World Bank Document

Document of The World Bank FOR OFFICIAL USE ONLY & d Public Disclosure Authorized Report No. 2573 Public Disclosure Authorized PROJECT PERFORMANCE AUDIT REPORT MALAYSIA - KUALA LUMPUR URBAN TRANSPORT PROJECT (LOAN 851-MA) Public Disclosure Authorized June 29, 1979 Public Disclosure Authorized Operations Evaluation Department This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. 4 e FOR OFFICIAL USE ONLY PROJECT PERFORMANCE AUDIT REPORT MALAYSIA - KUALA LUMPUR URBAN TRANSPORT PROJECT (LOAN 851-MA) Table of Contents Page No. PREFACE iii PROJECT PERFORMANCE AUDIT BASIC DATA SHEET iv HIGHLIGHTS v PROJECT PERFORMANCE AUDIT MEMORANDUM I. Background 1 II. Implementation 1 III. Conclusions 4 Annex Borrower's Comments 5 ATTACHMENT: PROJECT COMPLETION REPORT I. Introduction 7 II. Project Identification, Preparation and Appraisal 9 III. Project Implementation and Cost 13 IV. Institutional Performance and Development 16 V. Economic Reevaluation 17 VI. Bank Performance 21 VII. Conclusions 23 Tables 1. Principal Resource Documents 24 2. Alternative Design Schemes Presented for Feasibility Analysis 25 3. Actual and Expected Project Implementation 26 4. Actual and Appraisal Estimates of Project Costs 27 5. Detailed Estimates of Construction Cost 28 6. Comparison of Actual and Appraisal Estimate of Disbursements 29 7. Number of Daily Hours Highway Capacity Equaled or Exceeded Without Project 30 8. Actual and Forecast Daily Traffic, 1971-80 31 9. Actual and Forecast Traffic Composition Between Jalan Pantai Baharu and Jalan University 1978 32 10. Kuala Lumpur Vehicle Registrations 33 IThis document has a restricted distribution and may be used by recipients only in the performance of their oMcial duties. Its contents may not otherwise be disclosed without World Bank authorization. - ii - Page No. Tables 11. Sensitivity Testing of Economic Rate of Return 34 12. Operating and Personal Time Costs per Hour: 1975 35 13. Ex-post and Appraisal Estimates of Economic Rates of Return 36 14. Listing of Staff and Consultants on Missions 37 Figures 1. Variation of Cost: Other Materials, Transport, O/H (Staff) Salaries, Consumer Price Index (CPI) 38 2. Variation of Cost: Bitumen, Copper Cable, Cement, Diesoline, M.S. Reinf 39 Maps IBRD 2919 : Revised Scheme - Petaling Jaya Intersections IBRD 3702 : Klang Valley Region IBRD 3708R : Kuala Lumpur Urban Transport Project: Urban Federal Highway Improvement IBRD 10050R2: Third Highway Project IBRD 11701 : Second Kuala Lumpur Urban Transport Project: Location of Major Project Components PR6JECT PERiFOR0ANCE AUDIT REPORT MALAYSIA - KUALA LUMPUR URBAN TRANSPORT PROJECT (LOAN 851-MA) Preface This report presents a performance audit of the above project for which Loan 851-MA for US$16.0 million, made in July 1972, was fully disbursed in January 1978. It consists of a memorandum prepared by the Operations Evaluation Department (OED) and a Project Completion Report (PCR) prepared by the Bank's Urban Projects Department. OED discussed the PCR with Bank Projects staff, reviewed the appraisal report, project files and the minutes of the Executive Directors' meeting which considered the project. During his visit to Malaysia in connection with other project audits, a consultant to OED had opportunities to meet with Government officials to obtain their views and clarifications on certain aspects of the PCR, which have been taken into account in preparing the audit memorandum. The draft of this report was sent to the Borrower and he replied that he has "no further commencs to add" and that the "statements made in the said report are substantially accurate and reflect discussions" held between OED staff and the Borrower's Public Works Department. The Bor- rower's reply is attached as an annex to the audit memorandum. The as- sistance of the Government is gratefully acknowledged. On the basis described above, the audit concurs with the principal conclusions of the PCR that by and large the project has been suc- cessfully implemented. The project has led to the Second Kuala Lumpur Urban Transport Project, still under implementation, for which a Bank loan was made in March 1976. OED's comments are reflected in the present ver- sion of the PCR; the audit memorandum briefly enlarges on the comment on certain aspects of the project experience, especially on the quality of Bank supervision. 伊 f 1---―「―-(1111---―・―,----------------―。―-------―「―・――「―---―「！-!1「「，、―・――「―-:-―「―--―「「「―「，-:―・―--―・ - v - PROJECT PERFORMANCE AUDIT REPORT MALAYSIA - KUALA LUMPUR URBAN TRANSPORT PROJECT (LOAN 851-MA) Highlights Malaysia - Kuala Lumpur Urban Transport Project financed the improvement of a six-mile urban section of Federal Highway 2 between the capital city, Kuala Lumpur, and the adjacent town of Petaling Jaya, and various studies, including the Kuala Lumpur Urban Transport Study. The project's total estimated cost was US$31.6 million, of which US$16 million was financed by the Loan 851-MA. The construction part of the project was completed with a cost overrun of 30% due to inflation, and a delay of 16 months (44% time overrun) as a result of slow land acquisition and associated problems of squatters, and inadequate performance of the contractor during the initial period of the project (para. 4). All but one of the studies were satisfactorily carried out. The exception was the important study of the transportation problems in metropolitan Kuala Lumpur which, although it produced a useful planning framework, left certain important aspects untreated (para. 7). The reestimated economic rate of return ranged between 26% and 30% com- pared with the appraisal estimate of 37%. The reduced return, which still is satisfactory, was due to the slower than expected traffic growth (para. 9). Points of special interest are: - the need for obtaining agreement, during loan negotiations, from the Borrower that effective arrangements would be made with those third parties whose timely actions and cooperation are required for project implementation (para. 5); - the Borrower's constructive action to re- negotiate with the contractor a new escalation formula when, due to unforeseen price increases, the existing escalation clause was found to be inadequate to give reasonable protection to the contractor (para. 6); and - the need for more effective deployment of the Bank's supervision manpower (para. 8). PROJECT PERFORMANCE AUDIT MEMORANDUM MALAYSIA - KUALA LUMPUR URBAN TRANSPORT PROJECT (LOAN 851-MA) I. Background 1. About 80% of West Malaysia's population and economic activities are located west of the north-south mountain range which divides Peninsular Malaysia into western and eastern regions. Most activities take place in or near the Kuala Lumpur metropolitan area in the western region. Klang Port (previously called Port Swettenham), located about 30 miles west of Kuala Lumpur, is the country's main port, and the Klang Valley between Kuala Lumpur and the port is the major growth center of the country's econ- omy. Federal Highway 2, which runs through the valley, was inadequate to meet the fast growing traffic in this corridor. This was particularly true for the 6-mile section between Kuala Lumpur and Petaling Jaya, the improvement of which was the objective of Loan 851-MA, made in 1972 in an amount of US$16.0 million. 2. Since the above project was to be only the first in a series of similar projects, it was realized from the beginning that the physical com- ponent of the project would serve to only partially alleviate the difficult traffic situation in this largely urban section. Therefore, studies were included in the project for further planning of the region's future land use and transportation needs. As future projects would put heavy loads on the Roads Division within the Federal Government's Public Works Department, strengthening the competence and capability of that agency was an implicit objective of the project (PCR, para. 2.09). 3. The project's total estimated cost was US$31.6 million and included the improvement of Federal Highway 2 (US$28.8 million) and three studies (US$2.8 million). The construction work was to be carried out in three years between April 1973 and April 1976, and the studies at various times between September 1972 and December 1973. The studies included were: the Kuala Lumpur Urban Transport Study, the Road Maintenance Study and De- tailed Engineering of Federal Highway 1. In addition, under UNDP financing, a regional planning study for Klang Valley was included in the project, for which the Bank acted as executing agency. II. Implementation 4. The construction part of the project has been completed with a delay of about 16 months (only 53% of the work was completed by the sched- uled completion date) and a cost overrun of about 30% in US dollars (15% measured in Malaysian Ringgits due to appreciation of the Malaysian cur- rency vis-a-vis the US dollar). Much of the cost overrun was due to the rapid inflation following the oil crisis of 1973/74 and scarcity of materials, which was not possible to foresee at the time of appraisal in 1971/ 72. Delays were caused by slow land acquisition and the associated problem of squatters, and inadequate performance of the contractor during the initial period of the project. - 2 - 5. The right-of-way acquisition required the cooperation of the State Government. Whereas project implementation was the responsibility of its Public Works Department, the Feder:' Gvernment at the time did not have the right of eminent domain which was vested in the State govern- ments. By the same token, the Federal Government had no direct control over the public utility agencies which were responsible fcr moving cables, pipes and other utilities. Since neither the State nor the public utility agencies were party to the Loan Agreement (PCR, para. 3.04), agreement should have been obtained from the Borrower, during loan negotiations, that effective arrangements would be made with such third parties.

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