Document of The World Bank
FOR OFFICIAL USE ONLY
Public Disclosure Authorized Report No. 7303
PROJECT PERFORMANCE AUDIT REPORT
MALAYSIA Public Disclosure Authorized THIRD HIGHWAY PROJECT (LOAN 1376-MA)
June 22, 1988 Public Disclosure Authorized
Operations Evaluation Department Public Disclosure Authorized
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. LIST OF ABBREVIATIONS AND ACRONYMS
DBST - Double bituminous surface treatment EPU - Economic Planning Unit ERR - Economic Rate of Return GOM - Government of Malaysia JKR - Ministry of Public Works MAS - Malaysian Airline System MHA - Malaysian Highway Authority MR - Malayan Railway OED - Operations Evaluation Department (World Bank) PCR - Project Completion Report PPAM - Project Performance Audit Memorandum PPAR - Project Performance Audit Report PWD - Public Works Department RMS - Road Maintenance Section SPWD - Sabah Public Works Department TST - Technical Support Team UNDP - United Nations Development Programme Vpd - Vehicles per day VOC - Vehicle operating cost FOR OFICIAL USE ONLY THE WORLD BANK Washington, D.C. 20433 USA.
Office of oiector-Cetwal Operatim Evaluation
June 23, 1988
MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT
SUBJECT: Project Performance Audit Report - Malaysia Third Highway Proiect (Loan 1376-MA)
Attached, for information, is a copy of a report entitled "Project Performance Audit Report - Malaysia Third Highway Project (Loan 1376-MA)" prepared by the Operations Evaluation Department.
Yves Rovani
by Ram K. Chopra
Attachment
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 Sank authorization. FOR OFFICIAL USE ONLY PROJECT PERFORMANCE AUDIT REPORT
MALAYSIA
THIRD HIGHWAY PROJECT (LOAN 1376-MA)
TABLE OF CONTENTS Pate No.
Preface...... * .* ...... Basic Data Sheet ...... 40...... 1 Evaluation Summary ...0...... iv
PROJECT PERFORMANCE AUDIT MEMORANDUM
I. BACKGROUND...... *.o.*...... 1
Transport and the Economy...... 1 Emphasis on Road Transport...... 1 Third Highway Project ...... 0 ...... 0...... 1
II. IMPLEMENTATION ...... 2
Road Construction - 5abah...... 2 Road Maintenance Program - Sabah...... 3 Pilot Pavement Strengthening Program in West Malaysia...... 4 Studies.A.l ...... o o...... 4... *4
III. RESULTS ...... o .. 5
IV. CONCLUSIONS ...... 7
Overall Assessment ...... oo...... o...... o...... 7 The Ax1e Load Limit Issue ...*...*...... 7 Environmental Aspects ...... o...... 7 Sustainability ...... **...... o...... 7 Prequalificatiou of Contractors.....t...... t....8
Attachment 1: Comments from the Borrower...... 9
PROJECT COMPLETION REPORT
I. Project Background and Sectoral Setting ...... 13 II. Project Formulation ...... 16 III. Project Implementation ...... 18 IV. Project Cost and Bank Loan...... 25 V. Institutional Development...... 26 VI. Economic Reevaluation...... 27 VII. The Role of the Bank...... 28 VIII. Conclusions...... o...... 28
1Thit doc" ient has a restricted distribution and MAY be used by reciplents only la the performance TABLE OF CONTENTS (Cont'd)
Page No. Tables
1. Actual and Expected Project Implementation...... 29 2. Actual and Forecast Estimates of Project Cost*..... *...... 30 3. Estimated and Actual Dsbursements...... 31 4. Compliance with Major Loan Conditions...... 32 5. Actual and Forecast Traffic (1981-99)...... 34 6. Vehicle Operating Costs...... 35 7. Ex-Post and Original Rates of Return...... 36
Maps - IBRD 10050 R3 (PPA) IBRD 12223 Ri (PCR) d
PROJECT PERFORMANCE AUDIT REPORT
MALAYSIA
THIRD HIGHWAY PROJECT (LOAN 1376-MA)
PREFACE
This is a performance audit of the Third Highway Project in Malaysia, involving a Bank loan of US$35 million to the Government, with as main objective to support the Government's poverty alleviation strategy by providing improved transportation in previwusly underemphasized areas. Hence the project focus on road construction and maintenance in Sabah. The loan was approved in March 1977 and became effective in May 1977. In early 1986 the last disbursement took place, four years behind schedule, and US$4.6 million was cancelled.
The PPAR consists of the Project Performance Audit Memorandum (PPAM) prepared by the Operations Evaluation Department (OED) and the Project Completion Report (PCR) prepared by the Asia Regional Office of the Bank. The PPAM is based on the attached PCR, the Staff Appraisal and the President's Reports, secror and economic reports, special studies, the loan documents, the summary of uhe Board discussion, study of the project files and discussions with Bank staff. An OED mission visited Malaysia in March 1988 and discussed the effectiveness of the Bank's assistance with Government officials. Their kind cooperation and valuable assistance in the preparation of this report is gratefully Acknowledged.
Tha PCR provides an excellent account and a thoughtful and candid assessment of the project experience and the results achieved in particular in terms of longer term institution :)uilding. The PPAM summarizes the PCR's major findings; moreover, it supplements the PCR by providing some additional information and conclusions, and highlights, inter alia, the issue of enforcement of axle load limits of trucks, the importance of carefully screening contractors before prequalification, and the sustainability of the project.
As is customary in the preparation of audit reports, copies of the draft audit report were sent to the Borrower for comment on April 6, 1988. In response, the Federal Treasury, also on behalf of the Ministry of Public Works and the Sabah Public Works Department, has indicated that it had no comments on the report (Attachment 1). MALAYSIA
THIRD HIGHWAY PROJECT (LOAN 1876-MA)
BASIC DATA SHEET
KEY PROJECT DATA
Item Approtleal Expectation Actual or Current Estimate
Total Project Cost (US1m) 168.0 116.0 - Overrun (X) - 6.5 Loan Amount (USIm) 86.0 85.6 - Amount Disbursed - 86.4 - Amount Cancelled - 4.6 - Amount Repaid as of August 31, 1987 - 16.5 - Amount Outstanding as of August 81, 1987 - 18.9 Date Physical Components Completed 66/86/81 12/81/84 Proportion of Tim Overrun (X) - 87 Economic Rate of Return (1) 18 28 Institutional Performance Good Good
CUMULATIVE DISBURSEMENTS
FY77 FY78 FY79 FY86 FY81 FY82 FY88 FY84 FY85 FY86
Appraisal (US$ million) 2.0 18,7 28.1 82.8 84.8 85.0 Actual (USS million) - 1.8 16.9 14.6 17.7 21.8 28.1 26.8 86.6 86.4 Actual as X of Estimate 0 9.0 42.0 48.6 51.6 66.6 86.6 75.6 86.6 87.0
Date of Final Disbursement: April 9, 1986
STAFF INPUT (staffweeks)
FY74 FY75 FY76 FY77 FY78 FY79 FYPO FY81 FY82 FY88 FY84 FY85/8 TOTAL
Preparation 89.6 4.9 24.8 9.1 ------68.9 Appraisal - - 21.4 8.6 ------29.8 Negotiation - - - 18.8 ------16.8 Supervision - - - 8.5 5.2 7.0 8.6 6.2 2.4 8.9 4.6 10.7 49.8 Other - 6.1 - - - - - 9.8 - - - 6.4
TOTAL 89.6 4.9 46.8 81.9 5.2 7.0 8.5 8.2 2.7 8.9 4.5 10.7 186.8 OTHER PROJECT DATA
Original Actual or Item Plan Revisions Est. Actual
First Mention in Files 8/09/72 - - Negotiations 01/12/77 - 01/12/77 Board Approval 8/15/77 - 08/15/77 Loan Agreement Date 64/04/77 - 04/84/77 Effectiveness Date 05/64/77 - 06/04/77 Closing Date 06/86/82 08/81/84 10/28/86
Borrower Government of Malaysia Executing Agency Public Works Department (PWD) Fiscal Year of Borrower January 1 - December 31 Follow-on Project Name Sabah/Sarawak Roads - Loan Number 2291-MA - Amount (US$u) 8.2 - Loan Agreement Date 08/27/68
MISSIUN DATA
Date No. of Specializations Performance Types of Date of (Mo/Yr) persons Represented L _Ra#* Ab Trend &c Problem L Report
Identification 11/73 2 EN,EC - - - 12/27/78 Preparation 8/74 2 EN,EC - - - 08/27/74 Preappralsal 09/76 8 EN(2),EC - - - 11/08/75 Appraisal 62/76 2 EN,EC - - - 02/22/77
Supervision I 65/77 1 EN 2 2 M 07/06/77 Supervision II 11/77 4 EN 2 2 M 01/28/78 Supervision III 10/78 1 EN 2 2 M 11/29/78 Supervision IV 09/79 1 EN 2 2 M,F 12/10/79 Supervision V 11/89 1 EN 2 1 M,F 06/09/81 Supervision VI 10/82 1 EC 2 1 F,O 11/16/82 Supervision VII 04/88 2 EC,EN 2 1 F 85/15/88 Supervision VIII 62/84 2 EC,EN 2 1 F 68/068/4 Supervision IX 11/84 2 EC,EN 2 1 F 12/26/84 Completion 1 EC n/a n/a n/a - 06/15/68
COUNTRY EXCHANCE RATES
Name of Currency (Abbreviation) Malaysian Dollar (MI) Exchange Rate Appraisal Year Average 1976 US81 = M82.60 Exchange Rate Intervening Years Average 1977-84 US1 = M82.48 Exchange Rate Completion Year 1985 US81 = M82.46 Exchange Rate Average 1976-85 US1 a MS2.47
L EN=Engineer/EC=EconomIst A 1=Problem Free or Minor Problems/2=Moderate Problems/8=Major Proleme /c 1=Improving/2Statlonary/8=De*riorating /d F=Financial/MManagerial/T=Technical/P=Political/=Other - iv -
PROJECT PERFORMANCE AUDIT REPORT
MALAYSIA
THIRD HIGHWAY PROJECT (LOAN 1376-MA)
EVALUATION SUMMARY
Objectives
This project was in support of the Government's poverty alleviation strategy by providing improved transportation in previously underemphasized areas. Hence the project focus on road construction and maintenance in Sabah. This was the third Bank-assisted project for the road subsector but the first to focus primarily on East Malaysia (PPAM, paras. 2 and 3).
The project included (i) reconstruction of 146 miles of trunk roads in Sabah, (ii) a four-year road maintenance program f(ir Sabah, (iii) a pilot road maintenance and pavement strengthening program for West Malaysia, and (iv) a transport/railway study plus an urban study for Kota Kinabalu. Total project costs, estimated at US$108 million, were to be disbursed over four years (PPAM, paras. 4 and 5).
Implementation Experience
Implementation of the main component, construction of roads in Sabah, was slow primarily because of right-of-way acquisition problems combined with unsatisfactory contractor performance (PPAM, para. 7). One of the three road sections included in the project was completed one year behind schedule, the other two were three and five years behind schedule (PPAM, para 8). Other components suffered relatively minor delays (PCR, Table 1).
Results
This was a well prepared and successful project. The construction of roads in Sabah, the main project component, was achieved albeit with considerable delay. In addition, and in the long run perhaps more importantly, the PWD road maintenance capability in Sabah, and also in West Malaysia, was considerably strengthened as a result of the project. Moreover, the project resulted in the development of capable local road construction and maiatenance contractors as well as consultants in Sabah (PPAM, para. 19). On the other hand, the objective of enforcement of the axle load limit of trucks was not achieved (PPAN, paras. 21 and 22) while the process of prequalification of contractors was flawed and may have contributed to the delay in completing the construction of the East Coast -v -
Road in Sabah (PPAM, para. 23). The reestimated rate of return of the overall project is about 23% compared with an estimate of 18% rt appraisal (PPAM, para. 24).
Sustainability
Given the increased road maintenance capability created by the project the roads constructed under the project are likely to be maintained in the future. As to the improved maintenance ec-apability itself, it is likely to last as the changes which were introduced are well absorbed in the institutional framework. Also, the budget allocation for road maintenance at present is adequate and likely to remain so, reflecting the high priority the Government attaches to road maintenance. In addition, a follow-on p..oject, Sabah and Sarawak Roads (Loan 2291-MA of 1983), provides for training support to the Sabah PWD to further strengthen the qualifications of its staff (PPAM, para. 28).
Findings
This audit reconfirms once again that adequate enforcement of axle load limits is a highly desirable but elusive objective. At present, more than a decade after the Third Highway Project started, the issue is still actively being pursued (PPAM, paras. 21 and 22). Essential ingredients to make axle load limit enforcement a reality include: (i) the proper legal framework for it, (ii) strategic checkpoints with appropriate weighbridges and properly staffed, and (iii) most import-nt of all, the full commitment to enforcement by all relevant authorities. At present, item (i) is a reality; item (ii) should not be too difficult to accomplish; while item (iii) seems now to exist so that adequate enforcement may be within reach (PPAM, para. 26).
A second, less successful aspect of the project has to do with the construction element and the problems encountered with one of the contractors working on the East Coast Road. In the end, he failed to deliver and had to be replaced. A reo:-nt review of the background information which formed the basis for the contractor being prequalified at the time (1976) indicates inadequate previous experience in road construction. In this case, the scrutiny of the contractor's qualifications at the time was inadequate and may have contributed to the delay in completing the construction of the East Coast Road (PPAM, para. 23). Generally, as any prequalified contractor may be awarded the contract, all should be properly screened before being prequalified. This to reduce the possibility of subsequent frustration, increases in costs, and delays in execution (PPAM, para. 29) PROJECT PERFORMANCE AUDIT MEMORANDUM
MALAYSIA
THIRD HIGHWAY PROJECT (LOAN 1376-MA)
I. BACKGROUND
Transvort and the Economy
1. Since the 1970s the Malaysian economy has grown at an average rate of 8% per year and per capita income of US$1990 in 1984 is among the highest in South East Asia. This growth primarily resulted from light industrialization (in West Malaysia), development of agriculture, forestry and mining (in Sabah and Sarawak), and placed heavy demands on the transport sector. The Government of Malaysia's basic objective in the past has therefore been to increase transport :apacity in line with projected traffic growth and avoid major bottlenecks. This objective has largely been achieved (PCR, para 1.02).
Emphasis on Road Transport
2. Government transport sector policy has been focussed on road transport (averaging 60% of total sector investments) which is by far the dominant mode. The Second Malaysia Plan (1971-75) focussed on high priority investments in particular to cater for the rapid increases in demand for transport in both rural and urban areas. The first two Bank highway projects supported this Plan (PCR, para. 1.08).
Third Hiihway Project
3. In 1977, the Government and the Bank agreed on a lending strategy that would emphasize poverty alleviation. For highway investments this meant a shift in Bank activities towards East Malaysia. The Third Highway Project supported this strategy as its main objective was to provide improved transportation in previously underemphasized areas iq4 Sabah (PCR, paras. 1.09 and 2.02).
4. The Loan Agreement for the Third Highway Project, to be implemented within a four-year period, was signed in April 1977 and became effective the following month. The project included:
(i) reconstruction of 146 miles of trunkroads in Sabah (128 miles to paved standards, 18 miles to gravel standards);
(ii) a four-year road maintenance program for Sabah (including procurement of equipment and upgrading of 290 miles of roads); -2-
(iii) pilot road maintenance and pavement strengt'.ening programs for the states of Johore, Porak and Kelantan in West Malaysia; and
(iv) a transport/railway study for West Malaysia and an urban study for Kota Kinabalu (PCR, para. 2.06).
5. Total project costs were estimated at US$108.0 million, of which some 80% for roads in Sabah (items i and ii, previous paragraph). The project was to be financed by the Bank, US$35.0 million, and the Government, the remainder.
6. Important loan conditions were (PCR, Table 4):
(i) modification of legislation regarding vehicle weight limitations including enforcement assisted by the weighbridges to be procured under the project; and
(ii) modification of road design standards as agreed with the Bank.
II. IMPLEMENTATION
Road Construction - Sabah
7. The contracts for the road construction in Sabah, one for the West Coast Road and two for the East Coast Road (see PCR, map), were awarded in March/April 1977 and work began in September 1977. The work was supervised by the Sabah PWD assisted by the same consultants (Danish) that had carried out the feasibility studies and detailed engineering. Progress was slow partly because of right of way acquisition difficulties and also because of unsatisfactory contractor performance caused by lack of personnel and equipment and financial problems. And there were other factors such as: increaed earthwork quantities because of unforeseen soil conditions, the unusually rainy weather in 1979, and damage done by logging trucks using sections of one of the roads during construction. In one case, the contractor had to be replaced because of inadequate performance (PCR, paras. 3.01 to 3.05).
8. Work on the West Coast Road was finished by the end of 1980, one year behind schedule. Tht two East Coast Road sections were finished in 1983 and 1985 compared with a planned completion in 1980 (PCR, Table 1). Actual costs for the West and East Coast Roads combined was 10% below appraisal estimates but 24% above the contract amounts (PCR, Table 2). -3-
Road Maintenance Program - Sabah
9. This component focussed on road maintenance and on strengthening the organization (PWD) responsible for it. Hence, this component included: (i) purchase of equipment (including weighbridges); (ii) a road upgrading program; (iii) technical support for Sabah PWD; and (iv) reorganization of the maintenance unit and other items such as modifications to road traffic legislation, axle load limitation enforcement, and modification of roaL design standards.
10. Procurement of Equipment. Following tendering in mid-1977 delivery started in November 1977 and the bulk of the equipment was delivered by mid-1978 and distributed to the maintenance districts by end 1978, substantially strengthening their maintenance capability (PCR, paras 3.09 and 3.10).
11. Road UpAradinx Program. The purpose of the upgrading was to bring 13 sections of the secondary road network, some 530 miles, to maintainable standards as part of the Four-Year Road Maintenance Program. Domestic consultants designed the roads and Sabah PWD decided to expedite the work program by carrying out some of it by force account and financed entirely by its own budget. The force account works were executed under a modified tendering system. Also, construction management vas provided by local consulting firms hired by the Sabah PWD. While the Bank considered this arrangement to be generally adequate, it did not agree to participate in any of the financial arrangements. Thus Government financed most of the cost of this work from its own resources prqiucing surplus funds in the loan account. More important, however, is the fact that the work produced was of good quality and provided opportunities for the development of local consultants and the construction industry (PCR, para. 3.11).
12. Technical Support Team. A Danish consultant firm provided the Technical Support Team (TST) to assist SPWD in improving its operations. The TST very effectively assisted in building up the road maintenance organization in Sabah. A number of maintenance districts were reorganized, additional staff mobilized and maintenance work methods, procedures and controls improved. This reorganization led to the creation of 18 districts to cover all :f Sabah. In addition, a training division was set up in SPWD and courses have since been given continually in road maintenance operation, equipment operation, and equipment maintenance. The Bank fully supported this program and agreed to the use of US$1.2 million of loan funds (intended for the road upgrading, see previous paragraph) for it (PCR, para. 3.12). In addition, the TST helped SPWD to establish a maintenance program which provided more control and responsibility over the use of maintenance funds and placed maintenance budgeting on a much firmer footing by using physical parameters and a road inventory in preparing estimates and testing targets (PCR, para. 3.13).
13. Axle Load and Vehicle Size Control. Six weighbridges were procured under the project; two were installed by mid-1980, the remaining four four years later, mainly because of the road construction delay (para. -4-
8). Implementation of a statewide program of axle load control started in late 1984 but is not yet effective. Enforcement is the responsibility of the Sabah police force and the Government has established a special committee to assist them. The main problem is overloaded logging vehicles (PCR, para. 3.14).
14. Sabah Road Design Standards. The work required to review and modify SPWD's design standards was delayed by about two years primarily because of the late start of the TST. By mid-1981, however, the revised road design standards were ready and SPWD started statewide introduction (PCR, para. 3.15).
Pilot Pavement Strengthening Program in West Malaysia
The main purpose of the program was to reorganize maintenance operations by establishing (i) a separate maintenance unit in the Federal PWD to assist the states in planning and coordinating maintenance efforts and in evaluating and designing pavement strengthening needs, and (ii) a separate maintenance section in each state PWD which would be adequately staffed and equipped to deal exclusively with maintenance. The initial implementation of the program was to be in three pilot states: Johore, Perak and Kelantan. Because of bureaucratic reasons the creation of new posts was slow. In addition, because of low government salaries, recruitment took time. As a result, it was not until 1982 that these units became fully staffed and operational. The organizational separation of road construction and maintenance activities in the state PWDs proved effective in improving road maintenance (PCR, para. 3.16).
16. The actual pavement strengthening included in the program was to be carried out on 120 miles of road in Johore by contract. Similar programs were carried out in Kelantan by domestic contractors and in Perak by force account and contract. The overall program in the three pilot states was satisfactorily completed by mid-1981. A major positive feature of the program in all three states was the initial corrective work done to drainage and road shoulders. As a result the thickness of the pavement overlay could be reduced resulting in considerable savings (PCR, parp. 3.17 and 3.18).
Studies
17. The transport/railway study, carried out by a Canadian consultant, was completed in March 1978, slightly behind schedule. The study originated from the Government's concern over the role of the Malayan Railway (MR) in West Malaysia's rapidly developing aconomy. The consultant's principal recommendation was that the East Coast rail link be closed because of lack of traffic and that MR concentrate on its West Coast line. The Government decided not to follow this recommendation principally because it wanted to keep the East Coast line as insurance in case of future bulk transport of (still undiscovered) minerals and also for trading with Thailand (PCR, parac. 3.19 and 3.20).
18. The Kota Kinabalu urban study focussed on the problems of the rapidly urbanizing Sabah state capital. The lack of efficient land use -5- planning and control measures, disparities in basic infrastructure and services, inadequate flood control, and so on, were creating significant transport and other problems. The study was undertaken by Belgian consultants in association with a Malaysian firm and satisfactorily completed in 1978. The study did not lead to a Bank-supported project mainly because of the Governmeat policy on subsidized housing. Some of the study's traffic management suggestions were implemented by the Kota Kinablu city government on its own (PCR, para. 3.23).
III. RESULTS
19. The principal results from the project were:
(i) The road network in Sabah was substantially improved through the construction of the West and East Coast Roads (paras. 7 and 8), the road upgrading program (para. 11), and improved road maintenance generally.
(ii) The Sabah WD road maintenance capability was substantially strengthened through the road maintenance program, in particular through the infusion of equipment (para. 11), but more importantly through the institution building efforts such as revamping the maintenance organization, recruitment of additional staff, staff training including creation of a training unit, setting up a maintenance program, establishing proper cost accounting used among other things to underpin and strengthen budget allocation requests, developing a road inventory and adopting appropriate road design standards (paras. 12 and 14).
(iii) The development of capable local contractors and consultants in Sabah (para. 11). At present, some 30 to 50% of routine and periodic road maintenance in Sabah is contracted out to private contractors in Sabah; similarly, under the ongoing Sabah and Sarawak Road Project (Loan 2291-MA), out of the six construction contracts awarded in Sabah, four have been awarded to Sabah-based contractors; a decade ago, when the Third Highway Project took off, virtually no private road maintenance and construction capacity existed in Sabah.
(iv) In West Malaysia., the pilot pavement strengthening program (paras. 15 and 16) considsrably strengthened the road maintenance capability by zreating separate maintenance units on the federal level and the state level in three states.
20. In addition, the transport/railway study and the Kota Kinabalu urban study provided the Government with a better basis for its decision making and planning activities. As result of the transport/railway study, the Government started to compensate the railways for 50% of its losses on passenger traffic on the East Coast Line; also, a cost accounting system -6- was developed which now effectively serves to determine cost-based rail tariffs for freight. As a result of the Kota Kinabalu urban study, traffic management was improved and added impetus given to the creation of the Kota Kinabalu ring road.
21. On the other hand, the enforcement of the axle load limit for trucks in Sabah was not achieved under the Third Highway Project. Initially, in 1984, an effort was made but this fizzled out. Recently, in early 1988, at the instigation of the World Bank in the context of the ongoing Sabah and Sarawak Road Project, this issue has been revived forcefully. "The State Committee for Enforcement of the Legal Axle Load Limit has taken a serious view of the damage caused to the roads by overloaded trucks and is taking concerted measures to enforce the legal axle load limit. These include the immediate setting up of nine check points at strategic locations to be manned by a joint force from the Road Transport Department, the Police, and the Forestry and Public Works Departments. Moreover, the two mobile units will be set up immediately. In addition, the Federal Public Works Department will set up five permanent weighbridges in Sabah for which the locations are being identified (March 1988). Finally, the Road Transport Act of 1987 came into effect in January 1988 and gives prosecuting authorities wider powers and imposes heavier penalties." (Telex from Sabah PWD to World Bank, February 23, 1988.)
22. Overloading of trucks has affected sections of the West Coast Road while under constiuction (PCR, para. 3.03). Recent inspection of the West Coast Road showed that the north-bound lane south of Papar is deformed and damaged over a distance of some 15 to 20 km. On the East Coast Road the damage is limited to a few short sections totalling a few hundred meters. Studies are being undertaken to recommend the required remedies. Though the estimated rate of return for the Papar-Beaufort Road section (PCR, para. 6.03 and Table 7) does not take into account the repair cost associated with the damage done by overloading, given the high estimated rate of return of 33%, this project element remains fully justified in any case.
23. A second, less successful aspect of the project has to do with the construction element and the problems encountered with one of the contractors working on the East Coast Road. In the end, he failed to deliver and had to be replaced (PCR, para. 3.04). A recent review of the background information which formed the basis for the contractor being prequalified at the time (1976) indicates that the prequalification process was flawed: the contractor's background information indicates inadequate previous experience in road construction. In this case, the scrutiny of the contractor's qualifications at the time by both the Federal Public Works Department, wl proposed the contractor for prequalification, and the World Bank, who voicec "no objection", was inadequate and may have contributed to the delay in completing the construction oi the East Coast Road.
24. The project's principal component, the construction of the West and East Coast Roads in Sabah, had rates of return ranging between 10 and -7-
33% compared with 14 to 16% estimated at appraisal. The corresponding figures for the Sabah road upgrading were 50 and 221. Overall the * project's rate of return was 23% as compared with 18% estimated at appraisal (PCR, para. 6.03).
IV. CONCLUSIONS
Overall Assessment
25. This was a well prepared and successful project. The construction of the West and East Coast Roads in Sabah, the main project component in terms of cost, was achieved albeit with considerable delay. In addition, and in the long run perhaps more importantly, the road maintenance capability in Sabah, and also in West Malaysia, was considerably improved. Finally, the two studies included in the project, the transport/railway study for Peninsular Malaysia and the Kota Kinabalu urban study, provided the Government with a better basis for its decision making and planning activities.
The Axle Load Limit Issue
26. This audit reconfirms once again that adequate enforcement of axle load limits is a highly desirable but elusive objective. At present, more than a decade after the Third Highway Project started, the issue is still actively being pursued. Essential ingredients to make axle load limit enforcement a reality include: (i) the proper legal framework for it, (ii) strategic checkpoints with appropriate weighbridges and properly staffed, and (iii) most important of all, the full commitment to enforcement by all relevant authorities. At present, item (i) is a reality; item (ii) should not be too difficult to accomplish; while item (iii) seems now to exist so that adequate enforcement may be within reach.
Environmental Aspects
27. Paving the gravel roads has resulted in dust reduction while generally the upgrading of roads implied improved drainage and hence reduced erosion and flooding. Overall the project had a positive environmental impact.
Sustainability
28. Given the increased road maintenance capability created by the project, the roads constructed under the project are likely to be maintained in the future. As to the improved maintenance capability in Sabah, it is likely to last as the changes which were introduced are well absorbed in an appropriate institutional framework. Also, the budget allocation for road maintenance is adequate. It has remained constant over the last three years while allocations for other purposes were reduced, reflecting the Government's assessment of the priority of road maintenance. - 8 -
In addition, a follow-on project, Sabah and Sarawak Roads (Loan 2291-MA of 1983), provides for training support to the Sabah PWD to further strengthen the qualifications of its staff.
Prequalification of Contractors
The experience with the construction of the East Coast Road in Sabah (para. 23) highlights the importance of proper prequalification of contractors. As any prequalified contractor may be awarded the contract, all should be properly screened before being prequalified. This to reduce the possibility of subsequent frustration, increases in costs, and delays in execution of the contract. -9- ZCZC DERP0147 RCA2421 FT01~Attachment 1 Comments received . REF : TCP JK from Borrower
IDEDDI:4:
248423 UORLDBANK GRAPHNET EGUA MSG. OCE808
71248423 248423 WORLDBANK 6A 05/19 00:14 1058 1823-1 C056 205 05/19/88 04:49 / SOA1823 MUR892 KMB209 P038 URGW CO MAPO 085 KUALALUMPUR 85/81 19 1030
GRAHAM DONALDSON CHIEF AGRICULTURE INFRASTRUCTURE AND HUMAN RESOURCES DIVISION OPERATIONS EVALUATION DEPARTMENT THE WORLD BANK 1818H STREET N.W. WASHINGTONDC20433
RE MALAYSIA THIRD HIGHWAY PROJECT (LOAN 1376-MA) DRAFT PROJECT PERFORMANCE AUDIT REPORT REF YR LETTER DATED APRIL 6 1988 REGARDING THE ABOVE STOP PLEASE TO INFORM THAT FED. TRESURY MINISTRY OF PUBLIC WORKS AND PUD SABAH HAS NO COMMENCES ON PPAR PREP. BY MR JAN DE UEILLE STOP EPO WILL REPLY DIRECTLY TO YOU REGARDS HO SIEW CHING FINANEiDIVISION FEDERAL TRESURY - 11 -
PROJECT COMPLETION REPORT
MALAYSIA
THIRD HIGHWAY PROJECT (LOAN 1376-MA)
Asia Regional Office - 13 -
MALAYSIA
THIRD HIGHWAY PROJECT (LOAN 1376-MA)
PROJECT COMPLETION REPORT
I. PROJECT BACKGROUND AND SECTORAL SETTING
The Transport Sector
1.01 The Federation of Malaysia is made up of 13 states. Eleven states are located in Peninsular (or West) Malaysia, which occupies the southern one- third of the Malay Peninsula. The two Borneo States (or east Malaysia), Sabah and Sarawak are separated from Peninsular Malaysia by about 900 miles of South China Sea. Sabah has no overland connections with Sarawak and the transport system is in the process of development with only 6,000 miles of roads, 6 sea- ports and 9 airports. Major seaport and airport improvements in both East and West Malaysia have been underway for the last decade. Civil aviation and sea transport are now becoming more developed and more extensively used, especially within East Malaysia and between East and West Malaysia. The transport system of West Malaysia is well developed with 25,000 miles of roads, most of which are paved, 1,040 miles of railway, 4 main seaports and 8 airports.
1.02 The Malaysian econ;bmy has grown consistently at rates averaging 8% p.a. since the 1970s, and per capita income of US$1990 in 1984 is among the highest in Southeast Asia. This growth primarily resulted from light industrialization (in Peninsular Malaysia), development of agriculture, forestry and mining (in Sabah and Sarawak), and placed heavy demands on the transport sector. The Government of Malaysia's (GOM) basic objective in the past has therefore been to increase transport capacity in line with projected traffic growth and to avoid major bottlenecks. This objective has lacguiy been achieved, in particular for highways, which carry over 70% of all freight and nearly all passenger traffic, and has received most transport sector investments. The distribution of roads per thousand square mile in each state now reflects the considerable differences in levels of economic development with the highest dersity being in Penang, the most developed state, and the lowest in Sarawak, which is the least developed state. The network as a whole is adequate to service transport needs.
1.03 Administrative responsibility for the sector is fragmented at both the Federal and State levels. The Ministry of Public Works (JKR), including the Malaysian Highway Authority (MHA), is responsible for the planning, design, construction and maintenance of the federal road system. The State government's independently plan and execute their own (mostly feeder) road investments. The Ministry of Public Enterprises is responsible for road transport regulation as far as licensing is concerned; the Ministry of Forestry reguiates sizes and weights of timber trucks. A number of autonomous ports such as Penang, Kelang and Johore are involved in multimodal operations requiring coordination with road transport which is difficult under the - 14 - present organization. In addition, the Malayan Railway, Malaysian Airline System (MAS), Malaysian International Shipping Corporation and several bus and trucking companies undertake investments in isolation rather than within a system capable of analyzing overall transport supply and demand.
1.04 The Economic Planning Unit (EPU) in the Prime Minister's Department has taken on the role of reviewing all federal government investments, but it does not have adequate numbers of suitably qualified specialists (e.g., to evaluate technical design standards and engineering feasibilities) necessary to carry out this task. Nonfederal public investments are not reviewed or coordinated adequately, and the most critical weakness facing the administra- tion of the sector is the lack of a focal agency which could be responsible for overall coordination, planning ard policy.
1.05 The Bank has had several transport projects in Malaysia which have been directed at physical capacity expansions as well as at establishing and strengthening of institutions in the transport sector. A summary of invest- ments follows:
Signing Amount Project Loan no. date ($ m)
Urban transport 851 07/20/72 16.0 Highways II 931 08/22/73 19.5 Urban Transport II 1214 03/11/76 26.0 Highways III 1376 04/07/77 35.0 Sabah-Sarawak roads 2291 06/27/83 86.2
Subtotal 182.7
Railway I 799 02/11/72 16.0
Sabah Ports I 774 06/30/71 16.1 Sabah Ports II 1580 09/20/78 13.0 Port Kelang 2686/2687 06/20/86 18.8
Subtotal 47.9
Total 246.4
The Road Subsector
1.06 To accommodate the substantial growth (over 10% p.a.) in traffic, the road network in the entire country was expanded significantly from about 15, 000 mi in 1979 to 30 ,000 mi by 1984. On Peninsular Malaysia, 80% of the road network is paved, and it connects most towns, villages and cities. By contrast, only 31% and 25% of the roads in Sabah and Sarawak, respectively, - 15 -
are paved, and gaps still exist in the network. Many of Sabah's roads were initially built as private roads to serve logging and plantation interests. As a result, the present system does not provide adequate linkages between towns and is of poor quality -- long stretches of the roads become impassable during the rainy season and maintenance costs are excessively high. Road passenger transport services are generally adequate. However, in view of the poor quality of most roads, freight rates fluctuate and are usually established by negotiation.
1.07 During the period 1970-1984, the number of motor vehicles in Malaysia grew by 15% p.a. from 747,000 to 4.1 million. This resulted in an increase in the overall vehicle population ratio from 72 per thousand in 1970 to 242 per thousand by the end of 1984. This represents the highest motoriza- tion rate in ASEAN nations. In Peninsular Malaysia, the motor vehicle growth was greatest, upwards of 15% p.a., partly because of tremendous growth in motorcyles which now account for 60% of the fleet. However, as incomes increase, there will be a shift from motorcyles towards cars and this will place even greater demands on the transport system. In Sabah and Sarawak, despite the poor road network, motor vehicle growth has averaged 9% p.a. since 1970, with cars accounting for approximately 50% of the growth. Also, traffic volumes on paved sections of the trunk network exceed 1,000 vehicles per day (vpd) in the rural areas and several times that in the immediate vicinity of towns. On gravel roads, traffic densities range from 50 to 500 vpd.
1.08 Government transport sector policy has been focused on road transport (averaging 60% of total sector investment) which is by far the dominant mode. The second Malaysia plan (1971-75) focused on high priority investments, in particular to cater for the rapid increases in demand for transport in both rural and urban areas. The first two Bank highway projects supported this plan and had a major impact in assisting the Government with the following: (a) construction and improvement of priority sections of the main highways on the west coast of peninsular Malaysia, including links to Kuala Lumpur; (b) urban and rural transport improvement studies which helped formulate investment programs; and (c) training and institution building within the Economic Planning Unit (EPU). Significant policy changes which were supported by Bank projects included the adoption of more appropriate road design standards (especially in East Malaysia) and regulation of vehicle axle loading.
1.09 In 1977, the Government and the Bank agreed on a lending strategy that would emphasize the alleviation of poverty. For highway investment this meant a shift in Bank activities towards East MaLaysia. The Third project supported this strategy as most of the investments in rehabilitation and new construction were in Sabah. This report reviews the progress made under the Third Highway project and is based on information provided by the Sabah Public Works Department (SPWD) and the Ministry of Public Works (JKR) as well as upon a review of the Bank's files in Washington. - 16 -
II. PROJECT FORMULATION
Preparation Stage
2.01 The project was identified by the 1968 General Transport Survey, which was financed by the UNDP with the Bank as executing agency. It was prepared with the assistance of American & Danish consultants, in association with a local firm, financed under the Second Highway Project (Loan 931-MA). By the time of appraisal in early 1976, all studies and detailed engineering had been completed. The maintenance component of the project was based on a countrywide highway maintenance study completed in December 1976 by the same Danish consultants and the local firm. It was financed under the Urban Transport (First Highway) Project, Loan 851-MA.
Project Objectives
2.02 The main objective of the project was to support the Government's poverty alleviation strategy by providing improved transportation in previously underemphasized areas. Another objective was to protect road investments in Peninsular Malaysia through a pilot road maintenance and a pavement strengthening program in three states. Also, thi overall pattern of urban development was to be examined in the Kota/Kinabalu urban study, and the role of the railways defined in the transport/railway study for Peninsular Malaysia.
Appraisal Stage
2.03 The appraisal mission, composed of an engineer and an economist, visited Malaysia in February 1976 and reviewed the project documents. These included the detailed engineering, economic evaluation, bid documents and other information requested previously by the Bank.
2.04 Several issues were raised at appraisal. These included:
(a) Surfacing of the Beaufort to Sin4umin road. Due to the relatively low traffic volume forecast for this 54 km road section of the west coast road, the'consultants had recommended that proposals for improvement to a bituminous surface be deferred. The Sabah PWD was not very responsive to this idea as the alternative was to build an all weather gravel road; they would have rather postponed works for about three to four years and then have the road fully reconstructed and paved as traffic would by then fully warrant this. The mission had agreed with the consultants recommendations.
(b) Axle load design standards. The consultants had recommended that the east coast road be designed for a 16-ton axle load in order to accomodate the heavy timber trucks. The mission disagr2ed because the adoption of,such a standard for this road would later have to be extended to other public roads on Sabah; this could lead to substan- tial overinvestment. The mission recommended that the design be adjusted to a 10-ton axle load using double bituminous surface - 17 -
treatment pavements (DBST). This represented a more normal loading and, in any case, the 16-ton timber trucks were never really designed for operation on public roads.
(c) Preparation of a maintenance program. Although the Government had the findings and recommendation of the maintenance study for Malaysia as a whole (financed under Loan 851-MA), no specific imple- mentation program had been finalized. There was a draft paper for Peninsular Malaysia but the mission felt that the paper needed to separate more clearly routine periodic maintenance from streng- thening and upgrading roads, which are capital expenditures rather than recurrent budget items. The mission recommended that the sub- mission by the Government of an acceptable maintenance program be a precondition to the invitation for loan negotiation.
2.05 Loan negotiations were held in Washington in January 1977. The Government and the Bank agreed on a number of points, the principal ones being:
(a) the Beaufort to Sindumin road would be reconstructed to gravel at ndards;
(b) the loan amount would be increased from the original allocation of US$30 million to US$35 million, primarily because of the Govern- ment's decision to include a highway maintenance and upgrading component in Sabah and a pilot maintenance and pavement strength- ening program in Peninsular Malaysia;
(c) the project scope was expanded to include, along with a 4-year maintenance program for Sabah, the upgrading of about 290 miles on 13 sections of secondary roads totalling 530 miles and pavement strengthening for about 120 miles of Federal Route 1 in the state of Johore;
(d) the inclusion of a program for reorganizing road maintenance in the Sabah, the Federal, and the Peninsular Malaysia Public Works Departments. Technical specifications for maintenance, upgrading and pavement strengthening operations were also to be a part of this program. Also the budget would have adequate provisions for annual road maintenance expenditures;
(e) there would be no new capital investments in the Sabah railways. Also a plan for phasing out the railway between Papar and Beaufort, which parallels the project highways, would be prepared and submitted to the Bank; and - 18 -
(f) axle load restrictions would be applied to vehicles using public roads in Sabah and several weigh bridges would be built to help enforce these restrictions.
Project Description
2.06 The project, as agreed, consisted of the following:
(a) the reconstruction to paved standards of 128 miles, and to gravel standards of 18 miles, of trunk roads in Sabah, including super- vision by consultants;
(b) a 4-year maintenance program for Sabah, including procurement of equipment, upgrading of 290 miles on 13 road sections and assistance by consultants;
(c) the development of pilot road maintenance and pavement strengthening programs for the states of Johore, Perak and Kelantan in Peninsular Malaysia, including pavement strengthening of about 120 miles in Johore; and
(d) a transport/railway study for Peninsular Malaysia and an urban study of Kota Kinabalu.
2.07 The appraisal report, No. 1182a-MA was issued February 22, 1977. The loan was approved by the Bank's Board of Directors in March 1977 and Loan Agreement No. 1376-MA (US$35.0 million, for a term of 17 years including 3.5 years of grace and interest at 8.5Z p.a.) was signed on April 4, 1977. The Loan Agreement became effective on May 4, 1977.
III. PROJECT IMPLEMENTATION
Overview
3.01 Contracts for road construction in Sabah (three contracts covering four road sections) were awarded in March/April 1977 and work began in September 1977. Progress was slow on all contracts, due partly to right-of- way acquisition difficulties and also due to unsatisfactory contractor per- formance. One contract had to be reassigned after the original csntra%tor went bankrupt, and, as a result, the road section's completion was over four years overdue. Consultants providing technical assistance to the Sabah Public Works Department (SPWD) began work in April 1978, some 12 months behind schedule; consequently, implementation of the Sabah Maintenance Program and Road Upgrading program was delayed significantly. The maintenance and pave- ment strengthening program for the three Pilot states in Peninsular Malaysia was completed successfully. The railway/transport study in Peninsular Malaysia and the urban study of Kota Kinabalu were completed satisfactorily, after some delays. The loan was finally closed on October 23, 1985. - 19 -
Road Construction and Paving
3.02 The work was divided into three packages, one (lots I and 2 combined) for the west coast road and two (lots 3 and 4 separately) for the east coast road. Tenders for the three packages were invited in July 1976 and bids received by November 1976, well in advance of loan negotiations. After bid evaluation in January 1977, contracts were awarded to lowest bidders (all were foreign contractors) in March and April 1977. Notices to proceed were issued in July 1977 and actual construction began in September 1977, about five months behind schedule.
3.03 Progress on the west coast road was slower than anticipated and by the original completion date only 66% of the work was completed. The main reasons for this were (i) lack of provision by the contractor of adequate personnel, equipment and other resources on a timely basis; (ii) slow acquiSaition of land and rights-of-way by the agencies (public and private) responsible; (iv) addition by the Government of extra work to the contract for lot 2 (the Bank concurred); (v) the need to increase earthwork quantities substantially on both lots 1 and 2 due to unforeseen soil conditions; and (vi) the unusually rainy weather experienced during mid-1979. Further problems resulted from the fact that logging trucks were uaing (and severely damaging) sections of lot 2 that were finished except for paving; this meant that several sections had to be redone. The two lots were finally completed by November 1980, some 19 months overdue and 30% over contract cost. Most of the increased cost waa due to claims for additional work. Also, since completion, the contractor has filed claims whit t are still pending for M$60 million, some 120% over the total civil works cost (M$49.2 *lion) for the 2 lots. The contractor's claim was based on the adverse construction conditions, including the difficult weather conditions, the remoteness of some of the construction areas and the soil conditions being poorer than expected at the design stage. The contractor's claim has not yet been settled.
3.04 By comparison. construction was even more difficult and delayed on the East Coast roads. Lot 3 (Giram Estate-Lahad Datu, 48 miles) experienced the most difficulty and was only 25% completed by the appraisal estimated completion date. By late 1978, the contractor's performance was deemed unsatisfactory due to a shortage of experienced management personnel and a lack of adequate manpower and equipment. In mid-1980, it was decided to change contractors since poor site management and basic inability by the contractor had caused most of the problem. Accordingly, in November 1980, the Government agreed to let the contractor responsible for lot 4 also take over lot 3 at the same unit rates. However, this contractor also had financial problems and progress was very slow during 1981 and 1982. Following a change in project manager, the work pace improved and it was completed in June 1985, some five years behind schedule and with a significant cost overrun.
3.05 The contractor for lot 4 (Giram Estate-Semporna) started off well but was slowed down due to difficulties in providing adequate manpower and equipment suitable for the type of work required. Later on, equipment and manpower provision was adequate, but cash flow constraints adversely affected progress. Due to the lack of timely financial support from his Manila head- quarters, the contractor was often unable to meet payroll and other payments - 20 - and also to pay for certain local materials; this resulted in frequent work stoppages. Also, there were problems with the right-of-way and securing access to work sites because the Government was slow in taking steps to acquire needed land. Lot 4 was finally completed in May 1983, some 39 months behind schedule and at a cost of M$47.5 million, some 11% over contract cost of M$42.9 million. Most of the overrun was due to price escalation as there was little variation in work quantities.
3.06 All civil works construction was supervised by the Sabah PWD, assisted by the same consultancy team that had earlier carried out the feasibility studies and detailed engineering. The consultant established a central office in Kota Kinabalu with two expatriates and five local staff. They worked closely with the chief superintending engineer, who was provided by the Sabah PWD and was responsible for the overall execution of the project. In general, the supervisory arrangements were satisfactory. Reporting was prompt and in adequate detail for monitoring project performance. Also, given the circumstances and delays involved, relations with contractors were reasonably good.
3.07 The actual length of roads improved and constructed totalled 147 miles. The roads were handed over to Sabah PWD field organization for maintenance.
Road Maintenance Program in Sabah
3.08 This project component focussed on road maintenance in Sabah and on strengthening the organization (PWD) responsible for it. Hence this component included: (a) purchase of equi ment; (b) a road upgrading program; (c) tech- nical support for Sabah PWD, and (d) reorganization of the maintenance unit and other items such as modifications to road traffic legislation and to road design standards in Sabah.
3.09 Procurement of Equipment. Tenders for the supply and delivery of road maintenance equipment (trucks, graders, loaders, rollers, etc.) were invited in mid-April 1977 and a total of 32 suppliers submitted bids. The tender evaluation was carried out by the Sabah PWD, and the report with recommendations was submitted to the Bank in September 1977; the Bank con- curred with the recommendations. Delivery of some items started in November 1977 but the bulk of the equi Pment was delivered by mid-1978 and subsequently distributed to the various maintenance districts by end 1978. The total cost of the equipment purchased amounted to about M$10 million.
3.10 This component led to a significant increase in road maintenance capability as before the districts were underequipped or had old, worn-out equipment. Also, facilities for subsurface investigations and materials qual- ity control were lacking throughout Sabah. The Sabah PWD therefore decided to provide facilities, procure testing aparatus and spare parts for needed soils and materials laboratories. The Bank agreed to this and the Cesting aparatus and spares were financed from the loan (about US$150,000) while Sabah PWD pro- vided the buildings and basic facilities. In addition, a training program for Sabah PWD maintenance staff was established in 1980. This program has been judged effective by Bank missions as it has trained PWD -staff in least-cost, efficient maintenance and management procedures for the entire equipment pool. - 21 -
3.11 Road Upgrading Program. The purpose of the upgrading was to bring about 13 sections of the secondary road network, totalling 530 miles, to main- tainable standards as part of the ongoing Four-year Road Maintenance Pro- gram. Domestic consultants for designing the first group of roads in the program were selected by Sabah PWD in 1978, with Bank concurrence. The cost of these services were paid entirely by the Government. Sabah PWD also decided to expedite the work program by carrying out some of it by force account and financed entirely by its own budget. The force account works were executed under a modified tendering system whereby equipment was hired through competitive tendering but labor and materials were supplied by the Govern- ment. Also, construction management was provided by local consulting firms hired by the Sabah PWD. While the Bank considered this arrangement to be generally adequate, it did not agree to participate in any of the financial arrangements. Thus Government financed most of the cost of this work from its own resources* This produced surplus funds in the loan account. More important, though, is the fact that the work produced was of a good quality and provided some opportunity for the development of local consultants and the construction industry.
3.12 Technical Support Team. The consultants (a Danish firm) providing the Technical Support Team (TST) which advised and assisted SPWD in improving its operations, commenced work in May 1978, about one year later than expected at appraisal. This delay was c#used mainly by Government's reluctance to accept an all-expatriate consulting team for the TST. It was only when it was clearly demonstrated that no local firms were qualified to provide personnel for the TST that the Government finally agreed to the appointment and staffing of the team. This delay was crucial because all of the targets established for the Four-year Road Mfintenance Program in Sabah could not be started without the TST, since Sabah PWD lacked the capability to undertake the various measures required. The TST was very helpful and effective in advising and building up road maintenance organizations in Sabah. A number of maintenance districts were reorganized, additional staff mobilized, and maintenance work utilizing modified and improved methods, procedures and controls was undertaken, all under TST guidance. This maintenance reorganization program led to the creation of a total of 18 districts to cover all of Sabah's public road network. Also a training division was set up in Sabah PWD in 1980 and courses have since been given continually. The main training courses include road maintenance operation, equipment operation and equipment maintenance. The Bank fully supported this program and agreed to the use of US$1.2 million of loan funds (intended for the road upgrading program) for it. The Sabah PWD employs over 8,000 people and the training needs are substantial. The TST, by designing a suitable training program, was able to make a substantial impact on the development of the Sabah PWD as an institution.
3.13 Budgeting, Programming and Control of Maintenance Operation. Sufficient funds were generally available to Sabah PWD for road maintenance and no severe financial restrictions were foresee.. The constraints that existed concerned organizational matters, shortage of competent management personnel, lack of technical capability, unsatisfactory methods and procedures and lack of sufficient qualified staff. This had affected the PND to the extent that in most years it could not execute all of the maintenance work for - 22 - which funds had been budgeted. The TST helped Sabah PWD to establish a maintenance program which provided the individual road maintenance units with more control and responsibility over the use of maintenance funds. The program also placed maintenance budgeting on a much firmer footing by using physical parameters and a road condition inventory in preparing estimates and setting targets. The effect of the program was therefore to enable the road maintenance organization, beginning in mid-1980, to establish a systematic maintenance program and take full financial control and responsibility for road maintenance funds. This revised maintenance planning and budgeting systems was considered to have been well implemented by Bank staff. It has helped to streamline the Sabah PUD organization and improved its works maintenance execution capacity.
3.14 Axle Load and -Vehicle Size Control. Six weigh bridges were procured under the project and t#o were installed by mid-1980 (near Kota Kinabalu and Tawau) just a few months.behind schedule. The remainder were installed on the west coast road (one) and east coast road (three) by mid-1984. The delayed installation was due to slow road construction. Implementation of a statewide program of control started in late 1984 but is not yet fully effective. Sabah PWD, assisted by the TST, desigLed a detailed program of operational procedures, institutional measures, staffing arrangements, consultations with police, public information and punitive measures to be taken against violators. Progress on implementing it was slow. Enforcement is the responsibility of the Sabah police force and the Government has established a special committee to assist them. The major problem in Sabah concerns overloaded logging vehicles, and this will change only gradually as new logging contracts can contain enforceable covenants or penalties.
3.15 Sabah Road Design Standards. The work required to review and modify- Sabah PWD's road design standards started only in mid-1980. This two-year delay was due primarily to the late start of the technical support team (para. 3.10). Once started, work progressed well and preparation of revised general specifications for road construction works was completed by mid-1981. Sabah PWD commenced statewide introduction of these modifications to the road design standards in 1981. This satisfied the requirements of the loan agreement, Section 4.04 (b).
Pilot Pavement Strengthening Program in Peninsula Malaysia
3.16 The main purpose of the program was to reorganize maintenance operations by establishing (i) a separate maintenance unit in the Federal PWD to assist the states in planning and coordinating maintenance efforts and in evaluating and designing pavement strengthening needs, and (ii) a separate maintenance section in each state PWD which would be adequately staffed and equipped to deal exclusively with maintenance. The initial implementation of the program was to be in three pilot states, Johore, Perak and Kelantan. The first step was to create posts and recruit staff for the federal and subsequently the state road maintenance sections (RMS). Accordingly, letters instructing the Directors of the states PWDs were issued by the Government in late 1977. Actual progress in creating the posts was slow, mainly due to bureaucratic reasons. This meant that the planned increase in efficiency and productivity of road maintenance, which depended on timely reorganizations, - 23 - was not being realized. It was not until 1982 that these units became fully staffed and operational. This was because it took some time to recruit enough staff due mainly to the low government salaries. By then the allocation for maintenance was about M$15,O00, on average, per mile per year to cover routine and periodic operations; this amount was quite adequate. In the final analysis, the organizational separation of road development and maintenance activities in the state public works departments proved effective in ensuring better servicing of road maintenance needs.
3.17 The actual pavement strengthening included in the program was to be carried out on 120 miles of Federal route 1 in Johore state by contract, the Bank loan financed a small part of the cost. Similar programs were carried out in Kelantan by domestic contractors and in Perak by force account and also by contract. Force account works mainly involved corrective drainage works and shoulder rehabilitation on weakened pavement sections. Domestic and foreign contractors were prequalified for route 1 by end 1977, but only domestic contractors were prequalified for the works in Kelantan state by early 1978. The Johore contract was won by a British contracting firm, which was the lowest evaluated bidder. The work was scheduled for completion in 1981. Implementation proceeded well and it was completed with only a few months' delay. In Perak, about 20 miles were completed by force account and 125 miles by domestic contractors. This arrangement proved to be adequate, as the works were completed with minimal delays. In Kelantan, about 139 miles of pavement strengthening was completed by local contractors between December 1978 and September 1980. The overall program in the three pilot states was completed by June 1981.
3.18 A major positive feature of the pavement strengthening programs in all states was the initial corrective work done to drainage and road shoulders. In the past such corrective work had not been done first and the consequence was generally an overdesigned pavement overlay to obtain the necessary strength because of poorly drained subsurface materials in the road bed. By carrying out the corrective works first, the subsurface areas became less saturated, and subsequent Benkelman Beam testing usually showed that the existing pavement structure had a high-enough residual strength to require only a pavement overlay at relatively small investment cost. The decision by the Federal Government to carry out these corrective works first was therefore a good one as it saved a considerable amount of money when compared to previous pavement strengthening practices.
Studies
3.19 The transport/railway study was carried out by Canadian consultants between March 1977 and March 1978, slightly behind schedule. The study originated from the Government's concern over the role of the Malaysian Railway (MR) in Peninsula Malaysia's rapidly developing economy. The study included updating transport sector information, making new projections of transport needs, and examining the future role of the railway in the overall transport patterns of Peninsula Malaysia. About 50 man-months of consulting time was used for this study. - 24 -
3.20 The consultants examined the future role of MR in the context of the expanded network of highways, especially the new Ulu-Kelantan highway which competes directly with the east coast railway line. In their report of February 1978 the consultants estimated MR's share of freight traffic would drop from the 1977 level of 26% to a low of 18% by 1990. This was because traffic patterns were generally changing to the disadvantage of MR. The MR's rail network could not be justified economically, and it should therefore be contracted by closing the east coast line. This would enable the MR to concentrate on the west coast line and face the competitive challenges of the 1980s. Keeping the east coast line would only worsen MR's financial condition as it would be a perennial money loser.
3.21 For various reasons the Government decided not to follow the consultant's recommendations. Principally, it was because they wanted to keep the east coast line as insurance towards adequate future bulk transport for (still undiscovered) mineral deposits in the east region and also for trading wich Thailand.
3.22 The other project-financed study focused on the problems of the rapidly urbanizing Sabah state capital, Kota Kinabalu. The lack of efficient land use planning and control measures, the wide disparities of housing standards, deficiencies and disparities in basic infrastructure and services, inadequate flood control, and the proliferation of private and public development schemes were at that time creating significant transport and other problems.
3.23 Proposals for the study were invited in December 1976 and received in March 1977. The contract was awarded to a Belgian consultant in associa- tion with a Malaysian firm, and work started in September 1977, about four months behind schedule. The consultants did a good job in analyzing develop- ment plans for the city and in conducting the traffic study. They also pre- pared project proposals for a new sites and services development and some road and/or traffic engineering works. They also analyzed the need for better drainage and flood control measures. The study made clear that the capacity of existing roads could be considerably improved by a combination of traffic engineering measures including intersection improvements, signalizati;n, road widening and better overall traffic routing. The study was completed in June 1978, about two months behind schedule. It did not lead to a Bank-supported project mainly because of the government policy on subsidized housing. Some of the traffic management suggestions were implemented by the Kota Kinabalu city government on its own. - 25 -
IV. PROJECT COST AND BANK LOAN
Project Costs
4.01 The total cost of the project, including contingencies, was about M$247.9 million. This is exclusive of the Government financed portions of the project. It represents a cost overrun of 10% over appraisal estimates of M$224.9 million, including contingencies. Given the overall difficulty of executing civil works in east Malaysia, this cost overrun was quite reasonable. The cost overrun was mostly due to design changes and long delays in executing the civil works component and could increase substantially if the pending claims are awarded in the contractor's favor. Details of actual and estimated costs are in Table 2.
Loan Disbursement
4.02 Cumulative disbursements (detailed in Table 3) compared to appraisal estimates were as follows:
FY77 FY78 FY79 FY80 FY81 FY82 FY83 FY84 FY85 FY86 ------(US$ million)------
Appraisat 2.0 13.7 26.1 32.8 34.8 35.0 Actual 0 1.3 10.9 14.0 17.7 21.3 23.1 26.3 29.5 30.4
The delays in disbursement were caused by the slow implementation of the civil works component. It was slower than previous Bank highway projects in the region but typical of Malaysia. This project was the first predominantly east Malaysia Bank action and hence the possibility for over optimistic disburse- ment estimates.
Reallocation of Loan Funds
4.03 At the Govern*nt's request, the Bank loan funds were reallocated on May 19, 1983. Final withdrawal applications were submitted on September 24, 1985. The Government requested on October 1, 1985, that the loan be closed and the y7disbursed portion (US$4.63 m) be cancelled. The Bank agreed and this sum was cancelled on March 19, 1986. The following table shows the original and actual allocation of loan proceeds.
1/ The actual amount cancelled was US$4,634,407.62. - 26 -
Category Loan Reallocation of Actual as of Agreement May, 1983 February 27, 1986 ------(US$ Thousand)
1. Civil Works 20,900 23,400 23,144 2. Equipment 3,900 3,900 3,214 3. Consultants' Services 2,300 4,500 4,008 4. Unallocated 7,900 3,200 0
Total 35,000 35,000 30,366
Fulfillment of the Main Loan Covenants
4.04 Compliance with covenants (Table 4) was generally satisfactory. The slow provision of rights-of-way did affect road construction and project exe- cution as a whole. Also, much more could have been done to enforce the vehicle axle-load standards. Overall, the difficulties in compliance were due more to the slow Sabah bureaucracy than to any supposed reluctance to comply.
V. INSTITUTIONAL DEVELOPMENT
5.01 In addition to assisting the Government of Malaysia in attaining its road construction goals, the third highway project contributed to the development of road subsector institutions. The main beneficiary institutions were the public works departments at the state and federal levels.
Sabah PWD
5.02 The SPWD's road maintenance capability was particularly strengthened and the perennial issue of inadequate maintenance works execution addressed. The input by the technical support team (TST) was particularly helpful in reorganizing the maintenance sections throughout Sabah and increasing their capabilities to plan and execute works. Recently, Sabah PWD has been able to execute (by both contract and force account) most of its planned maintenance works.
5.03 In addition the training program designed by the TST has considerably strengthened the Sabah PWD. This is because it has established a viable means of training the staff of the PID in least-cost methods of road design, construction, supervision and also in effective maintenance management. - 27 -
Peninsular Malaysia PWD9
5.04 Again the focus on establishing the road maintenance sections at Federal and St;te levels and the pilot programs in Johore, Perak and Kelantan have effectivel* contributed to strengthening these institutions' capacities to plan and implement road maintenance works. Just as in Sabah, peninsular Malaysia PWDs also faced the problem of having enough funds budgeted for main- tenance but not being organized enough to execute the required program. The new road maintenance sections with their combined use of force account and private contractors have made significant advances in addressing this issue.
VI. ECONOMIC RE-EVALUATION
6.01 The economic re-evaluation compared the benefits and costs of constructing the roads for an assumed life of 15 years. The economic costs of the project include all outlays, net of taxes and duty. Also included are the cost differentials of reutine maintenance and periodic resurfacing required to maintain the standard *f the road surface with and without the road constructiun or improvement works.
Traffic
6.02 Traffic in 1985 was much higher than expec-ed on most of the project roads (Table 5). This was due to significant growth in national income and the demand for transport in Malaysia over the past decade. Traffic growth rates between 5% and 10% p.a. were common, and by 1985 most of the roads had average annual daily traffic greater than 600 vehicles per day.
Re-estimated Rates of Return
6.03 Measurable project benefits were mainly reflected in vehicle operating costs (VOC) savings due to the paved and improved conditions of the roads when compared with their previously poor surface conditions. The recalculated ERR (Table 7) was about 23%, excluding time savings. This compares favorably with the appraisal estimate (18%). The ERR was higher, due mainly to the much higher than anticipated traffic growth which more than compensated for the increased investment costs. Hence the project roads, taken as a whole, are fully justified economically. Only the two east coast roads had ERRs lower than appraisal estimates. This was due primarily to extensive construction delays (nearly five years). They have only recently been opened to through traffic, and hence the benefit streams have been delayed significantly. It is expected that, with the building of additional roads connected to them, traffic growth will be higher than in the past and the roads will prove to be fully justified. The re-estimated economic rates of return are summarized below. - 28 -
Section ERR (%) Appraisal Comnletion
1. Reconstruction and paving: Papar-Beaufort 13.8 33.1 Beaufort-Sindumin 16.4 22.9 Lahad Datu-Balung 14.2 9.8 Balung-Semporna 14.4 10.1 2. Sabah road upgrading 22 50+ 3. Project average 18 22.6
VII. THE ROLE OF THE BANK
7.01 The project continued and expanded the dialogue between the Government and the Bank which had been started under previous projects. For Sabah state, which was now beginning to modernize and develop its road network the Bank played a very important role in helping to set design standards and encouraging road subsector institutions to focus on least-cost developments. This was true for both maintenance and new construction. Encouraging the Sabah authorities to control vehicle axle loadings will also help to protect and extend the useful life of the road network.
7.02 The exchange of views between the Government and the Bank has also helped in the evolution of road subsector policies. Of these, the most important are the greater 7riority now being given to maintenance of the road network and to effective, least-cost transport investments.
VIII. CONCLUSIONS
8.01 The reconstruction and paving of the East and West coast roads in Sabah were major objectives of the project, and they were achieved. There was considerable delay involved, but this was of the same order of magnitude as in other highway projects in Malaysia. The difference here was that the delay was due not only to the usual right of way acquisition difficulties but also to contractor failure. Still, on balance, the project was a very good one, in particular for its emphasis on establishing and strengthening maintenance organizations and the use of a technical support team to do so. It has left the various public works departments in a much better position to manage and maintain their respective shares of the Malaysian road network. T4NRO NICNAV PRW-IFCT (LOAN 1176-MA)
PROJF.rCTCOMP.TION PPORT
Actmal and Expected Projert Implenentation
Paten of: I af Uetnnin ~ Co,pletion wrk rompleted Contractor/eonul tant "Id receipt Contrart award of work of work by epected pro lect r.mp.,nenbt and nattonality Actual Expected Actuall Epected Actual mnpected Actual Expecte1 co~pletjon date
A. tnad Reenntrucrtinn In Sahah 1. Wet Vnil Road l Ppeiiper-Reauefort (17 m) Toblahma Conetruction Co., Ltd. II/76 11/76 01/17 il7 09/77 04/77 30/80 09/79 61 (lapan) I-ni Rrnu frrt-l ndmfn (18 a) Tobiqhima Constrieetion Co.. l.td. l/76 Il/76 01/177 03/77 04/77 04/177 It/ 09/179 46 (Japan)
7. F-%-a Roend Ur l .ih.e4 nant-Clraa Ftate (4 at) Conerriertfon Reao-nrreo AaIa of 11176 11176 01/77 01177 04177 04/77 - 02/80 21 (Phillppinc) & Constructton and nevelopment - - - - ki/O - 06/AS 01/04 Corporatton of the Phitippines I 4: Cfraf Fst;bte-S.mpnrna (41 et) Cnnstruction and Development 11/176 i/lE 04/177 01/77 ng/F 04/177 ni/el 02/RO 54 Corporation of the Philippnaes
N. Four-Year H.ilnten,ance Prograp for Sahah I. Prcu,aremn0t of equnpe-t 06/7 04/77 10/77 07/11 11/77 09/77 12/0 12/74 2. ii,ar., of 17 road necrions <290 ai) 07/74 04/7a 09/78 071/74 01/79 09/7a 06/34 09/82 C. PIlint P'avPett Strengtrnlng Program in ,nhore 1. 1211 al ot Fe,lr.i nte 1 Tavlor Unodrou (IOK) 12/73 06/7R 02/79 10/7R 01/79 06/174 02/81 12/80 f. dannlnt hi rvce_s . A.1 andf A.7: rr Canatr tal Table 2 - 30 - 4ALAYSIA .4TRD RIGlWAY PROJECT (LOAN 1376-MA) PRIJFCT CM'PLFTISM REPnRy Actual and Forecast Rstimates of Project Cost (MS million) Actual Forecast cost as % of estimate of cost la Contract Actual cost /b Forecast Contrac! Project component Local Foreign Total amount Local ForeigntTotal amount amount I. Bank-Financed A. Road Reconstruction in Sabah 1. West Coast Road (a) Papar-Beaufort (37 vel) 17.6 28. 46.2 ) 30.2 30.3 6.8 37.1 1M3 123 (b) Beaufort-Siodumin (18 mi) 8. 9.3 2.8 12.1 118 13Q 2. East Coast Road (a) Lahad Datu-Giram (48 qi) 18.4 24.9 48.3 33.2 21.7 27.4 49.1 In2 14R (b) Giram-Seamporna (43 mi) 23.2 39.3 62.5 42.9 21.3 22.5 43.8 70 102 Subtotal A 59.2 97.8 157.A 115.0 82.4 59.5 142.1 9n 124 B. Capital Costs of 4-Year Road Maintenance Program in Sabah. Including Road tograding 1. Procurement of equipment, including weighbridges - 11.6 11.6 7.6 9.7 - 9.7 R4 12' 2. Upgrading of road sections 10.4 16.2 27.1 20.9 62.4 - 62.4/c 230 . - Subtotal 8 10.9 27.8 38.7 28.5 72.1 - 72.1 186 - C. Pilot Pavement Strengthening Program in Peninsular 4alaysia Federate Route 1. Johore 6.2 9.4 15.6 12.5 7.1 8.6 15.' 1nn 12" 0. Consulting Services for 1. I.A: construction supervision 5.R 3.8 9.6 5.8 6.4 3.9 10.3 107 2. I.8: technical support teaff to Sabah Public Works nevartment 0.4 1.4 1.4 1.7 4.8 1.3 h.1 130 la 3. Transport/Railvay Study in Peninsular Malavsia n.2 n.9 1.1 1.2 0.2 n.5 A.7 A4 4. Kota Kinabalu Urban Study in Sabah 0.2 0.9 1.1 0.9 0.4 0.5 0.9 82 Subtotal D 6.6 7.0 13.6 9.6 11.4 6.2 18.0 12 Total 1 82.4 42 0 224.9 165.6 171.6 74.3 247.9 tin II. Government-Financed 1. Land acquisition in Sabah for l.A 2.5 - 2.5 5.0 - 5.0 2nn . 2. Domestic consulting services for detailed engineering and construction supervision of 1.8.2 2.5 - 2.5 6.3 - 6.3 252 - 3. Capital costs of pilot road maintenance an-i oavement strengthening proeraa (maintenance equipment and construction) for States of Johore (excluding IC). Perak and Kelantan 9.5 30.5 40.0 16.1 !4.3 15.6 - Total II 14.5 30.5 45.0 27.6 l^1 46.9 1.- Total Drotect Cost 97.' 172.5 264.9 21.2 93.1 244. t^* - /I Contingency allowances distributed over all oroiect components. Using exchange rates of V'SSI - N!I.5' for estimated cost and MS2.53 for actual ssts. No loan funds used. - 31 - Table 3 MALAYSIA THIRD HIGHWAY PROJECT (LOAN 1376-MA) PROJECT COMPLETION REPORT Estimated and Actual Disbursements (USs million) Appraisal Actual Actual disbursements as IBRD FY estimate disbursements 2 of appraisal estimate 1977 =nd semester 2.0 0.0 0 1978 TIt semester 6.5 0.8 12 2nd semester 13.7 1.3 9 1979 lTt semester 20.5 8.3 40 2nd semester 26.1 10.9 42 1980 =Tt semester 30.1 12.7 42 2nd semester 32.8 14.0 43 1981 =Tt semester 34.4 16.2 47 2nd semester 34.8 17.7 51 1982 =st semester 35.0 21.1 60 2nd semester - 21.3 61 1983 =st semester - 22.1 63 3rd quarter - 23.1 66 4th quarter - 23.1 66 1984 =9t quarter - 23.7 68 2nd quarter - 25.9 74 3rd quarter - 26.1 74 4th quarter - 26.3 75 1986 =it quarter - 27.8 79 2nd quarter - 28.5 81 3rd quarter - 29.2 83 4th quarter - 30.0 86 1986 Tit quarter - 30.4 87 Closing date 00/30/82 10/23/85 Table 4 -32- Page MALAYSIA TRIRD HICHWAY PROJECT (LOAN 1376-MA) PROJECT COMPLETION REPORT Compliance vith Major Loan Condition Action required Action taken Section 3.02: (a) in order to assist the Borrower in supervising Complied with, but with some Parts A and B (ii) of the Project, the Borrower delays. shall employ or causp to be employed engineering consultants whose qualifications, experience and terms and ccr..itions of employment shall be satisfactory to the Bank. Such consultants shall be employed prior to the commencement of works for Parts A(i) and A(ii) of the Project, and prior to the awarding of any contracts for works for Part B(ii) of the Project. (b) In order to assist the borrower in carrying out Complied with. Part D of the Project, the Borrower shall employ consultants whose qualifications, experience and terms and conditions of employment Rhall be satisfactory to the Bank. Section 3.05 The Borrower shall take or cause to be taken all Complied with, but usually behind such action as shall be necessary to acquire all schedule. This adversely affec- such land and rights in respect of land as shall be ted road construction. required for the carrying out of Part A of the Project, in sufficient time so as to enable contractors to carry out their agreed work programs without delay, and shall furnish to the Bank, promptly after such acquisition, evidence satisfac- tory to the Bank that such land and rights in res- pect of land are available for purpnses related to the Project. Section 3.06 Except as the lank shall otherwise agree, the roads Complied with. Standards were reconstructed under Part A of the Project shall con- modified where soil conditions form to the design standards set forth in Schedule 5 warranted it. to this Agreement. -33 Table & Page T Action required Action taken Section 3.07 The Borrower shall carry out and cause to be carried Complied with. The technical out Parts B and C of the Project in accordance with support team provided advice and road maintenance and strengthening programs estab- assistance to the Sabah PWD in lished in agreement with the Bank. the planning and execution of the 4-year maintenance program, Section 4.03 The Borrover shall phase out, or cause to be phas9d The railway has been phased out. out, the railway service between Papar and Beaufort, starting with the opening of the road between such cities reconstructed under the Project to traffic. Section 4.04 (a) The BoFrorer shall introduce and enforce, or Complied with. cause to be introduced and enforced, not later than January 1, 1978 or such other date as may be agreed between the Borrower and the Bank, the modifications to the road traffic legislation of Sabah agreed with the Bank. (b) The Borrower shall introduce and enforce, or Complied with. cause to be introduced and enforced, not later than July 1, 1977 or such other date as may be agreed between the Borrower and the Bank, the modifications to the road design standards of Sabah agreed with the Bank. Section 4.05 (a) The Borrower shall continue: (i) to cause its Substantial improvement in main- road netvork to be adequately maintained; and tenance practices have been (ii) to cause all necessary rspairs therof to be achieved. made promptly, all in accordance with sound engineering practices and shall provide promptly, as needed, the funds, facilities, ser- vices and other resources required for such maintenance and repairs. (b) The Borrower shall take or cause to be taken all Weighing stations in operation. necessary action to ensure tYat the limensions Logging trucks are still over- and axle-loads of vehicles using itr roads do loaded. Sabah police are enfnr,-- not exceed limits appropriate to the structural Ing standards. and geometric design standards of such roads. Section 4.06 The Borrower shall develop, and continue to collect Complied with. and record, in accordance with appropriate statis- tical methods and procedures, such technical, economic and financial information as shall be reasonably required for proper planning of main- tenance, improvements and extensions of its road network, including traffic counts and surveys. - 34 - Table 5 MALAYSIA THIRD HIGWAY PROJECT (LOAN 1376-MA) PROJECT COMPLETION REPORT Actual and Forecast Traffic. 1981-99 (Vehicles/day) Traffic growth rate (2) Annual average daily traffic Actual Forecast 1981 1982 1983 1984 1985 (1981-85) (1985-99) Reconstructed Roads Paper-Beaufort 3,268 3,596 3,957 4,355 4,647 9.2 9 Beaufort-Sindumin 936 1,606 1,889 2,015 2,150 20 9 Lahad Datu-Balung 414 498 598 685 730 15 8 Balung-Semporna 667 742 811 892 983 10 6 Upgraded roads in Sabah 132 152 175 201 231 15 6 - 35 - Table 6 MALAYSIA THIRD HIGHWAY PROJECT (LOAN 1376-MA) PROJECT COMPLETION REPORT Vehicle Operating Costs (MS per mile) Cars Buses Trucks Without With Without With Without With project project project project project project Roads to be Reconstructed in Sabah West Coast Road Papar-Beaufort 0.58 0.36 2.48 1.18 1.74 0.83 Beaufort-Sindumin 0.54 0.40 2.36 1.48 1.66 1.04 East Coast Road Lahad Datu-Balung Junction 0.58 0.3A 2.48 1.24 1.74 n.91 Balong Junction-Semporna 0.54 0.36 2.36 1.18 1.66 0.83 Roads to be Upgraded in Sabah (gravel surface) 0.54 0.45 2.36 1.77 1.66 1.29 - 36 - Table 7 Page 1 MALAYSIA THIRD HIGHWAY PROJECT (LOAN 1376-MA) PROJECT COMPLETION REPORT Ex-Post and Original Rates of Return Proportion of Rate of return (%) total investment Ex-post Original Reconstruction and Paving Papar-Beaufort 12.6 33.1 13.8 Beaufort-Sindumin 4.1 22.9 16.4 Lahad Datu-Balung 16.7 9.8 14.2 Balung-Semporna 14.9 10.1 14.4 Road mainten4nce program 24.5 50.0+ 29.0 Johore pavement strengthening 5.3 39.4 28.0 Project Average 22.6 18.0 MALAYS- THIRD HIGHWAY PROJECT (LOAN 1376-MA) PROJECT COMPLETION REPORT Economia EveluatLos West Coast Road : Paper - Beaufort seation 1.R. YEAR A.A.D.T. COST BENEFIT CAS- FLON (*) ($) ($ (t) Cars Bus Trucks TOTAL Care Bas Trucks -TOTAL 1977 73 11 70 154 1646644.36 -1648644.36 1978 80 11 76 167 12453732.85 .12453732.85 1979 88 11 82 181 10676207.55 -10676207.55 1980 290 28 108 426 11905260.59 *11905260.59 1981 2773 74 421 3268 2062108.87 6680157.,00 2199154.20 5430521.10 14309832.30 12247723.43 1982 3050 82 464 3596 2583926.72 7347450.00 2436900.60 5985102.40 15769533.00 13165606.20 1983 3355 91 511 3957 115005.03 8082195.00 2704365.30 6591440.10 17378000.40 17262995.37 1984 3691 101 563 4355 16471.00 8891619.00 3001548.30. 7262193-30 19155360.60 49&38889,60 1985 3949 106 591 4647 9514032.33 3151625.72 7625302.97 20290961.01 20290961.01 1986 4226 111 621 4958 10180014.59 3309207.00 0006560.11 . 21495709.71 21495789.71 1987 4522 117 652 5290 10892615.61 3474667.35 6406896.52 22774179.48 22774179.48 1988 4838 123 684 5645 5800000.00 11655098.71 3648400.72 8827241.34 24130740,77 18330740.77 1989 5177 129 719 6024 12470955.62 3830820.75 9268603.41 25570379.78 25570379.78 1990 5539 135 754 6429 13343922.51 4022361.79 9732033.50 27098343.8 4398347.89 30.703. w 1991 5816 142 792 6750 14011118.64 4223479.88 10218635.26 20453233.78 28453233.78 1992 6107 149 832 7088 14711674.57 4434653.88 10729567.02 29875895.47 29875895.47 1993 6412 157 873 7442 15447258.30 4656386.57 11266045.38 11369690.;64 31369690.24 1994 6733 165 917 7815 16219621.21 4809205.90 11829347.64 32938174.-75 32930174.75 1995 7070 173 963 8205 5800000.00 17030602.27 5133666.19 12420015.03 34565003.49 28785083.49 1996 7423 181 1011 .8616 17882132.38 5390349.50 13044055.-8 36443331.63 36314337.67- 1997 7794 190 1062 9046 18776239.00 5659866.98 13693948.57 38130054.55 38130054.55 200 1115 9499 19715050.95 5942860.33 14378646.00 40036557.28 40036557.28 1990 8184 33.182 1999 8593 210 1170 9974 20700803.50 6240003.34 15097578.30 42030385.14 42038385.14 tw MALAYSIA THIRD HIGHWAY PROJECT kJAN (1376-MA) PROJECT COMPLETION REPORT woonomic Svaluation went coast aced :Beaufort - Bindumin Section TEAR A.A.D.T. COST EMES CUM-Om t.a.a. (S) (S) (S) (S) Care Bus Trucks TOTAL Care Bus TrAcks TOTAL 1977 151 5 56 214 .00 1976 166 5 63 234 4238891.61 *4238691.69 1979 103 5 68 256 3214070.21 -3214070.2t 1980 215 7 73 295 4794434.38 -4794434.30 1981 625 6 305 936 634122.30 913412.50 55117.92 1974014.90 2942545.32 2308423.02 1982 1301 6 299 1606 912685.69 1901359.46 55117.92 1935101.62 3691659.20 2973773.51 1983 1612 6 271 1669 3341.06 2355673.52 55117.92 1753960.76 4164952.22 4161611.36 1984 1725 6 285 2015 2520784.67 55117.92 1641656.62 4417561.41 4417561.41 1965 1846 6 299 2150 2697239.59 55117.92 193374t.36. 466609923- 46686099.23 1986 1975 6 314 2294 2866046.36 55117.92 2030426.65 4971593.13 4971593.13 1987 2113 6 329 2448 3068069.61 55117.92 2131950.29 5275137.62 5275137.02 198 2261 6 346 2613 3304234.48 5117.92 2236547.60 5597900.21 5597900.21 1989 2419 6 363 2788 3535530.90 SS117.92 2350475.20 5941124.01 5941124.01 1990 2589 6 361 2976 3763018.06 55117.92 2467996.95 6306134.93 6306134.93 22.9bb2 O THIRD HIGHWAY PROJEL.- (LOAN 1376-MA) . PROJECT COMPLETION REPORT mconoste Evaluatteas Fast Coast Road :Lahad Date - Balung Junction Section YEAR A.A.D.T. COST BENSPIT CASM FLOW I.R.8 (M) (S) S$) (a) Cars Dus Trucks TOTAL Cars Bus Trucks TOTAL 1977 182 11 86 279 370417.18 -370417.18 1978 207 11 96 314 9200692.11 9200892.41 1979 236 11 96 343 3711870.57 3711870.57 1980 215 12 96 323 2612059.50 2612059.50 1981 300 18 96 414 2194471.53 939510.00 695408.22 1609807.68 3244725.90 1050254.37 1982 383 19 96 498 1980575.49 1199441.10 734042.01 1609807.68 J543290.79 1562715.30 1983 466 36 96 598 7335118.84 1459372.20 1390816.44 1609807.68 4459996.32 -2875122.52 1984 549 40 96 685 17366589.53 1719303.30 1545351.60 .1609802.68 484462.58 12512S.95 1985 587 42 101 730 10432925.90 1839654.53 1622619.18 1690298.06 5152571.78 5280354.13 1986 629 44 106 778 1968430.35 1703750.14 1774812.97 5446993.45 5446993.45 1987 673 46 111 830 2106220.47 1768937.65 1863553.62 5758711.73 5758711.73 1988 720 49 117 865 2253655.91 1878304.53 19562324.30 6088771.23 6088771.73 1989 770 51 123 944 2411411.82 1972303.75 2054567.86 6436283.43 6436283.43 1990 824 54 129 1006 2580210.65 2070918.94. 2A52296.25 6808415.84 8825A. A 1991 865 56 135 1056 2709221.18 2174464.89 2265161.07 7148847.14 7146847.14 1992 908 59 142 1109 7160000.00 2844682.24 2283188.11 2316419.12 7506269.49 -253710-51 1993 954 62 149 1165 2986916.35 2397347.54 2497340.08 7881603.97 7881603.97 1994 1001 65 156 1223 3136262.17 2517214.92 2622207.08 8275684.16 8275684.16 1995 1052 68 164 1284 3293075.28 2643075.66 2753317.43 6689468.37 8689468.37 1996 1104 72 172 1348 3457729.04 2775229.45 2890983.31 912394t.79. 9123941.3 1997 1159 75 181 1416 3630615.49 2913990.92 3035532.47 9580138.88 9560136.88 1998 1217 79 190 1487 3012146.27 3059690.47 3187309.09 10059145.83 10059145.83 1999 1278 83 200 1561 7760000.00 4002753.56 3212674.99 3346674.55 10562103.12 2802103.12 9.74932 2000 1342 87 210 1639 4202891.26 3373308.74 3514008.26 11090208.27 11090208.27 2001 1409 92 220 1721 4433035.82 3541974.17 3689706.69 11644718.69 644715.69 2002 1480 96 231 1807 4633687.61 3719072.88 3&74tg4.43 12226854.626 4226954,62 2003 1554 101 243 1897 4865371.99 3905026.53 4067903.83 12838302.3C 12038302.35 2004 1631 106 255 1992 5108640.59 4100277.85 4211299.02 13480217.47 13480217.47 2005 *1713 111 267 2092 5364072.62 4305291.75 4484863.97 14154228.34 14154228.34 2006 1798 117 281 2196 7760000.00 5632276.25 4520556.33 4709107.17 14861939.76 7101939.76 2007 1888 123 295 2306 5913890.07 4746584.15 4944562.53 15605036.75 15605036.75 2008- 1983 129 310 2421 $209584.57 4963913.36 5191290.66 16362a3&% 163&SUaS.58. 2009 2082 135 325 2543 6520063.80 5233109.03 5451300.19 17204553.01 17204553.01 2010 2186 142 341 2670 6846066.99 5494764.48 5723943.20 18064280&66 I.S64700.66 12.8373 0mt- MALAYSIA THIRD HIGHWAY PROJEC .iOAN 1376-MA) PROJECT COMPLETION REPORT icoote valuation ast Coast Road :Baluang Junction - sempora Bection YEAR A.A.D.T. COST .ENEFIT CASM FLW Z.8.8 (S) 1$) (S) (a) Cars Bus Trucks TOTAL Cars Bas Trucks TOTAL 1977 260 4 111 375 6217037.73 -6217037.72 1978 296 4 123 - 423 10037190.04 -10037190.04 1979 338 5 137 480 10625399.57 --40625399.51 1980 426 6 139 571 6942552.56 -6942552.56 1981 520 6 141 667 11052857.46 1419704.00 202084.44 2061276.18 3663064.62 -7369792.84 1982 592 6 144 742 5660529.90 1616278.40 202084.44 2105133.12 3923495.96 -1731033.94 1983 607 57 147 811 5414520.38 1657231.40 1919802.18 2148990.06 5726023.64 314503.26 1984 668 62 162 892 1991378.79 1823773.60 2008205.88 2366274.76 6280254.24 4288875.45 1985 735 69 179 983 2006697.00 2323971.06 2616197.42 6947465.48 6941465.4e 1986 786 72 88 1047 2147165.79 2440169.61 2747637.29 7334972.69 7334972.69 1987 842 16 197 1115 2297467.40 2562178.09 2685019.16 1744664.64 1744664.64 1988 900 80 207 1187 2458290.11 2690287.00 3029270.11 8177847.22 8177847.22 1989 963 84 218 1265 2630370.42 2824801.35 3180733.62 8635905.39 8635905.39 1990 1031 88 228 1347 6800000.00 2814496.35 2966041.42 3339770.30 9120306.07 2320308.07 1 1991 1082 92 240 1415 2955221.17 3114343.49 350676861 96576323,47 6676323.4? X 1992 1137 97 252 1486 3102982.23 3270060.66 3682096.76 10055139.64 10055139.64 > 1993 1193 102 264 1560 3258131.34 3433563.69 3666201.59 10557896.62 10557896.62 1994 1253 107 278 1638 3421037.90 3605241.88 4059511.67 11085791.46 11085791.46 1995 1316 112 292 1720 3592089.80 3785503.97 4262487.26 11640081.03 11640001.03 1996 1381 118 306 1806 3771694.29 3974779.17 4475611.62 12222085.08 12222085.08 1997 1451 124 321 1896 6800000.0 3960279.00 4173516.13 4699392.20 12833189.33 -6033169.32 1996 1523 130 338 1991 4158292.95 4362194.04 4934361.01 13474848.80 13474848.80 1999 1599 137 354 2090 4366207.60 4601303.74 5181079.90 14148591.24 14148591.24 10.1375 2000 1679 143 372 2195 4584517.96 4831368.92 5440133.90 14856020.80 14856020.80 2001 1763 151 391 2304 4613743.88 5072937.37 5712140.59 15596821.84 1559821.84 2002 1851 150 410 2420 5054431.08 5326584.24 5997747.62 16378762.94 163718762.94 2003 1944 166 431 2541 5307152.63 5592913.45 6297635w00 17197701-0, 11197701.08 2004 2041 174 452 2668 6800000.00 5572510.26 5872559,12 6612516.75 18057586.14 11257586.14 2005 2143 83 475 2801 5851135.77 6166167.06 6943142.59 18960465.44 16960465.44 2006 2250 192 499 2941 6143692.56 6474496.43 7290299.72 19908488.72 19908488.12 2007 '2363 202 524 3088 6450877.19 6798221.26 7654814.70 20903913.15 20903913.15 2008 2481 212 550 3243 6773421.05 7138132.32 6037555.44 21949108.61 21949108.61 2009 2605 223 577 3405 7112092.10 7495038.93 8439433.2$ 2304656426 33446564.25 2010 2735 234 606 3S75 7467696.71 7869790.88 8861404.87 24198692.46 24198892.46 12.5627 LA -41 - TABLE 7 Page 6 MALAYSIA TEIRD RIGHWAY PROJECT (LOAN 1376-MA) PROJECT COMPLETION REPORT fl Mr . 1- -CLu.ng T.me. Yvar Cot CenEfit I RR (per mil Maintna; Vchicle Total (7) Cost Operating 5aw tngL Cost ] Savingsa 1979 9.6 1980 11. C? 14.2 29.2 9159.¶ 1:.f. 313 1 .6. 783 5:.7' 1 44. 1 1984 46.4 1985 51. 1 1986 22.3 53.7 1987 .0 *s6.5 1988 .'-¯7.3-9 40. 4 62.9. 1C92' 44. C 66.5 (991 ~':' 47.5 0. 1992 74.7 199. 57.. 79.5 49.9 1994 22,5 61.6 84.1 1995 .'. . 6. 5 899. 0 890 1 6.~ 1 99 ~. 8 ;.~ . 9. 94l..'. . .' . 97 1 .2 . 128.0¯ 2301 2:. -10.t3 5 2002 .'... 11·. 136.4 5.8 costs with r riThi Dq umn . oo .. .-.. !jt ween time maintenance and without the projeci . It hau been assumed that while the cost of maintenance bth with :.nJ without the project wculd increase with traffic, the di+f. ... :.u -ould remain constant. This is a cornn..,rva H vti ... .s:nr 1 er - 42- TABLE 7 Page 7 MALAYSIA THIRD HIGHWAY PROJECT (LOAN 1376-MA) PROJECT COMPLETION REPORT Pavement Strengthening in Johore Estimated Cost and Benefit Streams (In M$ '000 Excluding Taxes) Year With Proiect Without Project Cost of Cost of Reconstruction Strengthening after Failure 1/ Overlay (per mile) (per mile) 1 140 2 75.n 3 .75.0 4 75.0 5 .75.0 The ERR is 39% 1/ The cost of reconstruction per mile is estimated at M$300,000. It has been assumed that without the project, all sections would have failed within four years and that one-fourth would fail every year. -43 - TABLE 7 MALAYSIA Page 8 THIRD HIGHWAY PROJECT (LOAN 1376-MA) PROJECT COMPLETION REPORT Road Maintenance rovim in Satam Estimated Cost and Beneit Streams (In MS Million E:cluding Taxes) YEAR : COSTS BENEFITS : I.R.R. ------Savings in Vehicle Operating Costs (Z Equipment Increase ------and in On Paved Roads On Gravel Roads Consultants Recurrent ------Cost 585,000 157,000 E1l vehicle mile/day vehicle mile/day in 1995 in 1985 ------I S S t 1978. 9.04 0.34 0.37 1979 0.61 1.00 2.01 2.17 1980 I 2.18 1.50 4.77 5.05 1991 0.55 3.00 5.67 5.96 1992 : 3.00 : 6.74 7.00 1983 : 3.00 1 8.01 8.18 1984 1 3.00 : 9.51 9.55 1985 3.00 : 11. 11.32 1986 : 3.00 ! 13.34 13.22 1 80.82 Cil This column is the difference between recurrent costs of maintenance with and without the project. It reflects the gradual build-up of the new organization with new equipment over 3 years. It has been assumed that after the build-up period, the cost of maintenance both with and without the project would increase with traffic, but the difference would remain constant. MAP SECTION IBRD 10050 R3 (PPA) • MALAYSIA SEPTEMBER 1984 THIRD HIGHWAY PROJECT 1 1(1" OTPROGRAMFORROAD MAINTENANCE A1 l AN D ' PROPOSEDPROJECT ROADS FORPAVEMENT STRENGT1ENING T HAlIAFEDERAL ROADS AND ROUTE NUMBERS OTHER PRINCIPAL ROADS K-ng - --- PRINCIPA. ROADUNDER CONSTRUCTION .RAILtWAYS .. *. . . .*.DETAILEDENGINEERING Lo r - FstHg ayi CONSTRUCTIONAND IMPROVEMENT SeoO Hlghwa A.0 _e], ta So KLANGVALLEY REGION STATE ROUNDARIES -- INTERNATIONAL 1OUNDARIES Puth Kqrmpan Raja 0 20 dop a c9TonrlaM sunge.d M3itES Kepa,3 8 ? I,? o 190 KualKm-KILOMETERS . TION IV GeorgeTo Be -or G& g,Kucela Trengg oh Koto 1,u.j ,o. > S %i a usz h Sentongo Dukn lo K ul.E SeCangs ,4Tm BAS 0-,- 171 ]Y'9R Ipoh a g ý SECEO Ti 11 KualgPamoEddo RA'IC WeidO pocrt VCameron proKO Tewerfo 1s Borou mers[g y - PHIUPPeNE0 -N OPortneC.I N SI NMuSngon s~.. Mersinga THALA D SKAMPINIDON>S0 ~c N E'.5 l A1 l- 04 IBRD12223R1(PC TAIWAN 1O119 LAO-) PHILIPPINES VETMALAYSIA AO NAM -7 MPUCHE>.' THIRD HIGHWAY PROJECT < Kudat SABAH ROADS MALAYSIA 9 pitas $4NGAPoRt INDONESLA -Pingan PinganI PROPOSED PROJECT ROADS FOR RECONSTRUCTION C ,-- PROPOSED PROJECT ROADS FOR UPGRADING PROPOSED PROJECT WEIGHBRIDGES Kota ßeIu EXISTING ROADS W- - PRIMARY HIGHWAYS JPAVED) Tuaran T---(PRIMARY -- HWGHWAYS (GRAVEL) Tamparu CROCKER RANGE CROSSING 44...f RAILWAYS KOTA KINABALU - 4 anau RIVERS RANAU-SANDAKAN 0 Beuran SandakanBONDARIES (But0t by PWO With Auraln assistence) --- STATE BOUNDARIES Pap - WEST COAST ROA pembunan - INTERNATIONAL BOUNDARIES /9' Telupid Kuala PenyLko c Telpi embakut TH,70 PCRMAP [5 ,ASED ON SANDAKAN Lamag R FERARYuiROn2223V, 1 N. ~ COUNTRYNAS ANDMAP AN Beauf eningu Tuid DIStAIMERHAVE RKEN UPDATD )ezo k6enomn ' ~ DNabawan tang 7.. r--- Lahad Datu Sindumin f Kenabong JE TomanIN INTERIOR Ga SARAWAK TA WA oKunak BALUNG pSemporna 7Sungai Rertaiý JUNCT,fON~4 S C -e - 0 10 20 30 40 50 - alung MILES Tawau 0 20 40 60 80 INDONESIA KILOMETERS 1160 1170 - 1180 119° 1200