Project Administration Memorandum
Project Number: 38255 Loan Number: 2308-IND May 2008
India: Uttarakhand State-Road Investment Program (Project 1)
The project administration memorandum is an active document, progressively updated and revised as necessary, particularly following any changes in project or program costs, scope, or implementation arrangements. This document, however, may not reflect the latest project or program changes.
CURRENCY EQUIVALENTS (as of 30 April 2008)
Currency Unit – Indian rupee/rupees (Re/Rs)
Re 1.00 = $0.024 $1.00 = Rs40.15
ABBREVIATIONS
ADB – Asian Development Bank AP – Affected person EARF – environmental assessment and review framework EIRR – economic internal rate of return EMP – environmental management plan FFA – framework financing agreement FY – fiscal year IEE – initial environmental examination IPDF – indigenous peoples development framework km – kilometer LIBOR – London interbank offered rate MFF – multitranche financing facility MIPMS – management information and project management system NCB – national competitive bidding NHDP – national highway development program PBC – performance-based contract PFR – periodic financial request PIU – project implementation unit PMGSY – Pradhan Mantri Gram Sadak Yojana PMU – project management unit PWD – Public Works Department RDP – road development plan RF – resettlement framework RP – resettlement plan SRTC – State Road Transport TA – technical assistance
NOTES
(i) The fiscal year (FY) of the Government and its agencies ends on 31 March. FY before a calendar year denotes the year in which the fiscal year ends, e.g., FY2006 ends on 31 March 2007.
(ii) In this document, "$" refers to US dollars.
This document was prepared by N. Zhang (Senior Transport Specialist), SATC and A. Garrovillas (Assistant Project Analyst)
CONTENTS
LOAN PROCESSING HISTORY i
DESIGN AND MONITORING FRAMEWORK ii
I. PROJECT DESCRIPTION 1 A. Project Area and Location 1 B. Investment Program Objective and Scope 1 C. Project Components 1 D. Special Feature 2
II. COST ESTIMATES AND FINANCING PLAN 3 A. Investment Program Cost Estimates 3 B. Investment Program Financing Plan 3 C. Project 1 Cost Estimates and Financing Plan 4
III. IMPLEMENTATION ARRANGEMENTS 5 A. Program and Project Management 5 B. Project Preparation and Appraisal 5 IV. IMPLEMENTATION SCHEDULE 6
V. CONSULTANT RECRUITMENT 6 A. Design and Supervision of Works 6 B. Program Support 6 C. Infrastructure Management 6 VI. PROCUREMENT 7
VII. DISBURSEMENT PROCEDURES 7
VIII. PROJECT MONITORING AND EVALUATION 8 A. Performance Monitoring and Evaluation 8 B. Reviews 8 C. Stakeholder Participation and Consultation 8
IX. REPORTING REQUIREMENTS 9
X. AUDITING REQUIREMENTS 9
XI. MAJOR LOAN COVENANTS 9
XII. KEY PERSONS INVOLVED IN THE PROJECT 10 A. Asian Development Bank 10 B. Resident Mission Error! Bookmark not defined. C. Executing Agency 10
XIII. ANTICORRUPTION MEASURES 11
APPENDICES
1 Institutional Assessment and Capacity Development Plan 12 2 Detailed Cost Estimates 20 3 Selection Criteria and Approval Process for Projects 23 4 Implementation Schedule 26 5 Outline Terms of Reference for Design and Construction Consulting Services 27 6 Outline Terms of Reference for Program Support Consulting Services 31 7 Outline Terms of Reference for Infrastructure Management Consulting Services 36 8 Procurement Plan 40 9 Disbursement Letter 44 10 Disbursement Procedures 48 11 Proforma of Executing Agency’s Project Progress Report 53 12 Project Completion Report 58 13 Audit Letter 60 14 Loan Covenants 64 15 Financial Management Assessment 68
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LOAN PROCESSING AND ADMINISTRATION HISTORY Chronology of Important Events
Activity Date(s) A. Processing of the Multitranche Financing Facility 1. Approval of PPTA 4607-IND: Uttaranchal State Roads 1 July 2005 2. Feasibility Study 3. Fact-finding Mission 18-28 April 2006 4. Management Review Meeting (First) 31 May 2006 5. Pre-Appraisal Mission 19-29 June 2006 6. Consultation mission 18-25 August 2006 7. Management Review Meeting (Second) 18 September 2006 8. Frameworks Financing Agreement negotiations 13-14 November 2006 9. RRP Board circulation 27 November 2006 10. Board consideration and approval of $550 million for the Investment 18 December 2006 Program B. Processing of the First Loan 1. First Periodic Financing Request received from Government for an 14 November 2006 indicative amount of $50 million. 2. ADB Management’s approval to proceed with negotiations of the first 6 October 2006 loan 3. First Loan Negotiations successfully concluded between Government of 14 November 2006 India and ADB in Manila 4. ADB approval of the Loan 18 December 2006 5. Signing of Loan Agreement and Project Agreements 25 October 2007 6. Loan Effectiveness 14 January 2008 C. Project Implementation 1. Loan Inception/Handover Mission 15-18 Sept 2008 2. Initial Disbursement to the Imprest Account 3. Loan Review Mission 4. Loan Review Mission 5. Loan Review Mission 6. Midterm Review Mission 7. Loan Review Mission 8. Loan Review Mission 9. Project Completion Review Mission
ii DESIGN AND MONITORING FRAMEWORK
Design Performance Data Sources/Reporting Assumptions Summary Targets/Indicators Mechanisms and Risks Impact Assumption Increased economic Households below the • National and state public • State transport service growth and reduced poverty line in Investment statistics regulations and taxes are poverty in Uttaranchal Program catchment areas • Reports of Center for relaxed further to decrease from 36% in Monitoring Indian encourage new entrants 2006 to 20% by 2017 Economy Pvt. Ltd. into the operator market
Risk • State tourism and horticulture development programs are not advanced
Outcomes Assumptions
1. Increased efficiency of 1.1 Increase in the • Post-implementation • State funds for road sector inter- and intrastate number of goods surveys are sustained at the level transport services vehicle permits • Facility and project required to maintain the issued from 660 to performance management network roads 750 per month by systems • PWD staff are provided 2012 adequate time to attend 1.2 Increase in SRTC training programs bus utilization rate
from 200 to 250 km Risks per bus per day by • Rise in fuel prices and 2012 vehicle sales taxes 1.3 Increase in stage • Turnover of trained staff carriage permits • Environmental clearances issued from 15 to 20 and resettlement activities per month by 2012 are delayed
2. Enhanced 2.1 Routine maintenance sustainability of road cost reduced from network in good $1,400 to $1,000 per condition km through area-wide PBCs by 2012
2.2 Average service life
of periodic
maintenance works
increased from 3 to 5
years by 2012
3. Increased operational Road Board transparency and functional by 1 governance of PWD January 2008 and holds formal meetings to discuss user concerns External audits of financial accounts including procurement indicate full compliance with agreed procedures
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Design Performance Data Sources/Reporting Assumptions Summary Targets/Indicators Mechanisms and Risks
4. National road 4.1 Share of roads in good development programs condition connected to synergized NHDP and PMGSY roads increased from 10% to 30% by 2010
Outputs Assumptions 1. Paved, repaired, or 1.1 At least 10,800 km of • Engineers’ progress • First loan is effective by rehabilitated state state roads are in reports and audit reports March 2007 roads good condition submitted to ADB • Advance procurement for (IRI<4.5) by 2015 Project 1 is completed by • Review missions and March 2007 2. Staff with improved At least 200 PWD project completion reports skills and revised staff trained in one or operating procedures more areas of Risk planning, quality • Shortage of qualified control, contract contractors administration, safeguard compliance, and MIPMS usage by 2010 State-wide programs and budgets after 2008 are prepared by PWD’s central planning unit MIPMS used for financial management and monitoring by 2008 PWD initiates procurement of all works under PBCs by 2012
Activities with Milestones Inputs 1.1 All improvement works under Project 1 are completed by 1 September 2008 • ADB $550 million 1.2 Preparatory activities of the last project to be financed under the Investment • India $280 million Program are completed and PFR submitted to ADB by 1 May 2012 1.3 All road works financed under the Investment Program are completed by 31 December 2017 1.4 Each road improved roads under the Investment Program is maintained according to predetermined performance standards for at least 3 years after the improvements
2.1 Implementation of MIMPS by 1 June 2007 2.2 Establishment of Road Board by 1 December 2007 2.3 Planning Unit operational by 1 December 2007 2.4 Training of PWD staff completed by 1 June 2008 2.5 Two new operational zones mobilized by 1 June 2008
ADB = Asian Development Bank; IRI = international roughness index; km = kilometers, MIPMS = management information and project management system; NHDP = National Highway Development Program; PBC = performance based contract; PFR = periodic financing request; PMGSY = Pradhan mantra Gram Sadak Yojana; PWD = Public Works Department; RDP = road development plan; SRTC = State Road Transportation Corporation.
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I. PROJECT DESCRIPTION
A. Project Area and Location
1. The Project is located in the state of Uttaranchal in India. The 54,000 square kilometer (km2) state of Uttaranchal was created as the 27th state of India by bifurcating the state of Uttar Pradesh in November 2000. Over 90% of its terrain is hilly with the highest point reaching 7,817 meters (m), and 62% is forest covered.
B. Investment Program Objective and Scope
2. The road development plan (RDP) is programmed for implementation as a series of seven discrete projects between 2007 and 2017, and specific capacity development initiatives. Its goal is to improve the 16,800 kilometer (km) state roads network to national standards, and maintain it in a good condition. The RDP needs an investment of about $1.2 billion over the next 10 years. The proposed Investment Program would finance part of the RDP.
3. The Investment Program will have a positive long-term impact on the state’s economy and living standards of the rural population. The principal outcomes of the physical components under the Investment Program will be increased efficiency, safety, comfort, and reliability of inter- and intrastate transport services, and lower road maintenance costs. The nonphysical components of the Investment Program would lead to (i) increased satisfaction among road users; (ii) more opportunities for private sector participation; (iii) more synergy benefits for the parallel road development programs; and (iv) improved governance. Together, these investments would increase mobility and accessibility to educational and health services, employment opportunities, and markets for the community and enterprises in rural and urban areas of the state.
C. Project Components
4. The main outputs of the seven-project Investment Program would be (i) about 10,800 km of motorable state roads–almost two thirds of the Public Works Department (PWD) network–repaired or upgraded, 1 and maintained for a minimum of 3 years under performance-based contracts (PBCs); and (ii) a proactive and accountable PWD that is better equipped to manage road infrastructure.
5. Under Project 1 of the Investment Program, a subnetwork of 23 roads totaling about 570 km would be improved and maintained. Pre-construction activities have been completed for Project 1. These physical improvements will increase the percentage of the state-road network in good condition from 6% to 10% by 2008. The nonphysical outputs of Project 1 would be (i) staff skilled in essential areas of road asset management; (ii) a fully functional planning unit responsible for strategic-level programming; (iii) a road board to increase transparency and stakeholder participation; and (iv) revised accounting, planning, and asset management procedures based on a computerized management information and project management system (MIPMS) to increase the operational efficiency of PWD.
1. Infrastructure Improvement Component
6. The Investment Program outputs will be derived from the two main physical and nonphysical components–infrastructure improvement and infrastructure management. The
1 Includes improvements to transverse and cross-sectional drainage; minor widening; paving, repaving, or reconstruction of pavements; and stabilization of slopes. 2
infrastructure improvement component of each project will include five elements (i) consulting services for preparation of detailed project reports; (ii) physical improvements (repair, rehabilitation, reconstruction) to selected roads to elevate them to a good condition with higher capacity and safety standards; (iii) maintenance of improved roads according to predetermined performance standards; (iv) supervision of physical improvements and administration of maintenance contracts; and (v) consulting services for increasing the capacity of the program management unit (PMU) and project implementation units (PIU) to administer contracts and ensure compliance with safeguards. The roads to be improved under each project have been selected and prioritized using a multi- criteria ranking system based on the overall vision of Uttaranchal, and considering the financial, environmental, social, and technical constraints.
2. Infrastructure Management Component
7. The main objective of the infrastructure management component is to increase the sustainability of the investment by helping PWD restructure and adopt improved policies and operational procedures, and increase staff skills (Appendix 1). The infrastructure management component in Project 1 will include (i) assistance for the planning unit at PWD headquarters to start developing policies, setting performance targets, and programming to ensure road network quality and consistency; (ii) assistance to establish a fully functional road board 2 comprising representatives of PWD’s senior management, transport users, automobile associations, transport operators, and road builders; (iii) revisions to operating manuals for planning, design, construction, and maintenance in line with the vision and mission of PWD; (iv) training in areas such as design review, performance monitoring, quality assurance, financial management, and the MIPMS to improve the staff’s ability to execute tasks under the revised organizational structure and operational procedures; and (v) workshops to increase the awareness and skills of state civil works contractors on preparation and bidding for PBCs, quality control, overall construction, equipment and labor management, and environmental and social safeguard compliance.
D. Special Feature
8. Physical works under the Investment Program would include improvements to road infrastructure and performance-based maintenance. This would be the first time a state agency in India has agreed to adopt PBCs in an externally funded program. Moreover, the Executing Agency has agreed to its gradual adoption as the default method of works procurement. PBCs can generate substantial savings, increase opportunities for private sector involvement, and reduce opportunities for corruption. The savings would be derived from economies of scale and lower prices in return for long-term work assurances for contractors. PBCs which are generally larger and longer than conventional construction contracts also help contractors spread the overhead, and provide incentives to build better roads to lower subsequent maintenance costs. That would encourage in-state contractors to consolidate or expand, and be more professional and innovative. PWD, on the other hand, can reduce the number of contracts and variation orders, which create opportunities for misinterpretation of work and ex gratia payments for expeditious processing.
2 The main objective of the road board is to provide a forum for the PWD to soliciting input from key stakeholders on the performance of the road network. The terms of reference for the road board as well as its mandate will be finalized with the assistance of the infrastructure management consultants in Project 1.
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II. COST ESTIMATES AND FINANCING PLAN
A. Investment Program Cost Estimates
9. The Investment Program is estimated to cost the equivalent of about $830.0 million, including taxes, duties, and interest and other charges on the loans from ADB during construction (Table 1). Detailed cost estimates by expenditure category and financier of the Investment Program are in Appendix 2.
Table 1: Cost Estimates for Investment Program ($ million) Item Total A. Base Costsa 1. Infrastructure Improvement Componentb 775.0 2. Infrastructure Management Component 2.0 Subtotal (A) 777.0
B. Contingencies 31.0
C. Financing Charges During Implementationc 22.0 Total 830.0 a In mid-2006 prices for Project 1 and current prices at the start date of each remaining project. b Includes social and environmental mitigation, resettlement, civil works, and consulting services for design and supervision. c Includes interest during construction computed at the 5-year forward London Interbank Offered Rate plus a spread of 0.6%. d Includes taxes estimated to be $32.0 million. Source: Asian Development Bank.
B. Investment Program Financing Plan
10. India has requested financing of up to the equivalent of $550 million from ADB’s ordinary capital resources to help finance part of the Investment Program. The financing will be provided under the Facility in accordance with ADB policy.3 The Facility will extend multiple loans of no less than $50 million to finance part of the costs of the seven projects constituting the Investment Program. These will be subject to submission of related periodic financing requests (PFR) by India, and execution of the related loan and project agreements. India has entered into a framework financing agreement (FFA) with ADB, which satisfies the requirements set forth in Appendix 4 of the Pilot Financing Instruments and Modalities (footnote 4). India is required to comply with the FFA requirements. If India requests from ADB any Cofinancing or related assistance for the projects under the Facility, ADB may assist, subject to compliance with its related policy and procedures.
11. The provisions of the ordinary operations loan regulations applicable to ADB’s London Interbank Offered Rate (LIBOR)-based loans4 will apply to each loan, subject to modifications, if any, that might be included under any loan agreement. India can choose between the eligible currencies and the interest rate regimes for each loan. The specific terms of each loan will be based on the related PFR, with interest to be determined in accordance with ADB’s LIBOR-based lending facility. India has provided ADB with (i) the reasons for its decision to borrow under ADB’s
3 ADB. 2005. Pilot Financing Instruments and Modalities. Manila. 4 ADB. 2001. Ordinary Operations Loan Regulations Applicable to LIBOR-Based Loans Made from ADB’s Ordinary Capital Resources. Manila.
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LIBOR-based lending facility; and (ii) an undertaking that these choices were made independently, and did not rely on any communication or advice from ADB.
12. India will provide the proceeds of the loans under the Facility to Uttaranchal on terms and conditions applicable to its own lending modalities. India will bear the foreign exchange risk on the loans. The financing plan for the Investment Program is in Table 2.
Table 2: Financing Plan for Investment Program ($ million) Source Total % Asian Development Bank 550.0 66.0a India 280.0 34.0 Total 830.0 100.0 a This is below the assistance limit for India. Source: Asian Development Bank.
C. Project 1 Cost Estimates and Financing Plan
13. Project 1 is estimated to cost the equivalent of about $74.0 million, including taxes, duties, and interest and other charges (Table 3). Detailed cost estimates by expenditure category and financier of Project 1 are in Appendix 2. A loan of $50.0 million from ADB‘s ordinary capital resources will be provided under ADB’s LIBOR-based lending facility to cover part of the cost of Project 1. The loan will have a 25-year term, including a grace period of 5 years. It will have an interest rate determined in accordance with ADB’s LIBOR-based lending facility, a commitment charge of 0.75% per year, and such other terms and conditions as agreed in the FFA, and supplemented under the Loan Agreement. The financing plan is in Table 4.
Table 3: Cost Estimates for Project 1 ($ million) Item Total A. Base Costsa 1. Infrastructure Improvement Componentb 66.0 2. Infrastructure Management Component 2.0 Subtotal (A) 68.0 B. Contingencies 4.0 C. Financing Charges During Implementationc 2.0 Totald 74.0 a In mid-2006 prices. b Includes social and environmental mitigation, resettlement, civil works, and consulting services for design and supervision. c Includes interest during construction computed at the 5-year forward London Interbank Offered Rate plus spread of 0.6%. d Including taxes estimated to be $3.0 million. Source: Asian Development Bank.
Table 4: Financing Plan for Project 1 ($ million) Source Total % Asian Development Bank 50.0 68.0 India 24.0 32.0 Total 74.0 100.0 Source: Asian Development Bank.
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III. IMPLEMENTATION ARRANGEMENTS
A. Program and Project Management
14. As the Executing Agency, PWD of Uttaranchal has established a PMU for Project 1 to serve as its representative. That PMU will remain adequately staffed and functional for the duration of the Investment Program, and will be responsible for day-to-day operation of each subsequent project and the Investment Program. The PMU also will undertake periodic functions, such as (i) preparation of PFRs; (ii) announcement of projects; (iii) engagement of consultants and contractors; (iv) preparation of reports; (v) obtainment of approvals from ADB and government agencies; and (vi) supervision of consultants.
15. The PMU staff will comprise a project director and at least one planning and design engineer; procurement specialist; project finance manager; and an environment specialist and social and resettlement specialist to help implement the provisions of the resettlement framework (RF), indigenous peoples development framework (IPDF), and environmental assessment and review framework (EARF). The project director will report to the chief engineer who, as the head of PWD, would be responsible for approving submissions to ADB through the secretary of PWD. The secretary of PWD would be responsible for interdepartmental coordination, as well as overall supervision of the Investment Programs and individual projects.
16. PWD will establish an adequate number of PIUs for each Project. Six PIUs have been designated for Project 1. Each PIU for a project will be headed by a superintending engineer, assisted by an executive engineer and at least two other technical staff, an accounts officer, and two administrative staff. The PMU will engage independent consultants, financed by Uttaranchal, for monitoring social and environmental safeguard implementation. The head of each PIU will liaise with the project director of the PMU on matters of implementation of the related project, and will be responsible for providing the information and data necessary for recording and reporting purposes.
17. The steering committee set up by Uttaranchal to monitor and guide the preparation of the Investment Program will remain properly constituted and functional during the implementation of the Investment Program. It will help the PMU to ensure effective and timely implementation of the Investment Program and projects. The chief secretary of Uttaranchal will chair the steering committee, which will comprise the secretary of PWD, and secretaries of key state agencies. The secretary of PWD will call meetings every quarter or earlier, if necessary.
18. PWD will establish a road board chaired by the secretary of PWD, and comprising at least one representative from (i) passenger and freight transport providers’ associations; (ii) state traffic police; (iii) state medical department; and (iv) any other agency that can provide input to increase the impact of the Investment Program and projects. The road board chair will convene bi-annual meetings, and minutes of the meetings and any actions taken will be made public. The salient aspects of the discussions and the main actions taken will be summarized in the quarterly project and Investment Program reports to ADB.
B. Project Preparation and Appraisal
19. For Project 1, pre-construction activities, including those related to environmental and social safeguards, have been completed. Resettlement activities are expected to be completed before the commencement of works. 6
IV. IMPLEMENTATION SCHEDULE
20. The seven projects of the Investment Program and their subcomponents will be implemented over 10 years, as shown in the indicative implementation schedule in Appendix 4. The detailed schedules for the first four projects have been finalized, and the schedules for the remaining three projects will be completed during the implementation of Project 3. PWD will prepare detailed implementation schedules those projects during the pre-construction of the previous project.
21. Project 1 is expected to be implemented over 4.5 years, beginning April 2007. This schedule includes 1.5 years for the physical improvements and 3 years of performance-based maintenance. The infrastructure management component in Project 1 will be implemented over 2 years, commencing upon the effectiveness of the first loan.
V. CONSULTANT RECRUITMENT
22. All consultants financed from the Facility would be selected and engaged in accordance with ADB’s Guidelines on the Use of Consultants (2007, as amended from time to time).
A. Design and Supervision of Works
23. PWD will engage one or more private firms of engineering consultants for design and construction supervision of each project, except for Projects 1 and 2.5 For these two projects, consulting firms will be engaged only for supervision. The number of construction supervision consulting service packages needed for each project will be determined based on the scope and geographic spread of the works packages. For Project 1, three packages will be used to procure the 1,000 person-months of input needed. The outline terms of reference for the supervision consultants for Project 1 are in Appendix 5.
B. Program Support
24. PWD will engage experienced national consultants, financed under Project 1, to provide 92 person-months of inputs to help the PMU coordinate and facilitate timely processing and implementation of the Investment Program activities. The scope of services would include assistance to the PMU to (i) update the RDP; (ii) prepare the supporting documentation required for the future PFRs and PBCs; (iii) carry out technical reviews of the subproject designs, including safeguard compliance; and (iv) prepare reports for submission to ADB. Outline terms of reference for this consulting service are in Appendix 6. Additional consulting services, if necessary, will be procured in subsequent projects to ensure timely implementation.
C. Infrastructure Management
25. PWD will engage an international consulting firm working with national experts to provide 98 person-months of assistance (14 person-months of international consulting services and 84 person-months of national consulting services) to the PMU to implement the infrastructure management component in Project 1. Outline terms of reference for these consulting services are in Appendix 7. Additional consulting services, if necessary, will be procured in subsequent projects.
5 PWD has financed the design part of Projects 1 and 2 to increase project readiness.
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VI. PROCUREMENT
26. Works to be financed from the Facility will be procured using national competitive bidding (NCB) procedures and post-qualification method, in accordance with ADB’s Procurement Guidelines (April 2006, as amended from time to time), as described in the procurement plan for the Investment Program in Appendix 8. The bidding documents and procurement procedures agreed between PWD and ADB for use under advance contracting, as also set out in the procurement plan, will be followed for NCB. Any modifications to these will be agreed between PWD and ADB, and further set out in the procurement plan. The upper limit for a works contract to be procured through NCB procedures initially will be set at $10.0 million, and will be reviewed during implementation.
27. The standard review and approval procedure described in ADB’s Procurement Guidelines and the procurement plan (Appendix 8) will be used for procurement in Projects 1 and 2 of the Investment Program. PWD will submit the documentation, as specified in the guidelines, for ADB’s review and approval before signing the works contracts. Indicative contract packages for Project 1 are described in Appendix 8.
28. If PWD is deemed to have adhered closely to the procurement plan and guidelines in Projects 1 and 2, ADB may allow subsequent NCB contract packages to be awarded without prior review to reduce procurement time. This would increase ownership of the process within PWD, as well as promote transparency, accountability, and good governance practices. This approval procedure requires that PWD (i) retains records of all procurement documentation, including copies of the signed contracts and the bid evaluation reports for inspection; (ii) provides ADB with a certified summary sheet describing the main aspects of the bid evaluation and contract award at the time of each contract award; (iii) engages an independent private firm to perform periodic audits of the procurement processes and contract awards; (iv) engages an independent private firm of chartered accountants to audit the PMU annually; and (v) acknowledges that, if any contract award is found to be unacceptable, ADB may refuse to finance the contract. ADB will select contracts at random for review to ensure that all due processes have been followed.
29. Works in any project may be procured under PBCs or traditional works contracts if only improvement works are procured. ADB has reviewed the documents to be used for combined improvement and maintenance works procurement, which are based on ADB’s standard bidding documents for small works and other national and international guidelines, and found them to be generally acceptable.
VII. DISBURSEMENT PROCEDURES
30. The last disbursements under any tranche from the Facility must be made by 31 December 2017. The last PFR is expected to be submitted no later than 1 May 2012, provided that the availability period will lapse 12 months from the date of approval of the Facility by ADB’s Board, unless by such time the legal agreements for the first tranche under the Facility are signed and made effective. For consulting services, procurement of equipment, and civil works contracts, loan disbursements will be in accordance with ADB’s Loan Disbursement Handbook (2007, as amended from time to time), using direct payment and reimbursement procedures. The PMU may use the statement of expenditure procedure under the reimbursement procedure for individual payments not exceeding $100,000, in accordance with ADB’s Loan Disbursement Handbook. Withdrawal of Loan proceeds is detailed in ADB’s disbursement letter in Appendix 9.
31. The PMU will maintain separate bank accounts for each project. The funds drawn down in accordance with each PFR, with the corresponding counterpart funds, will be credited to the
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corresponding account. Each PIU for a project will submit contractor payment certificates to the PMU, which will arrange for the necessary bank transfers to be made into the contractors’ nominated account(s). PWD will be responsible for monitoring the project bank accounts, and for reviewing monthly reconciliation of the accounts made by the PMU. PWD also will approve withdrawal applications.
32. The summarized disbursement procedures and sample forms are in Appendix 10 and in the ADB’s Loan Disbursement Handbook. ADB would regularly advise the Borrower, the PMU and the PIUs on the status of the loan fund disbursements through a semi-monthly Listing of Loan Disbursements. The handbook and the reports are available electronically in the Loan Financial Information Services Web System (LFIS) (http://lfis.adb.org). To obtain access to the LFIS Web access must be filled out and submitted to ADB.
VIII. PROJECT MONITORING AND EVALUATION
A. Performance Monitoring and Evaluation
33. With the assistance from the construction supervision consultants of Project 1, PWD will develop an investment program performance monitoring system and a project performance monitoring system to monitor and evaluate the impacts, outcomes, outputs, and activities in relation to the targets and milestones set for each project and the Investment Program.
34. At the beginning of each project, PWD and ADB will agree on a set of baseline values of economic, social, environmental, and poverty reduction impact indicators. With the assistance of the construction supervision engineer(s) of that project, PWD will conduct participatory surveys, and collect and analyze data at intervals agreed with ADB. Comments and findings of the data analyses will be submitted as part of every other quarterly report of PWD to ADB. A complete analysis of related primary and secondary data on impacts and outcomes will be performed at completion, and 3 years after completion of each project and the Investment Program. The results, which will be reported to ADB within 3 months, will highlight the positive and negative impacts and outcomes of each project and the Investment Program.
B. Reviews
35. ADB, India, and Uttaranchal will undertake a midterm review of the Investment Program in June 2012. A midterm review of Project 1 will be undertaken in January 2010. The timing of midterm reviews of subsequent projects will be agreed upon during the approval of each project. The reviews will focus on impacts, particularly those relating to institutional, administrative, organizational, technical, environmental, and social aspects, and poverty reduction. The projects’ economic viability, and other relevant aspects that might impact performance, also will be assessed during the reviews. In addition, the reviews will examine the implementation progress for the sector reforms, policy development, performance of the road sector as a whole, and compliance with assurances in the FFA.
36. ADB’s Board will be briefed annually on the progress through the review missions’ back-to- office reports, and after the review of the PFRs.
C. Stakeholder Participation and Consultation
37. PWD will ensure that the Investment Program is implemented with active participation of all stakeholders, using participatory practices. As part of the preparation of Project 1, consultations were held with stakeholders, including directly affected people, and local administrative
9 departments. Issues related to the implementation of Project 1 and activities involved in the implementation were discussed. Stakeholder consultation and participation will continue throughout implementation. The initial poverty and social assessment report, and the short resettlement plans (RP) for Project 1 have been made available to the public by PWD and are posted on the ADB Web site. For subsequent projects, PWD will ensure that completed RPs, IPDPs, and resettlement monitoring reports are made available to affected people and are submitted to ADB for posting on its Web site. Additionally, the meetings of the road board would serve as a forum for stakeholders to discuss and seek resolutions to significant issues.
IX. REPORTING REQUIREMENTS
38. Monthly Report. PWD will submit detailed monthly progress reports of project implementation.
39. Quarterly Progress Report. Based on the monthly reports, PWD will prepare and provide ADB with quarterly progress reports on project implementation. Such report will include a report on progress made against established targets during the period of review, changes if any of the implementation schedule, problems or difficulties encountered and remedial actions taken, utilization of funds, physical and financial progress; and proposed works to be undertaken in the coming quarter. A proforma of the Project Progress Report is in Appendix 11.
40. Project Completion Report. The Government will submit to ADB a project completion report within 3 months of physical completion of all the subprojects under the Project. This report will include a detailed evaluation of the project covering the design, costs, contractors’ and consultants’ performance, social and economic impact, economic rate of return, and other details relating to the Project as may be requested by ADB. The outline of the report is in Appendix 12.
X. AUDITING REQUIREMENTS
41. Uttaranchal has agreed to adhere strictly to accounting, financial management, and corporate governance requirements during implementation of the Investment Program. PWD will assign to the PMU a professionally qualified finance manager, as well as an administrative assistant trained on the new computer-based system. The PMU will maintain separate records and accounts adequate to identify (i) the goods and services financed from the proceeds of each loan; (ii) the financing resources received; (iii) the expenditures incurred on the components of each project; and (iv) use of local funds. PWD will engage independent external auditors acceptable to ADB to audit consolidated project accounts annually, and provide opinions on the accounts and statement of expenditure operations. The state auditor general’s office, which also maintains the accounts, will conduct its routine annual audits of PWD, as well as the projects and the Investment Program. The independent financial audits will enable PWD to submit its audited financial statements and audited project accounts to ADB not later than 6 months after the end of each fiscal year. The first audited reports should be submitted to ADB by 30 September 2008. Audit requirements are also discussed in Appendix 13.
XI. MAJOR LOAN COVENANTS
42. The standard loan covenants, as well as the other assurances, which have been agreed with the Government, the Executing Agency, and ADB to be complied with are in Appendix 14.
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XII. KEY PERSONS INVOLVED IN THE PROJECT
A. Asian Development Bank
Address : India Resident Mission Asian Development Bank 4, San Martin Marg, Chanakyapuri, New Delhi-110021; P.O. Box 5331, Chanakyapuri HPO
Facsimile : +91-11-2687-0955
Telephone : +91-11-2410-7200
Country Director : Mr. Tadashi Kondo Email: [email protected]
Project Implementation Officer : Mr. Anil Motwani (Transport) Tel. No. +91-11-2410-7200 Fax No. +91-11-2687-0955 Email: [email protected]
Sr. Counsel, OGC : Ms. Vankina Sri Rekha Tel. No. + 91 11 2410 7200 Fax No. + 91 11 2687 0955 Email: [email protected]
Sr. Control Officer : J. Srinivasan Tel. No. + 91 11 2410 7200 Email: : [email protected]
ADB Websites Main : http://www.adb.org Procurement : http://www.adb.org/Procurement/prequalification-bid- documents.asp Consulting Services : http://www.adb.org/Consulting/default.asp Disbursements : http://lfis.adb.org/home.asp
B. Executing Agency
Address : Public Works Department of Uttaranchal 19 Siddarth Enclave, G.M.S. Road near Joseph Petrol Pump, Dehradun, 248001
Contact Person : Mr. Manoj Kumar Bisht, Project Manager
Facsimile : +91 135 272 2911
Email : [email protected]
11
XIII. ANTICORRUPTION MEASURES
43. ADB defines corruption as “abuse of public or private office for personal gain.” ADB will systematically identify, in consultation with its member countries opportunities for reducing corruption as part of its broader emphasis on improving good governance and sound development management. ADB’s Anticorruption Policy has set the guidelines and procedures in addressing fraudulent corrupt practices. Anyone coming across evidence of fraud or corruption associated with the Investment Program must contact ADB’s Office of the General Auditor, who will investigate such allegations.
44. ADB has assessed thoroughly the accounting and financial management policies, regulations, and practices of PWD (Appendix 15); and agreed on measures to improve governance, accountability, and transparency. These measures include (i) independent external audits of contracts and accounts; (ii) the stakeholder road board; (iii) Web-based bid disclosures; and (iv) project performance tracking Web-based systems (i.e., MIPMS). ADB has explained to and discussed with Uttaranchal and PWD the Anticorruption Policies and Strategies (1998), as amended from time to time; and its right to investigate, directly or through its agents, any alleged corrupt, fraudulent, collusive, or coercive practices relating to the projects under the Facility. Relevant provisions of ADB’s Anticorruption Policies and Strategies (1998) and oversight measures are included in the loan regulations and the bidding documents for the projects financed from the Facility. In particular, all contracts financed by ADB from the Facility will include provisions specifying the right of ADB to audit and examine the records and accounts of PWD and all contractors, suppliers, consultants, and other service providers as they relate to the projects under the Facility.
12 Appendix 1
INSTITUTIONAL ASSESSMENT AND CAPACITY DEVELOPMENT PLAN
A. PWD’s Structure and Responsibilities
1. The Public Works Department (PWD) is a statutory department of the state of Uttaranchal under the Ministry of Public Works Department. PWD is headed by chief engineer I, who reports to the PWD secretary appointed by the Public Service Commission of India. The secretary is assisted by an additional secretary of PWD, also appointed by India; and a joint secretary appointed by the state Public Service Commission. The secretaries are responsible for establishing the policy framework and monitoring organizational performance. The current organization chart is in Figure 1.1, showing the reporting lines and other senior staff positions.
Figure A1.1: Current Organizational Structure of PWD
PWD Minister
Secretary – Additional Secretary – Joint Secretary
Engineer-in-Chief – Level 1
Senior Staff Officer Senior State Officer Finance Operations Establishment Controller
Chief Engineer Chief Engineer Pauri Kumaun
SE SE SE SE SE National Highways Circle (5) Electrical Circle (4) Electrical Mechanical Mechanical
Abbreviations: PWD = Public Works Department; SE = superintendent engineer.
2. For planning, budgeting, and executing work programs, the state is divided into two main PWD operational zones headed by a chief engineer. The zones are divided into circles headed by superintending engineers, divisions headed by executive engineers, and areas headed by assistant engineers (AE). Each AE is supported by three to four junior engineers. In total, PWD has 9,383 employees: 895 engineers; 2,061 administrative staff; 1,425 field staff, including skilled laborers and drivers; and 5,000 maintenance workers. The maintenance workers are being phased out though a hiring freeze. Staff cost has decreased as a percentage of the administrative budget from 25% in FY2003 to the current estimate of 16% in FY2005, which is considerably less than the national average.
B. Procedural Deficiencies
3. Clearance Procedures. More than 50% of the PWD road network passes through forest areas. As such, PWD must obtain clearances from the state Department of Forests (DOF) for Appendix 1 13
any major repairs or rehabilitation work on those roads. Clearances for up to 5 hectares of land are issued through its district offices. However, given the average 10-meter rights-of-way (ROW) of most roads, the maximum length of a road that a district DOF office can clear is 5 kilometers (km). Clearances for longer stretches must be obtained from higher authorities of the state or central governments, which is often time consuming. In a state where the construction season is short,1 those delays have had undermined productivity significantly.
4. Excessive Travel Times. The hilly terrain that characterizes the state limits speeds to 25–30 km per hour on most roads. As a result, traveling from each of the two zone offices to many of the respective divisions takes 1 day, and to the circles requires half a day. That reduces the time available for supervision and monitoring of works by PWD staff.
5. Excessive Consultation. Another factor 2 that affects effective supervision and monitoring time is the many state-level meetings between headquarters staff and chief engineers; and zone-level meetings between the superintending engineers and the executive engineers. Reportedly, an average of 10–20 days a month are spent attending meetings, which mostly address one outstanding issue and are often do not produce a result.
6. Archaic Manuals. PWD’s procedures still contain remnants of the system set up in the mid-1850s, and are guided by manuals from Uttar Pradesh. For instance, the outline of the basic organizational structure and job descriptions stem from the Financial Handbook, Volume VI that the government of Uttar Pradesh issued in 1974. Likewise, maintenance methods are based on the Maintenance Manual for Roads issued by the PWD of Uttar Pradesh in 1984. While supplementary manuals and guidelines have been issued on an ad hoc basis, an integrated updated manual has not been produced.
7. Inadequate Planning. Planning is limited to preparation of budget proposals for the next fiscal year, largely in isolation from state development goals and stakeholder views. Proposals are based on quantities from project lists submitted by the districts and inflation-adjusted unit rates from the previous fiscal year, and include amounts for completing ongoing works. Depending on the central allocations to the state roads sector for the corresponding fiscal year, and the share of federal projects in the work program, the state determines and allocates the additional funding needed to accomplish PWD’s work program from its own sources. As a result, road investment has been uncoordinated and unstable. Moreover, this has perpetuated the practice of preparing single-year work programs based on ad hoc criteria, which in turn has created opportunities for political interference.
8. Weak Accounting and Reporting. PWD uses manual accounting procedures, which are based on the financial handbook adopted by Government organizations and the Central Public Works accounts Code. PWD does not have (i) a formal system of regular financial management reporting, (ii) a system of comparing actual expenditures with budgeted and programmed allocations, or (iii) a practice of exception reporting. The comptroller and auditor general of India conduct the statutory audit of PWD once per year through the Office of the State Accountant General of Uttaranchal, which is also responsible for the accounting and record keeping aspects of PWD. The audit report is not received on a timely enough basis to allow corrective action to be taken. Further, an external audit opinion is not expressed on PWD as an entity.
1 About 6 months from mid-February to the end of June, and from mid-September to mid-November. 2 Highlighted by working groups at an institutional review workshop conducted by the project preparatory technical assistance consultants in Dehradun on 10 April 2006.
14 Appendix 1
9. Inadequate Supervision and Monitoring. The average observed service life of improved and new roads is almost half the established service life for comparable roads internationally. For instance, rehabilitation is needed every 3–4 years, compared to every 6–8 years if properly constructed. This is attributable to construction methods and material that sometimes are unsuited for the climate and terrain in Uttaranchal, as well as to inadequate supervision. Limited quality control and survey equipment, visual inspection and other imprecise techniques,3 and limited expertise among the engineers constrain supervision. On average, a supervision engineer makes less than three site visits per month. Periodic maintenance interventions are determined through ad hoc visual inspection of a limited number of roads.
10. Dated Standards and Specifications. The sequence followed by the junior engineers who prepare bidding documents is site inspection and identification of required intervention(s), followed by preparation of bills of quantities. Force account workers perform typical interventions under routine maintenance, including (i) shoulder repairs, (ii) pothole patching, (iii) landscaping, (iv) removal of minor earth slips, and (v) road sign and furniture repair. However, performance standards have not been established, and evaluation of works is highly subjective. Construction specifications generally are set according to Indian Roads Congress’ geometric and pavement design standards.
11. Low Value of Contracts and Quality of Contractors. The practice of awarding many small contracts reduces the intensity of supervision and monitoring, and attracts only contractors with limited capacity to perform quality work.
12. Lack of Incentives. The opportunities for promotion and career development are limited. More than half the executive engineers and superintending engineers are designated as “acting”. Although training courses are available, finding a relevant course at a convenient time has been difficult for most staff.
C. Ongoing or Planned Efficiency Improvement Initiatives
13. Reduction in Implementation Delays. The chief secretary of Uttaranchal has instructed district magistrates to conduct biweekly coordination meetings with PWD, DOF, and other relevant government agencies to ensure that all clearance applications are approved within 2 weeks.
14. Increased Supervision Capacity. Funding has been allocated for purchasing 100 new vehicles, and additional surveying and testing equipment, in FY2006. Legislative approval has been received for subdividing the two existing zones, which would enable the number of operational zones to be increased to four. Additionally, state approval has been sought for (i) designation of a separate chief engineer for externally funded projects, including National Highways (NH), Pradhan Mantri Gram Sadak Yojana (PMGSY), and Asian Development Bank (ADB); (ii) establishing one maintenance and one PMGSY division in each circle; and (iii) establishing asset development and maintenance cells at the zone level. These changes are expected to increase accountability, enable more delegation of duties to the divisions and circles, increase monitoring of asset development and asset maintenance targets, increase familiarity with best practices, and increase overall return on investment.
3 For example, distance is based on odometer readings; pavement thickness is not based on soil strength; quantities are estimated using average per km values.
Appendix 1 15
15. Computerization. A Web-based management information and project management system (MIPMS) funded by the World Bank is expected to be introduced to PWD by December 2006. This would vastly improve asset planning, budgeting, construction and maintenance work monitoring, personnel management, and procurement.
16. Draft Road Policy. A draft road policy, covering 10 years through 2015, has been prepared to guide road sector reforms aimed increasing economic growth and ensuring an equitable distribution of benefits among regions and population groups. Reforms will ensure that (i) investment is in line with the Road Development Plan (RDP), or priorities based on sound technical and economic criteria; (ii) asset maintenance strategies will increase service life and private sector participation; (iii) adequate funds are available for road development and maintenance; and (iv) legislation is in place to promote sector efficiency.
17. Improved Planning. The state has prepared a RDP to guide the implementation of the road policy. Additionally, the state government has approved the creation of a separate unit within PWD headquarters that would be responsible for strategic planning. The planning unit would undertake review and updating of the RDP, programming and budgeting, and monitoring and evaluation. The unit will be headed by a chief engineer, supported by professionals. The organizational chart after the establishment of this unit is shown in Figure 1.2.
Figure A1.2: Organizational Chart of PWD After Restructuring
Public Works Department Minister
Secretary – Additional Secretary – Joint Secretary
Road Stakeholder Board Contractor and Consultant Registration Board
Engineer-in-Chief – Level 1
Chief Engineer Additional Engineer-in-Chief Senior State Officer Finance National Highways Quality and Strategic Planning Establishment Controller
Chief Engineer Chief Engineer Chief Engineer Chief Engineer Chief Engineer External Funding Dehradun Pauri Almora Nainital
18. Increased Stakeholder Participation. PWD will establish a road board to increase stakeholder participation and transparency of decision making. This board will ensure that the views of road users and stakeholders are considered for strategic planning and investment decision making. The secretary PWD would chair the board, which would include the engineer in chief of PWD, as well as six to eight members representing (i) private and public sector freight and passenger transport service providers, (ii) consumer protection groups, (iii) traffic police, (iv) chamber of commerce, (v) engineering and contractor associations, (vi) the state accountant
16 Appendix 1 general or a senior deputy of the office of the accountant general, and (vii) other state stakeholder agencies.
E. Actions Required to Support Efficiency Initiatives
19. Information Technology. Staff training for MIPMS on data collection and input, and report production will be needed to enhance PWD-wide usage of the system.
20. Business Processes. Operations manuals and guidelines must be revised in line with the contract administration duties that will ensue from the creation of new zones; establishment of the planning division; new civil works procurement methods, such as performance-based contracts; and the need to be more customer-oriented. The state also must finalize the road policy and submit it for approval by the state cabinet, and implement the organizational restructuring.
21. Financial management and corporate governance mechanisms must be improved to support the increased level of investment, based on the RDP. A review of the financial handbook, the PWD account codes, and related financial guidelines and procedures must be undertaken to (i) revise and update financial and management accounting and related procedures, (ii) ensure compliance with related ADB financial management guidelines, and (iii) strengthen procedures necessary to ensure compliance with anticorruption guidelines and good governance. A training module to enhance awareness of these mechanisms must be developed, and training sessions conducted.
22. Adequate annual financing is needed to implement the RDP if the share of state roads in good condition4 is to be increased to 90% by 2017. An additional $14 million is needed to clear the maintenance backlog.5
F. ADB Assistance
23. To accelerate the reform process and increase its impact, ADB has prepared an infrastructure management component to be implemented under Project 1 of the Investment Program. This component will provide technical support to PWD through a consulting service contract to restructure PWD and reengineer the business processes, develop a human resources strategy and provide staff and contractor training. The expected outcomes of this components and implementation schedule are in Table A1. The outline terms of reference and scope of services for the consultants are in Appendices 5 to 8.
24. Organizational Restructuring and Business Process Reengineering. Support provided for these activities will cover revisions to operating manuals to reflect the new processes. These include (i) preparation and approval of divisional budget proposals; (ii) supervision and monitoring of works; (iii) procurement, particularly state-wide performance- based maintenance works; (iv) use of the MIPMS; and (v) guiding and assisting the PWD in
4 Current condition of the network was estimated by the consultant engaged to develop the road development plan. The estimate for 2015 is based on the length of scheduled for rehabilitation under the investment program plus an average allowance of 150 km per year through the PWD program. 5 The annual costs of routine and periodic maintenance are Rs1.05 billion and Rs0.95 billion respectively. Routine maintenance costs are based on unit per km cost estimates for 5-year post construction performance-based contracting on PMGSY roads in Uttaranchal adjusted for road width and condition of the existing PWD network. Periodic maintenance costs are based on per km costs for 50 mm bituminous concrete overlay applied on a 6 to 8 year cycle depending on road class.
Appendix 1 17
obtaining the necessary approvals for the revised manuals. The revisions will be based on current requirements and best practices in road construction and maintenance.
25. Human Resources Strategy. Based on an assessment of the skills needed to implement the RDP, consultants will prepare and deliver training programs for PWD staff. They also will provide training and guidance for the state road contractors. The main objective of the training modules is to familiarize PWD staff with the revised manuals.
26. Financial Management. Finance and accounting staff deployed at the PWD divisions will receive training on the use of the new planning, budgeting, project evaluation, and monitoring systems, as well as the MIPMS. Additionally, semiannual reporting requirements will be introduced. A firm of chartered accountants will perform external audits, in compliance with international accounting and auditing standards, to ensure transparency, accountability, and good governance.
27. Risk Management and Insurance. The consultants also will review the adequacy of insurance coverage of all assets, workmen’s compensation, and public liability; and propose a risk management and insurance plan to be considered by the state.
G. Capacity Development Plan
28. The capacity development plan is in Table A1.3. This plan summarizes the ongoing initiatives being progressed within PWD, and it highlights the areas in which PWD will require consulting services support to facilitate achievement of the objectives. The table shows the time frame within which actions must be completed to maximize the impact, and to link such actions with the infrastructure improvement schedule.
Table A1.3: Capacity Development Plan 18
Subject Actions Needed ADB Assistance Time Frame pedx1 1 Appendix
Strategic Planning and Obtain cabinet approval of the road policy (i) Finalize draft policy document Stakeholder Participation (ii) Prepare documentation needed for submission to (i) 2007 Q3 cabinet (ii) 2007 Q3
Make planning unit operational (i) Prepare planning guidelines (i) 2007 Q3 (ii) Establish performance targets (ii) 2007 Q4 (iii) Prepare annual report formats and guide (iii) 2008 Q4 preparation of first annual report
Establish the road board (i) Prepare TOR and composition of the board (i) 2007 Q3 (ii) Assist with convening quarterly meetings (ii) 2008 Q1 (iii) Help PWD prepare and submit annual report (iii) 2008 Q4
Supervision, Monitoring, Improve operational procedures (i) Review and revise operational manuals (i) 2007 Q3 and Accountability (ii) Obtain relevant approvals of manuals for adoption (ii) 2008 Q1 by PWD (iii) Establish training needs (iii) 2007 Q4
MIMPS Make system fully operational (i) Review data collection and input procedures (i) 2007 Q2 (ii) Review output formats and information sharing (ii) 2007 Q2 mechanisms (iii) Establish training needs (iii) 2007 Q3
Contracting Mechanisms Improve contracting mechanisms (i) Construction and periodic maintenance (i) Propose packaging to increase contract size and (i) 2007 Q4 (ii) Routine maintenance increase incentives for contractors to upgrade equipment and staff (ii) Assess potential for performance-based, area- (ii) 2007 Q4 wide maintenance contracting, and prepare spatial plan for implementation (iii) Establish training needs for contract administration (iii) 2008 Q1 and contractor development
Subject Actions Needed ADB Assistance Time Frame
Human Resources Development of skills and achieving the right level of (i) Assess training needs identified in each area (i) 2007 Q4 Development Strategy skills mix within the PWD (ii) Review available training programs, sources and (ii) 2007 Q4 costs of delivery (iii) Prepare training modules including study tours and (iii) 2008 Q3 other hands-on methods of skills enhancement in each area (iv) Establish links, if necessary, to deliver training (iv) 2008 Q3 programs (v) Conduct training (v) 2008 Q4
Increase project management and construction (i) Conduct training workshops for contractors on (i) 2007 Q4 technology skills of contractors preparation of work schedules and quality Appendix1 assurance programs, bidding on performance- based contracts, and financial management
Increase financial management capability (i) Provide training to finance and accounting staff (i) 2008 Q2 deployed at the PWD divisions (ii) Introduce semiannual reporting requirements (ii) 2007 Q2 (iii) Introduce requirements for external audits (iii) 2007 Q2
PWD=Public Works Department, Q1=first quarter, Q2=second quarter, Q3=third quarter, Q4=fourth quarter, TOR=terms of reference
19
20 DETAILED COST ESTIMATE
Table A2.1: Detailed Cost Estimate by Expenditure Category for the Investment Program 2 Appendix
Rs million $ million % of Base Investment Program Foreign Local Total Foreign Local Total Cost A. Investment Costsa 1. Resettlement 17 17 0.5 0.5 0.1 2. Civil Worksb 31,163 31,163 695.5 695.5 89.5 3. Consulting Services – Design 591 591 13.5 13.5 1.7 4. Consulting Services – Construction 1,257 1,257 28.0 28.0 3.6 Supervision 5. Environmental Mitigation and Monitoring 14 14 0.5 0.5 0.1 6. Taxes and Duties 1,435 1,435 32.0 32.0 4.1 Subtotal A 34,477 34,477 770.0 770.0 99.1
B. Project Management and Administration 1. Project Management Unit 31 31 1.0 1.0 0.1 2. Project Implementation Unit 135 135 3.0 3.0 0.4 3. Program Support Consultant 49 18 67 1.1 0.4 1.5 0.2 Subtotal B 49 184 233 1.1 4.4 5.5 0.7
C. Other Program Components 1. Infrastructure Management Component 18 49 67 0.4 1.1 1.5 0.2 Subtotal C 18 49 67 0.4 1.1 1.5 0.2
Total Base Cost 67 34,710 34,777 1.5 775.5 777.0 100
D. Contingencies 1. Physical Contingencyc 887 887 20.0 20.0 2.6 2. Financial Contingencyd 485 485 11.0 11.0 1.4 Subtotal D 1,372 1,372 31.0 31.0 4.0
E. Interest During Constructione 953 953 22.0 22.0 2.8
Total Investment Program Cost 1,020 36,082 37,102 23.5 806.5 830 106.8 a costs given in current prices at the start of each project b includes cost of performance based maintenance for 3 years c computed at 3% if civil works and consulting services cost d computed using 4% annual inflation over implementation period of each project e interest taken as London interbank offered rate floating rate of 5.16%, plus a 0.6% lending spread Source: ADB estimates.
Table A2.2: Detailed Cost Estimate by Expenditure Category for Project 1
Rs million $ million % of Base Project 1 Foreign Local Total Foreign Local Total Cost A. Investment Costsa 1. Resettlement 1 1 0.1 0.1 0.1 2. Civil Worksb 2,606 2,606 58.1 58.1 85.1 3. Consulting Services – Design 51 51 1.1 1.1 1.7 4. Consulting Services – Construction 130 130 2.9 2.9 4.2 Supervision 5. Environmental Mitigation and Monitoring 1 1 0.1 0.1 0.1 6. Taxes and Duties 120 120 2.7 2.7 3.9 Subtotal A 2,909 2,909 65.0 65.0 95.2
B. Project Management and Administration 1. Project Management Unit 9 9 0.2 0.2 0.3 2. Project Implementation Unit 26 26 0.6 0.6 0.8 Appendix2 3. Program Support Consultant 45 45 1.0 1.0 1.5 Subtotal B 80 80 1.8 1.8 2.6
C. Other Program Components 1. Infrastructure Management Component 18 49 67 1.1 0.4 1.5 2.2 Subtotal C 18 49 67 1.1 0.4 1.5 2.2
Total Base Cost 18 3,038 3,056 1.1 67.2 68.3 100.0
D. Contingencies 1. Physical Contingencyc 70 70 1.6 1.6 2.3 2. Financial Contingencyd 105 105 2.3 2.3 3.4 Subtotal D 175 175 0 3.9 3.9 6.1
E. Interest During Constructione 70 70 1.8 1.8 2.6
Total Investment Program Cost 88 3,213 3,301 2.9 71.1 74.0 108.7 a costs given in current prices at the start of each project b includes cost of performance based maintenance for 3 years c computed at 3% if civil works and consulting services cost d computed using 4% annual inflation over implementation period of each project 21 e interest taken as London interbank offered rate floating rate of 5.16%, plus a 0.6% lending spread Source: ADB estimates.
22 Appendix 2
Table A2.3: Detailed Cost Estimate by Financier for the Investment Project ($ million)
Investment Program ADB India Total A. Investment Costsa 1. Resettlement 0 0.5 0.5 2. Civil Worksb 519.5 176.0 695.5 3. Consulting Services – Design 0 13.5 13.5 4. Consulting Services – Construction 28.0 0 28.0 Supervision 5. Environmental Mitigation and Monitoring 0 0.5 0.5 6. Taxes and Duties 0 32.0 32.0 Subtotal A 547.5 222.5 770.0
B. Project Management and Administration 1. Project Management Unit 0 1.0 1.0 2. Project Implementation Unit 0 3.0 3.0 3. Program Support Consultant 1.0 0.5 1.5 Subtotal B 1.0 4.5 5.5
C. Other Program Components 1. Infrastructure Management Component 1.5 0 1.5 Subtotal C 1.5 0.0 1.5
Total Base Cost 550.0 227.0 777.0
D. Contingencies 1. Physical Contingencyc 0 20.0 20.0 2. Financial Contingencyd 0 11.0 11.0 Subtotal D 0 31.0 31.0
E. Interest During Constructione 0 22.0 22.0
Total Investment Program Cost 550.0 280.0 830.0 % Total Investment Program Cost 66% 34% 100% a costs given in current prices at the start of each project b includes cost of performance based maintenance for 3 years c computed at 3% if civil works and consulting services cost d computed using 4% annual inflation over implementation period of each project e interest taken as London interbank offered rate floating rate of 5.16%, plus a 0.6% lending spread Source: ADB estimates.
Appendix 3 23
SELECTION CRITERIA AND APPROVAL PROCESS FOR PROJECTS
Road Selection Criteria To be financed from the multitranche financing facility for the Uttaranchal State-Road Investment Program as part of a project, each road should:
(i) satisfy the requirements of the agreed financing framework agreement, environmental assessment and review framework, indigenous peoples development framework, and the resettlement framework within the specified time frames without causing delays to the project or Investment Program implementation schedules; (ii) be an existing section or the full extent of a state highway, major district road, other district road, village road, or light vehicle road, and be part of the network administered by the Public Works Department (PWD) of Uttaranchal; (iii) be on the prioritized list1 in the road development plan (RDP), with precedence given to the highest-ranking roads. This prioritized road list will be updated annually, with roads re-ranked after removing those improved under other programs and adding roads that need urgent repairs ranked alongside roads in the existing list; (iv) provide access to or link remote communities that do not fall under the Pradhan Mantri Gram Sadak Yojana Program or other state and central schemes, and improve overall network connectivity; (v) be improvable within the existing right-of-way and/or derive significant direct or indirect benefits in the form of year-round motorability, significant safety improvements, etc; (vi) be at least 5 km long. Roads shorter than 5 km will only be considered if improvement would offer (a) significant benefits to the road network, (b) specific social benefits to disadvantaged groups of the population, (c) improved access to firm development proposal(s), and/or (d) improved access to identified tourist sites; and (vii) be one for which necessary central and state government approvals have been, or could be, obtained in time for the project or Investment Program implementation schedules to be maintained.
Project Approval Procedure Roads for improvement and components in Project 1, prepared under Asian Development Bank’s technical assistance,2 have been approved.
For subsequent projects financed from the Facility, the approval procedures will be as follows:
(i) In consultation with PWD’s circle and divisional offices, the project management unit (PMU) will update the priority list of the RDP by revising the priorities with specific reference to the selection
1 Details of the roads prioritized in 2005 and assigned to the first four projects are in Table A4.1. 2 ADB. 2005.Technical Assistance to India for Uttaranchal State Roads. Manila (TA4607-IND).
24 Appendix 3
criteria listed above (or use annual RDP updates prepared by PWD’s planning unit after it is fully functional). (ii) Based on the updated priority list, the PMU will identify the roads to be included in the next project to be financed under the Facility, and submit the project proposal to the secretary of PWD for approval. (iii) Upon approval of a project proposal by the secretary of PWD, the PMU3 will prepare detailed project reports (DPR) for the project roads, in accordance with national, state, and ADB’s social and environmental requirements, economic criteria, and national and state technical standards for road design. Simultaneously, the PMU may initiate advance action, in accordance with ADB’s requirements. (iv) Based on the DPR detailing the environmental, social, and economic analyses of physical improvements to all roads included in the project, the PMU would prepare a summary project appraisal report in the format outlined in the facility administration memorandum. The summary would include descriptions of all components (physical and nonphysical) of the project. (v) The secretary of PWD will approve the summary appraisal report, which will be submitted to ADB with the draft periodic financing request for review. (vi) If acceptable, the secretary of PWD will ensure that the draft PFR is modified and revised, as required by ADB; and submit to ADB through the Department of External Affairs of the Government of India for presentation to the Board for approval.
Monitoring During Implementation PWD will adhere to guidelines, policies, and other requirements during pre-construction through reviews of supporting documentation, and during physical implementation, monitor project impacts and contractor performance through specialists engaged to support the PMU and the supervision consultants.
3 Or its consultants.
Appendix 3 25
Table A3.1: Roads Prioritized for Improvement in Project 1
Length to Road Cost Road Be District Block Road From Road To Length (Rs Million in Type Improved (km) 2005 prices) (km) Almora SH Almora Bageshwar 72.0 72.9 366.1 Almora MDR Raniket Mohan 70.2 70.2 262.8 Barechhina (Sheraghat Almora SH 42.0 42.3 224.6 (Almora) Berinag) Udiyari Bend Bageshwar MDR Kanda Bageswar) 25.0 25.7 126.1 (Berinag Chamoli ODR Nandprayag Ghat 18.5 18.5 57.1 Chamoli ODR Rudrprayag Pokhri 14.5 14.5 48.8 Champawat VR Pula Chamdewal Silling 6.5 6.5 33.4 Champawat VR Lohaghat Choumel 7.5 7.5 26.2 Champawat VR Tuligarh Bhairav Mandir 6.3 6.3 101.1 Champawat VR Kakrali Thuligarh 13.0 13.0 206.5 Dehradun MDR Kalsi Chakrata 41.6 41.6 133.4 Nainital ODR Betalghat Bhatrojkhan 16.7 16.7 47.6 Nainital VR Nathuakhan Suyalbadi 29.0 29.0 113.5 Pauri ODR Pathradkhal Umrasu 18.0 18.0 52.8 Pauri ODR Pauri Srinagar 42.0 18.0 43.4 Pauri ODR Fatehpur Lansdowne 22.0 21.8 42.8 Pithoragarh SH Udiyari Bend Thal 22.0 22.0 157.9 Rudrprayag ODR Jakholi Guptkashi 54.3 13.1 57.4 USNagar ODR Zafarpur Gularbhoj 13.8 13.8 64.9 USNagar ODR Jaitpur Dhanori 10.8 10.8 67.0 USNagar ODR Mukandpur Dhakiya Gulabo 25.0 25.0 138.4 Uttarkashi ODR Naugaon Purola 19.0 17.9 30.4 Uttarkashi ODR Kuwa-Kafnol Rarhi 48.0 47.6 78.9 Total for Project 1 572.6 2,481.1 km = kilometers; LVR = light vehicle roads; MDR = major district roads; ODR = other district roads; VR = village roads Source: Road Development Plan. November 2005.
INDICATIVE IMPLEMENTATION SCHEDULE 26 2006 2007 2008 2009 2010 2011 2012 2013 2014 Activity Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4 Appendix 4 Appendix
Project 1 Project 1 preparation (by PWD) Works Procurement Social and Environmental Safeguards Consultant Procurement Program Support Consultancy Infrastructure Management Consultancy Supervision Consultant - Procurement Improvement Works - Maintenance Selection of Roads for Project 2
Project 2 Design Consultant Procurement Subproject design (by PWD) Works Procurement Social and Environmental Safeguards Improvement Works Maintenance Selection of Roads for Project 3
Project 3 Subproject Design Works Procurement Social and Environmental Safeguards Improvement Works Maintenance Selection of Roads for Project 4
Project 4 Subproject Design Works Procurement Social and Environmental Safeguards Improvement Works Maintenance Selection of Roads for Project 5
Project 5 Project 6 Project 7
Appendix 5 27
DESIGN AND CONSTRUCTION SUPERVISION CONSULTING SERVICES OUTLINE TERMS OF REFERENCE
A. Introduction
1. The Uttaranchal Road Development Program will improve approximately 10,800 km of State Highways (SHs), Major District Roads (MDRs), Other District Roads (ODRs), Village Roads (VRs) and Light Vehicle Roads (LVRs) across the State. This Program will be implemented by the Public Works Department (PWD) of the State Government of Uttaranchal (SGOU) in seven separate tranches, over an 8-year period. A Project Management Unit (PMU) has been established in Dehradun to support the PWD in the implementation of the Program. Project Implementation Units in the Districts will assist the PMU in the day to day management and administration of the civil works contract packages.
2. National consultants will be engaged by PWD to provide design and/or construction supervision consulting services for groups of sub-project roads associated with each implementation tranche. All domestic consultants will be engaged in accordance with the Asian Development Bank’s (ADBs) Guidelines on the Use of Consultants.
3. The road improvement works will be designed to offer cost-effective solutions that: (i) are in accordance with PWD’s general design strategy; (ii) minimize resettlement; and (iii) minimize environmental impacts. These works will include on-line road improvements to the road pavement, drainage structures, bridges, retaining structures, within the existing Right of Way (RoW). Widening of roads is only to be carried out where justified on traffic capacity grounds. and the design of the road improvement works should generally avoid any realignments that involve cutting into unstable hill slopes.
4. Each design consultant will be required to establish a liaison office in Dehradun which would be staffed over the full period of each assignment. Construction supervision consultants would be required to establish site offices local to each sub-project road. PWD will second staff to the construction supervision teams. These staff are to work under the direction of the consultant and the consultant is provide the seconded PWD staff with training in quality control procedures, contract management and other related matters.
B. Scope of Activities for Construction Supervision Consultants
1. Activity 1: Construction Supervision
5. The civil works will be executed based on the Conditions of Contract, as specified in the Bidding Documents. The designated PIU will undertake the duties required of the Employer and the Consultant will act as the Engineer for all civil works contract under the Project. The Consultant’s Team Leader will be the Engineer’s representative, and will monitor the execution of the civil work contracts.
6. The Consultant shall be required to administer the civil works contracts as the Engineer under the Conditions of Contract, subject to certain requirements for the Engineer to seek the approval of the Employer, prior to taking action under specified clauses of the Conditions of Contract. The Consultant shall be required to establish and follow detailed construction supervision procedures based on sound international practice to monitor the completion of the project within the agreed program and budget and to the quality standards and environmental
28 Appendix 5 provisions stipulated in the contracts. The duties of the Consultant shall include, but not be limited to:
(i) ensuring that the Notices to Commence have been issued; (ii) ensuring submission of the Contractor’s insurance policies is made and providing general advice on these policies, in relation to the Contract requirements. (The Consultant is not required to be an insurance specialist and the PWD may take independent advice on the adequacy of the policies); (iii) ensuring submission and advising on the adequacy of the Contractors’ performance bonds and advance payment guarantees; (iv) reviewing and agreeing with the Employer, the Contractors’ work programs and subsequently monitoring the construction progress in accordance with contract requirements; (v) ensuring that the Contractors are granted Possession of Site in accordance with the agreed programs or otherwise providing advance notice to the Employer of possible delays due to lack of possession; (vi) issuing clarifications and supplementary drawings to avoid delays to the Works; (vii) providing the Contractors with all necessary survey and reference data for setting out the works; (viii) liaising with the appropriate authorities to ensure that all affected utility services are promptly relocated; (ix) carrying out checks on the Contractors’ setting out and ensuring that the Works are carried out in accordance with the drawings and other design details; (x) monitoring the Contractors’ laboratory testing and carrying out independent testing as required; (xi) checking the contractors’ working and “as built” drawings; (xii) ensuring that the Works are executed in accordance with all provisions of the Contracts, including those relating to standards of workmanship, other safety requirements and environmental protection requirements; (xiii) measuring the Works, agreeing and certifying interim and final payment certificates for submission to the Employer, and assisting the Employer in preparing loan withdrawal documentation for submission to ADB; (xiv) administering, assessing and, where appropriate, making recommendations on applications for extension of time, claims for additional payment and other contractual disputes; (xv) issuing site instructions, variation orders, provisional sum orders and day works orders, as appropriate; (xvi) maintaining regular estimates of the cost to completion and time to completion for the Contracts; (xvii) preparing monthly progress reports, in a form agreed with the Employer and ADB and submit these within 10 days of the end of the month to which they refer; (xviii) preparing quarterly progress reports, in forms agreed with the Employer and ADB and submit these within 1 month of the end of the reporting periods. These reports are to cover physical progress, financial progress, loan withdrawals,
Appendix 5 29
compliance with the environmental mitigation requirements, results of the project performance monitoring system and results of other environmental monitoring; (xix) maintaining full and detailed permanent site records, which include site correspondence, survey data, quality acceptance data, site diaries, measurement and certification, minutes of meetings and records of all other contractually relevant matters; (xx) administering the completion of the Contracts, including all activities related to the issue of the Taking Over Certificates and the Defects Liability Certificate; (xxi) throughout the services, consulting and maintaining close liaison with the PWD, other relevant agencies, including the police and other Government and regional authorities, and local stakeholders; (xxii) prepare a final report for each of the Contracts, which will be a compilation and condensation of data presented in regular monthly progress reports, together with copies of as-built drawings within three months of the issue of each of the Defects Liability Certificates; (xxiii) provide on-the-job training for the PWD’s staff in carrying out construction supervision, including contract administration, quality control, monitoring and evaluation, and other relevant activities. The on-the-job training will also cover the operation of the environmental monitoring system and the project performance monitoring system; (xxiv) monitor any land acquisition and resettlement activities being undertaken by the Government and the provincial authorities, and include reports on these activities in the monthly progress reports. Assist the PWD and other authorities in the administration of any resettlement activities, including arranging consultations with local people, as well as affected people, preparation and serving of notices to affected people, liaising with affected people and ensuring that any communications and grievances raised by affected people are promptly passed onto the relevant authorities. (xxv) develop and operate a quantitative and qualitative project performance monitoring system (PPMS) in consultation with ADB and EA to monitor and evaluate the performance of the project in relation to its goals, purposes and outputs. Base line values shall be established for (a) traffic volumes and journey times; (b) freight tariffs and bus fares, (c) environmental impact indicators, (d) socio-economic indictors and (e) social and poverty reduction impact indicators. Where relevant, social indicators shall be disaggregated by gender. Implementation and evaluation monitoring indicators would be measured at the necessary agreed frequency during the project. Measurements of these indicators, together with relevant comments would be included in the quarterly progress reports as well as the final completion report.
C. Staffing Inputs
7. The team composition and input will vary with each design and construction supervision package, depending on the number and of the sub-project roads in each package. Details of indicative minimum staffing inputs for typical design and construction packages covering a total length of around 300 km are given in Table A5.1 below.
30 Appendix 5
Table A5.1: Minimum Staff Input Periods for Construction Supervision Package of 300 km Specialist Person-months Team Leader 18 Resident Engineers (3 x 16) 48 Highway Engineers (3 x 15) 45 Pavement Construction Engineers (3 x 15) 45 Structural / Drainage Engineers (3 x 12) 36 Senior Contracts Engineer 15 Quantity Surveyors / Measurement Engineers (3 x 15) 45 Environmental Specialist 15 Site Engineers (6 x 12) 72 Quality Control / Materials Testing Engineers (6 x 15) 90 Topographical Surveyors (3 x 12) 36 Inspectors (9 x 12) 108 Total 573
D. Facilities
8. Each design and construction supervision consultant will have to make its own arrangements for office, utilities, accommodation and transport and they should include cost of all these elements in their financial offers.
E. Reports
9. Each construction supervision consultant will submit the following reports timely and in the number of copies (also soft copies) indicated for each activity, as listed below.
(i) Inception Report: To be submitted within 4 weeks of the commencement of services. The report will be based on work and staffing schedules agreed during contract negotiations, and will include the consultants’ detailed work program including Quality Assurance Plan (three copies to the PWD);
(ii) Progress Report: Monthly reports to be submitted by the 10th day of the following month, and quarterly report to be submitted by the 15th day of the following quarter (six copies to the PWD);
(iii) Project Completion Report: To be submitted upon completion of the services. (six copies to the PWD).
10. The above reports will summarize the work performed during the reported period identifying the problems encountered, and indicating the corrective action taken or recommended. The Progress Reports will include records of the meetings on contract administration, decisions taken, mobilization of resources (Consultant’s and Contractor’s), approval/changes in work program, delays anticipated, and action proposed, physical and financial progress achieved and the projected progress for the forthcoming period, in the format agreed with the PWD.
Appendix 6 31
OUTLINE TERMS OF REFERENCE FOR PROGRAM SUPPORT CONSULTING SERVICES
A. Introduction
1. The Uttaranchal Road Development Program will improve approximately 10,800 km of State Highways (SHs), Major District Roads (MDRs), Other District Roads (ODRs), Village Roads (VRs) and Light Vehicle Roads (LVRs) across the State. This Program will be implemented by the Public Works Department (PWD) of the State Government of Uttaranchal (SGOU) in seven separate projects, over an eight year period. A Project Management Unit (PMU) has been established in Dehradun to support the PWD in the implementation of the Program. Project Implementation Units (PIUs) in the Districts will assist the PMU in the day to day management and administration of the civil works contract packages. Loan finance for the Investment Program would be provided by the Asian Development Bank (ADB) under a multi- tranche financing facility (MFF).
2. An international consulting company will be engaged by PWD to provide specialist support services to the PMU, to assist it in all areas of its activities including planning, procurement, project management and monitoring. The consultant would be engaged in accordance with the Asian Development Bank’s (ADBs) Guidelines on the Use of Consultants.
3. The majority of the consulting services would be carried out in the PMU office located in Dehradun and the consultant would work under the overall control of the PMU Project Director. The consultant would also be required to visit the PIUs in the Districts. On-the job-training would be given to PWD counterpart staff to ensure technology transfer.
B. Scope of Activities for Program Support Consultant
4. The scope of activities for the Program Support Consultant would include, but not be limited to, the following:
1. Activity 1: Provision of General Project Management, Technical and Procurement Support
(i) provide general project management, technical and procurement support to the PMU staff to assist them in the effective management and monitoring of all Investment Program activities; (ii) assist the PMU in ensuring that the Investment Program is implemented and managed in accordance with all relevant requirements of ADB; (iii) assist the PMU in the procurement of design and construction supervision consultants as well as civil works contractors; (iv) assist the PMU and PIUs in the management of the design and construction supervision consultants, as well as monitoring their activities and review of deliverables; (v) assist the PMU to prepare the quarterly progress reports to be submitted to ADB.
32 Appendix 6
2. Activity 2: Updating of Roads Master Plan and Selection of Sub-projects for each Implementation Project
(i) consult with the PWD Circle and Division offices on the prioritized sub- project lists in the Road Development Plan (RDP) and adjust the lists to reflect road improvement and periodic maintenance works either recently carried out by PWD or sanctioned for implementation in state level schemes; (ii) consult with the PWD Circle and Division offices and obtain details of any proposed new sub-project roads for possible implementation under the Investment Program; (iii) review the prioritization of sub-projects, using the scoring method set out in the Pre-Feasibility Study dated August 2005 to take into account: (a) any proposed new sub-projects roads; (b) sub-project roads removed or shortened due to other recent or sanctioned works; (c) the current road condition; and (d) any other changes that would affect the prioritization scoring; (iv) prepare revised district-wise prioritization lists of the sub-project roads; (v) review and update the estimated costs of the sub-project road improvement works, using current unit rates; (vi) reconcile the master plan sub-project improvement works cost estimates for previous implementation tranches to take account of updated cost estimates included in the detailed project reports (DPRs); tender costs and final account construction costs; (vii) assist PWD in preparing a list of sub-project roads to be implemented in the forthcoming implementation tranche, based on the planned output targets for that tranche and the available funding; (viii) prepare an update of the roads master plan to take into account the updated sub-project prioritization lists, updated costs and the agreed sub- project lists for the forthcoming implementation tranche.
3. Activity 3: Economic Appraisal of sub-projects in each Implementation Tranche
(i) prepare an economic appraisal of the sub-projects to be implemented in the forthcoming implementation tranche that is based on: (a) an update of current vehicle operating costs and time costs; (b) the cost estimates prepared by PWD’s design consultants; and (c) traffic forecasts prepared by the PWD’s design consultants. This appraisal is to consider the individual sub-projects as well as the aggregated total of the sub-projects for the particular tranche; (ii) calculate the economic rates of return (EIRRs) and net present values (NPVs) for the individual sub-projects and the aggregated total of all ssub- projects in that particular implementation tranche according to the ADB’s Guidelines for Economic Analysis of Projects. Sensitivity tests are to be carried out on the aggregated total of the sub-projects that examine of the effects of variations in cost, traffic, vehicle operating costs and time savings;
Appendix 6 33
(iii) carry out a distribution analysis of the aggregated total benefits of all sub- projects and calculate the poverty impact ratio (PIR) of the aggregated total of the sub-projects, in accordance with the ADB’s Handbook for Integrating Poverty Assessment in the Economic Analysis of Projects ; (iv) carry out a quantitative risk analysis of the economic appraisal, using an agreed software package that examines the combined effects of imposing likely changes in key variables on the EIRR and NPV of the aggregated total of the sub-projects. This risk analysis is to be carried out in accordance with ADB’s Handbook for Integrating Risk Analysis in the Economic Analysis of Projects. (v) prepare a report on the economic appraisal that details and substantiates all input parameters and key assumptions, and gives a full description of the methodology used in the appraisal.
4. Activity 4: Assist the PMU to prepare supporting Documentation for each MFF project loan
(i) assist the PMU in preparing documentation to be submitted to ADB in connection with the application for each loan under the multi-tranche finance facility. This documentation would include details of the scope of the road improvement works, costs, economic appraisal, environmental examination, social impact and resettlement impacts.
5. Activity 5: Technical and Safeguarding Review of Sub-project Designs
(i) Assist the PMU in carrying out a technical due-diligence review of the draft design preliminary and detailed project reports prepared by PWD’s design consultants. This due-diligence review would include assessing: (a) compliance with the requirements of the design consultant’s terms of reference; (b) the overall technical standard of the design work; compliance with the technical design standards; (c) cost effectiveness of designs and applicability to the sub-project road conditions; (ii) review the environmental examinations carried out on the sub-project road improvement works by PWD’s design consultants to: (a) assess compliance with the terms of reference, ADB’s environmental guidelines and GOI requirements; (b) ensure that environmental impact assessments have been prepared where required by the ADB and GOI requirements; (c) adequate and appropriate mitigation and monitoring measures have been included in the environmental management plans for individual sub-projects; (d) all appropriate measures have been included in the sub-project designs and contract documents for minimizing and mitigating environmental impacts; and (e) all necessary environmental clearances and permits have been identified. (iii) review the poverty and social impact assessments carried out on the sub- project road improvement works by PWD’s design consultants to: (a) assess compliance with the terms of reference, ADB’s guidelines and GOI requirements; (b) ensure that adequate consultation has been carried out with local stakeholders in the influence area of each sub-project; and (c) all appropriate measures have been included in the sub-project design to minimize and mitigate any adverse social impacts.
34 Appendix 6
(iv) review the resettlement requirements for each sub-project road identified by PWD’s design consultants and review any resettlement plans/ IPDPs prepared by PWD’s design consultants (a) to assist PWD in preparation of resettlement plans and IPDPs; and (b) to assess compliance with the terms of reference, ADB and GOI requirements, and the agreed Resettlement Framework and IPDP for the Investment Program; (v) prepare written comments on the technical and safeguarding reviews that identify any sub-standard aspects, correction required, omissions and other remedial measures to be carried out before approval can be granted by PWD. The Program Support Consultant would also be required to attend meetings with the design consultants to discuss the review comments.
6. Activity 6: Safeguard Monitoring
(i) assist the PMU in ensuring that the environmental safeguarding measures incorporated in the contract documents, environmental management plans and resettlement plans are being implemented by the PIUs, construction supervision consultants and contractors.
7. Activity 7: Performance Based Maintenance
(i) assist the PMU in finalizing the contract documentation required for the performance based maintenance that is to be incorporated in the road improvement contract packages. Particular attention should be paid to setting: (a) realistic quantitative performance indicators that apply to the different conditions in the hill and plain areas of the State; and (b) appropriate penalties to be applied in the event that the contractors fail to comply with the performance indicators; (ii) provide initial training and on-going support to the PIUs in the management and supervision of performance based maintenance works.
C. Staffing Inputs
5. It is envisaged that the Program Support Consultant would be engaged for a 36 month period to provide support services for preparation and implementation of the first three Projects, covering the improvement of around 3,600 km of roads as well as implementation of an institutional development component. The indicative team composition and input periods are given below in Table A6.1. The team leader is required to be resident in Dehradun over the full 36 month period of the assignment, but the timings of the other inputs will be agreed with the PMU Project Director and will be dependent on general progress with implementing the Investment Program. Table A6.1: Indicative Staff Input Periods Specialist Person-months International Team Leader / Technical Support Consultant 36 Transportation Engineer / Transport Economist 10 Senior Highway Engineer / Pavement Engineer / Bridge Engineer 12 Environmental Specialist 10 Social Development Specialist / Resettlement Specialist 12 Road Maintenance Specialist 12 Total 92
Appendix 6 35
6. The Program Support Consultant shall be required to provide other support staff as required by the PMU Project Director.
D. Facilities
7. Office accommodation will be provided to the support consultants in the PMU office in Dehradun. The support consultants would provide their own computers and transport.
E. Reports
8. The Program Support Consultant will submit the reports listed below:
(i) Inception Report: To be submitted within four weeks of the commencement of services. This report will be based on the work and staffing schedules agreed during contract negotiations and it will include the consultant’s detailed work program (3 copies to PWD); (ii) Progress Reports: Quarterly Progress Reports are to be prepared in a format agreed with the PMU Project Director that will be suitable for onward submission to ADB. These progress reports shall be submitted within 30 days of the end of the reporting period and they shall summarize activities carried out in the period, inputs provided, costs of inputs provided, inputs to be provided in the next period, estimated final costs of the assignments, problems encountered and corrective action taken estimated (6 copies to PWD); (iii) Specific Reports for particular activities that are set out in Section C above (6 copies to PWD); (iv) Completion Report: to be submitted upon completion of the assignment that describes activities carried out under the assignment, inputs, costs and technology transfer.
36 Appendix 7
INFRASTRUCTURE MANAGEMENT CONSULTANT OUTLINE TERMS OF REFERENCE
A. Objectives
1. The main objective of the component is to strengthen Public Works Department’s (PWD) capacity to provide effective management of the road network, which will ensure sustainability of the Infrastructure Investment Component. For this purpose, consulting services are required to assist the PWD of the State of Uttaranchal, the executing agency (EA), to transition to a modern organization and manage the road network applying international best practices. The consulting services will support ongoing initiatives by facilitating: (i) implementation of the EAs revised organizational structure designed to increase emphasis on policy, strategic planning and stakeholder involvement; (ii) identification of performance targets, allocating responsibility for their delivery, (iii) definition and documentation of operating procedures; (iv) development of a Human Resources Strategy to achieve these targets; and (v) delivery of a training program for EA staff and contractors.
B. Scope of Services
2. To that end, consultants engaged under the MFF, will undertake the following tasks:
Organizational Restructuring: The consultants will support the EA to carry out ongoing organizational restructuring activities, including:
(i) Establishment of a separate unit at PWD headquarters, responsible for the development of policy directives and performance targets to ensure quality and consistency; (ii) Creation of two additional operational Zones to permit closer supervision of projects and increase accountability; and (iii) Establishment of a Road Stakeholder Board (RSB) to increase stakeholder participation and transparency of decision-making.
Performance Targets: The consultant will undertake the following activities to support the EA in promoting accountability for results:
(i) Assist in defining performance targets and developing position descriptions; (ii) Document operating procedures for efficient and timely delivery of performance targets;
Human Resources Strategy: The consultant will undertake the following activities for human resource capacity building:
(i) Conduct an assessment of staff requirements and skills-mix; (ii) Prepare a Human Resources Strategy (HRS) including an assessment of training needs.
Training Program: The consultant will organize training for EA staff as well as local contractors:
Appendix 7 37
(i) Design specific training programs for enhancing the skills of the categories of staff identified in HRS as well as private contractors engaged by or intending to seek work with the EA. (ii) Establish a formal agreement on the part of the EA with one or more recognized state educational institutions such as IIT Roorkee to deliver the training programs and support successful completion of the courses by the selected staff;
C. Terms of Reference
3. The services to be provided will include, but not be limited to, the following:
1. Assist the EA with Organizational Restructuring
(i) Review the status of the plan to establish: (a) an Additional Engineer in Chief position at Headquarters level, (b) two additional Zones (c) the Road Stakeholder Board and (d) the Consultant and Contractor Registration Board. (ii) Reconfirm implementation arrangements with PWD in accordance with the policy measures and reform actions as stated in the institutional development plan of the RRP. (iii) Assist the EA to develop terms of reference for the RSB including objectives, duties, responsibilities, composition and terms of service. It is expected that the Secretary PWD would be Chairperson, with participation of the Engineer in Chief and six to eight additional members representing private and public sector road transport freight and passenger service providers, consumer protection groups, traffic police, chamber of commerce, engineering societies and other state stakeholder agencies.
2. Support the EA in Establishing and Meeting Performance Targets
(i) Review existing guidelines for road sector development and planning, including guidelines for project selection, DPR preparation, supervision and quality control of contractors and consultants, and define operating procedures to conform to Indian Road Congress standards and International good practices; (ii) Review existing procedures for planning, programming contracting for road maintenance including the 5 year performance based maintenance contracting provision included in projects funded through the ADB loan and prepare recommendations for contracting maintenance for the remaining PWD network; (iii) Review the existing financial accounting methodology and practice and the requirements of the Management Information and Project Management System (MIPM), and recommend areas for improvement, such as development of a financial accounting manual or additional training; (iv) Review current regulations and operating guidelines on social impact assessment and environmental management and identify operating procedures to improve compliance and support obtaining of required clearances; (v) Assist the EA to define roles, performance targets and verifiable indicators for PWD and its respective Zones, Circles and Divisions. Performance targets will include specific indicators to measure achievement in areas such as staff training, construction and maintenance programs, quality of construction, and road condition. Budgetary restrictions if any should be considered. It is expected that
38 Appendix 7
the manner in which Zones organize accomplish these goals, including outsourcing, would be determined by operating units. (vi) Update the PWD manual including preparing position descriptions for key personnel. (vii) Develop operating manuals to document approved procedures and support the achievement of performance targets;
3. Assist the EA to Develop a Human Resource Strategy
(i) Based on the anticipated work program and service delivery strategies including the degree of outsourcing identify staffing categories and numbers of staff required. The EA expects to outsource all of its construction and maintenance activities and move to more outsourcing of planning, design and construction supervision. Therefore the focus of the human resource strategy should be to equip staff with equipment and skills to successfully manage private sector service providers. (ii) Prepare human resource development programs and incentive structures in line with EA operating conditions; (iii) Conduct a training needs assessment defining types of training, training curriculum, and numbers to be trained. (iv) The training curriculum should focus on practical applications including preparing (a) EA staff for performing activities outlined in the operating manuals and (b) private contractors for such activities as bidding for performance based contracts, quality control, equipment and labor management, environmental and social safeguard compliance. (v) Conduct a survey of existing institutions in Uttaranchal to determine availability of existing training courses that meet curriculum requirements, identify and enter into agreement with institutions to prepare the remaining course materials.
4. Strengthen the Financial Management Capacity of the EA and SGOU
(i) Review existing Central Public Works Account Code, Financial Handbook and related financial and management accounting procedures and design and develop a new Financial and Management Accounting Procedures Manual; (ii) Assist the PWD in the selection and installation of financial management systems, procedures and internal controls, including account reconciliations; (iii) Develop Training Modules and train staff of the office of Accountant General, deployed at the PWD Divisions and other accounting staff at PWD Head Office in the new financial management procedures; (iv) Train staff of the Office of Financial Controller at the PWD in annual budgeting, forecasting and monitoring; (v) Train staff of the Office of Financial Controller in the analyses, reporting and evaluation of significant deviations from and material exceptions to plans and budgets; (vi) Develop Terms of Reference for a periodical procurement audit in the Investment Program Project Management Unit (PMU) and develop criteria for selection of and a process for recruitment of an independent auditor. Assist in the first such evaluation and selection;
Appendix 7 39
(vi) Develop Terms of Reference for an annual independent external audit of the PMU account by a recognized private firm of Chartered Accountants who adopt international accounting and auditing standards.
5. Assist the EA to Implement the Training Program
(i) Prepare a training implementation plan in coordination with Zones and Districts; (ii) Coordinate with operating units to identify candidates for training and communicate course schedules; (iii) Maintain a register of staff trained and compliance with the training schedule by operating units; (iv) The consultants in consultation with the EA will design an appropriate training study tour for up to 15 key PWD management staff to visit modern highway organizations in India or neighboring countries to observe good practices including: (a) governance and sector management, (b) modern technology for construction and maintenance (c) innovations for involving the private sector in financing construction and maintenance, and (d) gaining an understanding of lessons learned through discussions with counterparts in these agencies. The consultants shall establish contacts with relevant highway agencies and prepare a comprehensive program, including training objectives, officials to be interviewed and sites to be visited. The proposal shall be supported by adequate cost estimates and shall be forwarded to the EA and ADB for approval prior to the commencement of training.
4. The consultant services will require 14 person-months of international consultants’ services, and 84 person-months of national consultants’ services with expertise in governance, policy, highway engineering, road maintenance, social and environmental management, human resources development, financial management and training.
5. Payment for training delivery for EA staff and out of state study tours, including tuition, per diems and transportation outside of Uttaranchal will be made out of loan funds and should not be included in the consultants cost estimate. PWD may charge a nominal fee from the participants to cover logistical and other costs.
D. Counterpart Services and Facilities
6. PWD, the EA for the consulting services, will be responsible for providing, free of charge, counterpart support and facilities necessary for the implementation, including office accommodations, local transportation services and logistical services, information and materials necessary for the implementation.
E. Reporting
7. The consultants shall furnish ADB and the EA quarterly progress reports on implementation progress including achievements and problems to be resolved, and conduct of the training programs. One month before completion of their services, the consultants shall prepare a draft final report covering all tasks required in the Terms of Reference as well as the planned and actual number of persons trained. A final report shall be submitted 15 days after receiving comments from the EA and ADB.
40 Appendix 8
PROCUREMENT PLAN
I. Program Information
Country India Name of Borrower India Project Name Uttarakhand State-Road Investment Program Loan or TA Reference Date of Effectiveness of Procurement Plan 30 May 2006 Amount Total estimated cost of the Investment Program is $830 million, which is financed partly from a Multitranche Financing Facility (MFF) from Asian Development Bank (ADB). The maximum amount available under the MFF is $550 million Total estimated cost of Project 1 is $74 million Of Which Committed $50 million Executing Agency Public Works Department of the State Government of Uttaranchal Approval Date of Original Procurement Plan This is the first Procurement Plan Approval of Most Recent Procurement Plan
Publication for Local Advertisements1 State and national newspapers
Period Covered by This Plan Period up to 31 December 2007, covering procurement of works and consulting services financed from the MFF.
A. Procurement Thresholds: Goods, Works, and Related Services
Procurement Method To Be Used Above or Below ($) ICB Works $10 million and above LIB Works less than $10 million NCB Works (footnote 1) less than $10 million ICB = international competitive bidding; LIB = limited international bidding; NCB = national competitive bidding
B. Procurement Thresholds: Consulting Services
Procurement Method To Be Used Above or Below ($) QCBS $200,000 and above CQS less than $200,000 LCS less than $100,000 Alternative Methods National consulting companies and individuals may be engaged in accordance with the Asian Development Bank guidelines to provide short-term specialist consulting support to the Public Works Department’s Project Management Unit. QCBS = quality- and cost-based selection; CQS = consultants’ qualifications selection; LCS = least cost selection
1 General procurement notice, invitations to bid, and calls for expression of interest.
Appendix 8 41
II. Project 1 Information:
A. List of Contract Packages in Excess of $100,000: Goods, Works, and Consulting Services
Ref Contract Estimated Procurement Prior Review Comments Description Cost Method (Yes or No)
1. Eight works Individual NCB Yes Eleven civil contract contract works contract packages for packages (prior review packages have improvement and between $3.8 completed) been awarded. 3-year million and performance- below $10 based million maintenance of state roads, as shown in Table 1 of this Procurement Plan
2. Three packages Total value of QCBS Yes Two supervision for consulting packages is with STP consulting services for $2.9 million As per Para 2.3 service construction of ADB’s packages supervision Guidelines on started to the Use of mobilize in Consultants December 2007. (2007) as it applies to proven borrowers.
3. One package for $1.5 million QCBS Yes Consultants consulting with STP already engaged services for As per Para 2.3 and mobilized infrastructure of ADB’s February 2008. management Guidelines on component the Use of (1 contract) Consultants (April 2006) as it applies to proven borrowers.
4. Consulting $1.0 million QCBS with STP No May engage services for or CQS individual program support consultants or a consultants firm to provide part of the services at different times
42 Appendix 8
Ref Contract Estimated Procurement Prior Review Comments Description Cost Method (Yes or No)
5. Consulting $50,000 CQS for companies No NGOs and other services for consultants for companies and monitoring social individuals and providing short- environmental term specialist safeguards will support to PMU be financed by PWD
CQS = consultants’ qualifications selection; NCB = national competitive bidding; STP = standard technical proposal; QCBS = quality and cost-based selection
Table A8.1: Details of Procurement Packages
Zone Contract Road Road Name Road Length 2005 2005 Cost in Improvement Maintenance Total Package No. Category (km) AADT IRI Rs ($ million) ($ million) Cost ($ No. (million) million)
Garhwal 1 1.1 Kuwa–Kafnol–Rarhi ODR 48 108 10 1 1.2 Naugaon–Purolaa ODR 8 561 8 1 2.2 Kalsi–Chakrata MDR 42 325 10 Subtotal 107 331 10 320 6.6 0.3 6.9 2 4.1 Fatehpur–Lansdowne ODR 22 398 6 2 4.2 Pathrakhkal–Gethichheda– ODR 18 152 8 Dodal–Umrasu 2 4.3 Pauri–Khirsu–Srinigara ODR 18 207 10 Subtotal 58 252 8 200 4.1 0.2 4.3 3 5.1 Nandprayag–Ghat Motor Road ODR 18 459 8 3 5.2 Rudraprayag–Pokri–Karanpryag ODR 15 195 8 3 6.1 Jakoli–Guptkashi ODR 13 141 8 Subtotal 46 265 8 190 3.9 0.2 4.1 Kumaon 4 1 Mukandpur–Paigadhakia– ODR 25 584 11 Dhakiaa–Gulabo 4 2 Jaipur–Dhatoli–Kharmasha ODR 11 584 9 4 3 Zafarpur–Gularbhoj ODR 14 628 7 Subtotal 50 599 9 310 6.4 0.3 6.7 5 4 Betalghat–Bhatrojkhan ODR 17 237 9 5 5 Nathuakhan–Suyalbadi VR 29 382 11 5 6 Raniket–Mohan MDR 70 664 10 Subtotal 116 428 10 440 9.3 0.3 9.6 6 7 Almora–Bageshwar SH 73 595 12 Subtotal 73 595 12 380 7.9 0.3 8.2 7 8 Barechhina–Sheraghat SH 42 523 11 (Berinag–Almora Section) 7 9 Udiyari–Bend–Kanda (Berinag– MDR 26 270 11 Bageshwar Section) 7 10 Thal–Udyari Bend (Berinag) SH 22 523 12 Subtotal 90 439 11 438 9.2 0.5 9.7 8 11 Pulai–Dhola–Chamdeval Siling VR 7 187 8 Motor Road
8 12 Lohaghat–Choumel Motor Road VR 8 187 8 8 Appendix 8 13 Tuligarh–Bhairav Mandir VR 6 187 9 8 14 Kakrali–Thuligarh VR 13 187 9 Subtotal 33 187 8 345 7.7 0.7 8.4
Total 573 387 9 2,623 55.1 2.8 57.9
AADT = annual average daily traffic; IRI = international roughness index; km = kilometers; LVR = light vehicle roads; MDR = major district roads; ODR = other 43 district roads; VR = village roads a Dropped from list. Source: ADB estimates.
44 Appendix 9
Appendix 9 45
46 Appendix 9
Appendix 9 47
48 Appendix 10
DISBURSEMENT PROCEDURES
Reference: ADB’s Loan Disbursement Handbook dated January 2007
A. DIRECT PAYMENT PROCEDURE
1. ADB, pays a designated beneficiary, at the request of the Borrower, from the loan funds (Section 7 of the Handbook). Narrative procedures are in Appendix 14 of the Handbook.
Requirements
(i) signed withdrawal application (form ADB-DRP/RMP in Appendix 5 of the Handbook) (ii) summary sheet (form ADB-DRP-SS in Appendix 8 of the Handbook)
Supporting Documents
(i) contract or confirmed purchase order (PO) indicating amount and due date (i) for payment of goods: supplier’s invoice, bill of lading, or other similar documents (ii) for payment of services: consultant’s claim or invoice (iii) for payment of civil works: claim or invoice from the contractor and a work progress certificate signed by the project engineer and approved by the borrower’s authorized representative
B. COMMITMENT PROCEDURE
2. ADB, irrevocably agrees to reimburse a commercial bank for payments made or to be made to a supplier against a letter of credit (Section 8 of the Handbook). Narrative procedures are in Appendix 20 of the Handbook.
3. ADB issues a Commitment Letter against a letter of credit (LC), and agrees to pay (on behalf of the Borrower and out of loan funds) the negotiating bank for the payments made or to be made to the supplier in accordance with the terms of LC.
Requirements
(i) signed application for commitment letter (form ADB-CL in Appendix 6 of the Handbook) (ii) summary sheet (form in Appendix 9 of the Handbook)
Supporting Documents
(i) contract or confirmed PO (ii) two signed copies of the LC
4. ADB issues a Commitment Letter to the designated commercial bank (usually advising bank) as shown in Appendix 15 of the Handbook. A copy of ADB’s commitment letter is also provided to the EA/PMO for information.
Appendix 10 49
ADB’s Payment to the Commercial Bank
5. ADB pays from the loan account after the receipt of the confirmation from the supplier’s nominated commercial bank (normally a negotiating bank) which has paid for or agreed to pay in accordance with the LC terms. Requests for reimbursement from the nominated commercial bank are made in authenticated SWIFT or tested telex.
6. ADB’s approval is required for amendment to the LC involving changes such as:
(i) extension of the LC expiry date beyond the loan closing date of the loan account; (ii) change in the LC’s value and currency; (iii) description or quantity of goods; (iv) country of origin; (v) beneficiary; and (vi) terms of payment
The forms are shown at Appendix 17 and 18 of the Handbook.
7. Amendments to the LC for: (i) extending the expiry date and shipping dates up to loan closing date; (ii) other amendments except those mentioned in para. 6 above. The Borrower simply informs ADB using the standard form in Appendix 19 of the Handbook and submits a signed copy of the amendment.
C. REIMBURSEMENT PROCEDURE
8. ADB pays to the borrower’s account, or in some cases, to the project account for eligible expenditures, which have been incurred and paid for by the borrower or EA out of its budget allocation or its own resources (Section 9 of the Handbook). Narrative procedures are in Appendix 21 of the Handbook.
Requirements
(i) signed withdrawal application (form ADB-DRP/RMP in Appendix 5 of the Handbook) (ii) summary sheet (form ADB-RMP-SS in Appendix 8 of the Handbook)
Supporting Documents
(i) contract or confirmed PO (ii) copy of the invoice/bill/claim and delivery receipt (iii) evidence of payment showing the amount paid; the date of receipt and the payee
D. STATEMENT OF EXPENDITURES (SOE) UNDER REIMBURSEMENT PROCEDURE
9. This procedure requires no submission of supporting documents (see paragraphs 9.8 to 9.23 of the Handbook for details). Ceiling for the Project is $200,000 per item of expenditures. The SOE is used in lieu of the usual supporting documents and the summary sheet. It may also be used in connection with the liquidation or replenishment of the imprest account.
50 Appendix 10
10. The SOE forms are in Appendix 22 to 25 of the Handbook.
E. INSTRUCTIONS FOR WITHDRAWALS
15. Before the first W/A is submitted to ADB, the name of the authorized representative(s) must be provided to ADB, through the Ministry of Finance, including the authenticated specimen signatures of the representative(s). 16. The W/A should be signed by the authorized representative(s), sequentially numbered and should not exceed five digits (00001, 00002, etc.).
18. The W/A forms and summary sheets to be used vary for the different procedures. A separate W/A for each currency requested should be submitted. The Project may use any of the above disbursement procedures. The WA forms can be downloaded from LFIS website http://lfis.adb.org.
19. The W/A to be submitted to ADB must be the signed original copy to the attention of Mr. Francis Emmanuel, Sr. Financial Control Specialist, CTLA-1 and copied to Mr. Kazuhiko Higuchi, Director, SATC. However, supporting documents may be in photocopies and the originals to be kept for audit purposes.
Appendix 10 51
52 Appendix 10
Appendix 11 53
PROFORMA OF THE EXECUTING AGENCY’S PROJECT PROGRESS REPORT
A. Introduction and Basic Date
Provide the following:
• ADB loan lumber, project title, borrower, executing agency(ies), implementing agency(ies); • Total estimated project cost and financing plan; • Status of project financing including availability of counterpart funds and cofinancing; • Dates of approval, signing, and effectiveness of ADB loan; • Original and revised (if applicable) ADB loan closing date and elapsed loan period based on original and revised (if applicable) loan closing dates; and • Date of last ADB review mission.
B. Utilization of Funds (ADB Loan, Cofinancing, and Counterpart Funds)
Provide the following:
• Cumulative contract awards financed by the ADB loan, cofinancing, and counterpart funds (commitment of funds to date), and comparison with timebound projections (targets); • Cumulative disbursements from ADB loan, confinancing and counterpart funds (expenditure to date), and comparison with time-bound projections (targets); and • reestimated costs to completion, need for reallocation within ADB loan categories, and whether an overall project cost overrun is likely.
C. Project Purpose
Provide the following:
• Status of project scope/implementation arrangements compared with those in the report and recommendation of the President (RRP), and whether major changes have occurred or will need to be made; • An assessment of the likelihood that the immediate development objectives (project purpose) will be met in part or in full, and whether remedial measures are required based on the current project scope and implementation arrangements; • An assessment of changes to the key assumptions and risks that affect attainment of the development objectives; and • Other project developments, including monitoring and reporting on environmental and social requirements that might adversely affect the project’s viability or accomplishment of immediate objectives.
D. Implementation Progress
Provide the following:
• Assessment of project implementation arrangements such as establishment, staffing, and funding of the PMO or PIU;
54 Appendix 11
• Information relating to other aspects of the EA’s internal operations that may impact on the implementation arrangements or project progress; • Assessment of the progress of each project component, such as (i) recruitment of consultants and their performance; (ii) procurement of goods and works (from preparation of detailed designs and bidding documents to contract awards); and (iii) the performance of suppliers, manufacturers, and contractors for goods and works contracts; • Assessment of progress in implementing the overall project to date in comparison with the original implementation schedule–quantifiable and monitorable target (include sample charts such as bar or milestone to illustrate progress, a chart showing actual versus planted expenditure, S-curve graph showing the relationship between physical and financial performance, and actual progress in comparison with the original schedules and budgets, the reference framework or guidelines in calculating the project progress; • An assessment of the vailidity of key assumptions and risks in achieving the quantifiable implementation targets.
E. Compliance with Covenants
Provide the following:
• The borrower’s compliance with policy loan covenants such as sector reform initiatives and EA reforms, and the reasons for any noncompliance or delay in compliance; • The borrower’s and EA’s compliance with financial loan covenants including the EA’s financial management, and the provision of audited project accounts or agency financial statements; and • The borrower’s and EA’s compliance with project-specific loan covenants associated with implementation, environment, and social dimensions.
F. Major Project Issues and Problems
Summarize the major problems and issues affecting or likely to affect implementation progress, compliance with covenants, and achievement of immediate development objectives. Recommend actions to overcome these problems and issues (e.g., changes in scope, changes in implementation arrangements, and reallocation of loan proceeds).
Appendix 11 55
Framework and Guidelines in Calculating Project Progress
A. Introduction
1. To ensure that all implementation activities are reflected in measuring implementation progress against the project implementation schedule, the term "physical completion” in the PPR has been changed to "project progress.”
2. Physical and pre-commencement activities are considered in calculating project implementation progress. These activities, which may include recruitment of consultants, capacity building, detailed design, preparation of bid and prequalification documents, etc., could constitute a significant proportion of overall implementation and therefore should be counted.
3. Each activity in the implementation schedule will be weighted according to its overall contribution (using time as a reference) to progress of project implementation. These weights will then be used to calculate the percentage of project progress along the entire time span of the project. This is to provide a holistic view of the pace of implementation.
B. Framework for Compiling Activity List and Assigning Weights
4. As implementation activities and their corresponding weights will vary according to the type of project, sector, and country, sector divisions or RMs will be responsible for determining and including them in the project administration memorandum. The actual project implementation progress of these activities should be reported regularly through the EA’s quarterly project progress report. To ensure ADB-wide consistency, the following framework has been established; its application will be monitored through the PPR.
a. Compilation of Activity List
5. Sector divisions or RMs concerned should identify major implementation activities and include them in the implementation schedule, which is attached as an appendix in the report and recommendation of the President (RRP). The implementation schedule should follow the critical path of the project’s major activities in project implementation taking account of various country, sector, and project constraints.
b. Assignment of Weights
6. Corresponding weights for each activity should be assigned to ensure that “project progress" measures the percentage of achievement (nonfinancial except when the project has credit components) for all events during the entire duration of the implementation schedule. To avoid disproportionate assignment of weights, to the extent possible these should be evenly distributed along the implementation schedule. When activities are concurrent, avoid “double counting.”
c. Computation of Project Progress
7. Once all activities are identified and corresponding weights assigned, project progress should be calculated using the following steps:
(i) Determine the actual percentage progress (nonfinancial) of each activity.
56 Appendix 11
(ii) Multiply these percentages by the assigned weight of each activity to arrive at the weighted progress. (iii) Add up the resulting weighted progress of all activities to determine the project progress.
Page 3 of this Appendix provides an illustration of this calculation using a generic sample implementation schedule and this Appendix, page 4 a specific example in the education sector.
Implementation Schedule with Activities and Weights
Yr1 Yr2 Yr3 Yr4 Yr5
A
a B
b C d c D ef A C T I V E S A
E
1. Sum of all weights should equal 100 percent (a+b+c+d+e+f+g = 100%) 2. When calculating the percentage of “project progress,” all completed activities should be counted as accomplished, regardless of when they were scheduled to be completed. For example, when calculating the percentage of “project progress” after year 3, if activity D is completed in year 3 rather than in year 2, it should still be included in the computation. 3. Total weight of each activity is as follows: Activity A–a; Activity B–b; Activity C–c; Activity D–d; and Activity E–e + f +g 4. Project progress of a project is the summation of the actual percentage of progress for each activity multiplied by the total weight of each activity.
Sample Implementation Schedule
(a) (b) (a) x (b) Activities Year 1 Year 2 Year 3 Year 4 Assigned Actual Weighted Weight Progress Progress Establish PIU 5% 100% 6% Establish Accreditation Board, etc. 5% 0% 0% Appoint Staff and Budget 4% 75% 3%
Adopt Architecture Plans 2% 100% 2%
Shortlist Consulting Firms 6% 100% 6% Prepare Fellowship Program 6% 76% 4% Prepare Civil Works Tendering 30% 0% 0% Civil Works: Classrooms, Dorms, etc. 6% 0% 0% Procurement of Furniture and Equipment 16% 10% 2% Field Work of Consultants 7% 0% 0% Provide Fellowships 6% 0% 0% Conduct Study Tours 6% 0% 0% Provide Curriculum Standards 6% 0% 0% Total Weight 100% Imp. Progress 24%
(a) Assigned weight for each activity
(b) Actual progress of each activity Appendix 11 (a) x (b) weighted progress for each activity Project progress = sum of all weighted progress for each activity
57
58 Appendix 12
PROJECT COMPLETION REPORT
Suggested Topics for Project Completion Reports to be Prepared by Borrowers (project, multiproject, sector, program, sector development program, and technical assistance loans)
I. PROJECT DESCRIPTION
A. Objectives
B. Components (or subprojects for sector and multiprojects)
C. Implementation methods
D. Description and justification of changes in components (or subproject appraisal criteria) or implementation methods
II. PROJECT IMPLEMENTATION
A. Compare original and actual implementation schedules. Indicate delays, length and causes of delays, and remedial action taken.
B. Compare cost estimates made during appraisal and actual costs (foreign and local). Local currency costs incurred, appropriate exchange rates for their conversion into US dollars, and the foreign exchange costs financed by cofinanciers must be compiled correctly with reference to audited project accounts. Indicate factors that contributed to any significant overruns or underruns.
C. State problems or difficulties in recruiting consultants, with reference to ADB procedures. Assess the consultant's work and the working relationship between the executing agency (EA) and the consultant. Use of a design and monitoring framework is strongly recommended.
D. State problems or difficulties encountered in procuring goods and services (including civil works) with reference to ADB procedures. Assess the supplier's or contractor's performance under the contract.
E. Give the extent of compliance of the borrower and EA with loan covenants, with reasons for noncompliance or delays in compliance and the remedial actions taken.
F. State reasons for any delays in loan utilization. Evaluate the appropriateness of the disbursement methods used. Justify the reallocation of loan proceeds.
G. State problems or difficulties with subproject appraisal. Evaluate the EA’s performance and capacity to appraise subprojects.
III. INITIAL OPERATIONS
A. Describe initial operations of the project and transitional problems encountered from project completion to initial operations.
Appendix 12 59
B. Describe measures taken to ensure continued smooth operation of the project relative to management, staffing, funding, and maintenance of project facilities.
C. Analyze the prospects of the project benefits being realized.
IV. EVALUATION OF THE ASIAN DEVELOPMENT BANK’S PERFORMANCE
A. Assess ADB's performance in supervising project implementation. Include comments on the adequacy of the consultants’ terms of reference and appropriateness of specifications in tender documents. Evaluate the effectiveness and timeliness of assistance extended by ADB to solve implementation problems.
B. Comment on problems encountered with ADB's procedures. Note the measures taken to resolve these problems and suggest changes in procedures and requirements.
60 Appendix 13
Appendix 13 61
62 Appendix 13
Appendix 13 63
64 Appendix 14
LOAN 2308-IND: UTTARAKHAND STATE-ROAD INVESTMENT PROGRAM STATUS OF COMPLIANCE WITH LOAN COVENANTS (As of 9 May 2008)
Covenant Status of Compliance Sector 1. The State shall ensure adequate and timely funds for The Government assured the maintaining the network of road developed under the timely allocation of funds. Project and the Investment Program in good condition during and after completion of the Project and Investment Program. (LA ,Schedule 5, para 12)
2. The EA shall ensure strict adherence by contractors to These requirements are included national and State road safety standards on signage, in the contracts and will be road markings, roadside structures, and maintenance, enforced in due time. as well as to good practices in construction zone traffic management. As part of the mid-term review of the Investment Program, the Stat and ADB shall conduct a road safety audit and, if necessary, implement any measures needed to revise the institutional mechanisms, financing modalities, and detailed implementing arrangements to improve safety performance. (LA ,Schedule 5, para 13)
Environmental 3. The EA shall ensure that subject to compliance with Ongoing. the requirements of the RF, IPDF and EARF and related RP, IEE/EIA and IPDP shall make (i) available land and rights in land, free from encumbrances, and (ii) clear the utilities, trees and any obstruction on such land, on a timely basis, i.e. strictly in accordance with the schedule as agreed under the related works contract, as required for activities relating to each road or section of a road in the works contract. (LA ,Schedule 5, para 9 (a) )
4. The EA shall (a) implement the Project in accordance Ongoing. with the EARF under ADB’s Environment Policy 2002, and applicable laws and regulations of the Borrower and the State; and (b) provide training to engineers to be assigned for environmental management and to ensure that the requirements of the EARF are fully implemented in consultation with the relevant contractor and construction supervision consultants. (LA ,Schedule 5, para 7)
Social 5. The EA shall (i) implement the Project in accordance Ongoing. with the RF and IPDF under ADB's Involuntary Resettlement Policy, 1995 and Indigeneous People's Policy, 1998 and applicable laws and regulations of
Appendix 14 65
Covenant Status of Compliance of the Borrower and the State; (ii) in case of any changes in the Project roads due to detailed design ensure that the RPs for the Project are updated on the basis of the final design and submitted to ADB for review and approval prior to award related civil works contract; and (iii) monitor and submit to ADB quarterly progress reports and completion reports on land acquisition, environment management, resettlement and other issues. (LA, Schedule 5, para 8)
6. The EA shall provide adequate funding for Ongoing. independent monitoring of activities relating to land acquisition, resettlement, environment and other social issues under the Project. (LA, Schedule 5, para 10)
7. The EA shall ensure that the works contractors under Ongoing. the Project incorporate provisions to the effect that the contractor shall (i) carry out HIV/AIDS awareness and prevention programs for labor, (ii) not employ or use children as labor, (iii) disseminate information at worksite on risks of sexually transmitted diseases and HIV/AIDS as port of health and safety measures for those employed during construction, and (iv) follow and implement all statutory provisions on labor including equal pay for equal work, health, safety, welfare, sanitation and working conditions. The civil works contracts shall also provide for termination of the contract by the EA in case of a breach of any stated provisions by the contractors. (LA, Schedule 5, Para 11)
Financial 8. The State shall (i) maintain separate accounts for the Not yet due. Project; (ii) have such accounts and related financial statements audited annually and (iii) furnish to ADB not later than 6 months after the close of the fiscal year to which they relate certified copies of audited accounts. The State shall furnish to ADB such further information concerning such accounts and financial statements and the audit thereof as ADB shall from time to time reasonably request. (PA, Section 2.09 a)
9. Uttaranchal will provide funding needed for Ongoing. maintaining the network roads in a good condition during and after the completion of the Investment Program. (LA, Schedule 5, para 12)
10. Uttaranchal will provide its share of funding for the Ongoing. Investment Program in accordance with the financing plan and the implementation schedule, as well as
66 Appendix 14
Covenant Status of Compliance provide for any cost overruns in excess of the contingencies.
11. The EA shall ensure that all contracts financed by Ongoing. ADB in connection with the Project include provisions specifying the right of ADB to audit and examine the records and accounts of PWD and of all contractors, suppliers, consultants, and other service providers as they relate to the Project. (LA, Schedule 5, para 17)
12. The EA shall ensure that an independent private audit Independent Audit firm has been firm is engaged (in consultation with ADB) and annual recruited 15 April 2008. audits of consolidated accounts of the Project including for procurement are conducted, prior to the audit performed by the Comptroller and Auditor General of India. (LA, Schedule 5, para 18)
13. Within not more than 12 months from the effective Not yet due. date, the EA shall with the assistance of the infrastructure management consultants, establish a "Road Board" that shall be chaired by Secretary, PWD and comprise at least one representative each of passenger and freight transport providers' associations, state traffic police, state medical department and any other agency that can provide input to increase the impact of the Investment Program and the Project, and establish a separate planning unit under Chief Engineer I, with a head of division and technical and administrative staff responsible for reviewing and updating the RDP according to input from the districts and circles, setting performance standards, and monitoring infrastructure performance. (LA, Schedule 5, para 19)
Others 14. The PMU set up by the State under the Facility shall The PMU is already in place, be adequately staffed and functional for the Project headed by a Project Director in and the Facility. The PMU shall comprise a Project the rank of superintendent Director and at least one road design and pavement engineer. manager, procurement and contract administration specialist, finance manager, environment specialist and social and resettlement specialist and coordinator to assist implement the RF, IPDF and EARF. (LA, Schedule 5, para 2)
15. The Borrower shall cause to apply QCBS/STP in Complied as of 20 December engaging specified consulting services. The State's 2007. standard procedures for selecting and engaging consultants maybe used for selecting and engaging national consulting companies and individuals to
Appendix 14 67
Covenant Status of Compliance provide short-term specialist consultancy support to the PMU. (LA, Schedule 4, para 7)
16. Conditions for Award of Contract: the Borrower shall All contracts were awarded. ensure that the State shall not award any works contracts financed under the Loan are awarded until all requirements as referred to in this Schedule and in pares 7-9 of Schedule 5 to this Loan Agreement have been complied with. (LA, Schedule 4, para 6)
17. At least one month prior to the award of the first works PIUs already in place and contracts under the Project and no later than one performing satisfactorily. month from the effective date shall establish six PIUs in close proximity to the relevant sites, to manage the works contracts. (LA, Schedule 5)
18. The EA shall engage Program Support Consultants, Complied as of 23 November within two months of the effective date, to assist the 2007. PMU to coordinate with supervision and infrastructure management consultants and facilitate timely processing and implementation of the Project. (LA, Schedule 5, para 2c)
19. A mid-term review of the Project shall be undertaken Not yet due. by ADB, the Borrower, and the EA in January 2010 and (ii) Investment Program in the fifth year from the date of approval of the Facility by ADB. (LA, Schedule 5)
20. The State shall provide ADB within 45 days from the Not yet due. close of each quarter with quarterly reports on all components of the Project and the Investment Program and a Project Completion Report within 3 months of physical completion of the Project and a Facility completion report within 3 months of physical completion of the Investment Program under the Facility. (LA, Schedule 5, para 15)
68 Appendix 15
FINANCIAL MANAGEMENT ASSESSMENT
A. Financial Management
1. Accounting, Record Keeping, & Internal Reporting
1. The Uttaranchal State Public Works Department (PWD) is an agency of the Uttaranchal State Government, and operates through Divisions, Circles and the Head Office. A manual system, which mainly generates a Cash Book and a Contractors Ledger, is maintained at the Divisions. The system does not generate a general ledger and subsidiary ledgers. The PWD as an entity does not prepare separate accounts. However, the Divisional Accounts Officers (DAO’s) of the Office of the Accountant General (AG) who are deployed at the over 50 Divisions of the PWD, forward data on all financial transactions, through monthly expenditure reports, to the AG, who in turn collates and summarizes this information for submission to the State Government. Through the AG, this financial information is periodically forwarded to the Treasury of the Government of India (GOI).
2. The revenues collected by road sector institutions within the state are directly banked primarily to the credit of the GOI Treasury and on account of certain types of revenue directly to the credit of the State of Uttaranchal Treasury. The disbursements made by the PWD on account of roads, bridges, maintenance, establishment expenses, payroll and related expenditure are out of funds allocated to the PWD by the State, from funds received from the GOI Treasury. Currently the Finance Department of the PWD engages in preparation of budgets, requesting and disbursing funds for construction of roads and bridges, disbursing maintenance, administration and establishment expenses, but has a limited number of staff – (viz., The Financial Controller, his assistant and a limited number of clerical staff).
3. The disbursements for contract work, which generate most of the financial transactions, are verified by the relevant engineers and recommended for payment. The amounts are then checked and paid under the supervision of the Divisional Account Officers who are staff of the Accountant Generals Office and not of the PWD. The existing procedures are based on the Financial Handbook adopted by Government organizations and the Central Public Works Account Code. Many of the DAO’s are not qualified, but experienced in compliance with the Central Public Works Account Code.
2. Budgeting, Variance Analysis, Exception Reporting, and Evaluation
4. Presently the Divisions develop budgets/estimates and submit to the Superintendent Engineer who in turn reviews and collates the information for submission to the Chief Engineer. The existing procedures at the PWD also call for the compilation of variation statements quarterly and annually. However, a formal system of regular Financial Management Reporting as well as a system of comparing actual expenditures with budgeted and programmed allocations, variance analysis, exception reporting and evaluation, requires to be introduced in order to strengthen the existing system.
3. Computerized Management Information System
5. A World Bank funded project relating to the “Development and Deployment of a Project Management Application and Management Information System” (PMA&MIS) is ongoing and the implementation is due for completion by December 2006. Training of staff of approximately 2 months is envisaged under this MIS project.
Appendix 15 69
4. Finance and Funding
6. The Ministry of Finance of the Government of India, on an annual basis determines the funding requirements of the PWD in consultation with the State and makes estimated allocations to the Uttaranchal State Government. Funds so allocated are credited to the PWD Account of the State Treasury.
5. Operation of Bank Accounts
7. The authorized signatories to the State Treasury A/c of the PWD (not a bank a/c) are mainly the Executive Engineer, who is the ‘drawing and disbursing’ officer in accordance with the Financial Handbook.
6. Conflict of Interest and Related Party Transactions
8. A specific written policy on lines of good governance practices on account of conflict of interest and related party transactions does not exist.
7. Safeguard of Assets, Risks, Insurance & Related Matters
9. The assets in connection with this entity are primarily road assets and heavy equipment and maintenance related supplies. The control over use of machines and material is exercised by the maintenance divisions. The adequacy of insurance coverage relating to PWD assets and related risks is presently unclear. Risks management strategies relating to workman’s compensation, public liability and road safety related issues, insurance obligations of outsourced contractors and other matters are unclear. These have been considered in this Financial Management Assessment due to the financial risk related implications connected therewith.
8. Auditing
10. The statutory audit of the PWD is conducted once per year by the Comptroller and Auditor General of India through the Auditor General of the State of Uttaranchal. The Report of the Comptroller and Auditor General of India, for the year ended March 31, 2005 was issued only in March 2006 – approximately 11 months after the end of the year to which it relates. An external audit opinion is not expressed on the PWD as an entity. It is a component of the State Government.
11. The office of the Comptroller and Auditor General of India conducted the audit for the year ended March 31, 2005 through the office of the Uttaranchal State Accountant General who also performs the duties and functions of the State Auditor General. However as AG, he is also responsible for accounting and record keeping aspects of the State, which includes the PWD.
B. Risk Management and Related Safeguards
1. Improvements to systems, procedures and internal controls and related training and capacity building
12. Simultaneously with the implementation of the World Bank Funded MIS implementation project, due for implementation by December 2006, the Infrastructure Management Consultants will review the existing Central Public Works Account Code, Financial Handbook and related
70 Appendix 15 financial and management accounting procedures and design and develop a new Accounting Procedures Manual (taking into consideration requirements of the ADB Accounting and Financial Management (AFM) Manual); undertake a review of the “re-engineered business processes, redundancies and resultant accounting organization”, recommend and assist in implementation of further revisions if any to the “accounting organization structure”; Guide and assist the Financial Controller of the PWD and his staff in adapting to the new MIS system by supplementing and complementing the MIS vendors training and development activity; Develop appropriate Training Modules and train staff of the office of Accountant General, deployed at the PWD Divisions and other accounting staff at PWD Head Office in new procedures; Train staff of the Office of Financial Controller at the PWD in Annual Budgeting, Forecasting, and Monitoring and related Analyses, Reporting and Evaluation of significant deviations from and material exceptions to plans and budgets etc as well as assist in developing Terms of Reference for a periodical procurement audit and criteria for selection of and a process for recruitment of an independent auditor. The efficiency of the envisaged PMU/PIU’s can be enhanced further by appointing a management accountant at the level of PIU’s and providing adequate training on financial and management accounting to all finance staff at Divisions, Circles and the PWD.
2. External Audit
13. The independence and objectivity of the external auditor is not established since the statutory audit of the PWD has been undertaken by the AG on behalf of the Comptroller and Auditor General of India. Since the AG’s staff at the divisions are engaged in verification of invoices and payment to contractors, as well as supervision of preparation of the account summaries and record keeping, all on a daily basis, there is a clear conflict of interest.
14. It is recommended that the independence of the external audit vis-à-vis this ADB co- financed project be achieved by the appointment of a private firm of Chartered Accountants who adopt internationally accepted standards of accounting and auditing. Such selection and appointment should be through transparent procedure acceptable to ADB. ADB’s Management and/or the Board will be briefed of the progress of such audits, related findings and corrective action, annually through the review mission back-to-office reports and during the submission of PFRs.
15. The Report of the Comptroller and Auditor General of India, for FY 2004, released in March 2006, reveals instances of lapses and weaknesses in controls which require attention. The implementation of the MIPMS; the strengthening of systems, procedures and internal controls; the development of procedural manuals and compliance therewith; training modules as envisaged in the infrastructure component; periodic independent procurement audits and independent external audits will collectively address these concerns.
3. Foreign exchange risk management
16. Foreign exchange risk management for States is undertaken by the GOI. Given that this will be a MFF, with opportunities to vary, (to the extent permitted by the FFA) certain terms of each subsequent tranche (loan) a coordinated approach between the State and the MOF of GOI, at the time of preparation of the PFR, is desirable. This will be undertaken under guidance of the Chief Financial Secretary of the Uttaranchal State Government and the Ministry of Finance in Delhi.
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4. Insurance of Assets and Risks
17. As part of the Infrastructure Management Component, the PWD will be requested to undertake a review (in consultation with the State) of the existence and adequacy of all insurance cover, of assets, workman’s compensation, public liability and related insurance and other risks, including resettlement, social and environmental compliance issues etc.
C. Project Management Unit
1. Project Management Unit – Accounting and Financial Management
18. This will be the first internationally funded project relating to road assets in the state. It is envisaged that a Project Finance Manager (PFM) will be recruited for the PMU and will be an integral part of the PMU. The PFM will prepare procedural manuals and be responsible for systems, procedures and internal controls.
19. The PFM will prepare regular monthly, quarterly, semi-annual and annual financial statements. In addition the PFM will prepare additional management information reports to facilitate timely decision making as well as for purpose of reporting to the PWD, the State, the GOI and ADB as necessary.
20. Based on the periodic finance requests prepared by the State, India will determine the funding requirements of the Investment Program and request loans from the multi-tranche financing facility agreed with ADB. Loan funds will in turn be credited by India to the State’s account on the same terms (as loaned by the ADB) and without any delays.
21. To facilitate transparency, accountability and related governance requirements on account of the USRIP, the ADB funds and Counterpart funds will only be credited to a dedicated PMU Bank Account. The payments and accounting on account of USRIP will be administered through this Project Specific Bank Account of the PWD and would be operated by the Project Director of the PMU. Authorized signatories and levels of authority and related controls will be established in consultation with the Chief Financial Officer of the PWD and the Chief Secretary Finance.
22. The USRIP and hence the PMU will fall within the purview of the statutory audit of all state institutions. However it is envisaged that, a private firm of Chartered Accountants will be appointed to undertake a separate special purpose audit with a reporting deadline which shall not extend beyond 6 months from the end of the Project Financial period.
2. Project Management Unit – Governance Oversight
23. Steering Committee - A Steering Committee (SC), chaired by the Chief Secretary of Uttaranchal, and comprising Secretary PWD and Secretaries of key state agencies will monitor the USRIP. It is recommended that the State Accountant General or a Senior Deputy of the Office of the Accountant General should serve on the Steering Committee. Given the dual role of the State Accountant General who also functions as the State Auditor General, discussed under “Risk Management and Related Safeguards – External Audit” the Deputy Senior Accountant General would be a more appropriate nominee of the Office of the Accountant General, to serve on the Steering Committee.
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24. Audit Committee - The Deputy Senior Accountant General can be invited to serve as the Chairperson of the Audit Committee (AC) of the PMU, (which will be a sub committee of the Steering Committee). In a manner similar to Governance Structures and Systems ordinarily prevalent in the private sector, the SC-AC can perform the external advisory role (inherent in the charter of audit committees) to provide the PMU with the level of comfort with regard to adequacy and effectiveness of systems, procedures and internal controls and compliance with best practice in procurement procedures and related measures. The SC-AC will also commission, review reports of and monitor corrective action connected with, outsourced internal audits, procurement audits or special purpose external audits of the PMU. This is particularly necessary, given the size, complexity and ten year duration of the project loan and the several compliance requirements contained in the loan agreements. The Terms of Reference of the audits can, inter-alia include external verification of compliance with all conditions and covenants of the Framework Finance Agreement of the Multitranche Finance Facility. Matters relating to conflict of interest and related party transactions will also fall within the purview of the Audit Committee.