title block shown in the plans is in accordance with D.O. No. 50, series of 2002. 13. The complete set of contract plans which forms part of the Bidding Documents will be submitted to ADB and DPWH as separate document. Together with other reports such as a) unit price analysis b) roughness survey c) pavement investigation d) pavement design e) other supporting related documents.

7.3 Maintenance Options Considered

14. The following maintenance options are shown by comparisons, in order to choose from which option is the most cost-effective. The comparisons are intended to apply to one and the same road section. (a) Concrete Pavements:

Concrete re-blocking and AC overlay. The work will consist of breaking and removing the damaged blocks, then placing a new PCC pavement before AC overlay. The scope of this work may consist of the following: (1) Breaking the affected concrete blocks into pieces. (2) Removing the broken pieces and disposing the debris. (3) Replacing the existing sub-base if they failed to meet required tests. (4) Subgrade preparation if sub-base passed the required tests. (5) Paving with new concrete for the removed portion with provision of steel bar ties between the new and the old pavements.

KEI in association with SKI and DCCD ES-40 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

Figure ES7-2

KEI in association with SKI and DCCD ES-41 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

Figure ES7-3

KEI in association with SKI and DCCD ES-42 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

(6) Application of Tack Coat. (7) Paving of AC for the whole section scheduled for AC overlay. 15. Using paving fabric and AC overlay - for a stretch of existing concrete pavement with longitudinal and transverse cracks but no base failures, provision of paving fabric instead of re-blocking, has a lower construction cost, less traffic congestion and has higher time savings.

Fracturing PCC pavement before doing AC overlay. The following are the recommended techniques in fracturing PCC pavement: . Break and Seat. Consists of breaking a Jointed Reinforced Concrete Pavement (JRCP) into pieces larger than about one foot (0.30m), rupturing the reinforcement or breaking its bond with the concrete and seating the piece firmly into the foundation. Seating typically consists of several passes of a 35 to 50 tones rubber-tired roller over a broken slab. . Crack and Seat. Consists of cracking a Jointed Plain Concrete Pavement (JPCP) into pieces typically one to three feet (0.30 m to 0.91m) in size and seating the pieces firmly into the foundation. Seating typically consists of several passes of a 35 to 50 tones rubber-tired roller over a crack slab. . Rubblized and Compact. Consists of completely fracturing any type of PCC slab (JRCP, JPCP, or CRCP) into pieces smaller than one foot (0.30m) and then compacting the layer, typically with two or more passes to be undertaken before placing the AC overlay. The scope may consist of the following: (1) Removing and replacing areas that would result in uneven support after fracturing. (2) Making subdrainage improvements, if any. (3) Breaking and seating, crack and seating or rubblizing the PCC slab and rolling to seat or compact. (4) Constructing widening, if needed. (5) Applying a tack coat or prime coat. (6) Placing the AC overlay (including a reflection crack control treatment, if needed 16. The objective of fracturing PCC slab by break and seat, crack and seat and rubblizing techniques are used to reduce the size of PCC pieces to minimize the differential movements at existing cracks and joints, thereby minimizing the occurrence and severity of reflection cracks. b) AC Pavements:

Reconstruction of existing pavement consists of breaking and removing of existing pavement by using mechanical equipments and disposing the debris or removing the desired depth of layer by use of roto milling machine.

Using Paving Fabric with leveling course and AC overlay.

KEI in association with SKI and DCCD ES-43 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

17. The maintenance options for Asset Preservation are determined and presented in the Main Volume of this report. To arrive at the costs it is determined by using the corresponding unit cost of the option and multiplied by the area of the road in consideration. 18. This manner of estimating, however, is only for approximation to obtain the total cost of the project and probably for evaluation purposes. For detailed cost estimates as basis of bidding, it is the standard way to calculate the quantities of the pay items and the corresponding unit prices to arrive at the construction cost of the package. The unit prices estimated as mentioned in the following Section 8.1 are used for the cost estimation of the corresponding road packages.

7.4 Recommended Maintenance Schemes 19. The different maintenance schemes by type of existing pavement, considered for the 8 road sections under Tranche 1, and the sample unit costs for each maintenance schemes are herewith summarized in Table ES-5 below:

Table ES-5: SUMMARY OF SCHEMES

Cost/sq.m. Scheme Description Remark (PhP) A2 PCCP Reconstruction with AC Overlay, 2,364.27 Existing PCCP for 50mm thick Bauang-Baguio Road

A3 AC Overlay 50 mm thick with Paving 960.51 Existing PCCP, Fabric Bauang-Baguio Road

A3-1 Crack and Seat and AC overlay, 50 mm 899.52 Existing PCCP, thick Bauang-Baguio

A5 AC Overlay on existing PCCP, 50mm 838.27 Existing PCCP, thick Bauang-Baguio

B1 Reconstruction of existing AC 1,228.21 Existing ACP, Pavement, 50 mm thick Iloilo-Capiz Road

B4 AC Overlay, 50mm thick On existing 775.20 Existing ACP, ACP Iloilo-Capiz Road

20. From the above schemes considered, the following options depending on the existing condition of pavement, are recommended:  Scheme A2 - PCCP Reconstruction with AC Overlay when the pavement upon investigation shows severe deterioration, severe cracking and settlement. Reconstruction for asset preservation is limited only to 20% in cost of the total project cost.  Scheme A3 - AC Overlay with Paving Fabric AC Overlay. To be used when longitudinal and transverse cracks are appearing but no base failure. AC Overlay with Paving Fabric – As mentioned in the pavement design is one of

KEI in association with SKI and DCCD ES-44 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

the measures in controlling reflective cracking. It mitigates surface reflective cracking problems at the same time the fiber acts as waterproofing membrane in sealing crack areas against possible water intrusion which will weaken the road foundation. Installation is faster and that overlay can be done even in lean hours in the night to avoid traffic problems.  Scheme A3-1 - Crack and Seat and AC overlay – Cracking and seating is another way of preventing reflective cracking in the hot mix asphalt concrete overlay over the concrete pavement. The existing characteristic of the pavement determines the required impact energy for a particular cracking pattern. The said characteristics may include the strength of the slab, the joint spacing, extent of the damage or disintegration, and joint condition.  Scheme A5 - AC Overlay on existing PCCP - when the existing condition is fair, that is when alligator cracking is low to medium, no rutting which indicates that the existing pavement is still stable.  Scheme B1 - Reconstruction of existing AC Pavement - It is dictated by the following conditions: High severity of alligator cracking, stripping of the surface, excessive rutting and base deterioration.  Scheme B4 – AC Overlay on existing ACP – when the pavement condition is still fair, low to medium alligator cracking and the base shows no deformation or rutting.

8. COST ESTIMATION BY ROAD SECTION

8.1 Updated Unit Rates

21. The unit rates (refer to Table ES-6) are based on the material cost for the first quarter of 2009. The methods adopted and the bases how these unit costs were arrived at are discussed below:  Bituminous Concrete Surface course a. The unit cost of the processed material, that is the material processed by the contractor at quarries and delivered to project site is first determined considering the components such as asphalt cement Pen. 60-70, crushed aggregate, fine aggregate, filler, etc, considering the equipment and their rental rates so with manpower and their corresponding hourly rates as presecribed by law. b. The direct unit price of the item is then determined by using the processed unit cost of the material for a certain quantity per tonne. The equipment and manpower to be used is determined to produce an output per square meter to arrive at the direct unit cost. c. The total unit price of the pay item is determined by adding to the direct unit price, the indirect cost that comprise the contractor’s profit, overhead, contingency and miscellaneous plus the 12% vat and dividing the sum by the total quantity of the item.

KEI in association with SKI and DCCD ES-45 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

TABLE ES‐6: UPDATED UNIT RATES FOR THE EIGHT PROJECTS OF ASSET PRESERVATION (Total Unit Cost)

CP‐1CP‐2 CP‐3A CP‐3B CP‐4 CP‐5CP‐6 CP‐7 PAY DESCRIPTION UNIT ITEM Bauang- Olongapo- Palo-Carigara- Daang Maharlika Iloilo-Capiz Butuan-Cagayan de Bukidnon- Dipolog-Oroquieta Baguio Road Bugallon Road Ormoc Road Road (Old Route) Oro City Road Cotabato Road City Road

101(3)a REMOVAL OF EXISTNG AC PAVEMENT sq.m. ‐ 45.85 ‐ 47.46 48.30 46.05 ‐ 46.61

101(3)b REMOVAL OF EXISTNG PCC PAVEMENT sq.m. 410.07 ‐ 413.23 ‐ ‐ ‐ ‐ ‐ CRACK AND SEAT OF EXISTING PCCP 101(3)c sq.m. 716.98 687.43 733.63 735.97 737.83 703.75 741.83 695.10 (with asphalt leveling course) 105 SUBGRADE PREPARATION sq.m. 28.19 27.38 28.38 28.38 28.91 27.51 28.78 27.85

200 AGGREGATE SUBBASE COURSE cu.m. 635.12 606.84 641.28 ‐ 654.18 ‐ ‐ ‐

202 CRUSHED AGGREGATE BASE COURSE cu.m. 1,109.09 817.14 954.14 957.66 973.63 830.63 ‐ ‐

300(2) AGGREGATE SURFACE COURSE cu.m. ‐ 836.83 ‐ ‐ 994.68 850.68 1,179.27 862.56

301(1) BITUMINOUS PRIME COAT, CUT‐BACK ASPHALT MC‐70 tonne ‐ 61,680.02 68,291.43 68,291.43 66,932.87 64,772.38 66,062.92 ‐

302(2) BITUMINOUS TACK COAT, EMULSIFIED ASPHALT SS‐1 tonne 60,891.04 59,590.02 66,159.17 66,159.17 64,784.42 62,671.01 63,918.19 58,604.81 BITUMINOUS CONCRETE SURFACE WEARING COURSE, 310(1)a sq.m. 640.99 603.83 673.82 678.11 667.69 633.63 677.53 602.61 HOT LAID (50mm thick) BITUMINOUS CONCRETE SURFACE WEARING COURSE, 310(1)b sq.m. 1,023.21 963.81 ‐ 1,082.59 1,065.85 1,011.50 ‐ 961.83 HOT LAID (80mm thick) BITUMINOUS CONCRETE SURFACE WEARING COURSE, 310(1)c sq.m. ‐ ‐ ‐ ‐ 1,368.08 ‐ 1,387.57 ‐ HOT LAID (100mm thick) BITUMINOUS CONCRETE SURFACE (LEVELING) COURSE, 310(2) sq.m. ‐ ‐ ‐ ‐ 568.05 ‐ ‐ ‐ HOT LAID (50mm thick) 311(1)b PCC PAVEMENT (PLAIN), 200mm thick sq.m. 1,096.58 ‐ 1,033.15 ‐ ‐ ‐ ‐ ‐

SPL 312 SEALING OF CRACKS AND JOINTS ON EXISTING PCCP l.m. 109.10 110.70 114.34 114.34 114.58 110.09 113.15 106.72

SPL 313 PATCHING OF POTHOLES sq.m. 1,283.01 1,227.02 1,344.19 1,352.49 1,334.63 1,270.39 1,352.71 1,211.08 REFLECTORIZED THERMOPLASTIC PAVEMENT MARKING 612(1) sq.m. 864.06 903.09 859.42 859.42 874.86 858.85 869.80 866.57 (White) REFLECTORIZED THERMOPLASTIC PAVEMENT MARKING 612(2) sq.m. 871.26 910.29 866.62 866.62 882.06 866.05 877.00 873.77 ES-46 (Yellow) GEOTEXTILE PAVING FABRIC WITH GLASS 715(8)1 sq.m. 655.40 670.82 653.13 653.13 655.58 656.76 654.60 ‐ REINFORCEMENT

KEI in association with SKI and DCCD ES-46 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

8.2 Updated Unit Rates for Periodic Road Maintenance

22. The following are the basis for derivation of updated unit rates for periodic road maintenance by item of work:  Crushed Aggregate Base and Surface Courses a. The unit cost of the processed material is first determined, considering the location as provided by the material source map. b. The cost of processing using the necessary equipment and manpower including the cost of the hauling distance from the quarry to the project site is determined. c. The total unit price is determined as in paragraph 119c above.  Removal of Existing AC Pavement a. The unit price is determined by considering the cost of equipment rental based on the Association of Carriers and Equipment Lessors, (ACEL), Inc., Year 2006. And the labor rates which comprise basic wage and monthly fringe benefits based on the respective Regional Wage Orders under the National Wages and Productivity Commission of the Department of Labor and Employment (DOLE). b. The unit price of the pay item is arrived at by adding the total cost of equipment rental corresponding to their hourly rental rates and the total cost of manpower with their corresponding hourly rates by dividing it with the targeted output per hour.

c. The total unit price is as in paragraph 119c above.

8.3 Cost Estimates by Road Section

23. On the basis of the above unit cost estimates by type of maintenance works and design considerations, the total cost estimates by road section under Tranche 1 is summarized in Table ES-7 below.

9. PROPOSED IMPLEMENTATION SCHEDULE

24. The corresponding proposed implementation schedules for each road section under Tranche 1 are presented in Annex 6 of the main volume report. The proposed overall implementation schedule for the whole RSIP project is presented in Figure ES9-1.

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2018 1234 2017 2016 2341234 1 2015 1234 2014 1234 4 2013 23 1 2012 21 2011 Philippine Road Sector Project 1234 34 Figure ES9-1: Implementation Schedule 34 2010 12 2009 1234 ACTIVITY rovement Phase 2 Phase rovement p Loan Processing AP-1 consultants of supervision recruitment EA's Services Consultants Supervision works 1 Civil of Tranche Procurement of CW 1 Tranche Implementation Preservation 2 Asset Tranche for Consultants DE Recruitment Improvement and Road Road and Preservation Asset Engineering Detailed Im 2 Phase for and RI for AP Tendering documents ICD Prepare ICD Procure ICD Implement 2 Processing Tranche Consultants Supervision 2 Tranche of Recruitment Services Consultants Supervision Works of Civil Implementation Consultants DE 3 Tranche of Recruitment 3 - Tranche Engineering Detailed 3 for Phase Tendering Implementation and Procurment ICD 3 Processing Tranche Consultants Supervision 3 Tranche of Recruitment Services Consultants Supervision Works of Civil Implementation Implementation and Procurment ICD

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10. ECONOMIC EVALUATION METHODOLOGY AND RESULTS

10.1 Economic Evaluation Model

1. In the economic evaluation process, the Study Team adopted the internationally accepted road evaluation model which is also being used by DPWH in the selection, prioritization, fund allocation and scheduling of Pavement Management projects and in preparing asset preservation programs, i.e., the Highway Development and Management Tools (HDM-4). The Study Team utilized own program of the same version as DPWH, but data and parameters were updated for 2008. The DPWH have HDM-4 results for the project roads under Tranche 1, however, the study team undertook the re-evaluation since DPWH version was only based on visual estimates on road roughness and the cost estimates have to be updated to the latest price level. The latest roughness values in terms of International Roughness Index (IRI) are based on actual measurement conducted in the field. 2. The analytical framework for HDM-4 employs the concept of pavement life cycle analysis, which is applied to predict various factors over the life cycle of a road pavement, which is typically 15 to 25 years, such as: road deterioration, road work effects, road user effects, and socio-economic and environmental effects. Once constructed, road pavements deteriorate as a consequence of several factors, most notably: traffic loading, environmental weathering, and inadequate drainage. The rate of pavement deterioration is directly affected by the standards of maintenance applied to repair defects on the pavement surface over time to preserve the structural integrity of the pavement, thereby permitting the road to carry traffic in accordance with its design function. The impacts of the road condition and design standards on road users are measured in terms of road user costs and other social and environmental effects. Road User Costs in HDM-4 are calculated by predicting physical quantities of resource consumption and then multiplying these quantities by the corresponding user specified unit costs, known as basic Vehicle Operating Costs. 3. HDM-4 determines the economic benefits from road investments by comparing the total costs for various works and construction alternatives against a base case (without project or do minimum) alternative, usually representing the minimum standard of routine maintenance. This tool is designed to make comparative cost estimates and economic analyses of different investment options. To make comparisons, detailed specifications of investment programs, design standards, and maintenance alternatives are needed, together with unit costs, projected traffic volumes, and environmental conditions. To determine the cost-effectiveness of investment options, the objective function is to maximize the NPV/capital cost (CAP). The incremental NPV/CAP ratio satisfies the objective of maximizing economic benefits for each additional unit of expenditure (i.e., maximize net benefits for each additional peso of the available budget invested). 4. The HDM-4 model was utilized mainly for economic evaluation of the different maintenance work alternatives for the roads proposed for asset preservation under Tranche 1. However, for the preliminary evaluation of roads proposed for the succeeding phases of the project under Tranches 2 and 3, considering the limited time available, the more simplified spreadsheet model known as

KEI in association with SKI and DCCD ES-49 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

“ECOVAL”, the earlier developed economic evaluation tool during the conduct of road feasibility studies in DPWH, was used.

10.2 Economic Applications

10.2.1 Traffic Projection 5. The study team established the base year traffic by road project, the source of data of which mainly came from the DPWH central database. However, the available traffic data from DPWH is as of 2008, this was then projected to 2009 base year estimates by applying the established traffic growth rates. The equivalent standard axle load (ESAL) factors utilized are likewise those established by the DPWH as a result of loadometer surveys undertaken in 2008. 6. Traffic growth rates previously estimated for the Project Management System (PMS) developed for DPWH under the newly operational Road Information and Management Support System (RIMSS) were utilized in this study on regional basis as presented in Chapter 11 of the main volume report. These traffic growth rates were estimated utilizing the model frequently used in various DPWH project evaluation considering the factors such as population growth, real per capita income growth and the income elasticity of demand for transport.

10.2.2 Basic Vehicle Operating Cost Estimates 7. As one of the inputs to the HDM-4 model, the updated basic vehicle operating costs (VOC) by type of representative vehicle are necessary. The DPWH has available updated estimates of basic VOCs as of July 2008, which were likewise utilized for this study. The breakdown of costs includes the new vehicle price of representative vehicle, tire prices, fuel and lubricating oil prices, maintenance labor costs, crew costs, annual overhead costs per vehicle, passenger time costs per person and cargo inventory costs. The different characteristics of each representative vehicle are also inputs to the model to estimate the cost consumption such as the number of wheels, number of axles, type of tires, annual vehicle-kilometers, annual working hours, passengers per vehicle, etc. The estimated basic VOCs, both in financial and economic prices, and vehicle characteristics as of July 2008 are shown in Annex 6 of the man volume report.

10.2.3 Cost-Benefit Analysis 8. The purpose of an economic appraisal of road projects is to determine how much to invest and what economic returns to expect. The size of the investment is determined by the costs of construction and annual road maintenance. The economic returns are mainly in the form of savings in road user costs due to the provision of a better road facility. 9. The economic evaluation process in HDM-4 is based on generated annual cost streams for road construction, road maintenance and road user costs. The cost streams will usually begin in a specified base year, onwards throughout the entire analysis period usually chosen to equal the design life of new road pavements.

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10. The cost of new road construction is calculated from the sum of site preparation, earthworks, pavement construction, bridge and drainage structures, and overheads. The annual cost of road maintenance works depends on the maintenance policy or specified standard and the predicted pavement condition. The applied maintenance may range from routine maintenance to full reconstruction. Routine maintenance includes activities which are required regardless of the overall condition of the road or the traffic level, i.e., grass cutting, road sign repairs, drainage clearance, etc. and maintaining localized failures. HDM-4 calculates the quantities of the various work activities which are multiplied by the specified unit cost of each activity, in either economic or financial terms to derive the maintenance costs. 11. Road user cost may be defined as costs incurred by vehicle operators and by the traveling public, which are specified in HDM-4 as economic rather than financial costs. Road user costs consist of vehicle operating costs, time costs and accident costs. 12. The economic analysis was performed on “with” and “without” project scenarios. The difference in vehicle operation costs between these scenarios is the expected benefits accruing from the road investment. Basically HDM-4 model normally quantifies the road user cost savings to normal traffic. Normal traffic is referred to as the traffic demand, which results from the natural growth in population and economic activities within the influence area of each project road. Other types of quantifiable benefits, which are separately inputted to the model after separate manual calculations, include generated traffic benefits as a result of the opportunity for faster, cheaper, more comfortable and reliable transport between the areas served; diverted traffic benefits or the savings realized by the traffic that is presently using other roads or other modes of transport upon diversion to the improved project road; and development benefits which may be in the form of net value added in agriculture or induced production increases. However, for the analysis of the project roads under Tranche 1, only the road user cost savings to normal traffic was calculated.

10.2.4 Economic and Shadow Pricing 13. Financial costs represent the actual investment and road user costs. Economic costs represent the real cost to the economy of this road investment and ownership and operation of vehicles, where adjustments are made to allow for market price distortions such as taxes, subsidies, foreign exchange restrictions, labor wage laws, etc. For the VOCs economic costs are estimated by deducting the tax component that varies by item of costs, while for the road construction and maintenance including other indirect costs tax component is generally estimated at an average of 18%. 14. The opportunity cost of capital, or the discount rate considered was at 15% as the rate of opportunity cost of capital established by NEDA. 15. On the other hand, the overall shadow pricing factors considered by NEDA based on the national situation is 0.8 for costs of skilled labor and 1.2 for foreign cost component of civil works costs. These factors were likewise applied in estimating total economic project costs.

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10.3 Economic Evaluation Results

16. The result of economic evaluation for the most cost-effective maintenance works for the 11 project roads under Tranche 1 is summarized in Table ES-8. This table shows that the resulting average Economic Internal Rate of Return (EIRR) for each road project range from a low of 16.3% for Dumaguete North Road (La Libertad-Vallehermoso Section) to a high of 112.2% for Butuan- Cagayan de Oro City-Iligan Road (Misamis Oriental Section). In terms of NPV/C, the lowest average is also for Dumaguete North Road (La Libertad- Vallehermoso Section) at 0.093 while the highest is Daang Maharlika Road (liloan-Naval Highway) at 26.941. 17. The detailed economic evaluation results by road section for the best/ recommended alternative maintenance works are presented in Annex 9 of the main volume report.

Table ES-8: Results of Economic Evaluation for Tranche 1

Length HDM-4 Evaluation Results Project Description (km) ENPV EIRR NPV/C 1. Butuan-Cagayan de Oro-Iligan Road 21.20 1,374.39 112.2 23.863 (Misamis Oriental Section) 2. Iloilo-Capiz (Old Route) 37.24 3,096.56 17.165 87.8 3. Bauang-Baguio Road 39.15 1,305.89 43.6 6.189 4. Olongapo-Bugallon Road 145.28 849.30 39.6 8.677 5. Dipolog-Oroquieta City Road 49.89 135.50 41.4 16.712 6. Bukidnon-Cotabato Road 47.61 91.29 22.3 0.469 7. Palo-Carigara-Ormoc Road 22.88 99.10 29.4 0.937 8. Daang Maharlika Road (Liloan-Naval 14.86 10.24 25.3 26.941 Highway) 9. Dumaguete North Road (Manjuyod-La 58.23 205.30 19.7 0.316 Libertad Section) 10.Dumaguete North Road (La Libertad- 41.56 109.54 16.3 0.093 Vallehermoso Section) 11.Butuan-Cagayan de Oro City-Iligan 36.30 98.63 19.6 0.456 Road (Agusan del Norte Section)

10.4 Sensitivity and Risk Analysis

18. Sensitivity and risk analysis has been undertaken for this project to help identify the key variables that can influence the project cost and benefit streams. It involves recalculating the project economic evaluation results for different values of major variables or key factors, which are the key determinants of project outcomes to which the project’s returns may be sensitive or unacceptable because of the effects of the identified key risk factors. In general, the principle of risk analysis is to provide analysis of project implementation risks so that the concerned parties can best manage or mitigate the identified risks to projects.

KEI in association with SKI and DCCD ES-52 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

19. For this project, considering the nature of the project which asset preservation of existing national road network and based on previous experiences of the executing agency in the implementation of similar projects in the country, the identified project risks are the probable decrease in actual traffic growth rates than what was estimated during the study, the delay in the implementation of the project, and the cost-overruns incurred by construction contractors due to various constraints. 20. Based on actual experiences in some road projects, most often experienced is that traffic growth are not realized during the actual operation as what were expected during the study, some are lower than the estimated growth while others are significantly higher. For this study, since all the project roads are already existing, a probable risk of 20% decrease in traffic growth rate is assumed. 21. Several times that delay in the implementation of road projects were experienced in the past due to longer time spent in preparation and negotiation (the most of which is 2 years), thus, this factor is foreseen as one of the major project risk. For this study an average of 2 years delay in implementation is considered as the probable risk. 22. Likewise, based on past experiences most project construction incur cost overruns due to variation orders, it is estimated on the average that about 20% additional cost from the original estimates was incurred as cost overrun. This is one of the risk in project implementation that has to be addressed also. 23. Sensitivity and risk analysis was performed considering the above risk factors. The sensitivity indicator (SI), summarizing the effect of change in a variable on the project NPV, and the switching values (SV), showing the percentage increase in a cost item required for the NPV to become zero, were also calculated. 24. The result of sensitivity analysis performed is summarized in Table ES-9 below.

10.5 Benefit Distribution Analysis 25. Benefit distribution analysis was carried out in order to evaluate the impact of the project among major beneficiaries and stakeholders. The distribution of benefits was identified based on the composition of road users as indicated by the composition of vehicles on the total AADT of each project road. The identified major project beneficiaries include: (i) users of passenger transport vehicles, (ii) users of freight transport vehicles, (iii) vehicle owners/operators (iv) labor sector, and (v) the Government and economy of the Republic of the Philippines. The distribution of benefits is shown in Table ES-10. 26. As shown in the said Table, the users of passenger transport vehicles will receive about 10%, users of freight transport vehicles will receive about 78%, vehicle owners/operators will receive about 5%, the labor sector (both vehicle crews and construction workers) will also receive about 5% and the Philippine economy will receive about 3% of the total net benefits accruing from the project implementation.

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11. SUMMARY RESULT OF ANALYSIS OF EXISTING FINANCIAL MANAGEMENT SYSTEM OF DPWH

11.1 The Present Financial Management System

1. The current financial management system is guided by the internal control policies and procedures of government, which are contained in several documents, particularly in the electronic-New Government Accounting System (e-NGAS) developed and issued by the Commission On Audit (COA) and Government Accounting and Auditing Manual (GAAM). 2. The FM system of DPWH consists of one main system supported by a sub- system for foreign-assisted projects (e.g. NRIMP-I and 2). The main FM system is used to maintain the books of accounts, monitor the Designated Accounts (DA) and prepare the required Project Financial Reports. The sub-system under the Project Management Offices (PMO’s) conducts initial screening of transactions, prepares disbursement vouchers, Statement of Expenditures (SOEs) and Withdrawal Applications for the DA, manages DA and prepares other financial management reports. 3. To ensure efficient monitoring and financial management of DPWH in handling and managing different stages of infrastructure development, different services and divisions are involved. The Comptrollership and Financial Management Service (CFMS) is responsible for financial systems procedure and control and handles the main FM system while the Internal Audit Service (IAS) is responsible in the conduct of management and control audit.

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4. The Internal Audit Service (IAS) is mandated to advise the DPWH Secretary on all matters relating to management control and operations audit; conduct management and operations audit of department activities; review and appraise systems and procedures, organization procedures, assets and management practices, accounting and other records, reports and performance standards such as budgets and standard costs of the departments central and regional offices; analyze and evaluate management deficiencies and assist top management in solving problems by recommending realistic courses of actions. 5. IAS has three divisions namely: Financial Audit Division, in charge of overall financial aspects of the Department, Operations Audit Division “A”, in charge of the technical aspects of operations such as engineering and civil works, and Operations Audit Division “B”, in charge of administrative aspects such as the procurement of goods, contractors and consultants. 6. Other related divisions, directly involved in the different stages of such infrastructure development tasks by DPWH that require financial management, have the following functions: the Bidding and Awards Committee (BAC) and the

KEI in association with SKI and DCCD ES-55 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

Procurement Office for Civil Works (POCW) responsible for the procurement and contracting of infrastructure projects; the Price Escalation and Price Adjustment Committee (PEPAC) responsible for the approval/regulation of price adjustments; the Infrastructure Right-of-Way (IROW) office responsible for monitoring and supervising the compensation of affected families and structure owners due to infrastructure right-of-way acquisition; and the Bureau of Maintenance (BOM) responsible for the planning and implementation of road maintenance works. 7. The efficiency and integrity of financial management in the DPWH is being enhanced through the agency-wide implementation of the e-NGAS and related controls. This was developed by the COA for which DPWH was one of its pilot agencies. The system was installed in order to simplify government accounting, and provide adequate internal control as well as reliable, timely financial management information without sacrificing data integrity and fiscal transparency. This allowed computerization of all its accounting records, enabled better management of voluminous transactions and ensured properly recorded transactions. It also improves the management reporting of financial information needed for operational and executive decision-making and, thus, greatly assisted in the monitoring of internal controls within the department as well as improved the delivery of services. 8. The present status of e-NGAS roll-out is as follows: (i) the Accounting module is fully operational in the central office and pilot regional offices; and (ii) DPWH will implement the new Budget module and seven additional modules, currently under development, as they become available. The additional modules include: Accounts Receivable, Accounts Payable, Cashiering, Project Monitoring, Personnel Information, Payroll, and Leave and Attendance. Specialist technical assistance will be provided on internal audit procedures and controls, as a means of strengthening and customizing the internal controls and monitoring of the whole DPWH financial management system. The IAS is preparing for the use of the new National Government Internal Control System developed by COA and DBM to be fully implemented by the second quarter of 2009. The Internal Audit System manual, to be released during the first quarter of 2009, will be used as basis by the NRIMP-2 Specialist. 9. Financial Management (FM) has been identified as one of the key support processes of NRIMP being implemented in DPWH. The component under this program aims to provide: 1) assistance in strengthening the internal controls for supporting documents associated with financial transactions at the Central Office; 2) assistance in improving financial reporting; Parallel testing of the FM Budget Module with subsequent adjustment of the software based on the COA’s input; 3) installation and proper implementation of e-NGAS; 4) installation of Modules and Outcomes Based Monitoring Framework; and 5) preparation of bidding documents for communication network equipment maintenance.

11.2 Result of Analysis

10. As a prerequisite to NRIMP-2, the review results conducted by the World Bank indicated that the overall main FM system at DPWH does not fully comply with the requirements of the Bank. Significant deficiencies were found in its internal controls on cash, inventory, property, advances and sub-allotment to Regions, payables, and certain expenditures as well as a weak internal audit function. These shortages resulted in an adverse audit opinion for several

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years, including the DPWH 2006 financial statements, due to inadequate compliance with government’s established internal controls, and significantly delayed both the agency and the World Bank projects. 11. There are weaknesses in the control environment, which are pervasive and significantly increase the risk of funds not being used for their intended purposes. At a program and office level, there are perceptions of the misuse of funds. On a project level, there have been allegations of collusion and payment of kickbacks to individuals. 12. Based on assessment, the following are the key corruption risks in DPWH performance of infrastructure development activities:

(1) On the Area of Procurement a. Collusion – the possibility of manipulation of bidders by an “arranger” under the direction of a patron, typically a senior or a local politician, is highly probable. b. Bid-rigging – the same “arranger” may influence the establishment of bid prices, with a sufficient margin above the cost estimate, which is often high but appears subject to control, to pay kickbacks to the patrons, cartel participants and some officials. c. Misrepresentation of Bidder Qualifications – in the absence of transparency and proper procedure to protect the integrity of bids, falsification of bid documents such as work history, productivity and financial records of bidder are highly probable. d. Fraud – falsification of submitted documents are also highly probable to happen. e. Manipulation of Bid evaluation – for contractor its possibility is relatively minor under recent internal controls, but could re-emerge, however, for consulting services this is highly probable. f. Irregularities in Bid Process – interference with bid submission, substitution of bid documents or misreading of bid prices, this is relatively rare in foreign-assisted projects due to observer controls, but may occur in locally-funded projects. g. Contract Processing – bribes to facilitate processing of contract award and subsequent payments are highly probable. The approval process has multiple layers and extended delays occur in key offices, e.g., legal service, BOC, Executive, PMO. h. Preferred Suppliers –nomination of preferred agents by contractors for key contract services such as bank guarantee, security, indemnity insurance, who may provide kickbacks to project level officials are also probable. i. Contract Variations – inflation of the size of some variations through estimates of quantities for pay items which are difficult to confirm or audit, such as repairs, excavation, landslide removal, etc are also probable. This may result to collusion of contractor with officials, but may involve collusion of supervising consultants also.

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(2) On Implementation Quality a. Falsification of quality control test results, defect or repair inspections, etc., through collusion between contractor and supervising officials or consultant. This incidence is very dependent on particular individuals and firms, said to range from negligible to modest for most foreign-assisted projects but minor to serious in most locally-funded projects.

(3) On Financial Management a. Weak Internal Control, which is manifested in the disbursements and financial reporting. The annual Audit report of the Department in the past several years has expressed an adverse audit opinion on DPWH Financial Statements, mainly due to weaknesses in the Internal Control. The weaknesses include: (i) unreconciled bank balances, (ii) unrecorded transactions, (iii) bank accounts with no cash, (iv) mispostings and double recording of disbursements, (v) improper write-off of account balance; (vi) cash advances and receivables due from National Government Agencies or Inter-Agency Receivables, Inventory, Property and Equipment, Accounts Payable and Expenditures; and (viii) unreconciled General Ledger and its Subsidiary Ledgers. NRIMP-1 Project Accounts audit contained lesser exceptions, mainly concerning the controls on Sub-Allotments and improvements needed in the software for projects, which record transactions based on obligation (even when reconciled with the regulatory accounts for the project which are on an actual basis). b. There is also a weak internal audit function. The Internal Audit lacks management support and has few staff with adequate coverage of the entity and projects. IAS has no training program and its staff needs capacity strengthening. IAS management comprises mostly engineers with no formal training in Internal Audit or Internal Controls. Some skills are acquired on the job. c. Payment Processing Irregularities. Certification of invoices for payment may involve delays and bribes to project officials or supervising consultants, but this appears minor and has not been reported to be a major problem in foreign-assisted projects. However, the government lately instituted reform through the introduction of computerized accounting system. Once submitted, the invoices will be processed electronically in the computerized e-NGAS accounting system. The processing status is then queued and published on the agency web-sites of both the implementing agency (DPWH) and the disbursement agency (DBM). d. Project accounting software records obligations of transactions as disbursed. However, reconciliation is being documented between the e-NGAS of the main Agency books of Accounts (which records transactions as they are disbursed), and the Project software reports by manually adjusting the report. e. Fund Flow. Presently, there is weak control on fund transfers, sub- allotment advices, etc. f. FM organization staffing is relatively weak. There are not enough employees to handle the FM function including those for Projects.

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Thus, the Agency resorts to hiring of contractual and casual employees. 13. The long delays in the completion and submission of Audit Reports during the last several years indicates weaknesses in the timely completion and consolidation of financial statements, as well as in the timely conduct of audit and prioritization of audit timetables by the national auditor. The Government auditor is now committed to addressing this issue and also ensuring more timely audits. 14. Results from the June 2006 Social Weather Stations Enterprise Survey revealed that the public’s perception of DPWH’s efforts to combat corruption in five main regions is one of the worst with regard to public agencies, and that it had further worsened over the previous two years. Speculations vary widely as to the level of leakage from DPWH-implemented projects and are difficult to verify.

11.3 Recommendations

15. Governance issues also include the selection of project locations or allocation of funds. A strong governance framework in the sector is needed to help ensure competitive procurement practices, improve the quality of road construction, and in turn, enhance efficiency and reduce the costs of road developments and maintenance. 16. The Philippine Public Expenditure Review (PER) on Transportation completed in 2008 recommends that construction supervision be outsourced to relieve the project supervision burden of DPWH in-house staff. Much of the construction supervision, particularly for locally funded projects, should be considered for outsourcing to private consultants. This step should be taken both for the central and district offices. It will also require the development of management capacity for planning, fund allocation, project execution, and financial management alongside strong internal controls and result-evaluation methodologies. 17. The same report also encourages the coordination between line agencies to ensure efficient implementation of the huge infrastructure program from 2008 and forward. A formal memorandum of understanding between DPWH and DBM indicates their performance obligations to be as follows: DPWH should commit to allocate funds within its budget ceiling, undertake specific policy, institutional, and process reforms to increase its absorptive capacity for more efficient use of funds and provide for stronger accountability and governance (setting quarterly performance targets, performance monitoring, financial management and audit, support to Road Watch and the like). On the other hand, DBM will commit to release allotments for the infrastructure program comprehensively upon the General Appropriations Act (GAA) approval and issue comprehensive quarterly cash allocations, from which DPWH can immediately disburse to support its projects. 18. One recommendation stipulated that DPWH Financial Management and associated information systems need to be tightened. Despite the significant reforms initiated by DPWH under its RIMSS project, weaknesses remain in financial management and information systems. The latest COA reports show cases of disallowances and other irregularities in significant, although decreasing, numbers. In May 2007 DPWH issued an updated set of omnibus

KEI in association with SKI and DCCD ES-59 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

delineation and delegation of authorities with an internal check-and-balance provision. It also rolled out to the regions the accounting module of the new e- NGAS prescribed by COA. DPWH and other line agencies should follow these guidelines to improve the transparency and accountability of their budget execution. Doing so would ensure that all implementing systems are interconnected and can interface with the information and project monitoring systems as well as ensure that physical accomplishments reflect the funds disbursed. 19. Appropriate training for staff was mentioned as one of the pressing needs of the Department. For IAS strengthening to be more effective, DPWH and other implementing agencies should strengthen their IAS, with emphasis on risk based and system audits in addition to the current compliance audits. Immediate capability build-up and trainings are needed. 20. The procurement processes in DPWH and other line agencies should be further shortened and streamlined by: (i) fully implementing (to the district level) the new DPWH Procurement Manual for locally-funded projects, recently approved by Government Public Procurement Board, including timelines and standard bidding documents (SBDs), however, the pending issue that this manual is invalid for non-publication should first be resolved; (ii) Installing and implementing the agency performance indicators (API) for procurement developed and piloted for DPWH with World Bank assistance in 2005; (iii) Intensifying the training of procurement officials and staff; (iv) Posting standard bidding documents on the website; (v) Completing any right-of-way acquisition before bidding; (vi) Computerizing eligibility screening and post-qualification of bidders, to the district level; and (vii) Applying stiff sanctions for breaches.

12. INSTITUTIONAL CAPACITY BUILDING (ICB) OF DPWH 12.1 Objectives of Analysis 1. The objective of this analysis is to evaluate and assess the status of DPWH ICB efforts through: a. Review of past, ongoing and planned efforts by other development partners such as the World Bank (WB), Australian Agency for International Development (AusAID), Japan Bank for International Cooperation (JBIC), Japan International Cooperation Agency (JICA), and others. b. Identify and evaluate past and current ICB efforts being carried out by the DPWH such as the Business Improvement and Implementation Projects (BIIPS) under the Road Improvement and Management Support System (RIMSS) and others. c. Identify policy and institutional deficiencies and constraints in the ICB efforts for road sector development, planning and management.

KEI in association with SKI and DCCD ES-60 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

d. Assess various resources and skills of DPWH personnel, identify management priorities, thrusts and directions for outsourcing and privatization by DPWH. e. Assess the potential of implementing various available ICB concept papers and project proposals submitted by various Offices concerned within DPWH 2. Through the above analysis, the Consultant aims to identify and recommend ICB measures that would effectively strengthen the institution’s provision of services in the road transport sector as well as augment and/or supplement other BIIP and RIMMS activities, such as: a. Identify and recommend ICB components and their relative priorities, component requirements and the corresponding organizational development. b. Recommend optimum and realistic implementation phasing of proposed ICB activities to be included in Tranches 1, 2 and 3. c. Prepare necessary concept papers, application request and other related documents.

12.2 Methodology 3. A comprehensive survey and review of documents prepared by various donor agencies such as the World Bank (WB), Asian Development Bank (ADB), JBIC/JICA, AUSAID as well as other development partners and related institutions was conducted to determine planned, existing, completed and closed projects for DPWH through website search, informant interview and library visits. Moreover, key informant interview was undertaken which involved representatives from various Department bureaus, donor agencies and through public consultations with stakeholders. 4. After the initial data were collected, synthesized and analyzed, prioritization of ICBs would be undertaken. This will be done through the utilization of a decision making tool, the Analytic Hierarchy Process survey, which can combine both qualitative and quantitative data. The said questionnaire would be administered to key representatives of the Department as well as key stakeholders and donor agency representatives.

12.3 Status of ICB Efforts in DPWH

5. As the importance of ICB entered the mainstream of development models of DPWH over recent years, there is a constant search for successful capacity building templates which can be replicated over multiple locations. A recurring frustration for international donors in their pursuit of effective aid spending has been the lack of capacity of government to deliver the intended programs. It was identified that the concept of ICB provision is rather vague within the DPWH and the initial perception of ICB approaches are limited to training, consulting services and equipment provision. Thus, there is a need to widen the understanding and ensure a more open understanding of the concept. Training is also necessary but to ensure adequate use of funds for trainings would bring about huge impact on the organization, there is a need to re-evaluate the whole

KEI in association with SKI and DCCD ES-61 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

process of identification and provision as well as post-evaluation of training needs. Training courses should therefore be updated regularly. 6. A previous exercise administered by Interdisciplinary Development Institute (SAIDI) in 2005 identified the DPWH five (5) core values which need to be strengthened. These are public service, integrity, professionalism, excellence and team work. Further activities should bring forth and concretize these core values. 7. The process of change management and business process reengineering are difficult processes which pose the danger of misunderstanding and lack of acceptance which dictates more substantial efforts in awareness building and consensus. The implementation of new methods and technology should be implemented within an overall framework of its relevance and potential replicability to other areas as well as ensuring that the capacity of users are at par with the system’s requirements. It involves assessing how the talents and energies of staff can be enlisted and upgraded on a regular basis to improve these institutions' operations. 8. The Consolidated Review Report on Relevant Transport Sector Work completed for PEGR indicated that DPWH personnel in general have high technical planning capabilities and skills which contrast with the local government units directly dealing with the road network. A gap arises between the technical-know-how of central personnel and staff at the regional/district offices. 9. The value of skills improvement and technical capabilities, especially in the short term, is undoubtedly important for capacity development, thus, should be encouraged. However, its sustenance as well as the proper matching of required trainings and actual personnel function are still recurrent issues. Moreover, utilization and retention of already available capacities can only be achieved if this is analyzed in relation to the overall constraints identified such as political and organizational issues. 10. Endemic corruption and collusion present within the Department heightened the Department’s negative public image and required that Capacity Building needs should address its bureaucracy and ineffectiveness. This has prompted the creation of the Public information division (PID) which is tasked to manage and optimize information needs of the Department, address the increasing need for stakeholder meeting, change the negative image of DPWH, provide a complaints desk as well as encourage and increase the involvement of civil society to ensure transparency in Department transactions and processes. 11. The lack of cooperation between districts and the region resulted in less efficient work output such as ensuring regular data collection and update as well as smooth transfer of data from district to the region. Moreover, active participation and involvement from other line units such as construction, research and maintenance should be encouraged to determine and optimize effective planning of systems change and improvement within DPWH as well as ensure smoother implementation of new systems. 12. Further action is still needed in several areas such as in project management which should include quality assurance. Although it has been the focus of REAPMP and NRIMP-2, a quality assurance system for engineering

KEI in association with SKI and DCCD ES-62 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

designs and estimates should be established and implemented across all regions. 13. Performance monitoring of DPWH capabilities should be conducted on a regular basis and should be assessed based on specific desired changes given its complexity and methodologically-challenging procedures. 14. Management priorities should focus on increasing the participation of the private sector, integrating value engineering, knowledge based development and increasing thrust on outsourcing. 15. Increasing thrust on outsourcing should be considered with the rationalization plan implemented in tandem with the outsourcing of construction and maintenance works and supervision. To minimize the impact of the rationalization plan, it is important to reconsider its impact on affected employees and introduce ways and means to assist displaced engineers and technical personnel such as support in construction and maintenance works or as groups that can provide contract works with the department. 16. To supplement the lacking technical capabilities within the region, outsourcing, contracting training services or strengthening partnership to existing training institutes such as Development Academy of the Philippines (DAP), University of the Philippines (UP), among others, could be an alternative option. 17. Strengthening stakeholder participation in DPWH procedures should be encouraged to increase transparency, awareness and accountability in government transactions.

12.4 Proposed ICB Component of the Project 12.4.1 Identification Process

18. Gaps and constraints on current ICB program in the DPWH have been identified and pointed to potential areas of ICB that would put in place sound and adequate systems for the DPWH to perform effectively its core functions. 19. ICB interventions that have been identified are basically based on the following criteria. (1) Those that continue existing activities. (2) Those that will institutionalize established systems. (3) Those that will ensure the successful implementation of established systems and processes. (4) New initiatives to address fully the ICB needs of the DPWH Strategic Plan.

20. The consultant worked closely with the Project Technical Working Group and the ICB Component Group of NRIMP-2 in preparing an ICB package for this project. The resulting package is described below.

KEI in association with SKI and DCCD ES-63 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

12.4.2 Proposed ICB Projects (1) Preparation of Manuals and Guidelines in the Conduct of Post Evaluation of DPWH Completed Infrastructure Projects and its Application to Pilot Projects 21. There is a recognized gap in the level of technical–know–how of the Department’s personnel in the Impact/Post-evaluation of completed projects. A manual and guideline for the conduct of post- evaluation of completed projects would increase the knowledge base of its personnel and thereby enable them to accomplish their functions better. 22. The project aims to procure consultancy services to develop DPWH Manual for Impact/Post-evaluation of completed projects. The said manual is targeted to be adoptable either to foreign or locally-funded projects. The scope of the consultancy services shall include: (1) the review of the existing criteria in the selection of Projects subject to impact/post-evaluation and make revision if deemed necessary and (2) review of available JBIC Handbook in the conduct of Ex-Post Evaluation of completed JBIC funded projects and the Benefit Monitoring and Evaluation for possible merging/revision in the preparation of Independent Manual. Further, it shall include the procedural steps on the following: (1) Procedures of Post-evaluation, (2) Tools of evaluation, (3) Points of evaluation along with the Development Assistance Committee (DAC), and (4) Feedback of evaluation findings. Other components of the proposed project are: (1) conduct of actual Post-evaluation of pilot projects, (2) training of Planning Service staff, other than the counterparts for sustainability, (3) the preparation of training materials that fits the training needs of the participants, in the conduct of Impact/Post-evaluation Training, and (4) the formulation of post-evaluation framework, procedure, guidelines and manuals for the assessment of performance of the DPWH versus the target Medium Term Public Investment Program (MTPIP). 23. The project is targeted for completion within two (2) years and has an estimated cost of PhP 95.7 Million.

(2) Development and Installation of Program Management Information System. 24. The overall objective of the project is to improve the tracking process of a project including feasibility study, design, environmental compliance, procurement of right-of-way, construction, project hand-over, maintenance and post-evaluation. The following activities will be undertaken: (a) Development of effective project management techniques that would include the delivery of projects on time and within budget; (b) Development of an automated project record-keeping application that tracks project performance on a daily basis and links with the payment process; (c) Development/procurement of a project management tool, including project management training that includes PERT/CPM methods and implementation, project management documentation, resource utilization for people, equipment and funds;

KEI in association with SKI and DCCD ES-64 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

(d) Development of a project implementation status monitoring application that will replace the Project Monitoring System (PMS) and Project Management Office Monitoring System (PMOMS) of the Department; and (e) Development and implementation of contract turn-over policies and procedures. 25. It may be noted that the project will entail the Development of application systems for some phases of a project life cycle where, currently, there is no enterprise application supporting them, e.g., environmental compliance management, design management, and post evaluation. It will also include the development of the application that would support the Contractors’ Performance and Evaluation System (CPES) and the Consultants’ Performance Evaluation System (CoPES). 26. The project is targeted for completion in 3.5 years and has an estimated cost of PhP 300 Million.

(3) Capability Building in Infrastructure Development and Quality Assurance 27. The aim of the project is to improve pavement performance in the country through a suitable research program, the improvement in material testing capability and capacity and the installation of a quality assurance system. The research program would focus on pavement performance, particularly concrete/asphalt mix design. 28. The services of technical coaches will be engaged to assist and provide the DPWH staff expertise in the field of Quality Assurance Management. Materials testing equipment will be acquired to upgrade the DPWH laboratories nationwide. Upgrading of facilities will cover the DPWH district, sub-regional, regional and BRS laboratories. 29. The project will also include engagement of consulting services to prepare and implement an appropriate training program to demonstrate surface dressing techniques for maintaining asphalt roads. The intention is to form a coherent, competent and skilled team that would become the core resource for subsequent training courses. 30. The project is targeted for completion within 8 years and has an estimated total cost of PhP760,880,000. The amount covers consulting services, requirements for research, and acquisition of materials and equipment.

(4) Strengthening the Environmental and Social Assessment Capability of DPWH 31. As mentioned earlier, one of the problems within the Department is the need to monitor, evaluate and assess programs. This project will increase the assessment and monitoring capability of the Department in terms of environmental and social safeguards. This specifically pertains to the management of Right–of–Way within the framework of Asset Management. 32. The DPWH has already taken several steps to strengthen its environmental management capability. These include the Highway Management Project and NRIMP-1 and 2. Under NRIMP-2, the use of GIS Applications for ROW functions

KEI in association with SKI and DCCD ES-65 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

was done. Initially, the use of GIS for ROW was piloted within 3 districts, i.e., one each from Regions 3, 7, and 11. The Department, however, envisioned that the piloting for GIS application for ROW will be expanded and replicated to the rest of the district offices in stages. 33. The project is targeted for completion within 7 years and has an estimated cost of PhP 285.0 Million.

(5) Procurement of Technical Assistance for the Gender Mainstreaming in Infrastructure Development. 34. One of the observed problems within the Department is the low level of productivity and performance of some of its employees. The project would increase the morale of the Department’s women employee. This would increase the chances of higher productivity and performance levels. 35. The project aims to formulate gender-sensitive policies and strategies for the DPWH. It also aims to prepare a 6–year gender action plan highlighting prioritized programs, projects and initiatives that will ensure gender-quality in infrastructure development. The project also includes: (1) an initial analysis of gender–related issues and concerns, (2) the implementation of gender–sensitive pilot projects, (3) the organization of women’s group for the department, and (4) training on trainers to enhance knowledge on gender and development within the Department. 36. The project is targeted for completion within three years and has an estimated cost of PhP 74.1 Million.

(6) Procurement of DPWH Communication Network Equipment (Voice and Data) 37. An essential component of an organization, especially those as large as DPWH, is its communication network. The project would respond to the lack of voice and data network equipment. The project aims to connect 73 additional District Offices to the Wide Area Network (WAN) of the Department. It includes the construction of a network room or data center, power house and concrete pedestal. It also includes the procurement of necessary equipment and accessories, as well as, the connection to the Department’s Wide Area Network. 38. The project is targeted for completion within four years and has an estimated cost of PhP 423.6 Million.

(7) Procurement of DPWH IT Computer and Software 39. The project responds to the discrepancy in the information and communication system of the Department. Specifically, it will broaden the network connectivity coverage of the Department’s information and communication technology through the acquisition and installation of necessary hardware and system software for 73 District Offices. 40. The project aims to expand the DPWH’s enterprise-wide platform of database servers, application servers, administrative servers, and client workstations. It includes the implementation of a three–tiered client server architecture running a number of enterprise applications in all Department Offices. Also, the Department intends to implement a virtualized server

KEI in association with SKI and DCCD ES-66 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

environment in the Central Office. The project also includes the procurement and installation of necessary equipment and softwares. Finally, it also includes the required training and orientation to implement the WAN/LAN connectivity in the most effective, efficient, and optimal manner. 41. The project is targeted for completion within four (4) years and has an estimated cost of PhP151.2 Million.

(8) Comprehensive Human Resource Development 42. Some of the observed problems within the Department are: (1) the low level of productivity and performance of some of its employees, and (2) old fashioned approaches and procedures. The project would focus on the over–all development and management of the Department’s workforce. 43. The project aims to develop a comprehensive approach to the management of the DPWH’s workforce. The Department recognizes that its workforce is its most valued asset who individually and collectively contributes to the achievement of the goals and objective of the organization. The project has 4 sub–components, namely: (1) Leadership Development, (2) Organization Culture Building, (3) Development of a Comprehensive Human Resource Development Plan (CHRDP), and (4) Development of process and specifications for procedures and the implementation of an Integrated Human Resource application system. 44. The project is targeted for completion within 3 years and has an estimated cost of PhP386.1 Million.

(9) Enhancement and Institutionalization of Traffic Accident Reporting and Analysis System (TARAS) 45. TARAS has been developed as part of the REAPMP. However, the installation of the system involving other agencies like the Philippine National Police (PNP) has not yet been done. It is also necessary to deploy the TARAS to the DPWH District Engineering Offices (DEOs) as currently only the Regional Offices (ROs) are authorized TARAS Users. 46. It is proposed that as part of the project, the TARAS be enhanced. Enhancement would include a shift in entry of accident data from the present manual encoding to direct input from an electronic device to prevent backlog and delays, as well as improving Reporting and Analysis Module (RAM) of the TARAS. It is also desirable to integrate other road accident data systems of other agencies, e.g. reporting and analysis system of the Development Authority (MMDA) and the Department of Health (DOH) with DPWH TARAS for a unified accident data system in the Philippines. 47. Part of the proposal is the delivery of continuous training for DPWH and the PNP personnel on accident data collection and on the new processes of TARAS, say twice a year for PNP Officers. It is also proposed that the application of TARAS be expanded to include local roads by conducting pilot application in the selected provinces/cities in Luzon, Vizayas and Mindanao. 48. The total cost of the proposal is PHP 42.2 Million spread over a period of three (3) years.

KEI in association with SKI and DCCD ES-67 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

(10) Improvement of Road Safety Audit (RSA) System 49. Just like the TARAS the development of the RSA was part of the REAPMP. Its application, however, had been limited. The purpose of this project is to make RSA an integral part of a sustainable Accident Prevention Program (APP) for the national road network. Towards this end, it is important to continue the conduct of training program for DPWH personnel and other government and private institutions on the principles and procedures of conducting RSA. An accreditation system would be put in place for personnel who had undergone training on RSA. 50. The project includes a provision for extending assistance to the Planning Service in the procurement and supervision of road safety projects. The conduct of RSA on road sections not identified as black spots to be pilot-tested. The proposed project would also entail a review of existing RSA policies and procedures. 51. It is estimated that the project would cost PHP 185.5 Million over a period of six (6) years.

(11) Road Partnership (Bantay Lansangan) Phase II 52. The general objective of the project is to provide continuous support to sustain “Bantay Lansangan” (BL) to effectively ensure its operation as a partner in good governance outside the sphere of government funding and vested interests. Still in its infancy, BL needs outside support to carry on its mission to uphold its advocacy in promoting changes and reforms in the country’s road sector policies. 53. The project would basically provide funding support to: (1) Continue participatory results monitoring and evaluation through public expenditure reviews in each budgetary cycle, planning and procurement. (2) Promote awareness of comparable and relevant global development in the delivery of road services and road user strategies in improving road service delivery through networking and linkages. (3) Develop a series of training seminars, workshops, etc. on donor anti- corruption policy and on how DPWH staff and other stakeholders can best advance integrity in DPWH operations. (4) Prepare and publish Road Sector Status Report Card. (5) Provide the public relevant information on national road services as monitored and analyzed by making appropriate use of media, internet, public forum and dialogues. (6) Build BL’s database on road sector information.

54. The total estimated cost of the project is PHP 48 Million spread over three (3) years.

KEI in association with SKI and DCCD ES-68 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

55. Likewise, the institutional capacity building (ICB) component of the Project will be implemented within the same 3-Tranche period, consisting of the above 11 different measures to contribute to further strengthening and enhancing the capacity of the DPWH.

13. RESETTLEMENT FRAMEWORK FOR TRANCHES 2 AND 3 13.1 Summary of Findings and Recommendation

1. The Resettlement Framework (RF) is prepared for road sections under Tranches 2 and 3. As mentioned in the Interim Report, Tranches 2 and 3 include road sections that, in addition to those for asset preservation in Tranche 1, also require more extensive rehabilitation and perhaps improvement. For this Project, ADB’s policy is to negotiate one Tranche at a time; i.e., the GOP and ADB shall only start negotiating the budget for Tranche 2 once the road projects in Tranche 1 comes close to completion. As such the final name and number of road sections to be included is not finalized yet. 2. On the other hand, there are no identified permanent impacts on land acquisition and resettlement and there will be no dislocations, nor significant effects on livelihood anticipated in the Tranche 1 road projects since construction activities shall mostly involve asphalt overlaying, drainage maintenance, repainting, and restoration of traffic information and safety signs. Although road reconstruction through re-blocking shall be undertaken at some sections, these are located in hilly areas with no observed human settlements. 3. As in other road improvement projects involving widening, realignment, or additional Right-of-Way, adverse social impacts as a result of involuntary resettlement can be expected. Some of these include loss of shelters, livelihood, disintegration of economic and social networks, and limited access to social services. 4. In a developing member country such as the Philippines, land acquisition and resettlement (LAR) policy is relatively young, i.e., it was officially prescribed by DPWH through Department Order No. 327, in December 2003. In fact prior to its issuance, foreign-assisted projects, which required application of said policy through the preparation of Resettlement Plans encountered difficulties during project implementation. As stated in the Validation Report for the ADB- Assisted Philippine Sixth Road Project, one of the reasons for its 47 months delay is because “Land acquisition and resettlement (LAR) was a major issue. Overlooked during project preparation, this issue was very hard to rectify during implementation. The Government at first refused to agree to ADB’s conditions; then, once agreement was reached, implementation and monitoring proved difficult.” 5. Most of the road sections under the present PPTA are geographically dispersed over the islands of Luzon, Visayas, and Mindanao making it difficult to implement and administer. Add to this is the fact that, since it is natural for long road alignments to cross several administrative boundaries, delineation of institutional responsibilities would be tough.

KEI in association with SKI and DCCD ES-69 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

6. Based on the foregoing it is, thus, important that a wide-ranging RF be drawn to ensure that PAFs are not disadvantaged by the Project. The ensuing RF shall be agreed upon between the GOP and ADB. It shall establish compensation and other entitlements for all Affected Persons (APs). Its main objective is to outline the necessary steps to prepare satisfactory Resettlement Plans for the remaining road sections under Tranches 2 and 3.

13.2 Project Impacts 7. From a long list of 40 road sections to be considered for Tranches 2 and 3, 32 are included in the short list. Envisioned positive project impacts include: (i) improved safety, increased capacity, shorter distances for traffic attracted from alternative roads, (ii) reduced travel times to hospitals and schools, (iii) improved employment opportunities, and (iv) better opportunities for agriculture, trade, and tourism. These direct and indirect positive impacts are expected to reduce poverty levels in areas benefited by the respective road projects. 8. Just like any other road network development/improvement project, adverse environmental and social impacts are also expected. These consist of: (i) encroachment to forested areas which may lead to denudation of its vegetative cover; (ii) conversion of prime agricultural lands into urban/industrial areas as a result of improved access; (iii) if involuntary resettlement cannot be avoided, loss of homes, livelihood, and social and economic networks would affect vulnerable groups----the poor, women headed families, the elderly, and the IPs.

13.3 Impact on Gender and Other Vulnerable Groups 9. Women have important economic roles in project areas and engage in a very wide range of income making activities in the agricultural and marketing sector. The project will pay particular attention to ensure that women are the recipients of the compensation pertaining to their activities and to ensure that women who are de-facto household heads are clearly listed as beneficiaries of compensation and rehabilitation proceedings under the loan. Special attention will also be given to identifying and addressing the needs of disadvantaged groups such as the landless, the poor, female-headed households, the elderly and the disabled, through measures included in the RP to try and improve (over and above cash compensations and restoration of) their livelihoods. 10. The DPWH, in its latest LARRIP Policy recognizes that the “identities and cultures of are inextricably linked to their physical environment and the natural resources on which they depend”. That is why in the said Policy it provided comprehensive guidelines so as to ensure that projects they implement “do no further harm to IPs and leave them worse off with the projects than without”. 11. For sub-projects where Indigenous Peoples may be affected by civil works and other related activities, depending on severity, an Indigenous Peoples Action Plan (IPAP) shall be prepared in lieu of, or in addition to a resettlement plan. For land acquisition inside ancestral domains, DPWH and its agents shall observe the Free and Prior Informed Consent (FPIC) Guidelines of 2006 or the

KEI in association with SKI and DCCD ES-70 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

provisions of any agreement made by and between the DPWH and the National Commission for Indigenous Peoples (NCIP). Please refer to the Social and Environmental Management Systems (SEMS) Manual of the DPWH for details on said FPIC guidelines. For details on the coverage of the policy on IPs and ICCs, see Chapter IV of the DPWH LARRIPP.

14. ENVIRONMENTAL ISSUES AND MEASURES 14.1 Introduction 1. Initial Environmental Examination (IEE) has been conducted for all 11 subprojects of Tranche 1. According to ADB guidelines, the Project can be categorized as environment category “B” for environmental assessment. According to Philippine Environmental Guidelines, the subprojects can be categorized as either Group II or III. Hence, IEE report is prepared to meet the requirements of both the ADB and the government. The IEE is prepared as a stand alone document and enclosed with the draft final report. The summary initial environmental examination is also prepared for the Project and presented as ‘Annex C’ of the IEE report.

14.2 Methodology 2. The following procedure has been adopted to examine the detailed baseline environment and assess the possible environmental impact on the physical, ecological and socio-economic resources that could result due to the implementation of the Project: • Field visits to all the road projects by the environmental specialists; • Preparofation environmental database of all subprojects through detailed review and analysis of available spatial maps for all environmental parameters; • Review of proposed civil works such as overlay, reconstruction and maintenance for each road project; • Review and analysis of reports and field data collected from the previous road projects; • Discussion with various stakeholders; • Assessment of the present environmental scenario and identification of the impacts of the proposed project; • Addressing critical problems, considering technical, financial and institutional factors; and • Preparation of an environmental management and monitoring plan, and mitigation measures. 3. An environmental data base consisting of the following information has been prepared for each road project. • Terrain – minimum and maximum elevations, steep slope areas, sensitive side slopes susceptible to landslide and rock fall. • Climate – mean annual temperature and mean annual rainfall.

KEI in association with SKI and DCCD ES-71 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

• Soils – soil group, texture, drainage, and sand fraction (a function of soil erodibility). • Geology – geology, geomorphology and hydrogeology. • Streams – total streams, watershed, names of major rivers • Protected areas – IUCN protected areas, wetlands, marine protected areas, mangroves, coral reefs, biosphere areas and world heritage sites. 1. Landuse – agriculture, residential, and forest 2. Population – population within 1 km of road link, minimum and maximum population density, densely populated areas. 3. Natural Hazards – seismicity, floods, typhoons, volcanic activity, and other geophysical risks.

14.3 Screening Environmental Impacts and Mitigation Measures 4. The initial environmental examination, based on the screening of baseline environment and review of proposed civil works, has not identified any environmental concerns due to the implementation of Tranche 1 road projects given that all the proposed civil works are only improvement of existing pavement and are located within existing ROW. However, there will be localised short-term impacts during construction activities due to implementation of civil works that were addressed in the detailed designs and through application of environmental management plans. These construction related impacts can be mitigated by: (i) the contractors’ work practices, especially those related to the storage of construction materials and cleanliness of the work sites; (ii) cooperation by the local authorities with the contractor in terms of traffic management and use of public space and utilities; (iii) project management’s strict enforcement of the proper construction practices and standards; and (iv) the incorporation of the mitigation measures identified in the IEE into the bid documents and specifications. A detailed Environmental Management Plan (EMP) has been prepared for all the identified impacts. EMP is presented as ‘Annex A’ of the IEE report. 5. Major environmental concerns that could be expected from the implementation of civil works are: a. Removal and disposal of asphalt and concrete pavement; b. Clearing of right of way, removal of vegetation (trees and shrubs) and disposal of spoils; c. Extraction and transport of construction material from existing quarry sites; d. Temporary use of land immediately adjacent to the road for siting of contractor’s yard, asphalt/concrete plant and construction camps; e. Reduced air quality and visibility (Air quality impacts and/or noise pollution from construction activities, quarry sites, material storage sites, temporary diversion roads, excavations, vehicle and equipment use and asphalt/concrete mixing plant); f. Reduced water quality (Water and soil pollution) at bridge rehabilitation

KEI in association with SKI and DCCD ES-72 Road Sector Institutional Development and Investment Program (RSIDIP): Executive Summary

sites from improper handling of and disposal of wastes and materials; g. Drainage from construction camps, material stockpiles, excavations and quarry activities; h. Interruption to smooth traffic flow, increased traffic congestion and public safety problems; and i. Social conflicts due to project activities. 6. The project is expected to benefit the environment and socio-economic conditions of the subproject areas through: j. Improved access and economic development to about 4.2 million people located within the project districts; k. Reduced soil erosion and landslides due to slope stabilization measures; l. Reduced dust due to improved pavement of roads ; m. Reduced extent of flooding in roadside villages due to improved drains; and n. Improved road safety due to installation of safety signs and construction of pedestrian paths.

14.4 Environmental Monitoring Plan 7. In response to environmental impacts identified during the study, an environmental monitoring plan has been developed and is presented in the IEE report. The contract documents will contain a listing of all required mitigation measures and a time frame for the compliance monitoring of these activities. The monitoring will comprise surveillance to check whether the contractor is meeting the provisions of the contract during construction and the executing agency during the operation of the Project. 8. A budget of US$ 1,053,500 has been proposed for monitoring of environment during civil works implementation of Tranche 1 road projects. A budget of US$ 105,600 has been proposed for environmental management during operational stages of the Tranche 1 road projects.

KEI in association with SKI and DCCD ES-73