Document of The World Bank
FOR OFFICIAL USE ONLY Public Disclosure Authorized
Report No. 4535-PH Public Disclosure Authorized
STAFF APPRAISAL REPORT
PHILIPPINES
FIFTH HIGHWAY PROJECT Public Disclosure Authorized
May 1, 1984 Public Disclosure Authorized
Transportation Division 2 Projects Department East Asia & Pacific Regional Office
This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS
Currency Unit = Pesos (P)
US$1.00 = P 14.00 P 1.00 = US$0.07
FISCAL YEAR
January 1 to December 31
ABBREVIATIONS
AA - Advise of Allotment ADT - Average Daily Traffic AASHTO - American Association of State Highway Officials ADB - Asian Development Bank BAT - Bureau of Air Transport of MOTC BLT - Bureau of Land Transport of MOTC BOM - Bureau of Maintenance of MPWH BP - Batasang Pambansa CDC - Cash Disbursement Ceiling; CIAP - Construction Industry Authority of the Philippines CO - City Office of MPWH COA - Commission on Audit DBCC - Development Budget Coordinating Committee DO - District Office of MPWH EMK - Equivalent Maintenance Kilometer ERR - Economic Rate of Return GRT - Gross Registered Tonnage MARINA - Maritime Industry Authority MDS - Manpower Development Service of MPWH MLG - Ministry of Local Government MOB - Ministry of Budget MOTC - Ministry of Transport and Communications MPH - Ministry of Public Highways MPW - Ministry of Public Works MPWH - Ministry of Public Works and Highways NEDA - National Economic and Development Authority NTPP - National Transportation Planning Project PCA - Philippine Contractors Association PMO - Projects Management Office of MPWH PNR - Philippine National Railways PPA - Philippine Ports Authority PTS - Philippine Transport Survey RO - Regional Office of MPWH SOE - Statements of Expenditure TOR - Terms of Reference USAID - United States Agency for International Development vpd - vehicles per day FOR OFFICIALUSE ONLY
PHILIPPINES: FIFTH HIGHWAY PROJECT
STAFF APPRAISAL REPORT
Table of Contents
Page No.
I. TRANiSPORT SECTOR ...... 1
A. The Transport System ...... 1 B. Policy, Planning and Coordination ...... 3 C. Sector Issues ...... 4 D. Bank Involvement in the Transport Sector ...... 5
II. HIGIIWAYS ...... 8
A. The Network ...... 8 B. Traffic ...... 10 C. Road Transport Industry ...... 11 D. Road User Charges and Highway Expenditures...... 12 E. Administration, Staff and Training ...... 13 F. Planning ...... 15 G. Design ...... 16 H. Construction ...... 16 I. Maintenance ...... 18 J. Financing, Budgeting and Accounting. 23
III. THE PROJECT . .C ...... 24
A. Background ...... 24 B. Objectives ...... 24 C. Main Features ...... 25 D. Detailed Description ...... 25 E. Status of Preparation . .32 F. Cost Estimates ...... 33 G. Financing ...... 35 H. Implementation ...... 36 I. Procurement ...... 37 J. Disbursements ...... 40 K. Environmental Aspects ...... 40 L. Role of Women ...... I . . . 40
The report is based on the findings of an appraisal mission consisting of Messrs. G. Trnka (engineer), M.S. Parthasarathi (economist), P. Jensen (engineer) and W. Hoehenwarter (financial analyst) which visited the Philippines in February/March 1983.
This documenthas a restricteddistribution and may be used by recipientsonly in the performanceof Itheir official duties. Its contents may not otherwisebe disclosed without WorldBank authorization. - l~i -
Page No.
IV. ECONOMICEVALUATION ...... 41
A. General ...... 41 B. Reconstruction Program for Bridges ...... 41 C. Improvement of National Highway Ba.guio-Mt. Data ...... 42 D. Restoration Program ...... 43 E. Economic Return on Whole Project ...... 43 F. Risks ...... 43 G. Beneficiaries ...... 44
V. AGREEMENTS REACHED AND RECOMMENDATIONS ...... 45
TABLE IN THE TEXT
2.1 Expenditures on National Highways ...... 20 3.1 Summary of Project Costs ...... 34 3.2 Procurement Summary ...... 38 ANNEXES
1. Action Program for Project Implementation ...... 46 2. Ministry of Public Works and Highways: Organizational Set-Up. . 50 3. Government Budget Process ...... 51 4. Project-related Documents and Data Available in the Project File 53
SUPPORTING TABLES
1. Government Investments in Transport Sector Infrastructure . . 55 2. Public Road Network .56 3. Vehicle Fleet by Type .57 4. Road User Revenues and Expenditures, 1970-81 ...... 58 5. Motor Vehicle Fuel Consumption, 1970-81 .59 6. Design Standards for National Highways ...... 60 7. Expenditures on Highway Maintenance by Road System, 1972-81 . 61 8. Ministry of Public Works and Highways: Medium-term Financial Plan, 1984-89 ...... 62 9. Reconstruction Program for Bridges on National Highways: 1985 Program ...... 63 10. Restoration Program on National Highways: Summary Table . . . . 64 11. Restoration Program on National Highways: 1985 Program . . . . 65 12. Consulting and Technical Assistance Services ...... 66 13. Proposed List of Future National Highway Projects ...... 67 14. Summary of Project Costs ...... 68 15. Schedule of Estimated Disbursements ...... 69 16. Basic Vehicle Operating Costs ...... 70 17. Restoration Program of National Highways: Vehicle Operating Costs 71 18 Cost and Benefit Streams for Improvement of National Highway Baguio-Mt. Data ...... 72 19. Economic Return Sensitivity Analysis ...... 73 - iii -
Page No. CHARTS
1. Ministry of Public Works and Highways - OrganizationChart 74 2. Ministry of Public Works and Highways, Regional Office - OrganizationChart ...... 75 3. ImplementationSchedule ...... 76
MAPS
1. IBRD 17013 - Previous Highway Project Components ...... 77 2. IBRD 17014R - Project Components ...... 78
I. TRANSPORT SECTOR
A. The Transport System
General
1.01 The Philippine economy has been growing at 6.0% a year between 1970 and 1980, thereby generating a strong and growing demand for transport services,which grew during the same period at 9% a year. To meet this demand, the Government undertook investmentstotalling around P 20 billion (US$1.4 billion), principally in highways, but also in other transport modes. As a result, the public road network grew from 65,000 km in 1970 to 155,000 km in 1982. With the majority of the national highways either already improved or under improvement,the Government has now turned its attention to improvinghighway maintenanceand to upgrading rural roads, while limiting highway investmentsto strengtheningweak bridges and highway sections in the generalLy satisfactorynetwork (para. 3.05).
1.02 Due to its geography, the Philippines depends to a great extent on interisland shipping and ferry services to link the main island of Luzon with the other islands. Nevertheless,road transporthandles 80% of the country's passengermovements and 60% of freight movements compared with water transport (8% of passenger and 40% of freight traffic). The railways and air transporthandle the remaining of 12% of passenger traffic and a small volume of freight (less than 1%). Basically, therefore, the Philippine transport system is a predominantlybimodal system, with road and water transport generally complementing,rather than competingwith, each other.
1.03 During the 1980s, the transport sector is expected to continue to grow but at a somewhat reduced pace of around 6-7% p.a., in line with the slowdown of the economy's growth caused by worldwide recession and structural problems of the Philippine economy.
Highways
1.04 Highways and highway transportare discussed in detail in Chapter II.
Ports and Domestic Shipping
1.05 There are 18 major and 73 minor national ports, some 400 smaller municipal ports, and 230 private piers and wharves in the Philippines. Together these handle yearly about 75 million tons of cargo, about half in domestic trade and half in foreign traffic, and some 16 million passengers, - 2 -
almost all domestic. The public ports handle about 45% of the total cargo and all passengers;about 75% of the cargo is domestic traffic. Of the public ports, Manila is by far the most important,with over 10 million tons of cargo in 1979. Private port traffic comprises mainly bulk cargo (oil, iron ore, sugar, etc.), 60% of it in foreign trade.
1.06 The interislandshipping fleet which handles the domestic traffic consists of some 3,200 vessels, with over 60% under 100 GRT each. Only some 250 are liner ships with an average GRT of 1,000. A majority of the small ships are owned and operated by some 200 small companies.
1.07 In the past decade, the main investmentsin port infrastructure have been in the country's major ports - Manila, Davao, Cotabato, Iligan, Cagayan de Oro, General Santos, Cebu, Zamboanga and Iloilo. Improvement works at many of these ports are still under implementation. Future investmentsare expected to shift substantiallyto the smaller ports which serve almost exclusivelydomestic traffic.
Railways
1.08 There are two railway systems in the Philippines: the Philippine National Railways (PNR) operating on the main island of Luzon and the Panay Railways on Panay Island. The Government-ownedPNR has 807 km of route in operation and carried in 1980 some 365,000 tons of freight and 1.28 million passengers. A project for the rehabilitationof the Main Line South, with the Asian Development Bank (ADB) financing, is nearing completion. However, PNR incurs substantialdeficits in its operations which have so far been met by Government contributions,and the Panay Railways receive favored treatment in carrying sugar mill traffic, and even so barely manages to cover operating expenses. The railways' role in internal transport is thus marginal, and there is no prospect of its becoming a major factor in the near future. The Government has recently initiated constructionof a 10 km elevated light railway transit system in Metro Manila but this system is likely to require operating subsidies for at least some years to come.
Air Transport
1.09 Internationaland domestic air transport are centered primarily on Manila, the country's capital, with Cebu as a secondary focal point. Altogether, there are 83 national airports under the jurisdictionof the Bureau of Air Transport (BAT) of the Ministry of Transport and Communica- tions (MOTC), of which two are internationalairports and two alternative internationalairports. There are also 120 privately operated airports, mostly for private services. A modern internationalpassenger terminal for Manila airport was completed in 1982 with ADB financing. Scheduled domestic air services are provided by the Government-ownedPhilippine Airlines. Government Outlays on Transport Infrastructure
1.10 During the 1977-81 period, the transportsector absorbed about P 16.7 billion (US$1.2billion) in national government expenditures. Of this sum, roads absorbed 82%, the remainder going to air transport (6%), railways (4%), and water transport (8%). For the period 1983-87, the Governmenthas tentativelyallocated P 40 billion (US$2.9 billion) for the transport sector covering ongoing and new projects (but excludingurban transport). This representsa doubling in annual investments in real terms over the annual investments in the sector during 1975-81. The highway share is, however, expected to decline to 71% (Table 1), since future emphasis in highway outlays will be increasinglyon maintenanceand not so much on new investments (para. 2.38). The main increase in future investmentsoutlays will be in the port subsectorwhose share will increase to 16% of the total transport investments. Relative to infrastructureoutlays by the Government, the share of transport (excludingurban mass transit system) will be about 25% in the future, about the same share as in the past.
B. Policy, Planning and Coordination
1.11 Established in 1975 as a separate Ministry, MOTC is responsible for transportpolicy, regulation and administration. It is also responsible for operationalcoordination among the different modes. MOTC carries out these tasks mainly through its Planning Service, the Bureau of Land Transport (BLT), the Maritime Industry Authority (MARINA),and BAT. The Philippine Ports Authority (PPA), the Philippine National Lines, and the Philippine National Railways are all under its jurisdiction. The quasi- judicial Board of Transport, which is the main regulatoryagency for public transport (routes, fares and tariffs), comes administrativelyunder MOTC. MOTC has, so far, relied on foreign consultantsto execute many of its functions. There are currently five foreign advisers in MOTC, namely a transport planning adviser, a transport policy adviser, a railway adviser, an air transportadviser, and a transport economist. Their services are financed under the Third Highway Project (Loan 1353-PH) and the Regional Cities Development Project (Loan 2257-PH). The services of all but the air adviser would be extended under the proposed project (para. 3.21).
1.12 Planning for the transport sector is, however, the joint responsi- bility of MOTC (for all modes other than highways), the Ministry of Public Works and Highways (MPWH) (for highways), and the National Economic and DevelopmentAuthority (NEDA), with NEDA having an intersectoralcoordinating role. MOTC undertakes overall sectoral planning through the National TransportationPlanning Project (NTPP) which prepared a five-year (1983-87) investment plan for transport as part of the national planning exercise. A ministerial committee - the NEDA Committee on Transport Planning, with representativesfrom NEDA, MOTC, MPWH and the Ministry of Tourism - has the final responsibilityon all planning matters for the sector.
1.13 Responsibilityfor detailed planning in modes other than highways rests with various semi-autonomousagencies under MOTC - PNR for railways, PPA for major and secondary ports, MARINA for shipping, and BAT for air -4-
transport. MOTC's Planning Service reviews investment proposals put up by the various agencies and advises MOTC on policy matters. Responsibilityfor highway planning rests with the Planning Service of MPWH (para. 2.25).
1.14 Intermodal coordinationhas improved considerably,particularly because railways are of little significancein domestic transport and roads and interislandshipping by and large complement each other. However, transport operationscould be made more efficient and less expensiveby the provision of freight consolidationand forwarding facilitiesas well as common passenger terminals in the country's main cities and towns. Such freight consolidationfacilities could also improve the transfer of cargo from trucks to ships and vice versa, an area in which the larger interisland shipping companies have begun to provide the service in some major ports. The proposed project would include technical assistance to MOTC to carry out a comprehensivereview of the transport industry and to make proposals for establishingfreight and passenger terminals in the main cities and towns (para. 3.21).
C. Sector Issues
1.15 In addition to a number of minor issues in specific modes, there are several important issues that require Government'sattention. The first and most important concerns the need to improve highway maintenance,which continues to be unsatisfactory(para. 2.36). A second sector-wideproblem is that of attracting and retaining staff of sufficient caliber and experience in MOTC and MPWH, especially in their planning services,due to the relatively low government salary scales. The problem appears to be particularlyacute in MOTC, which has so far relied on foreign consultant teams (para. 1.11). The third concerns government regulations relating to route licensing and tariff setting, particularlyin road transportand interisland shipping,which contribute to less than optimal efficiency in their operations. The fourth relates to the distinctionbetween trucks licensed for hire (TH) and trucks licensed for owner use (T), with some 80% of the trucks licensed as T trucks but with matiyin practice operating for hire; T trucks pay lower registrationand license fees and do not pay the turnover and franchise taxes, thereby depriving the Government of legitimate revenues and distortingthe market for trucking services. A fifth issue concerns the future of the PNR.
1.16 The Government is aware of these problems. As regards the first, MPWH now gives high priority to highway maintenance and has successfully completed pilot maintenanceprograms with the help of technical assistance provided under the Fourth Highway Project (para. 2.36). The proposed project would provide technical assistance to further improve MPWH's maintenance capabilities(para. 3.20). The second problem of the unattractivegovernment salary structure is the most intractable. To deal with salary issue on a government-widebasis would have overwhelmingfiscal implications. The technical agencies may, thereforehave to continue to use consultants (local and expatriate) over the next few years. Concerning the third issue, the Government has requested, and the proposed project would provide technicalassistance to MOTC to review the road transport industry, examine the road transport deregulationissue, and develop a plan for the deregulationof interislandshipping (para. 3.21). On the fourth issue, MOTC has indicated that it has tightened up procedures for the issue and renewal of licenses for T trucks to ensure that they are issued only in cases where the need is clearly established;the Government intends to monitor periodically this step and take further measures as necessary. As regards PNR, the Government has for the present decided against closure of the railway and to retain it for other than economic reasons. At the same time, it has taken steps to strengthen the management to enable it to operate efficientlyand minimize the need for annual government subsidiesfor operating losses. This, however, is not a serious issue as PNR's role in internal transportis marginal and the subsidy amount involved is relatively small (about P 25 million) (US$1.8million) year. The technicalassistance to MOTC under this project would also provide guidance to PNR in order to improve railway operations,facilities and maintenance (para. 3.21).
1.17 The technicalassistance provided under this project (paras. 3.20 and 3.22) should specificallyenable both MOTC and MPWH to phase out foreign technical assistanceservices in transportand highway management after 1986. However, due to the low government salary structure,MOTC and MPWH would have to continue employing local consultants. For the Ministry of Local Government (MLG), expatriateassistance in rural roads project implementationwould be needed at least until the completion of the proposed Second Rural Roads Project (para. 1.21).
D. Bank Involvement in the Transport Sector
1.18 The Bank Group has assisted the transportsector through four highway projects, one rural roads project, three ports projects and one shipping project. The Bank has been involved in the road subsector since the First Highway Project (Loan 731-PH, US$8.0 million) in 1971. Three larger Highway Projects (Loans 950-PH, 1353-PH, and 1661-PH) and one Rural Roads ImprovementProject (Loan 1860-PH) followed. Two of the highway projects have been satisfactorilycompleted. The Project PerformanceAudit Report (No. 2449, of April 4, 1979) for the First Highway Project found that problems during implementationwere largely caused by civil disturbancesin the project area. Still the project's re-estimatedeconomic return was satisfactory. The Project PerformanceAudit Report (No. 4757, of October 25, 1983) for the Second Highway Project (Loan 950-PH, US$68.0 million in 1973) noted that significantdifficulties and delays on one road construction - 6 -
contract coincidedwith variations from the Bank's procurementprocedures, and that responsibilityfor maintainingthe minor roads financed under the project should have been clearly indicated. The report estimatesthat the economic return of the project will be satisfactorydespite some loss in benefits caused by impositionof tolls and ban on truck traffic on one of the project roads.
1.19 The ongoing Third Highway Project (Loan 1353-PH, approved in 1976), provides US$95 million for constructionand improvementof some 500 km of national roads and 230 km of minor roads (Map 1), the first phase of a road maintenanceprogram (constructionof workshops, procurementof equipment and restorationof deterioratedroad sections), and consulting services, technical assistance to MPWH and MIOTC,and training. The project is two and a half years behind the appraisal schedule because of slow procurement,poor performanceof many contractorsand inadequatebudgetary planning. It was substantiallycompleted (about 95%) in April 1984. The loan is expected to be fully disbursedby August 1984.
1.20 The ongoing Fourth Highway Project (Loan 1661-PH, approved in 1979), provides US$100 million for constructionand improvementof about 365 km of national and 77 km of feeder roads (Map 1), the second phase of the road maintenance program, and consulting services, technicalassistance and overseas training. Initially, the implenientationproceeded slowly because of stricter prequalificationprocedures for contractors,delays in the first phase of the road maintenanceprogram, and late start of technical assistance services. To improve project implementation,MPWH agreed with the Bank in May 1981 on a 12-month action program and on a similar second program in June 1982, and has adhered to these programs. As a result, project implementationhas improved substantiallyover the last two years, and is now satisfactory. In view of its arrangementwith local "in-house" consultants (para. 2.19), MPWH has significantlyreduced the expatriate technical assistance services under the project, and has been using foreign experts only for highway maintenance. The project was about 65% completed in April 1984; it is expected to be completed by March 1985.
1.21 The ongoing Rural Roads ImprovementProject (Loan 1860-PH, approved in 1980), provides US$62 million for improvement of about 700 km of rural roads in 6 provinces, identificationstudy of rural roads for improvementin 22 more provinces, and technical assistance for project implementationand for preparationof a five-year national transportsector investment plan. The rural roads identificati:onstudy and the technical assistance services in planning have been completed. After an initial one year delay caused mainly by delays in obtaining budgetary provision for local costs, and consequent delays in hiring staff for the new Rural Roads Unit in MLG, constructionis now well under waLy. The project was 55% completed in April 1984 and is expected to be completed in March 1986. 15 months later than the appraisal schedule. ADB is providing assistance for rural roads in nine provinces under a highway project approved in 1983, and the Bank lending program for 1986 tentativelyincludes a Second Rural Roads Project for the other 13 provinces which were covered under the study.
1.22 In the port and shipping subsectors the Bank assisted the Government since 1961, when the First Ports Project (Loan 290-PH) provided US$8.5 million to finance dredgers. Unfortunately,the dredgers were not operated or maintained satisfactorily;consequently US$1.1 million of the loan was cancelled. In 1973, the Bank provided US$6.1 million for the Second Ports Project (Loan 939-PH) for improvementof two major ports, Cagayan de Oro and General Santos. Slow procurementcaused a three-year delay in project completion;and the project also experienceda cost overrun of about 60%. The Project CompletionReport (April 29, 1981) noted that the original cost estimatesand implementationschedules were too optimistic. The Project PerformanceAudit Report is under preparation. The ongoing Third Ports Project (Loan 1855-PH, approved in 1980) provides US$67.0 mil- lion for further improvementand rehabilitationand four major ports, Cagayan de Oro, Zamboanga,Iloilo and Cebu, consulting services,and technical assistance services. Progress in project implementationwas initially slow but all constructionwork is now underway. In April 1984, the project was about 50% complete and 12 months behind the appraisal schedule.
1.23 The Bank's First Shipping Project (Loan 1048-PH, approved in 1974) provided US$20 million to assist the Government in modernizing the inter- island fleet of vessels, and technical assistance for-maritimeplanning. The project was completed in 1981, two years behind the appraisal schedule. Most ships were procured locally and the project thus substantially strengthenedthe domestic ship-buildingindustry. The draft Project Performance Audit Report (December 2, 1982) concluded that the Bank should have convinced the Government to provide more favorable onlending terms to ship operators.
1.24 A principal objective of the Bank with transport sector lending in the Philippineshas been to strengthen the institutionsdealing with the sector and to help in the establishmentof an appropriateframework for planning and policy developmentand formulation. As a result, a major component in recent lending has been technical assistance in national transport planning,a task completed in July 1982. Assistance thereafter will be for policy formulationand implementation,with gradual phasing out of foreign experts. -8-
II. HIGHWAYS
A. The Networkl
2.01 The Philippineshas an extensive road network of some 154,800 km (1982), of which 24,000 km are national, 30,000 km provincial, 15,600 city and municipal, and 85,200 barangay /1 roads (Table 2). National roads include about 120 km of toll expressways /2 with grade separated intersec- tions north and south of Manila, and some 2,000 km of the Pan-Philippine Highway extending from northern Luzon to southern Mindanao. The average road density of 0.5 km/sq km of land area and'of 3.2 km/1,000 inhabitants compares favorablywith the correspondingfigures in Indonesia (0.1 km/sq km and 1.3 km/1,000 inhabitants)and Thailand (0.2 km/sq km and 1.9 km/1,000 inhabitants).
2.02 The network is, in general, quite adequate in location and extent, but suffers from many deficiencies. Only some 20,500 km, or about 13% of the total network, is paved, 8,600 km with cement concrete and 11,900 km with asphalt. Of the remaining 134,300 km, 82,000 km have gravel and 52,300 km have earth surfaces. The condition of many roads is poor because of initial deficienciesin design and construction,lack of maintenanceand damage from overloadedvehicles. Missing or weak bridges diminish the usefulness of many existing roads (para. 2.03); and in remote areas, access roads are scarce. In general, national roads carry significantvolumes of traffic, provide connectionsbetween main population centers and link provinces. Provincial roads usually carry medium or low traffic volumes, and constitutethe basic network within the provinces. City and municipal roads are urban roads, while barangay roads function mostly as penetration, feeder or farm-to-marketroads. However, the road classificationis often arbitrary as it is not always based on function. In remote areas national roads may serve as penetration roads providing the only access to villages. In many parts of the country, provincial and barangay roads are indistinguishable,both being characterizedby low volumes of traffic and serving limited areas, mainly connectingcommunities with administrativeand market centers. Under the Rural Roads ImprovementProject the consultants for the Rural Roads Feasibility Study have reviewed the classificationof
/1 Barangay is the smallest political subdivision in the country. Nation- wide, there are about 35,000 barangays; each barangay has a population of at least 1,000 and has its elected Barangay Captain and Council.
/2 About 51 km of two-lane toll road has been completed under the Second Highway Project and is being expanded to a four-lane toll expressway. - 9 -
all categoriesof roads in 22 provinces (about 30% of the country). Under the Fourth Highway Project, the consultantsfor the Bridge FeasibilityStudy have reviewed some parts of the national road network. The proposed project would include an overall road classificationstudy which would pull together the results of the above studies and would also review the remainder of the road network (para. 3.16).
2.03 Major road improvementactivities began in 1969 following completion of the Philippine Transport Survey (PTS)./l The survey recommendedimprove- ment of about 6,000 km of national roads, reorganizationof the highway administration,and improvementsin road maintenanceprocedures. Most of the priority roads identified in the PTS have been, or are being, improved with local resources,supplemented by assistance from Japan, USAID, ADB and the Bank. The proposed project includes a further 83 km for a major highway improvement (para. 3.08). Despite these road improvementactivities only some 10,400 km or about 43% of national highways are paved. Improvementworks on national highways usually include widening and strengtheningof existing substandardbridges and, where necesary, replacementof bridges on the verge of collapse and beyond repair or with excessive maintenancecost. However, the pace of general road improvementwork is not adequate to keep up with the need for repairing or replacing deterioratingbridges. MPWH, therefore, embarked in 1982 on a special steel bridge reconstructionprogram which provides for replacementof some 284 bridges over the three-yearperiod, 1983-85. The cost of steel structures is financed through a special MPWH allocation from the Government's 1981 "jumbo" loan;/2 and the civil works costs are being met from MPWH budget allocations. In continuationof the steel bridge reconstructionprogram, MPWH has formulateda second eight-year program (1985-92)which includes reconstructionof bridges on 60-70 high priority national highway links identified through the National Transportation Planning Project (NTPP) (para. 2.04). The proposed project would provide for financing of the first phase of this program (para. 3.06).
2.04 In 1982, the NTPP study stated that the deterioratingcondition of the national highway network was a critical issue facing the transport sector, and that inadequate maintenancewas the main factor for this state of affairs. The study also stated that inadequatemaintenance funding might be a factor, although it was not the only problem to be addressed. NTPP's main recommendationswere that MPWH should: (a) emphasize that maintenanceof
/1 A two-year study conducted under UNDP financingwith the Bank as Executing Agency.
/2 US$200 million borrowed by the Central Bank of the Philippinesfrom a consortium of internationalbanks. - 10 -
existing facilitieshas priority over any expansion or improvementprojects: (b) carry out a detailed survey of the conditions of the national highway network and identify roads that can be adequatelymaintained, that are to be restored, and that need to be reconstructed,then raise the road restoration program to a level that will bring the network to a maintainablecondition within a reasonable time span; and (c) upgrade its maintenance organization, provide for adequate maintenance funding (includinga permanent catastrophe fund) and institutea monitoring and cost accounting system. The proposed project would assist MPWH in implementingthe above strategy for national highway maintenanceby providing technical assistance and by financing continuationof the restoration program of national highways begun under the Third Highway Project (paras. 3.10 and 3.20).
B. Traffic
2.05 In 1980, there were some 942,000 motor vehicles in the Philippines,of which 471,000 were cars; 81,000 jeepneys;/1 18,000 buses; 293,000 trucks; and the rest motorcycles (Table 3). Between 1970 and 1980, the fleet grew by 6.8% per year, but there has been very little change in its composition,with cars and trucks constituting50% and 30% of the fleet, respectively. Over 40% of the vehicle fleet is in Central Luzon and Metro Manila which account for 22% of the country's population and 6% of the land area. Approximately65% of the trucks are two-axle trucks, about 25% three-axle trucks and the balance truck-semitrailers. Almost 90% of the trucks are diesel-powered. Trucks in use in inter-city movements in the Philippines range from the two-axle straight truck to the five-axle truck semi-trailer.
2.06 Overloadingof trucks is common and this causes excessive damage to roads. Loadometer surveys carried out withithe use of weighing equipment provided under the Third Highway Project indicate that typically 65% of all loaded vehicles are overloaded,with the average overload for overloaded vehicles being 4 tons, in terms of both gross vehicle weight and axle load. The overloadingof larger trucks is greater with axle overload reaching 10 tons for the three-axle straight truck.
2.07 Traffic volumes vary widely with over 30,000 vehicles per day (vpd) on the Manila North Expressway in Luzon to less than ten vehicles daily on some rural roads. With the Bank's assistance, a nationwide traffic counting program was initiated in 1975 with a total of 1,377 stations. At
/1 Jeepney is a modified jeep being used in the Philippines for public transport. - 11 -
present there are 1,497 counting stations in operation, of which 126 are automatic. The average mix of traffic on national roads is as follows: cars/vans - 55%; jeepneys - 30%; buses - 5%; and trucks - 10%.
2.08 At present, the maximum legal load for a single axle is 8,000 kg and for a tandem axle 14,500 kg; in addition, the maximum legal gross weight of a two- or three-axle truck is 13,600 kg and of a semi-trailer24,500 kg. These limits are low and if strictly inforced,would raise trucking costs higher than they need be. To review the efficiency of the road transport system, the Government is carrying out a study of its existing regulations on vehicle weights and dimensions. The study is financed under the Fourth Highway Project and is scheduled for completionby December 1984. Based on its findings,the Government plans to revise the regulationson vehicle weights and dimensions and take steps to enforce them on the roads.
2.09 Traffic accidents and fatalities constitute a growing and recognized socioeconomicproblem in the Philippines. However, accidents are neither accurately nor completely recorded, nor have comprehensive, coordinatedand effective measures been taken to prevent them. Speeding is quite common, driver behavior is often not in conformitywith the traffic laws, and driver education is unsatisfactory. At the Government'srequest, the proposed project would include a traffic safety study (para. 3.17).
C. Road Transport Industry
2.10 A majority of the trucks (estimatedas up to 80%) are "T" trucks licensed for noncommercialuse (or for use only in the business of the licensee). Nevertheless,despite their restricted licensewhich implies lower registrationand licensing fees and exemption from turnover and franchise taxes, most of the "T" trucks unfairly compete with trucks licensed for hire ("TH" trucks) in the freight market. This results in loss of revenue to Government from turnover taxes alone of around P 50 million (US$3.6 million) per year.
2.11 Overall, over 90% of the operators own three trucks or less, and only about 1% of the operators own more than 10 trucks. The former own 80% of the vehicles and the latter 10%. Over 30% of the vehicles are owned by individualswho own only one vehicle. Moreover, the distinctionsin truck licensing (para. 1.15) and the practice of heavy overloading (para. 2.06) are matters for concern. MOTC is tightening truck licensingto eliminate the abuse of T licenses and to increase the number of trucks licensed for hire. A solution to deal with the problem of enforcementof vehicle and traffic regulationsis expected to emerge from the vehicle dimensions and weights study (para. 2.08) as well as from the traffic safety study to be financed under the proposed project (para. 3.17). - 12 -
2.12 The intercity passenger transport industry consists of a small group of large, mostly family-ownedfirms with fleets of 150-450 vehicles offering efficient long-distanceservices, and of a large number of small operators. This latter group represents about 7% of the fleet of buses offering a wide range of complementaryshort-distance services. In addition, there are a vast number of jeepney operators offering a mix of short-distanceurban and short interurban services,mostly owner-operated.
2.13 Both truck and bus operations suffer from lack of common terminal facilities in the main towns and cities which would improve the efficiency of their operations and contribute to greater conveniencefor users. Trucks would benefit from freight consolidationand transfer facilities which would improve truck load factors, reduce costs and promote through movements, especially for interislandmovements where intermodal transfer is involved. Bus passengerswill benefit from common termLnals that would facilitate transfers. To review and help improve the efficiency of road transport operations (para. 1.14), the proposed projecl:would include technicalassi- stance to MOTC which would review the transport industry and would develop a plan for establishingfreight and passenger terminals throughout the country (para. 3.21).
D. Road User Charges and Highway Expenditures
2.14 Highway expendituresin the Philippines have increased from P 573 million in 1970 to P 4.5 billion in 1981 (Table 4). During this period, maintenanceexpenditures increased elevenfold to P 1.2 billion in 1981 and new constructionoutlays sevenfold to almost P 3.0 billion. Meanwhile, highway administrationexpenditures grew from P 55 million to P309 million. Thus, although there was a substantialincrease in new construction,the increase in maintenance expenditureswas much larger in percentage terms. Despite this, highway maintenance is still inadequate principallybecause of poor planning, diversion of resources, and insufficientmonitoring of maintenance activities (para. 2.36). During the same period revenues from road user charges (fuel taxes and motor vehicle fees) rose from under P 300 million to over P 5.1 billion (Table 4). Currently, road user charges generate more revenues than all highway outlays - maintenance,administration and new construction- which is a satisfactory situation.
2.15 There are, however, a few relativelyminor problems with respect to the system of road user charges. The first is the large number of trucks with T licenses for own use (and paying the lower fees and taxes that go with it) but operatingmainly for hire. The Government has initiated steps to deal with this (para. 1.15). The second is the lower taxes on diesel fuel compared with petrol (P 0.59 vs P 1.80 per liter) (Table 5). The Government has already agreed to eliminate this differentialgradually (as - 13 -
part of the SAL operation, Loan 2266-PH). The third is the inadequate license fees charged for three-axle trucks. This would be reviewed as part of the vehicle dimension and weights study financed under the Fourth Highway Project (para. 2.08).
E. Administration, Staff and Training
2.16 Responsibility for the public road network in the Philippines is divided, with some overlap, between the national governmentand local government agencies. In the national government,MPWH, the recognized technical highway authority, is responsiblefor the national highways system, and for providing technical assistance to other governmentagencies. At local government level, provincial governments,cities and municipalities,under the overall supervisionof MLG, are respectively responsible for the provincial,city and municipal roads in their areas. MPWH was, until recently, also responsible for barangay roads, but this responsibilityis being gradually transferredto MLG and barangay councils, which in the near future will assume full responsibilityfor these roads. Over the last two years, MLG has gained considerableexperience through the implementationof a number of externally assisted projects and it is now familiar with the technical and administrativerequirements of road network management. However, some provincial governmentsand barangay councils lack the technical expertise and experience necessary to manage their road networks and will depend heavily on assistance and support by MLG. The ongoing Rural Roads ImprovementProject (Loan 1860-PH) and the ADB Third Highway Project provide technical assistance to MLG and selected provincial governments;these services will need to continue under the proposed Second Rural Roads Project which is being prepared separately.
2.17 MPWH's main responsibilityis now for planning, design, construc- tion and maintenance of national highways. The Ministry was created in 1981 with the merging the Ministry of Public Works (MPW) and the Ministry of Public Highways (MPH). This reorganizationwas mainly to assure better cooperation of government staff on projects and to avoid duplicationof MPW and MPH field organizations.
2.18 MPWH is headed by a Minister who is assisted by three Deputy Ministers (for planning, administrationand finance; constructionand quality control; and design, equipment and maintenance). In addition,MPWH has six staff services and five staff bureaus. MPWH field organization which consists of 14 Regional Offices (ROs), 94 District Offices (DOs) and 55 City Offices (COs). At present, MPWH has an approved establishmentof about 19,000 personnel of which about 3,200 are headquartersand about 15,800 regional staff. The number of MPWH personnel is slightly larger than - 14 -
the former MPH (17,600) but considerablysmaller than MPH/MPW combined (24,600). Most of the reduction has been in the regional staff which has been reduced by 25%. The organizationsof MPWH headquartersand RO are shown in Chart 1 and 2 respectively;further details are given in Annex 2.
2.19 Because of the low government salary scales there is a shortage of well experiencedmiddle-level technical staff at MPWH headquartersand in the field, particularlyin the maintenance organization. To handle its staffing problems,MPWH engaged in 1981 a local management and engineering consulting firm which has provided a team of some 20 "in-house" consultants. These consultantsassist MPWH headquartersstaff in reviewing feasibility studies, designs, cost estimates, bid evaluations,contractors certificates, claims, variation orders, accounts, and others. MPWH is funding the "in-house" consultantsservices from its own budget and intends to continue this arrangementin the next few years until its implementationcapabilities reach a satisfactorylevel.
2.20 Despite the priority MPWH has been giving to maintenanceover the last two years, its maintenance organizationremains weak. MPWH engaged in 1981 a foreign consulting firm to provide six maintenanceexperts to work at headquartersand in four pilot regions. As an incentive to its maintenance staff, in 1982 MPWH upgraded the Maintenance Engineers' positions in its ROs and DOs. Improvementof MPWH maintenance capabilitiesto a satisfactory level may take several years, and the proposed project, therefore,provides for continuationof the foreign technical assistance services in highway maintenance (para. 3.20). This assistance would, however, prepare MPWH for phasing out the foreign technical assistance in highway management.
2.21 Training for technicaland administrativestaff of the Ministry has been conducted for many years. Since 1974, training activities were institutionalized,and headquartersand regional training officer posts were established. To further strengthen its training functions,MPWH carried out a study under the Second Highway Project in 1975/76 to identify manpower development needs and to recommend suitable training programs. The study was followed up in 1977-79 through technicalassistance under the Third Highway Project from three expatriate training advisers to the various training units. In late 1978, the Manpower Development Service (MDS) was established for planning and preparing training programs, including production of training aids, for implementationof the programs at the headquarters,and for assistance and guidance to the regional training units as well as coordinationof their programs (Chart 1).
2.22 The internal training courses offeredlby MDS and the regional training units are satisfactoryfor the routine!training involving large groups of trainees. The MDS's training efforts are mainly directed towards reorientationcourses and seminars for all MPWEHemployees. In addition,MDS - 15 -
arranges regular training courses in a wide range of subjects for clerical and professionalstaff to attend on a selective basis. The training includes courses for developmentof personal skills, for example, in oral and written communication,and for professionaland technicaldevelopment, such as materials engineeringand quality control, maintenanceplanning, programming and administration,and principles of flood control in bridge and highway design. In 1982, nearly 3,000 staff participatedin the regular training courses conductedby MDS both at MPWH headquartersand in the regions. The regional training units also arrange training courses regularly, for example, for highway maintenance crews, drivers, mechanics, and equipment operators. Every year, several hundred staff attend formal training courses in each region. Further informationand details on MPWH's training activities are in the Project File (Annex 4).
2.23 In addition to MPWH's internal training programs, a number of external training opportunitiesare available for MPWH staff, including overseas university courses and study tours. The Fourth Highway Project provided support for external training activities through advanced overseas technical training of 16 MPWH and MLG staff. This program met successfully the training objectives and the proposed project would continue this assistance (para. 3.23).
F. Planning
2.24 Planning activities for national highways are initiated in MPWH, and the resultant proposals are forwarded to the Ministry of Budget (MOB) which incorporatesthem in a Budget Message of the President of the Philippines to the Batasang Pambansa (BP), the law-making body of the country. A brief descriptionof the budget process is in Annex 3.
2.25 National highway projects are initially identifiedby MPWH's Planning Service in cooperationwith NEDA. In selecting projects, the Planning Service considers the recommendationsof the previous national transport studies and the NTPP study (completedin 1982), its evaluation of relative priorities, and the priorities expressed by the Regional DeveloiPmentCouncils. The InfrastructureProgram comprises large investment projecitsnormally spread over several years and approved under the various Public Works Acts or Decrees. The Planning Service consolidatesand finalizes the overall MPWH program.
2.26 Project proposals for provincial, city and municipal roads originate at the local government level and are submitted to MLG for approval on an annual basis. Projects to be implementedwith assistance from external sources are prepared by MLG. In the case of barangay roads, - 16 -
project proposals are formulated at the barangay level, coordinatedby DOs and ROs and submitted to MPWH headquartersfor approval and fund allocation. These functions of MPWH are gradually being transferredto MLG.
G. Design
2.27 Design and supervisionof constructionfor national highways are carried out by MPWH,either directly or by employing consultants. Most large projects are designed by local consultants,but a few have been under- taken by MPWH headquartersor ROs. For smaller projects, design and super- vision of constructionare done by ROs, often through their DOs or COs. The design and supervisionof externally assisted projects is usually performed by local consulting firms, sometimes in joint venture with foreign firms, and occasionallyby PMOs through a specially organized group for RO. For provincial and barangay roads, design and constructionsupervision are car- ried out by the provincial,city or municipal engineeringoffices, usually supported by MLG. In general, the quality of engineeringis satisfactory.
2.28 Highway design is based on standards which were developed during the first UNDP-financedtransport survey in the early 1970s. Since then a number of revisionshave been made and additional standardshave been developed. MPWH recently undertook a complete review of its design standards and intends to issue them officially in the near future. The new design standards (Table 6) are adequate for various types of national highways and terrain conditions in the Philippines.
2.29 The role and responsibilitiesof local consultantsfor both highway design and constructionsupervision have increased considerablyover the last ten years. The Bank assisted this development,particularly under the Second Highway Project (para. 1.18). At present, over 25 local consulting firms offer services for highways and bridges, and some of the larger firms also work overseas. Their performancein technicalmatters such as design and supervisionwork is, in general, satisfactory;some improvement is, however, still needed in work organizationand management. Local consultants thus continue to depend on expatriate staff for key roles such as Project Managers or Chief Resident Engineers on large projects.
H. Construction
2.30 Most of the constructionwork for national and provincial roads is carried out by contract; some minor projects, particularlyfor barangay roads, are also executed by force account, in many cases utilizing village labor. The Bank is assisting the Government in this field by financing technical assistance and labor-intensiveconstruction on several sections of - 17 -
barangay roads./l For government-fundedprojects, the road contracts are generally small, and are let to local firms after local competitive bidding. For large foreign-assistedprojects, contracts are awarded following internationalcompetitive bidding. In this field, local contractorsare also quite competitivewith foreign contractorsand succeed in getting most of the contracts. The Bank has assisted considerablythe developmentof local contractors (para. 1.18).
2.31 The major impetus to the development of a domestic construction industry in the Philippineswas the high level of rehabilitationneeded at the end of World War II. In 1945, a group of ten founding members/contrac- tors formed the Philippine ContractorsAssociation (PCA) which now has about 450 members. In 1982, some 6,000 persons/firmswere identified as engaged in the contractingbusiness in the country, and over 3,000 contractorswere licensed by Government to carry out works in that year. In the last decade, the domestic constructionindustry has benefited from several government measures, such as reviews of Government'scontract administrationprocedures and implementationrules, designed to assist domestic contractorsto become competitivewith foreign contractors. Moreover, the Government has recog- nized that the present contract documents are stipulatedexcessively in its own favor, and that its relationshipwith contractorsshould be placed on a more equitable footing. It established,therefore, in 1980 the ConstructionIndustry Authority of the Philippines (CIAP) which represents both government and private sector interests, to evolve an overall strategy for the developmentof the constructionindustry.
2.32 The Bank has been involved in a continuing dialogue with the Government on this issue for some time. In 1981, the Bank financed a National ConstructionIndustry Study under the Second Urban Development Project (Loan 1647-PH). This study has proposed further changes in the contract conditions,administrative procedures, contract implementation rules, and classificationand categorizationof contractors. The Government has accepted some of the recommendations,and has requested the Bank to assist CIAP. Accordingly,the Fourth Highway Project is financing technical assistance to CIAP and three short studies on availabilityof credit to contractors,equipment leasing operations,and constructionindustry data base requirements. Moreover, the Fourth Highway Project is financing advanced training on constructiontechnology and constructionproject management for two permanent CIAP staff members. The proposed project would provide for further technical assistance to CIAP, additional follow up studies and training to CIAP staff (paras. 3.18, 3.22 and 3.24).
/1 The ongoing Rural Roads ImprovementProject (Loan 1860-PH) (para. 1.21) includes upgrading of about 50 km of barangay roads by labor-intensive methods. Also, the Rural InfrastructureProject (Credit 790-PH) includes improvementof about 1,200 km of barangay roads of which some 50 km are being built by labor-intensivemethods under guidance of technical assistance experts of the InternationalLabor Organization. - 18 -
I. Maintenance
2.33 The greatest weakness in the Philippineshighway sector has been inadequate maintenance. Since the Bank's involvementin the highway sector in early 1970s, it has observed a serious lack of attention to road maintenance in the field. The reasons were many: there was no proper organizationalsetup or staff capable of carrying out the required tasks; funds allocated for maintenancewere either grossly inadequate or diverted to road construction,emergency bridge repairs or other activities;and maintenance operations and procedureswere ill-defined. Essential items of equipment were unavailablewhen and where needed; hand tools were in short supply; workshop facilities to service and repair equipmentwere inadequate; and many depots were clutteredwith broken-downequipment in scrap condition. Moreover, years of neglected road maintenancehave resulted in the deteriorationof a large part of the network to a point where it cannot be maintained by normal methods; restorationworks are needed to put the roads in a maintainablecondition.
2.34 In an attempt to improve this situation a maintenance study was initiated in 1972 under the First Highway Project and completed in 1975 under the Second Highway Project. Following the study recommendations,the Ministry was reorganized in 1974 (para. 2.17), and it has set up field offices for maintaining national highways, and prepared a Five-year Maintenance Program, which includes: (a) target annual budgetary requirementsfor routine and periodic maintenatnce;(b) substantialroad restoration; (c) procurementand management of maintenanceequipment and spare parts; and (d) a highway maintenance manual.
2.35 In order to reinforce the steps taken by MPWH to implement the first phase of the Five-YearMaintenance Program, the Third Highway Project included constructionof workshops, procurementof maintenance equipment, restoration of deterioratednational roads, and technical assistance (para. 1.19). During appraisal of the Fourth Highway Project in 1977, it was observed that little work had been done on the road maintenanceand restorationwork components of the Third Highway Project. In view of this, the timing of the Fourth Highway Project was delayed until some progress on road maintenance and restorationwork was achieved in 1979. The ongoing Fourth Highway Project provides for implementationof the second phase of the Five-YearMaintenance Program.
2.36 Field maintenanceof national highways,which continues to be a problem, is handled at the DO and CO level under the control and direction of the appropriateRO. Almost all routine maintenancework is done through force account using MPWH equipmentwhich is managed by ROs. Although the - 19 -
MPWH's Bureau of Maintenance (BOM) is responsiblefor ensuring adequate maintenance on national highways, it has initiated regular field inspections only recently. ROs report quarterly to BOM but mainly on financial accomplishments;and as proper monitoring and cost accountingof field operations is not performed, maintenance funds are often diverted to new constructionor bridge reconstruction. In general, routine maintenance operations are being carried out but periodic maintenanceis neglected in most regions. Over the last three years, MPWH has begun to give increasing emphasis to maintenance operations. In 1982 it started to implement in four pilot regions annual highway maintenance programs based on physical targets in each DO and CO together with resource requirements;in 1983 MPWR continued tb implement these pilot programs with considerablesuccess. These programs were implementedwith the assistance of six technical assistanceexperts financed under the Fourth Highway Project. With their help, BOM has prepared a reliable monitoring system which has enabled an assessment of the adequacy of funds being currently allocated for maintenance. MPWH is now introducing similar maintenancesystems in all 14 regions. However, periodic maintenance has still been neglected. MPWH has, therefore, earmarked20% of its 1984 maintenance funds for periodic maintenance,and this allocationwould be increased to 25% in 1985 and onwards. MPWH intends to execute periodic maintenance by force account or, wherever it proves more advantageousby contract. All these changes, however, will require several years to produce results in the form of improved maintenance operations. As the present technical assistance services will end in September 1984, the proposed project would provide for continuationof the technical assistance in highway maintenance in order to further strengthenMPWH's maintenancecapabilities (para. 3.20).
2.37 In 1971, MPWH developed with the help of its technical assistance consultants,a system for allocation of maintenancefunds for national high- ways based on the concept of an equivalent maintenancekilometer (EMK), and has been using this formula since. Maintenance funds requirementsare worked out in BOM by applying to the highway length the base EMK adjusted by the following factors: pavement width and type, length and type of bridges, and traffic volumes. The basic EMK norm should cover both routine and periodic maintenance;however, its last increase for price escalation took place in 1976 when the present basic EMK allocation of P 11,342 (US$810) was established. MPWH's requests for budgetary allocationsfor maintenance (Table 7) are approved by the Ministry of Budget (MOB); the maintenance funds are then suballottedby MPWH to its 14 ROs which, in turn, allocate funds to the various DOs and COs. As proper cost accounting for maintenance operations does not exist, it is difficult to assess if the yearly maintenance fund allocations are adequate or not. Following some experience of implementingthe 1982 and 1983 maintenance programs in the four pilot regions (para. 2.36) MPWH has concluded that the present EMKallocation may be approximatelysufficient to cover routine maintenance,but few funds would remain for periodic maintenance. - 20 -
2.38 Consequently,MPWH has prepared a proposal for a revised EMK formula which would increase the basic EMK norm by some 23% and would thus provide adequate funds for periodic maintenance,and submittedthis proposal for Bank review in March 1984. During negotiations,agreement was reached on the revised EMK formula and its biannual review in consultationwith the Bank. The revised EMK formula would be submitted to the parliament for legislativeapproval in July 1984. MPWH would reduce its capital expenditure program over the next five years and increase the expendituresfor national highway maintenance to specific amounts at the same time. The maintenance allocationsare feasible within the current economic climate and should provide for adequate maintenance levels. The past and projected MPWH maintenance expendituresin relation to new constructionand restoration expendituresare shown in the following Table 2.1.
Table 2.1: EXPENDITURESON NATIONAL HIGHWAYS (Current prices, Pesos million)
Total Capital expenditures Mainte- % of expendi- New Total % of nance total tures construc- Resto- capital total expen- exp. Year tion ration exp. exp. ditures
1975 1,603.0 1,339.4 - 1,339.4 84 263.6 16
1980 3,836.2 3,280.0 113.0 3,393.0 88 443.2 12
1981 3,488.2 2,922.3 106.7 3,029.0 87 459.2 13
1982 3,499.0 2,962.0 90.0 3,052.0 87 447.0 13
1983 3,874.0 3,339.0 114.0 3,453.0 89 421.0 11
1984 3,115.0 2,553.0 127.0 2,680.0 86 435.0 14
1985 3,024.0 2,312.0 192.0 2,504.0 83 520.0 17
1986 3,290.0 2,384.0 356.0 2,740.0 83 550.0 17
1987 3,494.0 2,504.0 390.0 2,894.0 82 600.0 17
1988 3,661.0 2,654.0 357.0 3,011.0 82 650.0 18
1989 3,675.0 3,000.0 - 3,000.0 82 675.0 18 - 21 -
The funds allocatedfor maintenancereflect MPWH's commitment to improved maintenance and restorationefforts and its intention to reduce new constructionactivities as necessary during the project period. The amounts specified are consistent with the recommendationsof the draft EMK formula and should also provide for future price escalation. The use of increased maintenance funds would be also enhanced through better management methods, more efficient applicationof resources, and monitoring and cost accounting.
2.39 Restorationworks on national highways should bring deteriorated and unmaintainablesections to their original standard and condition; these works included mainly road resurfacing,shaping of shoulders and improving drainage. The MPWH Five-Year MaintenanceProgram comprised restorationof about 13,000 km of national highways, consisting of some 7,500 km of resurfacingand 5,500 km of other works (mainly ditches and shoulders). The first phase restorationprogram (1977 and 1978) included in the Third Highway Project, originally comprised 2,200 km of road resurfacingand 2,500 km of other works, but the program was proceeding extremely slowly, mostly because of lengthy administrativeprocedures and slow contracting. In 1980, MPWH completed only 1,100 km of resurfacingand 1,300 km of other works. In 1981, the Bank agreed on revised and more realistic MPWHrestoration programs for 1981 and 1982 which included resurfacingof some 1,250 km of roads. These two programs were completed in 1982 and some 2,350 km of national roads have thus been resurfaced. In addition,MPWH completed in 1981 and 1982 some 4,500 km of ditch and shoulder works as priority maintenance operationsand excluded these works from its future restoration program. The second phase of the MPWH restorationprogram is now under way under the Fourth Highway Project, it is proceeding satisfactorily. Some 800 km of road resurfacingwas completed in 1983 and some 500 km will be done in 1984. Nevertheless,at its completion,the MPWH restorationprogram would thus accomplish only some 3,650 km of road resurfacingand some 5,800 km of drainage and shoulder works in total./l This project would continue the MPWH restorationprogram in order to complete the restoration of the national highway network (para. 3.10).
/1 The Loan Agreement for the Fourth Highway Project originally stipulated the target of 13,000 km of national road restoration. In December 1982, it was amended to include the restorationof about 9,000 km of national roads, including 3,200 km of road resurfacingand 5,800 km of ditches and shoulder work. - 22 -
2.40 Maintenance of provincial,city and municipal roads is the responsibilityof the respective local government authority and a maintenance equipmentpool is generallymaintained by its Engineering Office. Funds are provided partly from the local government budget and partly through grants from the National Government. The national government provides 67% of the total funds for provincial roads, 33% for city roads, and 60% for municipal roads. The total amount available for annual maintenance of provincial roads corresponds to 75% of the basic EMK for national highways, or P 8,506 (US$608) per kilometer, to cover both routine and periodic maintenance,and this is, in general, adequate. The maintenance funds from the National Government are channelled to local governments through MPWH. MLG is responsiblefor overall monitoring of the maintenance activities of the provinces. However, little monitoring is actually performed. This is due to the lack of available supervisorystaff and to the ill-definedmaintenance operations and practices of the provinces which MLG is supposed to monitor. In general, the status of maintenance operations on provincial roads is unsatisfactory. The Bank is assisting MLG, under the ongoing Rural Roads ImprovementProject (Loan 1860-PH), in improving the situation in the six provinces included in the project by providing technical assistance and maintenanceequipment. In 1982, MLG and the governmentsof the six provinces started annual maintenanceprograms establishingphysical targets in each province together with resource requirementsincluding organizationaland procedural requirements,and continued with similar programs in 1983. The accomplishmentsin the six provinces have been closely monitored by technicalassistance experts. The 1983 programs have been successfullycompleted and the 1984 programs are now underway. These activities represent an important first step towards improving provincial road maintenance;and the proposed Second Rural Roads Project (para. 1.21) will further assist MLG and provincial governmentsin their efforts.
2.41 Maintenance of barangay roads is the responsibilityof barangay councils under supervisionof MLG. Funds for this purpose (presently P 4,500) (US$321 per km) are provided annually by the National Government through MPWH and MIG to the barangays. No contributionis required from the provincial and local governments. Again, it is difficult to assess the adequacy of the yearly maintenance funds for barangay roads because monitoring of maintenanceoperations and cost accounting do not exist. The ProvincialEngineer's Office is required to provide equipment, direction and technical assistance,and barangay labor is used to do the work. This arrangement is likely to be satisfactoryin future, however, maintenance of barangay roads at present is generally inadequate. - 23 -
J. Financing, Budgeting and Accounting
2.42 In preparing its five-year financial plan, MPWH applies the fol- lowing priorities in descending order of importance: (i) foreign-assisted ongoing projects; (ii) foreign-assistednew projects; (iii) locally funded ongoing projects; and (iv) locally funded new projects. The MPWH financial plan for the next five years, as revised with MOB during negotiations,is in Table 8. The estimated funding requirementsfor the proposed project correspond with the MPWH budget amounts agreed during negotiations.
2.43 MPWH's accounting and auditing procedures are satisfactory. Accounting and auditing staff are well qualified, and despite the low government salary structure,MPWH has had no problems recruiting qualified accountants. Several accounting functions are fully or almost fully computerized(accounting system for MPWH financial/bookkeepingtransactions, project accounting system, personnel system), others are being converted from manual to computer operation (for example, Cost of Construction Information System, Equipment Management System). A major effort is underway (MPWH's InfrastructureComputer Center) to extend the computer system to include modules supporting the planning and management information function. An audit unit within the MPWH's AccountingDivision conducts internal audits and is also engaged in streamliningoperations and procedures. The Government'sCommission on Audit (COA) conducts a continuous external audit. After approval from COA, MPWH switched in 1982 from preauditingof transactionsto postauditing,which significantly reduced processing time (especiallyfor contract change orders). - 24 -
III. THE PROJECT
A. Backgroundi
3.01 The proposed project was identified in January 1981. Subsequently discussionswere held with the Government, particularlyMPWH, MLG and NEDA, on the probable content and timing of the project which was originally intended to assist both national and rural roads. During 1982, implementa- tion of the ongoing highway and rural roads projects (paras. 1.19 to 1.21) was closely monitored and the implementationcapacities of both MPWH and MLG were carefully assessed. In October 1982, it was agreed with the Government that, in order not to overstrainthe implementationcapacities of MPWH and MLG, the MPWH program for national highways would be split into two stages, the first stage to be assisted under this project and the second under a subsequenthighway project. Further the assistancefor rural roads would be processed in the proposed Second Rural Roads Project (para. 1.21).
B. Objectives
3.02 The objectives of Bank lending for highways are to assist in: (a) providing an adequate road network; (b) executing proper maintenanceand removing the backlog of restorationworks; (c) improving the project preparationand implementationcapabilities of MPWH; (d) developing the institutionalframework of MPWH; (e) improvinggeneral highway management (planning,design, constructionsupervision, maintenance and cost account- ing); (f) developing the domestic constructionindustry; (g) improving the system of cost recovery from road users; and (h) improving the efficiencyof transport industry operations.
3.03 The specific objectives of this project are to: (a) improve the existing network of national highways and bridges; (b) raise maintenance to adequate levels and in the process remove the backlog of restorationworks on national highways; (c) improve general highway management, particularly execution of maintenance,and thus further strengthenthe institutional framework of MPWH and its field organization;and (d) develop further the domestic constructionindustry. This project would also assist in reviewing the transport industry in order to improve its operations,and in formula- ting a proposal for deregulationof interislandshipping. It will thus carry one step further the Bank's efforts to assist in building up the institutionsdealing with the transport sector in the Philippines.
3.04 The project is an integral part of the Government'sfive-year developmentplan for the period 1983-87 and will support the overall developmentobjectives enunciated therein. - 25 -
C. Main Features
3.05 The project would comprise:
(a) reconstructionprogram for some 435 bridges and culverts on national highways with an estimated total span length of 9,282 m;
(b) improvementof a national highway section totallingabout 83 km;
(c) restorationprogram for some 1,223 km of national highways;
(d) consulting services for: (i) detailed engineeringand constructionsupervision; (ii) preparationof future projects; and (iii) studies related to highway management, traffic safety, and the domestic constructionindustry;
(e) technical assistance to strengthenMPWH highway maintenance capabilities,to help MOTC in carrying out a review of the road transport industry in order to improve its operations,and developing a plan for the deregulationof road transport and interisland shipping,and to help CIAP in further developing the domestic constructionindustry; and
(f) training of MPWH and CIAP staff.
The links on national highways on which bridges would be reconstructed,and the national highway to be improved under the project are shown in Map 2.
D. Detailed Description
(a) ReconstructionProgram for Bridges on National Highways
3.06 The project would include the first four-year phase (1985-88)of MPWH's eight-year bridge recontructionprogram (para. 2.03). Under this program, more than 800 bridges on about 60 national highway links would be reconstructed. While the NTPP study identified the highway links in the program, individual bridges for reconstructionwere identified through a feasibility study carried out in 1982 by consultants,Lyon Associates (USA) in associationwith Technosphere(Philippines) and financed under the Fourth Highway Project. The priority ranking of links and bridges over the six-year program is based on a feasibilitystudy which used an economic return analysis satisfactoryto the Bank (para. 4.02). The first four-year phase in the project would include about 435 bridges and culverts in a total length of about 9,282 linear meters. They are located on some 40 national highway links scattered throughoutall MPWH regions (Map 2). During appraisal, agreement was reached with MPWH on the first year (1985) program which included 72 structures (total length 1,718 meters) on 14 links of the highest priority (Table 9). For 1986, 1987 and 1988 the preliminary programs already drawn up would be reviewed by MPWH and the Bank at the - 26 -
appropriate time and modified as needed. In view of the large number of national highway links and structures involved, it is important that the scope of the bridge reconstructioncomponent be kept flexible. During negotiations,the Government has agreed to submit before February 1, 1985, 1986 and 1987 for Bank review and approval, the list of bridges proposed for reconstructionin the following fiscal year and an update of their economic evaluation (para. 5.02). Only bridges with an economic rate of return (ERR) of 15% and higher would be included in the program.
3.07 The majority of bridges to be reconstructedare existing single lane timber bridges, Bailey bridges with timber decks or bridges with low load carrying capacity. These will be reconstructedto a two-lane standard in reinforcedconcrete or, for short spans on streams with low flows, with culverts, also in reinforced concrete. At a few locations with low volumes of traffic, single lane bridge superstructureswill be used; and in some locations, submersiblestructures with provision for overflow during exceptionallyheavy rainfallswill be used in order to reduce construction costs. Some of the existing bridges will be widened and strengthenedto accommodate the projected traffic for 20 years. The waterway openings of the structureswill be designed for 25 and 50-year flood for culverts and bridges, respectively. Nearly all of the proposed structures would be built at or near the existing bridge sites for which foundation conditions are quite well indicated; nevertheless,soil investigationswill be thoroughly carried out at each site. For superstructures,standard designs would be used to the greatest possible extent. The structural design will follow the Bureau of Design's "Bridge Design Guidelines"which are similar to the "Standard Specificationsfor Highway Bridges" (1977) of the American Asso- ciation of State Highway and TransportationOfficials (AASHTO). Structures designed according to these guidelineswould accommodatevehicles with gross vehicle weight of up to about 40 tons.
(b) Improvementof National Highway Baguio-Mt. Data
3.08 The project would include improvementof a national highway section between Baguio (Acop)-Mt.Data in Central Luzon, in a total length of some 83 km. This highway section was selected from a list of 11 national highways with a total length of nearly 1,000 km proposed by MPWH for financing under the project.
3.09 The Baguio (Acop)-Mt.Data section is a part of the Baguio- Bontoc-Banawehighway. The existing alignment is located in mountainous terrain with an average altitude of 1,300 m above sea level. The existing road surface is mostly gravel with some short stretches of asphalt or cement concrete pavements. The gravel surfaces are extremely poor and the asphalt sections are fast deteriorating. Pavement widths range from 4.0-6.0 m on - 27 -
the gravel and asphalt sectionswhile the concrete pavements are 6.0 m wide with no distinct shoulders throughmost of the road. The proposed improve- ments would be to Class 1 of the MPWH design standards for a national highway in mountainous terrain (Table 6) and would include a 6.0 m wide cement concrete pavement with 0.5-1.0 m shoulders. The improved highway would generally follow the existing alignment except for some minor realignments. The proposed improvementstandards are adequate to accommodatethe projected traffic for the next 20 years (para. 4.06). Cement concrete pavement has been proposed to accommodate the heavy traffic from the Mt. Data mining areas, and to reduce maintenance costs in the mountainous terrain. The existing drainage would be improved and two substandardbridges would be replaced. The base cost of the proposed improvementworks is estimated on average at US$215,000/km,excluding contingencies.
(c) RestorationProgram of National Highways
3.10 Under the Bank's ongoing highways projects, MPWH was required to carry out a nationwide road inventory, including data on conditions for planning road maintenance,restoration, and improvementprograms for national highways. This task was completed in 1979, and since then MPWH has updated national highway inventory data on an annual basis. In the second part of 1982, MPWH began periodic inspection of national highways in all regions to update data on road conditions and assess the adequacy of the level of maintenance provided. From the preliminarydata collected in 1982, MPWH estimates that, of the total 24,000 km of national highways, some 7,500 km are in good condition, some 13,0nO km of fair condition but requiring periodic maintenance shortly, and some 3,500 km in poor condition and in urgent need of restorationor improvement. The restorationprogram included in this project (Tables 10 and 11) would implement the balance of the restorationworks on national highways started as the MPWH Five-Year Maintenance Program under the Third and Fourth Highway Projects, and would complete the restorationworks needed to bring the national road network to a maintainablecondition.
3.11 Under this project, some 1,223 km of badly deterioratednational highways would be restored to a conditionwhere normal maintenancewill be adequate for their upkeep under the present traffic needs; of that total, some 183 km of national highways would be overlaid in asphalt concrete. The restorationworks would include resurfacingof carriageways(such as regra- velling, double bituminous surface treatmenton the existing bituminous or gravel pavement,and 5 cm asphalt concrete overlay on the existing bituminous or portland cement pavement) shaping of shoulders,and improve- ment to drainage; raising of road formation over short sections subject to flooding would also be included. The restorationprogram would thus correct deficienciesand eliminate maintenance trouble-spotson existing highways. - 28 -
The program would be executed over a four-year period starting in January 1985 as an immediate follow-up to the ongoing Fourth Highway Project's restoration program (para. 2.39) which should be completed by the end of 1984. As with the Fourth Highway Project's program, ROs will use a simple rating system based on economic and cost criteria to identify the sections to be restored and to determine the nature of the works. At appraisal, MPWH had identified the national highway sections to be restored in the first year (1985) of this program (Table 11), and had tentatively identified the scope of works for 1986, 1987 and 1988. During negotiations, the Government has agreed to submit before July 1, 1985, 1986 and 1987, for Bank review and approval, its proposed list of national highway sections to be restored in the following year's program (para. 5.02).
(d) Consulting Services
3.12 In addition to consulting services needed for implementation of this project (detailed engineering and construction supervision) the project would provide about 1,990 man-months for studies and preparation of future projects (Table 12). Of the total, about 95% of the consulting services would be carried out by local and about 5% of the services by foreign consultants.
(i) Detailed Engineering and Construction Supervision for the Bridge Reconstruction Program
3.13 Detailed engineering of bridges and culverts for the 1985-88 pro- grams is being carried out by ten local consulting firms, each covering design work for about 40 structures. Standard bridge designs satisfactory to the Bank and developed either during the bridge feasibility study (para. 3.06) or in the initial year of the design works, are being used to the greatest possible extent for designing the structures in the entire program. The work is coordinated by one expatriate expert from Lyon Associates, the same consulting firm which carried out the bridge reconstruction feasibility study. The same consultants, local as well as foreign, would also be responsible for construction supervision; the consultants would arrange for one supervisory team to cover a contract package or a highway link consisting of several bridge structures. Involvement of the foreign consultants would, however, be limited to 48 man-months during t'he first year of detailed engineering and in subsequent years to assist in construction supervision and contract administration. Detailed engineering of bridges and culverts for the 1989-92 programs would require an additional 1,600 man-months of local consultants' services; this is included in the project. The terms of reference (TOR) for these services have been agreed with MPWHand are in the Project File. - 29 -
(ii) ConstructionSupervision for Improvementof National Highway Baguio-Mt. Data
3.14 For the improvementof the national highway Baguio (Acop) - Mt. Data (para. 3.08), constructionsupervision would be undertaken by the same local consultantswho carried out detailed engineeringof the project road. To strengthentheir supervisionstaff, the local firm will engage expe- rienced expatriateexperts for key positions (Chief Resident Engineer and Chief Materials/SoilsEngineer) if experiencedlocal staff are not available. TOR for these services have been agreed with MPWH and are in the Project File.
(iii) FeasibilityStudies and Detailed Engineeringfor Future National Highway Projects
3.15 The project would provide about 250 man-monthsof consulting services to undertake feasibilitystudies and detailed engineering for about 500 km of national highways identified under the NTPP Study (Table 13). It is estimated that local consultantswould carry out about 200 man-monthsand foreign consultantsabout 50 man-months of these services. TOR for these services have been agreed with MPWH and are in the Project File.
(iv) Road ClassificationStudy
3.16 To assist MPWH and MLG in reviewing the classificationof the national and provincialroad network (para. 2.02), the project would provide for a road classificationstudy (18 man-months) to be carried out partly by local (12 man-months) and partly by foreign consultants (6 man-months). TOR have been agreed with the Governmentand are in the Project File.
(v) Traffic Safety Study
3.17 In recognitionof the pressing problem of traffic safety on Philippine roads (para. 2.09), the project would include a traffic safety study (50 man-months) to be carried out mainly by foreign consultants. The study is to review the adequacy of laws and regulationsgoverning traffic safety, accident reporting procedures,Highway Police activities,and the interlinkagesof highway design and safety, and to recommend improvements. TOR have been agreed with the Government and are in the Project File.
(vi) ConstructionIndustry Studies
3.18 To assist CIAP in further developing the domestic construction industry (para. 2.32), the project would provide some 72 man-months of local consultants'services for three minor studies on regional profiles of the constructionindustry, on the needs of small and medium constructors,and on the constructionmaterials industry; their TOR have been agreed with the Governmentduring negotiations (para. 5.02). - 30 -
(e) Technical Assistance
3.19 In total, the project would provide about 242 man-months of technical assistance services (Table 12) of which about 72 man-months would be carried out by local and about 170 man-months by foreign consultants.
(i) Technical Assistance to MPWH
3.20 As continuing shortages of local staff experienced in up-to-date highway management impede its efforts to improve highway maintenance,MPWH has requested that the project include continuationof the foreign technical assistance provided in this field under the ongoing Fourth Highway Project (para. 2.36). The project would, therefore, include 72 man-months for technical assistance services to be provided by a foreign firm. A team of four expatriate advisers would assist MPWH. One Senior MaintenanceAdviser would advise BOM headquarterson planning, technical and operationalmanage- ment, control, monitoring, and cost accounting. Another MaintenanceAdviser would assist in introducingin all regions the maintenancemanagement system, previously tested in the four pilot regions, and a Road RestorationAdviser would help BOM and ROs in planning, programmingand implementingthe restorationprogram under this project. Moreover, one Computer System Specialist would assist MPWH in developing and establishinga computerized data informationsystem for the national highways inventory. TOR for these technical assistance services have been agreed with MPWH and are in the Project File.
(ii) Technical Assistance to MOTC
3.21 To help MOTC devise policies which will improve the efficiency of the road transport industry,make a start in gradually eliminatingregulations in the road and inter-islandtransport industrLes and improve railway oper- ations, the project would provide continuationof the present technical assistance services to MOTC (para. 1.11). Some 98 man-months would be provided by a foreign firm to extend the services of the present four advisers with terms expiring in 1984 and 1985 and to provide two additional advisers, one for 12 and the other for 24 months. The technical assistance team would: (i) review the road transportindustry in order to improve its efficiency, would determine the feasibilityof freight and passenger teminals throughout the country, and make proposals for necessary deregulatorymeasures; (ii) review the efficiency of interislandshipping and recommend a plan for its deregulation; (iii) develop within MOTC a management data base to provide informationrelated to commodity flows, trucking industry statistics and financial data of the industry; and (iv) provide guidance to PNR in order to improve railway operations,facilities and maintenance. - 31 -
During negotiations,it was agreed that MOTC counterpartstaff should continue to be assigned to work with advisers and that this assistancewould be phased out by about December 1986, at which time local staff would assume these functions. During negotiations,outline TOR for the MOTC technicalassistance have been agreed with MOTC and are in the Project File (para. 5.02).
(iii) Technical Assistance to CIAP
3.22 To assist the Government in its long-term objectiveof further developing the domestic constructionindustry (para 2.32), the project would provide 24 man-months of local technical assistance services to CIAP in order to continue the ongoing services financed under the Fourth Highway Project. TOR for these services have been agreed with CIAP and are in the Project File. In addition, the project would provide 48 man-months of local technical assistance for developing a constructionindustry monitoring system and expanding the CIAP management informationsystem. TOR for these services have been agreed with the Government during negotiations(para. 5.02).
(f) Training of MPWH and CIAP Staff
3.23 MPWH staff requiringadvanced training in specializedsubjects are usually sent overseas to educational institutionsor on study tours, and such a program has been quite successfulunder the Fourth Highway Project (para. 2.23) This project would provide for continuationof the MPWH overseas training programs. Altogether,30 permanentMPWH staff members would benefit from the project program. Three staff members would be sent on a one-year academic course and 27 (in five groups) would be sent on study tours of 8 to 12 weeks. The academic courses would cover highway engineeringand structural design, while the study tours would cover: (i) highway maintenance,including labor-intensivetechniques, (ii) constructionand contract management, (iii) equipment programming,utilization and maintenance,and workshop management and control, (iv) materials testing and quality control, and (v) manpower planning and development. MPWH has establishedregulations that obligate staff trained overseas to remain in their employment for at least three years after the training, and to disseminatelearning and experience gained to other staff members. - 32 -
3.24 In CIAP, short study tours have been provided for two permanent staff members under the Fourth Highway Project (para. 2.32). lJnderthis project, two staff members would undertake 8 to 12 weeks study tours covering financia'lmanagement and building research.
E. Status of Preparation
3.25 The consultantsfor the bridge reconstructionprogram completed, as part of the feasibilitystudy (para. 3.06), detailed engineeringof ten typical bridges representativeof the entire range of bridge designs to be used in the program; their detailed engineerinigwork is satisfactory. All bridge sites on the 66 highway links included in the study were surveyed and preliminary engineeringcarried out to determiLnethe most appropriatetype of structure. Further refinementsand final decisions on the choice of structureare being made during the detailed engineeringphase (para. 3.13). This phase began in January 1984, with substantialcompletion of the detailed engineering for the first year's program scheduled by May 31, 1984. During negotiations,it was ascertainedthat the work:on the detailed engineering for the first year's program has progressed sukfficientlyto enable its completion by May 31, 1984 (para. 5.02). The detailed engineeringfor each of the subsequentyears' programs would begin about one year before the scheduled start of construction. Most of the new designs would be for reconstructingexisting bridges at the same location. However, alignment improvementsof the approach embankmentswould be made at some locations for which relatively small areas of land may have to be acquired. The land acquisitionprocess is scheduled to begin in July 1984 for the first year program upon completion of the detailed engineeringand would be continued in the following years for the remainder of the program. Consideringthe long period provided for acquisition,no problems are anticipated (para. 3.45).
3.26 As regards the improvementof the national highway Baguio-Mt. Data, the feasibilitystudy and detailed engineeringfor this section have been completed and are satisfactory. Although improvementworks on this highway section will generally be on the existing alignment and mostly within the existing right-of-way,some land may have to be acquired for short realignments. MPWH started the land acquisitionprocess in late 1983. Consideringthe relativelysmall areas of land required and the long period provided for acquisition,no problems are anticipated.
3.27 Following the satisfactoryexperience gained on preparationof the minor works in the road restorationprogram undlerthe Third and Fourth Highway Projects, the relatively simple engineeringfor this program under the proposed project will continue to be prepared in MPWH regional offices. ROs have started simplifiedengineering for the 1985 restorationprogram, and its preparation should be completed by July 1984. Preparation of the 1986, 1987, and 1988 programs would follow. There are no land acquisition requirementsrelated to restorationwork. - 33 -
F. Cost Estimates
3.28 The total estimated financing required for the project, including contingency allowances and the capitalizedfront-end fee on the Bank loan, is estimated at about P 2,652.5 million or US$189.46 million. Total cost includes: (a) physical contingenciesof 10% of base costs on all items;/1 and (b) price contingenciesamounting to about 30% of base costs on all items, includingphysical contingencies(estimated for foreign costs at 3.5% for 1984, 8.0% for 1985, 9.0% for 1986, 1987 and 1988, and for local costs at 20.0% for 1984, 12.0% for 1985, 10.0% for 1986 and 7.0% for 1987 and 1988). Overall, physical and price contingenciescombined represent about 30% of the project cost. The cost estimates include approximately10% for taxes and duties. Detailed cost estimatesare given in Table 14 and are summarized below in Table 3.1.
3.29 For the bridge reconstructionprogram, the consultantsprepared preliminaryengineering of each bridge site which as a result gave type, length, and an assessment of foundation conditions for the proposed structure. Combining these data with cost estimates prepared in connection with detailed engineeringof typical structures and the ten actual bridge sites, the consultantsthen estimated constructioncosts for all bridges in the program. The unit rates used in the estimateswere establishedbased on a detailed price analysis, and the rates were compared to recent tenders for bridge and road works. The base cost per linear meter for a two-lane reinforced concrete bridge ranges from US$3,000 to US$6,000, with an average of about US$4,000. These estimatesare reasonable.
3.30 For the improvementof the national highway Baguio-Mt. Data, the design consultantsprepared cost estimates based on quantities derived from completed detailed engineering,and unit rates establishedthrough a detailed price analysis and compared to recent tender results. The estimated average base costs per kilometer, excluding contingencies,is US$215,000 which is reasonable.
3.31 For the restorationprogram, the average cost per kilometer (excluding contingencyallowances) is estimated at about US$20,000 equivalent for gravel road and at about US$60,000 equivalent for bituminous sealed road; and the average cost per kilometer of asphalt concrete overlay (excluding contingencyallowances) is estimated at about USS70,000 equivalent. In view of the experience gained under the Third and Fourth Highway Projects, these cost estimates are reasonable.
/1 Although the scopes of the programs for reconstructionof bridges and restorationof national highways are flexible, physical contingencies have been applied in order to provide for changes in contract quanti- ties and constructionmethods during implementationof the agreed programs. Table 3.1: SUMMARY OF PROJECT COSTS /a
Foreign Local Taxes Foreign Total Local Taxes Foreign Total exchange --- (Pesos million) ------(US$ million) -- (% of total)
Reconstruction program for bridges on national highways 181.7 51.9 285.9 519.5 12.97 3.72 20.42 37.11 55
Improvement of national highway Baguio-Mt. Data 87.5 25.0 137.5 250.0 6.25 1.79 9.82 17.86 55
Restoration program of national highways 337.3 86.5 441.0 864.8 24.07 6.17 31.53 61.77 51
Consulting services 99.8 10.9 47.8 158.5 7.13 0.80 3.39 11.32 30
Technical assistance 6.5 0.7 25.7 32.9 0.46 0.05 1.84 2.35 78
Training - - 6.2 6.2 - - 0-44 0.44 100
Land acquisition 20.0 - - 20.0 1.43 - - 1.43
Base Costs /a 732.8 175.0 944.1 1,851.9 52.31 12.53 67.44 132.28 51
Contingencies Physical 73.3 17.5 94.4 185.2 5.23 1.25 6.74 13.22 51 Price 293.4 73.4 244.4 611.2 20.96 5.24 17.46 43.66 40
Total Project Cost 1,099.5 265.9 1,282.9 2,648.3 78.50 19.02 91.64 189.16 48
Front-end fee on Bank loan - - 4.2 4.2 - - 0.30 0.30 100
Total Financing Required 1,099.5 265.9 1,287.1 2,652.5 78.50 19.02 91.94 189.46 49
/a May 1984 prices. - 35 -
3.32 Consultingservices (Table 12) for detailed engineeringof the MPWH bridge reconstructionprogram (1985-92)are estimated at the total cost of US$5.50 million equivalent (excludingcontingency allowances). These costs amount to about 7% of the estimated reconstructioncosts for the bridges. Consultingservices for supervisionof the reconstructionworks for the project bridges and for supervisionof the improvementworks of the national highway Baguio-Mt. Data are estimatedat the total cost of US$4.26 million. These costs are based on experience in implementingthe Third and Fourth Highway Projects and amount to about 8% of the estimated reconstruc- tion and improvementcosts for the project bridges and the highway. Consulting services for the feasibilitystudies and detailed engineeringof future highway projects will require about 250 man-months at a total estimated cost of US$0.75 million; and consulting services for studies of road classification,traffic safety, and constructionindustry will require the total 140 man-months at an estimated total cost of US$0.81 million equivalent. These costs are based on the cost of similar consultant's services under previous projects in the Philippinesand other countries.
3.33 Consulting services for technical assistance to MPWH, MOTC and CIAP will require a total of 242 man-months at an estimated cost of US$2.35 million equivalent (Table 12). These costs are based on the cost of similar technicalassistance services provided under previous projects in the Philippines and other countries. All foreign and local consultants costs include salaries, social costs, firm's overhead and profit, subsistenceand other allowances,and reimbursableitems such as local and, in case of foreign experts, internationalair travel. These costs are considered reasonable.
G. Financing
3.34 The proposed Bank loan of US$102.0 million would finance the project's foreign exchange costs, estimated at US$91.94 million (or 49% of total estimated cost) and US$10.06 million of local costs. Local cost financing is justifiedin view of the severe domestic resource constraints. The loan would thus finance 60% of the total estimated project cost without - 36 -
taxes. The loan includes US$0.3 million for the capitalizedfront-end fee on the Bank loan. Retroactive financing of US$500,000 equivalent is recommended for expenditureincurred after October 31, 1983 for the detailed engineering for the first year bridge reconstructionprogram, which was carried out by NPWH through consultants (Lyon Assoc., USA; Trans-Asia,Phil. Int. Cons., Certeza Dev. Corp., Techniks, A. Lazaro, Philnor Cons., Technosphere,F.F. Cruz, R.C. Gaite, and DCCD, all Philippines (para. 3.13). The Government would finance the remaining US$87.46 million equivalent through annual budgetary allocations to MPWH (Table 3.1).
H. Implementation
3.35 MPWH, assisted by qualified consultants,will be responsiblefor implementationof the project. MOTC will be responsiblefor execution of the transportindustry study and its technicalassistance; and CIAP will be responsiblefor execution of the constructionindustry studies, its technical assistanceand training. In view of the experiencegained in implementingthe Third and Fourth Highway Projects, the implementation capacity of MPWH and its ROs was carefullyassessed at appraisal,and the scope and size of this project has been designed accordingly.
3.36 Concerningthe reconstructionprogram for bridges on national highways, Table 9 shows the list of links and structuresagreed with MPWH at appraisal for the first year program (1985). For 1986, 1987 and 1988 programs, MPWH will submit by February 1, 1985, 1986, and 1987, for Bank review and approval, a proposed list of bridges, including an update of the economic evaluation (para. 4.02), to be reconstructedin the following year's program (para. 3.06). During appraisal, it was agreed that only bridges with an ERR of 15% and higher would be included in the program; this was confirmed during negotiations.
3.37 A similar arrangementhas been agreed with MPWH for implementation of the restorationprogram of national highways. Based on a tentativelist of restorationfor the 1985 program (Table 11) MPWH and ROs will prepare the final list of proposed projects and their cost estimates and submit it for Bank's review and approval by July 1, 1984. For 1986, 1987 and 1988 programs, NPWH will submit by July 1, 1985, 1986 and 1987, for Bank review and approval, a proposed list of national highway sections to be restored in the followingyear program (para. 3.11).
3.38 Civil works for the bridge reconstructionprogram would be carried out by contract, following internationalcompetitive bidding (ICB) for larger contract packages (value over US$2.5 million) and local competitive - 37 -
bidding (LCB) for smaller contract packages. Bridges on one road link would usually be tendered as one package, but links with few structurescould be combined into one package for tender purposes provided the links are located in the vicinity of each other. The MPWH project office handling Bank-financedprojects would be responsiblefor all administrative arrangements,assisted by consultantsfor contract administrationand supervision. Civil works for the improvementof the national highway Baguio-Mt. Data would be carried out by contract, following strict prequalificationof contractorsand ICB. The works have been divided into three contracts in the length of 25 to 32 km each. The administrative arrangementsfor implementationof the contracts would be similar to those for the bridge reconstructionprogram. Civil works for the restorationof national highways would be carried out under contract, following ICB for larger contract packages of the asphalt concrete overlay works (value over US$1.0 million) and LCB for smaller contract packages. Under BOM super- vision, ROs will be responsiblefor contract tendering,administration and supervision.
3.39 The project would be implementedover a four-year period and should be completed by December 31, 1988. Contractorswould be responsible for maintainingtheir respective works for a 12-month period after comple- tion, after which BOM would assume this responsibility. An implementation schedule is attached as Chart 3. During negotiations,the schedule was agreed and assurances obtained that the Governmentwould: (a) adhere to the agreed action program (Annex 1) (para. 5.02); (b) submit semi-annual progress reports to the Bank; (c) monitor overall implementationof the project; and (d) prepare a Completion Report within six months of the Closing Date.
I. Procurement
3.40 Civil works (totallingUS$68.33 million) for the improvementof the Baguio-Mt. Data highway and for larger contract packages of the bridge reconstructionprogram and of the asphalt concrete overlay of national highways would be procured under contracts through ICB in accordance with the Bank's Guidelines for Procurement (July 1980). Payments under constructioncontracts in the Philippinesare made exclusively in local currency, whether the project is externally financed or not. Since internationalcontractors are allowed to convert a proportion of their payments (stipulatedin the contract) into foreign exchange this regulation does not impede their participationin ICB. Key procurementinformation is summarized below in Table 3.2. - 38 -
Table 3.2: PROCUREMENTSUMMARY (US$ million)
ProcurementMethod Project element ICB LCB Other Total cost
Civil Works Reconstructionof bridges 34.00 20.88 54.88 (17.00) (10.00) (27.00)
Improvementof Baguio-Mt. Data 25.33 25.33 highway (13.00) (13.00)
Restorationof national highways 70.05 70.05 (35.00) (35.00)
Asphalt concrete overlay of 9.00 9.59 18.59 national highways (4.50) (3.98) (8.48)
Subtotal 68.33 100.52 168.85 (34.50) (48.98) (83.48)
Services
Consulting services 3.76 14.00 17.76 (3.70) (14.00) (17.70)
Training 0.52 0.52 (0.52) (0.52)
Subtotal 3.76 14.00 0.52 18.28 (3.70) (14.00) (0.52) (18.28)
Land acquisition 2.03 2.03 (nil) (nil)
TOTAL 72.09 114.52 2.55 189.16 (38.20) (62.98) (0.52) (101.70)
Notes: 1. Amounts shown for each project element include its share of physical and price contingencies.
2. Figures in parenthesesare the respectiveamounts financed by the Bank loan, including a prorated share of unallocatedfunds. - 39 -
3.41 Civil works (totallingUS$100.52 million) for smaller contract packages of the bridge reconstructionprogram and for restorationand asphalt concrete overlay of national highways would be procured under contracts (value of each package not exceedingUS$2.5 million for bridge works and US$1.0 million for restorationand overlay works) through LCB procedures satisfactoryto the Bank. During the review of each year's program (para. 3.06), agreement will be reached concerning the specific packaging of bridge reconstructioncontracts. Contractorswould be eligible to bid for one or several packages. The bidding would be arranged in stages so that unsuccessfulbidders on early contracts could bid on subsequent contracts. Internationalcontractors represented in the country will be allowed to participatein all LCB for Bank-financedprojects.
3.42 All bidding packages for civil works estimated to cost US$1.0 mil- lion equivalent or more (i.e., 50% of the total civil works financed under the project) would be subject to the Bank's prior review of procurement documentation. The bidding packages for civil works estimated to cost less than US$1.0 million equivalent (i.e., 50% of the total civil works financed under the project) would not be reviewed routinely by the Bank but MPWH would maintain copies of the bid evaluation for the Bank's inspection and send final contracts to the Bank prior to submission of the first withdrawal application.
3.43 Consultant services for detailed engineering/constructionsuper- vision, studies, and technical assistance would be obtained in accordance with the relevant Bank Guidelines (August 1981).
3.44 Contractorswill be free to choose their own constructionmethods, including the most economical use of equipment and labor, subject to their work complying with the technical specifications. It would be impractical to stipulatethat contractorsshould carry out the work largely by labor because of their and MPWH's relative inexperiencein managing labor- intensive projects,/land because it would be technicallydifficult to achieve satisfactoryquality.
3.45 The Government acquires right-of-wayby negotiation as far as possible, although it has adequate compulsorypowers if needed. As there have been cases in previous projects where delay in acquiring right-of-way has caused disruption of scheduling,confirmation was obtained during negotiationsthat the Government would take action to make available the right-of-wayon each highway section or bridge site before awarding the contract for its improvementor reconstruction,and will consult with the Bank prior to award of contracts in cases where other considerationsmake it desirable to begin work before all right-of-wayhas been acquired (para. 5.02).
/1 MPWH's staff is being trained in management of labor-intensiveconstruc- tion projects on the ongoing experimentalsections of barangay roads (para. 2.30). - 40 -
J. Disbursements
3.46 Disbursementswould be made for: (a) 50% of total expenditures for civil works; and (b) 100% of total expendituresfor consulting and tech- nical assistance services,whether expatriate or local, and for training. All expenditureswould be fully documented except expenditures:(a) under civil works contractswhose value is less than US$100,000, and (b) under consultant'sservices contractswhose value is less than US$50,000, and under training programs. Disbursementsfor these expenditureswill be made on the basis of statements of expenditure (SOE) certified by the Deputy Minister of MPWH. Supporting documentationwould be retained by MPWH and made available for review by Bank staff. MPWH's detailed audit reports of SOE for bridge reconstructionand highway restorationworks would be made available to the Bank within a reasonable time. Payments will be subject to audit by MPWH and COA. The schedule of estimated disbursements(Table 15) follows, with some modifications,the regional profile and provides for unexpected delays in implementation.
3.47 In order to facilitate implementatilonof the project, the Bank would make advance payments into a Special Account to cover the estimated Bank share of expenditures. The Special Account would be in US dollars in the Central Bank of the Philippines. The amount on deposit in the Special Account would at no time exceed US$7.0 million which is the estimated quarterly Bank share of expendituresincluding a 20% margin. Replenishment of the account by the Bank would be subject to review and approval of withdrawal application justifying expendituresfrom the account.
K. EnvironmentalAspects
3.48 The project is not expected to have any significantadverse ecological effects. Location of the civil works, bridges and road improve- ments, is largely on existing alignments, thus minimizing the requirements for additional land and disturbance to property. The improvementworks include features like drainage improvements,raising embankmentsto avoid flooding, provision of hard asphalt or concrete pavement surfaces on gravel and earth roads, constructionof wider and better shoulders,and some alignment improvements,all of which would improve the environmental conditions along the roads.
L. Role of Women
3.49 Approximatelyhalf the population to be served by the project is expected to be female. - 41 -
IV. ECONOMIC EVALUATION
A. General
4.01 The project has four principal components: (i) a reconstruction program for bridges on national highways, (ii) improvementof a high priority national highway Baguio-Mt.Data, (iii) a restorationprogram of national highways, and (iv) consulting and technical assistance services, and training. The economic evaluationfocussed on the first three components,as the benefits of many of the individual items in the last component are not quanitifiable. The cost of consultancyservices for detailed engineeringand constructionsupervision of the first three components were, however, taken into account in their evaluation.
B. ReconstructionProgram for Bridges
4.02 The bridge program involves the constructionor reconstructionof some 435 structures that have outlived their useful economic and, in many instances, technical lives. In addition to evaluating each of over 1,600 structures,the consultantswho undertook the feasibility study evaluated together all structures involved on each section of road, if failure of one structure could frustrate the better use of the whole section, to select the 435 structures included in this project. A minimum economic rate of return of 15% was used as the cut-off point.
4.03 The average daily traffic (ADT) on the 435 bridges and culverts selected under the project is over 300, with a low of 30 and a high of over 6,000. Cars and jeepneys comprise about 50% of the traffic and trucks and buses 50% on the average, but with low-trafficroads reportingmostly buses and trucks. Traffic growth is projected at under 3% p.a. for,passenger vehicles and at around 9% p.a. for trucks.
4.04 At present, vehicle decelerationand accelerationat each of the project bridges is estimated to require an additional 1/2 minute for cars to 1 minute for trucks, with added running costs of P 0.30 and P 0.80, respectivelyfor the two types of vehicles; the proposed project will eliminate this cost. Without the project, bridge closure in the event of failure or for floods is estimated to require a diversionof up to 50 km, with closure for floods lasting several days each year. By removing the low load limits on weak bridges, the project will also help improve truck load factors and thus result in a minimum 5% reduction in the number of truck trips needed to carry freight and a correspondingreduction in trucking - 42 -
costs. (Although trucks are generally overloaded on the main highways, overloading is not so common on secondary roads and especially on bridges with weight restrictionsfor safety reasons.)
4.05 For a typical 25 m bridge with an economic cost of about F 1.1 million (US$0.08million) and ADT of 300, the economic return is estimated at over 20%. For a typical link on which this is one of three bridges to be reconstructedunder the project, ERR is over 25%. As some 70 structures are included in the 1985 program, detailed cost/benefitstreams have not been shown. For the bridge program as a whole, the ERR is estimated at 23%, with 35% for the 1985 program, 26% for the 1986 program, 20% for the 1987 program, and 17% for the 1988 program.
C. Improvementof National Highways Baguio - Mt. Data
4.06 This is the only road which links three inland provinces in north- central Luzon with the rest of Central Luzon, mainly Manila (Map 2). The road serves an important vegetable-growingarea which supplies fresh produce to the capital city and surroundings. Copper and other metallic ores are also mined in the area and the ore concentratestransported out of the area by trucks. Traffic volume on the present road (which is mostly gravel) ranges from 2,740 vpd near Baguio to 395 near Mt. Data, with the number of heavy vehicles (trucks and buses) declining from 300 near Baguio to 150 close to Mt. Data. ADT is estimated at about 700 of which one third are heavy vehicles. Future growth is projected at 6% a year in the first few years, declining to under 5% later on, in line with past experience. A somewhat higher growth is forecast for cars, reflecting the faster growth of passenger traffic as a whole as per capita incomes improve.
4.07 The principal benefits of the project would be savings in vehicle operating costs and in road maintenance costs. Vehicle operating cost savings are estimatedat P 0.90 per km for cars, P 0.80 for jeepneys, E 2.70 for buses and P 2.80 for trucks, after taking into account the higher operating costs caused by the terrain and geometry of both the old and the new road (Table 16). The total of such savings are estimated at P 54.0 million (US$3.86million) (in October 1983 values) in the first year after project completion and would increase wijthtraffic growth. Maintenance cost savings are estimated at P 7,000 (US$500) per km per year, or P 0.60 million (US$ 0.04 million) per year. Together these savings are estimated to yield an ERR of 30% on the proposed investment;the cost/benefitstreams are shown in Table 18. - 43 -
D. RestorationProgram
4.08 The proposed road restorationprogram will cover 1,223 km of badly deterioratednational highways. Based on experience it is assumed that road restorationwith asphalt overlay will improve the road condition from fair to good, and without asphalt overlay from very poor to fair. The Planning Service of MPWH undertook an evaluation of the roads included in this program on the basis of vehicle operating cost savings and identified 338 km of roads for regravelling,702 km of roads for bituminous sealing, and 183 km for asphalt concrete overlay.
4.09 As a result of the project, vehicle operating costs are expected to decline by 26% to 35% in the case of gravel roads, by 15% to 19% for bituminous sealed roads and by 17% to 22% for asphalt concrete roads, with around 300 vehicles per day on gravel roads and up to around 10,000 vehicles per day on roads to be overlaid with asphalt concrete. Heavy vehicles constitute about 35% of the traffic. For all categories of roads, traffic is expected to grow about 6% p.a. Benefits in the opening year after completion of restorationworks are estimated at P 100,000 (US$7,100)per km for upgraded gravel and bituminous roads and P 1.25 million (US$0.09 million) for asphalt concrete overlaid roads. As some 20 restorationprojects are included in the 1985 program, detailed cost/benefit streams have not been shown. With the projected growth in traffic the above benefits are expected to yield ERRs of 32% on gravel and bituminous roads and over 100% on asphalt concrete overlaid roads included in the project.
E. Economic Return on Whole Project
4.10 The weighted ERR on the project as a whole is estimated at over 40%. This is very satisfactory. For calculatingthe economic returns, the foreign exchange component of both costs and benefits were valued at P 15.4 to US$1, 10% higher than the official rate; and both costs and benefits were adjusted to October 1983 values. Taxes and fees that were in the nature of transfer payments were, where relevant,excluded from the calculations.
F. Risks
4.11 The principal project risk is that the constructioncost of the project elements would be higher than estimated. However, several factors minimize the possibilityand consequencesof such a risk. With respect to the bridge reconstructionprogram, nearly all of the new structureswill replace existing structures,soil conditionsat all sites will, nevertheless,be thoroughly investigated,and standard designs for superstructuresemployed. On the national highway section included in the project, the improvement works are relatively simple. On the highway restorationprogram, the works - 44 -
proposed are relativelysmall-scale and their costs are based on experiencein implementingprevious restorationprograms. While there may still be some small risk of cost overruns, the possibilityof cost increasesmaking the project works uneconomicare not considered to be serious.
4.12 In order to test the sensitivityof the economic returns to possible cost increases,a sensitivity test was carried out to assess the impact of a 10% increase in costs. It was found that this would reduce the return on the project only marginally compared with the best estimates. The returns were also tested to assess their sensitivityto smaller benefits caused by slower traffic growth than those assumed (althoughfrom past experience,this is unlikely). For a 10% drop in traffic, the returns would decline only marginally,and the project would still be acceptable (Table 19).
4.13 Another major risk is that improvementworks carried out under the project may not be adequately maintained after completion. Some measures for improvinghighway maintenancehave already been initiated by MPWH. This is to be further dealt with through strengtheningof MPWH maintenance capabilitiesby providing technical assistanceunder the project. Finally, there is the risk that the project's policy and institutionalobjectives (improvinghighway management,particularly maintenance; developing further the constructionindustry; deregulatingroad transport and inter-island shipping; and improving transportsector efficiency)would not be met because the consultantswould not be recruited to schedule. To reduce this risk, the project implementationschedule has been extended in order to accommodateunexpected delays of up to a year in appointingconsultants.
G. Beneficiaries
4.14 The populationsserved by the project works will be the main bene- ficiaries of the investments. Because of the de facto free market in the trucking industry and the intense competitionfor freight among truckers, reductions in truck operating costs will be reflected in reductionsin freight charges. This will also apply to a substantialextent for passenger transport by jeepneys and, to a lesser extent, by buses. Private car-owners will, of course, reap the full benefit of all savings in vehicle operating costs resultingfrom the project. The constructionactivities that the project would generate will give direct employmentto some 1,500 workers over a period of four years. Moreover, the domestic constructionindustry would benefit from the project in both work availabilityand construction experience. - 45 -
V. AGREEMENTS REACHED AND RECOMMENDATIONS
5.01 Prior to negotiationsthe Bank has received MPWH's proposal for a revised EMK highway maintenance formula (para. 2.38).
5.02 During negotiations,agreement was reached with the Government on the following:
(a) MPWH's revised EMK formula for national highway maintenance allocations,its timely implementationand its biannual review in consultationwith the Bank (para. 2.38);
(b) MPWH's submissionbefore February 1, 1985, 1986 1987 for Bank review and approval, of its proposed list of bridges to be reconstructedin the following year's program (para. 3.06);
(c) MPWH's submission before July 1, 1985, 1986, and 1987 for Bank review and approval, of its proposed lists of national highway sections to be restored in the followingyear program (para. 3.11);
(d) TOR for the constructionindustry studies (para. 3.18);
(e) TOR for the technical assistance to MOTC and CIAP (paras. 3.21 and 3.22).
(f) completion date of May 31, 1984, for the detailed engineeringfor the first year of the bridge reconstructionprogram (para. 3.25);
(g) MPWH adherence to the agreed implementationschedule and action program (para. 3.39); and
(h) MPWH's arrangementsfor timely acquisitionof land, for right-of- way for each national highway section or bridge site before awarding contracts or consult with the Bank in advance in cases where it is desired to proceed before all right-of-wayhas been acquired (para. 3.45).
5.03 Subject to the above, the project provides a suitable basis for a Bank loan of US$102.0 million equivalent to the Government of the Philippines, for a period of 20 years, including a grace period of five years. ANNEX 1 Page 1 -46 -
PHILIPPINES
FIFTH HIGHWAY PROJECT
Action Program for Project Implementation
Implementation Project item Start Complete
A. ReconstructionProgram for Bridges on National Highways
Detailed Engineering 1. Design of structures in 1985 program, includ- ing cost estimates, bid documents, and update of economic evaluation 01/15/84 05/31/84 2. Updating of list of highway links and struc- tures for 1986 program 10/01/84 01/31/85 3. Design of structures in 1986 program, :includ- ing cost estimates, bid documents,and update of economic evaluation,and submittal of pro- gram to Bank for review and agreement 06/01/84 01/31/85 4. Bank review and agreement to 1986 program 02/01/85 02/28/85 5. Repetition of Steps 2, 3 and 4 on an annual cycle for the 1987 and 1988 programs 10/01/85 01/31/87 6. Preparation of 1989-92 programs, including update of economic evaluation,and submittal to Bank for review and agreement 04/01/86 01/31/87 7. Design of structures in 1982-92 programs, including cost estimates,bid documents and update of economic evaluation 04/01/87 06/30/88
Construction (on an annual cycle, shown for 1985 program) 8. Internationaland local advertisementof prequalificationof contractorsand descrip- tion of work to be tendered 05/01/84 05/15/84
9. Receipt of completed prequalificationques- tionnaires, screening and evaluation of these, and classificationof prequalified contractors 05/15/84 06/30/84
10. Send out invitations to prequalifiedcontrac- tors to bid on 1985 constructionpackages - 07/31/84 11. Receive and open bids, bid evaluation,and award of contracts 08/01/84 10/31/84 ANNEX 1 Page 2 - 47 -
Implementation Project item Start Complete
12. Construction, including supervision by design consultants 01/01/85 12/31/85
Land Acquisition (on an annual cycle, shown for 1985 program) 13. Cadastral surveys 04/15/84 06/30/84 14. Advertisement/notification of landowners 07/01/84 07/31/84 15. Negotiations with landowners 08/01/84 10/30/84 16. Payment:to landowners/acquisition of land 11/01/84 12/01/84
B. Improvement of National Highway Baguio - Mt. Data
Construction 1. Preparation of detailed procurement notice and submission to Bank for insertion in Development Forum 04/15/84 05/15/84 2. International and local advertisement of pre- qualification of contractors and description of work 05/01/84 05/15/84
3. Receipt:of completed prequalification ques- tionnaires, prequalification of contractors, and submission to Bank for review and comment 05/15/84 06/30/84 4. Invite bids from prequalified contractors: 07/15/84 07/31/84
6. Receive and open bids, bid evaluation and submission to Bank of Government's proposal for contract award 08/01/84 11/30/84 7. Bank review and agreement for: 11/30/84 12/15/84
8. Contract award and construction 01/01/85 12/31/87
Land Acquisition 9. Cadastral surveys 04/15/84 06/30/84 10. Advertisement/notification of landowners 07/01/84 07/31/84 11. Negotiations with landowners 08/01/84 10/31/84 12. Payment:to landowners/acquisition of land 11/01/84 12/31/84
C. Restoration Program
Survey and Engineering 1. Detailed engineering of 1985 program 03/01/83 06/30/84 2. Finalization of 1985 program, and submittal to Bank for review and agreement 07/01/84 07/31/84 ANNEX 1 Page 3 - 48 -
Implementation Project item Start Complete
3. Survey of national highways, identification of highway sections for restoration, prepara- tion of 1986 program 01/01/84 02/29/84 4. Detai'led engineering of 1986 program 03/01/84 06/30/85 5. Finalization of 1986 program and submittal to Bank for review and agreement 07/01/85 07/31/85 6. Repetition of Steps 3, 4 and 5 on an annual cycle for the 1987 and 1988 programs 01/01/85 07/31/86
Construction
8. Local advertisement of tender for restoration work 08/01/84 08/31/84 9. Receive and open bids, bid evaluation and award of contracts 10/01/84 11/30/84 10. Construction of restoration works 12/01/84 12/31/85
(on annual cycle, shown for 1986 program): 11. Preparation of detailed procurement notice and submission to Bank for insertion in Deve:Lopment Forum for asphalt concrete overlay work 04/15/85 05/15/85 12. International and local advertisement of prequialification of contractors and descrip- tion of asphalt concrete overlay to be tendered 05/01/85 05/15/85 13. Loca:L advertisement of tender for restoration work 08/01/85 08/31/85 14. Receive and open bids, bid evaluation and award of contracts 10/01/85 11/30/85 15. Consl:ruction of restoration and asphalt concrete overlay works 12/01/85 12/31/86
D. Consulting Services for Studies /a
1. Highwiay feasibility studies and detai:Led engineering for future projects 07/01/85 06/30/86 2. Road classification study 01/01/85 12/31/85 3. Traffic safety study 01/01/85 12/31/85 4. Construction industry studies 07/01/85 12/31/86 ANNEX 1 Page 4 - 49 -
Implementation Project item Start Complete
E. Technical Assistance /a
1. To MPWH 01/01/85 12/31/86 2. To MOTC 01/01/85 12/31/86 3. To CIAP 01/01/85 12/31/85
F. Advanced Technical Training for MPWH and CIAP Staff
1. Finalizationof program, and practical arrangementsfor university courses and study tours overseas 06/01/84 08/31/84 2. Screening and selection of candidates 06/01/84 08/31/84 3. Implementationof training courses and study tours 01/01/85 06/30/86
/a Appointmentof consultantsis preceded by standard series of steps as follows:
Days
1. Invite and receive proposals 45 2. Evaluate proposals 20 3. Obtain approval of MPWH and Bank concurrence 30 4. Invite and negotiate with consultants 15 5. Prepare initialed draft contract 15 6. Obtain approval of Government agencies and Bank concurrence to draft final contract 30 7. Sign contract and issue notice to proceed 15 8. Consultants"mobilization 45
Total 215
May 1984 -50 - ANNEX 2
PHILIPPINES
FIFTH HIGHWAY PROJECT
Ministry of Public Works and Highways - OrganizationalSet-up
1. In the NPWH field organization,each RO comprises seven divisions (including planning/design,construction, maintenance, materials/quality control, and three administrativedivisions) and a legal section (Chart 2). Attached to the office of the Regional Director are regional equipmentdepots and materials/qualitycontrol laboratories. On average, RO has seven subor- dinate DOs and four COs. Regional staff range from 600 to 950, of whom around 190 are attached to RO and the rest to equipment depots and shops. In one RO there are 70-75 senior technical positions composed of civil, mechanical and electrical engineers, architects and economists. The administrativedivisions and the legal section are supported by about 120-125 personnel. An organizationalscheme of RO is shown in Chart 2.
2. As now structured,MPWH has at least one DO for each of the 73 provinces; however, some provinces have as many as three DOs because of their size and location. DOs are classified into tlhreecategories according to the length of national highways supervised: (i) First Class, over 300 km; (ii) Second Class, 150 km to 300 km; (iii) Third Class, less than 150 km. Each DO is headgd by a District Engineer (by position a Chief Civil Engineer),with an Assistant District Engineer. A typical DO has four engineering sections,an administrationunit and a finance unit. The engineeringsections each headed by a Section Chief (Civil Engineer) include: (i) planning and design; (ii) construction; (iii) maintenance;and (iv) building code. A first class DO has a total force of about 90 personnel made up of 50 technical and 40 administrativepositions.
3. In addition,MPWH has a pool of 25 P'rojectManagement Offices (PMOs) which have been establishedto oversee special, usually externally assisted, projects, includingall types of public works projects. Occasionally,PMO may have a specially organized group in RO to carry out specific tasks in the regions. The PMO establishedfor the Bank-assistedhighway projects is headed by a Director, with a Deputy, supportedby three Project Engineers each of whom is responsible for one Bank-assistedProject. This PMO has about 30 technical and 30 administrativestaff. In general, the PMO system is satis- factory. As PMOs offer salaries slightly higher than the main MPWH organiza- tion, they attract:experienced technical staff. -51 - ANNEX 3 Page 1
PHILIPPINES
FIFTH HIGHWAY PROJECT
Government Budget Process
1. The overall policy framework for the national budget is set by the interministerialDevelopment Budget CoordinatingCommittee (DBCC) which prepares overall budget levels on the basis of revenue forecasts from the Ministry of Finance and domestic credit and balance of payments targets prepared by the Central Bank. The budget process commences about a year and a half prior to the beginning of the budget year. At that time, MOB sets the budget guidelines for the fiscal year under consideration. From about October to about January, the individual ministries and agencies prepare a first draft of their budget, for the next two years. This first draft is prepared from "the bottom up," that is, the lowest budgetaryunits within an agency prepare detailed lists of proposed projects, expendituresand expected revenues. These data are then reviewed and consolidatedwithin the agency during February and early March. As a result, the initial budget requests may get rearranged or scaled down to what the ministry considers realistic levels. This budget then is submitted to MOB before March 15. Concurrently, the various agencies and corporationsimplementing projects in the NEDA InfrastructureProgram must also submit their investment plans for the next five years to NEDA. The infrastructureprogram comprises the capital investmentsof major government corporationsand capital outlays implementedby MPWH and MOTC. NEDA staff then consolidate the infrastructureinvestment plans into an expenditureprogram in line with overall national development priorities. From late March on, MOB holds budget hearings to review both the technical feasibilityof budget requests and to develop detailed priorities for expenditure,which may lead to further scaling down or rearrangingof the budgets proposals. At the end of this process, MOB produces a program of expenditure for national government agencies and estimates of equity contributionto government corporations that is within the aggregate targets set by DBCC. This final version of the budget is sent to the National Assembly (Interim Parliament till 1984) as the President'sBudget Message. There are two appropriationsActs: the General AppropriationActs and the other is in the Public Works Acts. The General AppropriationActs includes the national government'scurrent operating expenditures,noninfrastructure capital outlays and equity contributionsto government corporations. The Public Works Act legislates appropriationsfor infrastructureprojects that extend over several years. Between October to December, NEDA requests the various infrastructure agencies, includingMPWH to submit their program based on the cash ceiling set by MOB. These Annual InfrastructurePrograms of the different agencies, - 52 - ANNEX 3 Page 2 consolidatedby NEDA, are submitted to the Cabinet's Committee of Infrastructurefor review; after approval by the committee, they are submitted through the Executive Committee to the President for final approval.
2. Budget execution rests on a system that first controls the amount of expendituresobligated for a specific purpose, and then controls the actual timing in the release of funds. First, the Advise of Allotment (AA) is issued by MOB and specifies the ceiling on obligationsthe agencies can enter into. For infrastructureprojects, these AA's cover the whole project constructionperiod broken down by years in accordance with the project program. The allotment issued for one year is only valid for that year and any unexpended balance will have to be programmed the succeedingyear. As soon as AA's are received, the ministries are allowed to enter into contracts up to the total amount indicated in AA. Second, the Cash DisbursementCeiling (CDC) is used by the Treasury to control the actual timing in the release of funds. CDCs are issued on a quarterly basis and for specific projects. To allow for some flexibility,the validity of the first three quarters' CDCs is extended up to the end of the calendar year and the fourth quarterly CDC's validity is extended up to the end of the first quarter of the following year. The maximum amount of CDC's for a project would normally equal the sum of AA's. In case of a shortfall in CDC of one project, the ministry is allowed to realign CDC's every quarter in order to adjust them in line with the performance of the projects and provided this does not result in an increase in CDC for the Ministry. Request for AA's and CDC's have to be submitted to OBM at least by the middle of December prior to the budget year. The CDC stringencyhas had occasional detrimentaleffects on project implementationas project expendituresare difficult to estimate that far in advance. - 53 - ANNEX 4 Page 1
PHILIPPINES
FIFTH HIGHWAY PROJECT
Project--relatedDocuments and Data Available in the Project File
A. General Reports and Studies
I. Studies and Reports
A-1 National TransportationPlanning Project, Renardet-Sauti(Italy) and Hoff & Overgaard (Denmark),June 1982.
A-2 Rural Roads DevelopmentProgram II, Norconsult (Norway),Renardet (Italy), Philnor (Philippines)and Hoff & Overgaard (Denmark),May 1982.
A-3 Bridge Feasibility Study, Lyon Associates (USA) and Technosphere (Philippines),March 1983.
A-4 National ConstructionIndustry Study, Redecon (Australia)and DCCD (Philippines),November 1981
II. Detailed EngineeringReports
A-5 Baquio-Bontoc-BanaweRoad Project Executive Summary. Angel Lazaro & Associates, Inc., March 1983.
III. Government Reports
A-6 Improvementof National Roads Component,MPWH, March 1983.
A-7 Productivityof Heavy Equipment Repair and Maintenance,BOE, March 1983.
A-8 Planning, constructionand Maintenanceof Philippine Roads, MPWH, March 1983.
A-9 Land AcquisitionProgram for Improvementof National Highways,MPWH, March 1983.
A-10 MPWH: Five-Year FinancialPlan, 1983-1987,March 1983.
A-11 InspectionReport on Proposed Overlay Projects on National Highways, MPWH, R. JorgensenAsso./TAMS, October 1982. - 54 - ANNEX 4 Page 2
A-12 Annual Report. Manpower Development. CY1982. MPWH, March 1983.
A-13 CY1983. Training Calendar. MPWH, January 1983.
A-14 Proposed Training Program. CY1983. MPWHRegional Office No. IV-A. November 1982.
A-15 Training Project Proposal. Fifth IBRD Highway Project. MPWH, MDS, March 1983.
A-16 Proposed Fifth IBRD Highway Project. Economic Re-evaluation,MPWH PMO -- Feasibility Studies, February 1983.
A-17 Justificationof National Road RestorationProgram, 1985-87, MPWH, March 1983.
B. Selected Working Papers
B-1 Parameters for Price ContingencyCalculations
B-2 Cash Flow Analysis and ContingencyCalculations for Project Components
B-3 Detailed Cost Estimates, including computer program for calculation of the cost Table
B-4 Detailed schedule of disbursementsand aegraph showing cumulative disbursementsfor the project and regional sector profile
B-S Economic Rate of Return and SensitivityAnalysis Calculations
B-6 Terms of Reference for Consultingand Technical Assistance Services
B-7 Miscellaneousworking papers Table 1
-55 -
PHILIPPINES
FIFTH HIGHWAY PROJECT
Government Investments in Transport Sector Infrastructure (in million pesos, 1980 prices)
Total Total 1983-87 1977 1978 1979 1980 1981 1977-81 (planned)
Highways & roads 2,353(86) 2,128(81) 3,133(79) 3,358(87) 2,780(78) 13,752(82) 28,664(71)
Airports & air navi- gation 153 (5) 224 (8) 183 (5) 191 (5) 174 (5) 925 (6) 3,000 (6)
Railways 104 (4) 122 (5) 312 (8) 105 (3) 100 (3) 743 (4) 2,267 (7)
Port works 129 (5) 160 (6) 335 (8) 207 (5) 514(14) 1,345 (8) 6,241(16)
Total 2,739 2,634 3,963 3,861 3,568 16,765 40,172
Note: Figures in parentheses represent percentages.
Sources: NTPP and NEDA.
April 1984 - 56 -
Table 2
PHILIPPINES
FIFTH HIGHWAY PROJECT
Public Road Network
1982
Surface Classification Concrete Asphilt Gravel Earth Total
National Highways Expressway 122 - - - 122 Other 5,323 4,970 12,674 868 23,835
Subtotal 5,445 4,970 12,674 868 23,957
Provincial Roads 690 2,666 20,074 6,524 29,954 City & Municipal Roads 1,936 3,4Ci5 6,881 3,416 15,638
Subtotal 2,626 6,071 26,955 9,940 45,592
Barangay Roads 558 857 42,290 41,559 85,264
Total 8,629 11,898 81,919 52,367 154,813
1975-82
City & National Provincial municipal Barangay Year highways roads roads roads Total
1982 23,957 29,954 15,638 85,264 154,813 1981 23,763 29,755 15,136 81,209 149,863 1980 23,674 30,034 14,0151 81,734 149,503 1979 22,912 28,997 13,449 87,465 152,823 1978 22,305 28,224 12,530 56,519 119,578 1977 21,852 29,189 11,954 52,886 115,881 1976 21,255 28,872 13,793 51,842 115,762 1975 21,260 28,431 10,7]L9 32,086 92,496
Source: MPWH.
April 1984 - 57 -
Table 3
PHILIPPINES
FIFTH HIGHWAY PROJECT
Vehicle Fleet by Type, 1970-80 /a
Jeepneys Year Cars /b /c Buses Trucks EMV /d Total
1970 268,260 43,262 13,506 152,664 30,530 488,322 1971 276,547 43,739 13,018 140,850 32,184 506,338 1972 301,992 44,940 15,870 152,413 42,593 557,808 1973 318,022 57,729 17,532 175,582 50,328 614,392 1974 371,334 59,268 19,199 204,791 54,569 709,581 197.5 388,890 56,901 18,325 207,758 58,917 730,791 1976 391,800 59,183 18,721 223,143 59,274 752,121 1977 433,837 69,008 19,485 246,060 66,974 835,364 1978 433,527 74,336 18,716 240,015 69,775 836,369 1979 455,479 64,147 15,499 289,591 74,951 899,667 1980 471,355 81,228 18,016 292,809 78,610 942,018
Average Annual Change (%) 1970-72 6.1 1.9 8.4 -0.08 18.1 6.9 1972-74 10.9 14.8 10.0 15.9 13.2 12.8 1974-76 2.7 -0.07 -1.3 4.4 4.2 3.0 1976/77 10.7 16.6 4.1 10.3 13.0 11.1 1977/78 -0.1 7.7 -4.1 -2.5 4.2 0.1 1978/79 5.1 -15.9 -20.8 20.7 7.4 7.6 1979/80 3.5 26.6 16.2 1.1 4.9 4.7
Changing Composition (x) 1976 51 8 2 31 8 100 1977 52 8 2 30 8 100 1978 52 9 2 29 8 100 1979 51 7 2 32 8 100 1980 50 9 2 31 8 100
/a Excludes trailers with no power units. lb Includes jeeps (noncommercial). /c Jeepneys and jeeps converted for passenger transport. /d Equivalent motor vehicles (4 wheelers) for motorcycles (3 motorcycles 1 EMV).
Sources: MOTC and MPWH.
April 1984 PHILIPPINES
FIFTH HIGHfWAY PROJECT
Road User Revenues and Expenditures: 1970-81 (In -P million)
1981 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 lb
Revenues Fuel taxes 189 198 208 186 467 805 1,172 1,512 1,904 2,280 2,673 4,499 Motor vehicle fees 97 102 110 99 145 156 259 242 254 265 337 649
Total 286 300 318 285 612 965 1,431 1,754 1,258 2,545 3,010 5,148
Road Expenditures /a Maintenance 104 122 156 216 270 533 796 875 894 872 1,138 1,164 New conistruction 414 231 354 531 610 1,440 2,880 1,618 1,586 2,664 3,312 2,977 Administration 55 53 70 05 179 284 234 239 285 305 309 309
Total 573 405 580 852 1,059 2,157 3,910 2,732 2,765 3,841 4,759 4,450
/a Covering the entire public road network. 7-b 1982 data being processed. Source: MPWH.
April 1984 Table 5 - 59 -
PHILIPPINES
FIFTH HIGHWAY PROJECT
Motor Vehicle Fuel Consumption, 1970-81
Gasoline Diesel fuel
Million Liters 1970 2,280 1,919 1971 2,481 1,721 1972 2,710 1,902 1973 2,839 2,320 1974 2,570 2,181 1975 2,294 1,994 1976 2,335 2,201 1977 2,313 2,330 1978 2,284 2,369 1979 2,343 2,641 1980 1,807 2,768 1981 1,420 2,733
Average Annual Change (%) 1970-73 7.6 -0.3 1973-75 -11.1 -7.8 1975/76 1.8 9.4 1976/77 -1.0 5.8 1977/78 -1.3 1.7 1978/79 2.6 11.0 1979/80 -29.7 4.8 1980/81 -27.3 -1.3
Source: Board of Energy Utilization, Philippines.
April 1984 -60- Table 6
PHILIPPINES
FIFTH HIGHWAY PROJECT
Design Standards for National Highways
Class Minor 1 /a 2 /b 3 /c 4 /d roads /a Average Daily Traffic 200 200-400 400-1,000 1,000-2,000 > 2,000 Mini- Desir- Mini- Desir- Mini- Desir- mum able mum able mum able
Design Speed (kph) Flat topography 60 70 70 90 80 95 90 100 Rolling topography 40 50 60 80 60 80 70 90 Mountainous topography 30 40 40 30 50 60 60 70 Radius (m) Flat topography 120 160 160 280 220 320 280 350 Rolling topography 55 85 120 220 120 220 160 280 Mountainous topography 30 50 50 80 80 120 180 160 Grade (x) Flat topography 6.0 6.0 3.0 5.0 3.0 4.0 3.0 4.0 Rolling topography 8.0 7.0 5.0 6.0 5.0 5.0 4.0 5.0 Mountainous topography 10.0-12.0 9.0 6.0 8.0 6.0 7.0 5.0 7.0
Pavement width (m) 4.0 5.5-6.0 -*-- 6.1 -- --- 6.7 -- 6.7 7.3 Shoulder width (m) 0.5 1.0 1.5 2.0 2.5 3.0 --- 3.0 --- Right-of-way width (m) 20 30 --- 30 -- 30 30 --- 60 --- Superelevation (m/m) ------0.10 (max.) ------…-- Nonpassing Sight Distance (m) Flat topography 70 90 90 135 115 150 135 160 Rolling topography 40 60 70 115 70 115 Q0 135 Mountainous topography 40 40 40 60 60 70 70 qO Passing Sight Distance (m) Flat topography 420 490 490 615 560 645 615 675 Rolling topography 270 350 420 560 420 560 490 615 Mountainous topography 190 270 270 350 350 420 420 490
/a Gravel, crushed gravel or crushed stone; bituminous surface treatment; one bituminous macadam pavement. /b Bituminous macadam pavement; or bituminous concrete surface course. T7 Bituminous concrete surface course. 7T Bituminous concrete surface course; or portland cement concrete pavement.
Source: MPWH.
April 1984 PHILIPPINES
FIFTH HIGHWAY PROJECT
Expenditureson Highway Maintenance by Road System, 1972-81 (P miillion)
System 1972 1973 1974 1975 1976/a 1977 1978 1979 1980 1981
Routine & Periodic Maintenance National highways 94.7 72.1 150.5 263.6 354.1 356.2 397.3 397.5 443.2 459.2 Provincial/city roads 39.5 34.8 42.4 100.6 182.5 143.4 180.2 168.1 175.7 183.5 Municipal roads 21.4 23.9 16.2 66.0 {158.8 25.5 35.8 31.1 34.9 36.2 1 Barangay roads - - - - { 114.5 142.5 185.9 370.7 378.4 Subtotal 155.6 130.8 209.1 430.2 695.5 639.4 755.8 782.6 1,024.5 1,057.3 1 Special Maintenance (Restoration) National highways - - 7.0 37.3 74.7 40.0 79.9 80.6 113.0 106.7 Provincial/city roads - - 25.7 6.5 Municipal roads - - 3.1 16.0 25.8 29.4 12.5 1.5
Barangay roads - - 19.9 0.6 Subtotal - - 10.1 53.3 100.5 143.9 138.0 89.2 113.0 106.7 Emergency Repairs Calamity fund - 85.3 50.7 50.0 - 91.5 - 21.0 0.2 - Total 155.6 216.1 269.9 533.5 795.9 874.9 893.8 871.8 1,137.7 1,164.0
/a Expendituresfrom July 1, 1975 to December 31, 1976. X Source: MPWH. April 1984. Table 8 - 62 -
PHILIPPINES
FIFTH HIGHWAY PROJECT
MPWH: Medium Term Financial Plan 1985-89 (Current prices, P million)
Financial plan (calendar years) Approved Total budget (1984- Expenditures 1984 1985 1986 1987 1988 1989 89)
Capital Outlays
MPWH Total 4,293 4,100 4,300 4,500 4,750 5,000 26,943
Of Which Highways & Roads 2,680 2,504 2,740 2,894 3,011 3,100 16,929
Of Which New Highway & Road Projects to Start in 1984-89 Period 195 489 7;91 1,004 1,024 1,050 4,553
Fifth Highway Project 10 300 600 800 800 120 2,630 Other projects (ADB, etc) 185 189 191 204 224 930 1,923
Road Maintenance Outlays
Highways & Roads 1,049 1,231 1,377 1,565 1,776 1,860 8,858
National highways 435 520 550 600 650 675 3,430 Provincial/city roads 185 203 226 252 281 300 1,447 Municipal roads 42 48 55 64 74 85 368 Barangay roads 387 460 546 649 771 800 3,613
Source: MPWH and MOB
April 1984 - 63 -
Table 9
PHILIPPINES
FIFTH HIGHWAY PROJECT
Reconstruction Program for Bridges on National Highways The 1985 Program
Number of proposed structures Estimated Link Bridges Cul- Length cost /b Region No. From To /a verts (lin m) (US$ mln)
I 4 Bacnotan Bangar 2 1 160 0.600
II 1 Tabuc Enrile 2 41 0.136
III 1 Dinalupihan Limay - 7 - 99 0.451 2 Rosales Baloc -
IV 4 Famy Infanta 4 1 137 0.679
V 1 Masbate Placer 9 1 162 0.745
VI 7 Escalante Vallehermosa 3 - 147 0.336 Fabrica
VII 2 Tagbilaran Trinidad 5 2 118 0.401
VIII 2 Jaro Maorga 3 3 138 0.427
IX 3 Pagadian City Zamboanga City 7 - 200 0.278
X 6 Maramag Davao 4 2 199 0.692 7 Oroqueta Dipolog
XI 2 Carmen Kapalong 7 2 188 0.773
XII 1 Kabacon Kibawe 2 5 129 0.192
Total 14 55 17 1,718 5.710
/a Span length of more than 5 m. /b May 1984 prices.
Source: MPWH.
April 1984 Table 10
PHILIPPINES
FIFTH HIGHWAY PROJECT
RestorationProgram on National Highways: Summary Table
Restorationprogram Bituminous Asphalt concrete Regravelling sealing Total overlay program Total program Length Cost Length Cost Length Cost Length Cost Length Cost (km) (US$ mln) (km) (US$ mln) (km) (US$ mln) (km) (US$ min) (km) (US$ mln)
1985 87 1.55 137 6.45 224 8.00 - - 224 8.00
1986 105 2.06 214 11.94 319 14.00 74 4.79 393 18.79
1987 98 2.10 213 11.90 311 14.00 69 4.93 380 18.93
1988 48 1.13 138 11.78 186 12.91 40 3.14 226 16.05
Total 338 6.84 702 42.07 )040 48.91 183 12.86 1,223 61.77
Notes: (1) Prices as of May 1984, excludingcontingencies.
(2) Average per km cost for restorationof gravel road US$20,000,bituminous sealed road US$60,000, and for 5 cm asphalt concrete overlay US$70,000.
Sources: MPWH.
April 1984 - 65 -
Table 11
PHILIPPINES
FIFTH HIGHWAY PROJECT
Restoration Program on National Highways: The 1985 Program
Estimated Length Type of cost /a Name of projects and limits Location ('000 km) work Work involved (us1$mIa)
Regign I CRMnSta. Maria-Tayug Rd. Pangasinan II 10.00 Bituminous Resurfacing 0.50 (km 172.000-182.000) Carmen-Alcala-Bayambang Rd. Pangasinan II 8.00 Bituminous Bit. surface treatment 0.34 (km 172.190-180.190)
Subtotal 18.00 0.84
Region II Nueva Vizcaya-Mt. Prov. Ifugao 20.00 Gravel Regravelling 0.36 (km 340.000-360.000)
Region III Nueva Ecija-Quezon Road Nueva Ecija 10.00 Bituminous Bit. surface treatment 0.43 (km 144.869-154.869)
Region IV-A Batangas-Quezon Road Batangas 10.00 Bituminous Resurfacing 0.56 (km 127.130-137.130)
Region IV-B loogpog-Sta. Cruz Road Marinduque 8.00 Gravel Regravelling 0.14 (km 13.000-21.000) San Agustin-Calatrava- Romblon 15.00 Gravel Regravelling 0.27 San Andres Rd. (km 3.200-18.200)
Subtotal 23.00 0.41
Region V Jb13n.-!agallanes Road Sorsogon 8.80 Bituminous Resurfacing 0.43 (km 612.090-615.090) (km 618.590-624.390)
Region VI iatuan New Lucena- Iloilo I 12.94 Bituminous Bit. surface treatment 0.55 Bangs-Bante Rd. (km 34.640-47.580) Guimba-Igdaros Rd. Iloilo I 8.00 Bituminous Bit. surface treatment 0.21 (km 31.000-39.000) Cara-San Dionesio Rd. Iloilo II 6.00 Gravel Regravelling 0.11 (km 106.000-112.000) Capiz East Road Capiz 8.00 Bituminous Bit. surface treatment 0.34 (km 135.689-143.689)
Subtotal 34.94 1.21
Region VII Dumaguete North Road Negros Oriental 4.78 Bituminous Resurfacing 0.20 (km 7-9, 17-20) Cebu South Road Cebu II 21.30 Bituminous Resurfacing 1.28 (km 18.00-39.00)
Subtotal 26.08 1.48
Rsegion VIII San Prancisco-Pintuyan- South Leyte 18.00 Gravel Regravelling 0.32 San Ricardo Road (km 315.400-333.400)
Region IX Pasaain-Zamboanga City Rd. Zamboanga del 11.73 Bituminous Resurfacing 0.59 (km 232.000-236.000) Sur (km 247.000-249.000) (km 308.174-312.306) (km 330.963-332.563) Dipolog-Oroquieta Road Zamboanga del 3.45 Bituminous Bit. surface treatment 0.15 (km 299.270-302.720 Norte
Subtotal 15.18 0.74 Region X t. nolo Fortich-Libona- Bukidnon 10.00 Bituminous Bit. surface treatment 0.44 Cagayan de Oro City (km 203.500-213.500) Region XI SouthlCotabato-Davao del South Cotabato 10.00 Bituminous Bit. surface treatment 0.43 Sur Coastal Road (km 387.000-397.000)
Recion XII ( 2t.a1-Bukidnon Road North Cotabato 20.00 Gravel Regravelling 0.35 (km 223.000-260.917)
GRANDTOTAL 224.00 8.00
la May 1984 prices.
Source: MPWH.
April 1984 - 66 -
Table 12
PHILIPPINES
FIFTH HIGHWAY PROJECT
C Services
Consultants Estimated Item Local Foreign Total cost /a - (Est. man-months) - (US$ mln)
Consulting Services Implementationof This Project Detailed engineeringfor the 1985-88 bridge reconstruction 1,588 12 1,600 2.50 Constructionsupervision for the 1985-88 bridge reconstructionprogram 2,488 48 2,500 2.90 Constructionsupervision for improvement of the national highway Baguio- Mt. Data 528 36 600 1.36
Subtotal 4,604 96 42L70 6.76
Studies & Preparationfor Future Projects Detailed engineeringfor the 1989-92 bridge reconstructionprogram 1,600 - 1,600 3.00 Feasibilitystudies and detailed engi- neering for national highways 200 50 250 0.75 Road classificationstudy 12 6 18 0.10 Traffic safety study - 50 50 0.55 Constructionindustry study 72 - 72 0.16
Subtotal ]1884 106 1,990 4.56
Total 6,488 202 6,690 11.32
Technical Assistance Services Technical assistance to 'MPWHfor highway maintenance - 72 72 1.00 Technical assistance to MOTC - 98 98 1.20 Technical assistance to CIAP 72 - 72 0.15
Total 72 170 242 2.35
/a May 1984 prices, excluding contigencies.
Sources: MPWH, MOTC, CIAP and Bank staff.
May 1984 - 67 - Table 13
PHILIPPINES
FIFTH HIGHWAY PROJECT
Proposed List of Future National Highway Projects
Estimated construction Length cost National highway Location (km) (US$ M) /a
Santiago-Tuguegarao Luzon 124.0 20.0
Limbog-Banga Panay 42.0 7.0
Vallehermoso-Sibucao Negros 78.0 17.0
Tagbilaran North Bohol 52.0 6.5
Tagbilaran East Bohol 63.0 7.0
Davao-Calinan-Bukidnon Mindanao 141.0 11.5
Total 500.0 69.0
/a April 1984 prices.
Source: MPWH.
April 1984 Table 14
PHLIPPINES
FIFTH HICHWAYPROJECT
Summary of Project Coat /a
Local Foreigo Total Local Foroigo Total S cost Taxes exchange cost cost Taxes exchange cost foreign Length --- (Pesos million)- -- (USS millio.) /b - enchange
Reconstruction Program for Bridges on National HiR ways 1885 program ( 12 structoreas 1,718 Iin 28.0 6.0 44.0 80.0 2.00 0.57 3.14 5.71 55 1986 program (108 structores) 2,121 lin m 42.0 12.0 66.0 120.0 2.89 0.86 4.72 8.57 55 1987 progr-a (122 structures) 2,138 lin - 42.0 12.0 66.0 120.0 2.99 0.86 4.72 8.57 55 1988 progra. (133 structures) 3,305 liI D 69.7 21.9 109.9 199.5 4.99 1.43 7.84 14.26 55
Subtotal (435 atructure.) 9.282 lin * 161.7 51.9 285.9 519.5 12.97 3.72 20.42 37.11 55
Ieprovement of National Hish, y0 lagolo (Acop) - Mt. Data Road 83 kl 87.5 25.0 137.5 250.0 6.25 1.79 9.82 17.86 55
Restoratio. Prograo of hatlomal HighwaY$ Re.toration of national highways 1985 program 224 kb 44.8 11.2 56.0 112.0 3.20 0.80 4.00 8.00 50 1986 progra 319 kb 78.4 19.6 98.0 196.0 5.60 1.40 7.00 14.00 50 1987 program 311 ku 78.4 19.6 98.0 196.0 5.60 1.40 7.00 14.00 50 1988 program 186 k. 72.2 18.1 90.4 180.7 5.16 1.29 6.46 12.91 50
Subtotal (i) 1,040 km 273.8 68.5 342.4 684.7 19.56 4.89 24.46 48.91 50
Asphalt concrete overlay of ostional highays 1986 program 74 bk 23.5 6.7 36.9 67.1 1.68 0.48 2.63 4.79 55 1987 program 69 k. 24.1 6.9 38.0 69.0 1.73 0.49 2.71 4.93 55 1988 program 40 ku 15.9 4.4 23.7 44.0 1.10 0.31 1.73 3.14 55
Subtota1 (Si) 183 k. 63.5 18.0 98.6 180.1 4.51 1.28 7.07 12.86 55
Subtotal (1 And iI) 1,223 kl 337.3 86.5 441.0 864.8 24.07 6.17 31.53 61.77 51
Consulting Services Detailed engineering for bridge rec-structioo 1985-88 programs 23.0 2.5 9.5 35.0 1.64 0.18 0.68 2.50 27 1989-92 progr-ms 27.7 3.1 11.2 42.0 1.98 0.22 0.80 3.00 27
Subtotal (i) 50.7 5.6 20.7 77.0 3.62 0.40 1.48 5.50 27
Construction 9operviaion for bridge reconstruction (1985-88 programs) 26.0 2.9 11.7 40.6 1.86 0.21 0.83 2.90 29 Co.structio. ssper"isioo for Isprovement of national highway Seguoi - Mt. Data 12.2 1.3 5.6 19.1 0.87 0.09 0.40 1.36 29
Sobto.tl (it) 38.2 4.2 17.3 59.7 2.73 0.30 1.23 4.26 29
Feaaibility studies snd detailed engineering for fotor. highway projects (250 e) 7.6 0.8 2.1 10.5 0.54 0.06 0.15 0.75 20 Seed clas.ifiation *tudy (16 m) 0.8 0.1 0.5 1.4 0.06 0.02 0.02 0.10 35 Traffic safety study (18 m) 0.7 0.1 6.9 7.7 0.05 0.01 0.49 0.55 90 Co.stroctioo i.d.stry studies (72 m) 1.8 0.1 0.3 2.2 0.13 0.01 0.02 0.16 20
Subtotal (iii) 10.9 1.1 9.8 21.8 0.78 0.10 0.68 1.56 44
Subtotal (i to iii) 99.8 10.9 47.8 158.5 7.13 0.80 3.39 11.32 30
Tchboical Asaistace Technical assistace to IYW1 (72 ee) 2.5 0.1 11.4 14.0 0.18 0.01 0.81 1.00 81 Technical aesistauce to Y.TC (98 ee) 2.4 0.4 14.0 16.8 0.17 0.03 1.00 1.20 83 Techoical easi.taoce to CIAP (48 m) 1.6 0.2 0.3 2.1 0.11 0.01 0.03 0.15 20
Subtotal (iv) 6.5 0.7 25.7 32.9 0.46 0.05 1.84 2.35 78
Traimino Training to HWWHstaff 5.9 5.9 0.42 0.42 100 Traialog to CIAP staff 0.3 0.3 0.02 0.02 100
Subtotal (v) 6.2 6.2 0.44 0.44 100
Subtotal (i to v) 106.3 11.6 -t9.7 197.6 7.59 0.85 5.67 14.11 40
I-ad Acquisition 20.0 20.0 1.43 1.43 z
Total 732.8 175.0 944.1 1.851.9 52.31 12.53 67.44 132.28 51
COntinsawie# Physical /c 73.3 17.5 94.4 185.2 5.23 1.25 6.74 13.22 51 Price /d 293.4 73.4 244.4 611.2 20.96 5.24 17.46 43.66 40
S.btotal - 366.7 90.9 338.8 796.4 26.19 6.49 24.20 56.88 4;
Totol ProJwct CoDS 1.099.5 265.9 1.2|92.9 2,648.3 78.50 19.02 91.64 189.16 48
18 Prices as of Nay 1984. AS 081.00 - Pasos 14.00. 77 Phyical contingencies of 102 on all itew. j Price iper-ses on all item, including physical co.tisgancies< (1) for foreign oepo-ent at am *stiated rate of 3.52 for 1984, 8.02 for 1985, And 9.0S for 1986, 1987 snd 1988; nd (1i1 for local compooent at An *stimates rate of 20% for 1984, 12.02 for 1985, 10.02 for 1986, 7.0S for 1987 and 1988.
Soorosa MMVR, MOTC, ClAP, coonultawto and Beakataff.
Way 1984. - 69 - Table 15
PHILIPPINES
FIFTH HIGHWAY PROJECT
Schedule of Estimated Disbursements
Fiscal Cumulative disbursements year and at end of semester semester (US$ million)
1985 First 8.0 Second 12.0
1986 First 20.0 Second 28.0
1987 First 38.0 Second 50.0
1988 First 62.0 Second 74.0
1989 First 86.0 Second 94.0
1990 First /b 102.0
/a Includes retroactivefinancing of about US$0.5 million.
/b Closing Date: December 31, 1989.
April 1984 - 70 - Table 16
PHILIPPINE'S
FIFTH HIGHWAY PROJECT
Basic Vehicle OperatLng Costs /a (on level paved road, in pesos per km)
Cars/vans Jeepneys Buses Trucks
Fuel cost 0.35 0.23 0.57 0.71
Taxes 0.04 0.05 0.10 0.20
Maintenance 0.15 0.15 0.25 0.38
Depreciation 0.18 0.14 0.29 0.22
Total 0.72 0.57 1.21 1.51
/a Economic costs.
Sources: MPWH.
April 1984 - 71 - Table 17
PHILIPPINES
FIFTH HIGHWAY PROJECT
RestorationProgram of National Highways
Vehicle Operating Costs /a (pesos per km, excluding taxes)
Gravel roads Bituminous roads Overlay Unim- Im- Unim- Im- Unimn- Im- proved proved Saving proved proved Saving proved proved Saving
Cars/vans 1.439 0.980 0.459 1.176 0.901 0.275 0.901 0.752 0.149
Jeepneys 1.320 0.881 0.439 1.057 0.804 0.253 0.804 0.673 0.131
Buses 4.044 2.699 1.345 3.239 2.307 0.932 2.307 1.799 0.508
Trucks 4.026 2.674 1.352 3.209 2.294 0.915 2.294 1.783 0.511
/a These take into account terrain conditions.
Sources: MPWR and Bank staff.
April 1984 -72 - Table 18
PHILIPPINES
FIFTH HIGHWAY PROJECT
Cost and Benefit Streams for Improvementof National Highway Baguio-Mt.Data (0000's Pesos)
Year Costs Benefits
1 187 0 2 375 0 3 564 0 4 837 300 5 0 578 6 0 613 7 0 619 8 0 688 9 0 628 10 0 768 11 0 810 12 0 855 13 0 701 4 0 950 15 0 998 16 0 1,047 17 0 1,099 18 0 1,154 19 0 1,211 20 0 1,266 21 0 1,322 22 0 1,382 23 0 1,443 24 0 754
ERR 30%
Source: MPWH and Bank staff.
April 1984 Table 19
- 73 -
PHILIPPINES
FIFTH HIGHWAY PROJECT
Economic Return SensitivityAnalysis
Best +10% -10% estimate cost traffic (2)+3) (1) (2) (3) (4)
Bridge ReconstructionProgram /a 23 20 20 18
Improvementof National Highway Baguio - Mt. Data 30 25 27 25
Highway RestorationProgram Asphalt concrete overlay 175 159 157 143 Regravellingand bituminous sealing 32 28 28 24
Total Project 43 39 39 36
Sources: MPWH and Bank staff.
April 1984 PHILIPPINES FIFTHHIGHWAY PROJECT Minhstryof Public Worksand Highways OrganizatIon Chad
D vMinistvel 3
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Fretst&Ilasti ros& | l W/hvocale | CooEdRi E| r& Mate o QIshty M-h~~ II Sstmse | DesSn l l Constu rtctlo Mce Mogeenotnt Ecegsondn Eapsoent Matea5 &r5Oio'
LlL| FtvdrouNicFtoostContro | | Ll H°°dC°ntid | | L| EaetptsnCo|tro hspector HSW Uc JO |oNHol .| S9eF t| rou9b eroHSb2 tcct 1903 PHILIPPINES FIFTHHIGHWAY PROJECT Ministry of Public Worksand Highways Regional Office Organization Chart Office of the _Regional _____ Director (_ Materials&Qai Project RegionalEquipment Control ManagementOffice Depots Laboratories PlFonning& Consructror) Mrainterx| Roniu& Adn i1nisatirzve Comnptrollership DesignDivs8 n Division Division Division W q Section l q ~~~~~Section Section Srco Section l - Section |^ 2 hchitecturcil| l 8rldges l | ~~~~~Roads& Bridges Crash DeMnpvelorr|nt ProjectOrg r Sectiorn) l 1 DworetgSection 1 Mntrn Design ~~~~~~~~~~~~~~~~Sechono|nSection Hydrr tulic Flood Control & ~~~~FloodControl & Procuremnent Record Assets & Supplies _ Design Section_ Water Supply _~~W.te Supply Sezction _ Section _ Control Section 1~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~- rPortsStructural & HartDors l || l ~~~~~~~~~~~~~~~~~~~~~Facilities& j _ esnSehn] _ ScinMateriols & Sectineonc QaualityControl _ eto MEechanial Source!-S~MP8/H~ ~ ~ ~ ~~~~~~~~~~iecto Division oagret hiso ivso _ Section InspLCorater HighwayDesign Section | Fragonrning j Section j Soufce MPWVH March 1983 world Bank-24910 - 76 - PHILIPPINES FIFTHHIGHWAY PROJECT Implementation Schedule CY 1984 1985 1986 1987 1988 ITEM ITEM ~~1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 _y 7 7_ /777 7 . __7,, 7 77, 7,'7 77J BOARDPRESENTATION LOAN EFFECTMTY BRIDGERECONSTRUCTION PROGRAM 1985 Program IF15 m _ 1986 Program TTT F o 11l - _1_1_ 1987 Program 1988 Program kF FtkT YET7 I * IMPROVEMENTOF NATIONALHIGHWAY - mm - _- - - BAGUIO- MT.DATA RESTORATIONPROGRAM 1985 Program allTTT t_I 1986Program | lii iii l Ill 1987 Program 1988 Program NINElo ll _ a CONSULTINGSERVICES Detailed Engineering for 1989 - 92 bridge reconstruction programs i Feosibility Studies & Detailed Engineering of Future Highway Projects Road Classification Study Traffic Safety Study ConstructionIndustry Studies - - r - TECHNICALASSISTANCE Technical Assistance to MPWHil Technical Assistance to MOTC - - i I - Technical Assistance to CIAP TRAINING MPWYHStaff - - - CLAP Staff Legendfor CivilWorkrs: kE111111 Detailed Engineering Period m m m Tendering & Award Perod Construction Perlod '/1/7/ / RainySeason May 1984 World Bank-24967 I OR17013 ------~ ~------~ ~~~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~~~~~~~~~~F<04<14 E~~~~~~~~~~~~~~~~~~ f:W > 40 -' ~~~ln~ C 00 s 0~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~9 4~~~~~~~~~~~~~~~~~~~~~~~g1 ~~~~~~~~~~~~~ 9#40 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~' ieaasnrsnasatasaman baa ~~~~~~FIFTHHIGHWAY PROJECT -1 lh~ ~ a Project Components flaeanabsnnttaeanca aNsntotsbra* ~~~~~~~~~~~~~~~~~~~~ tan---anFCflSsTnucnmOn FB5GAM FOP,BRIDGES tanG ANAL OUONDAH-E MINDORO 'AnAl A Y a~~~~arlat*e~~~~~~~~~~ ~FT at ,eaa-tn 5' las - - I \ MASBATErants "ran Sa4MAR 'a-~~~~~~~~~~~~~~~1 - *5g~~~~~~~~~~~~~~~~ -~~~ na , '~~~~~~~VIST~ ~ NAV~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ g51a I AI,,, A,~~~~~~~~~~~~~~~DA 0 Y se N b~~~~~~~~~~~~~~~~~~~~~:aaOdF Cne la ea 0 asa a aLone~~~~~~2 * - -- am~~~~~~~~~~~~~~