World Bank Document

Document of The World Bank

FOR OFFICIAL USE ONLY

Public Disclosure Authorized Report No. 16809

IMPLEMENTATION COMPLETION REPORT Public Disclosure Authorized

BANGLADESH

ROAD REHABILITATION AND MAINTENANCEPROJECT

(CREDIT 1827-BD) Public Disclosure Authorized June 26, 1997 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. CURRENCY EQUIVALENTS

Currency Unit = Bangladesh Taka (Tk.) May 1986 US$ 1.0 = Tk. 30.90 May 1986 SDR 1.0 = US$ 1.306 June 1996 SDR 1.0 = US$ 1.447 August 1996 US$ 1.0 = Tk. 42.01 April 1997 US$ 1.0 = Tk. 43.65

WEIGHTS AND MEASIURES

Metric US System 1 meter (m) = 3.2808 feet (ft) 1 square meter (m2) = 10.764 square feet (sq.ft.) 1 cubic meter (m3) = 35.315 cubic feet (cu.ft.) 1 kilometer (kIn) = 0.6214 mile (mi) 1 square kilometer (km2) = 0.3861 square mile (sq.mi) 1 metric ton = 2,204.6 pounds (lbs)

FISCAL YEAR

July 1 - June 30

ACRONYMS AND ABBREYIATIONS

ADB = Asian Development Bank DCA = Development Credit Agreement ERR = Economic Rate of Return GOB = Government of Bangladesh IBRD = International Bank for Reconstruction and Development ICB = International Competitive Bidding ICR = Implementation Completion Report IDA = International Development Association LCB = Local Competitive Bidding MOC Ministry of Communication MVOC = Motor Vehicle Operating Cost NPV = Net Present Value ODA = Overseas Development Administration OPEC-Fund = OPEC Fund for International Development PCWD = Project Civil Works Director RHD = Roads and Highways Department RMP Road Master Plan RMSS = Road Materials and Standards Study SAR = Staff Appraisal Report TOR = Terms of Reference UNDP = United Nations Development Program

Vice President Mieko Nishimizu Acting Director Fakhruddin Ahmed Division Chief Marie Robinson Staff Member(s) Mohiuzzaman Quazi/Stein Lundebye FOR OFFICIAL USE ONLY

BANGLADESH

ROAD REHABILITATION AND MAINTENANCE PROJECT (CREDIT 1827-BD)

PREFACE IMPLEMENTATION COMPLETION REPORT TABLE OF CONTENTS EVALUATION SUMMARY ii

PART I: PROJECT IMLEMENTATION ASSESSMENT

A. Statement/Evaluation of Project Objectives 1 B. Achievement of Project Objectives 3 C. Major Factors Affecting the Project 6 D. Project Sustainability 7 E. Bank Performance 8 F. Borrower Performance 9 G. Assessment of Outcome 9 H. Future Operations 10 I. Key Lessons Learned 11

PART II: STATISTICAL INFORMATION

Table 1: Summary of Assessments 14 Table 2: Related Bank Loans/Credits 15 Table 3: Project Time Table 16 Table 4: Loan/Credit Disbursements 16 Table 5: Key Indicators for Project Implementation 17 Table 6: Studies Included in Project 18 Table 7: Project Costs 18 Table 8: Project Financing 19 Table 9: Economic Costs and Benefits 19 Table 10: Status of Legal Covenants 20 Table 11: Compliance with Operational Manual Statements 22 Table 12: Bank Resources: Staff Inputs 22 Table 13: Bank Resources: Missions 23

APPENDIXES A: Borrower Contribution to the ICR B: Economic Re-evaluation C: ICR Mission's Aide-Memoire D: Map: IBRD No. 20236R

IMPLEMENTATION COMPLETION REPORT

BANGLADESH

ROAD REHABILITATIONAND MAINTENANCEPROJECT

(CREDIT 1827-BD)

PREFACE

This is the ImplementationCompletion Report (ICR) for the Road Rehabilitationand MaintenanceProject in Bangladesh,for which Credit 1827-BD in the amount of SDR 78.10 million (US$102million equivalent)was approvedon September2, 1987 and made effectiveon February 25, 1988.

The loan was closed on December 31, 1996, comparedwith the original closing date of June 30, 1996. Final disbursementtook place on May 7, 1997, at which time a balance of SDR 7.01 million (US$9.7 million equivalent) was canceled. Co-financing for the project was provided by OPEC-Fund (US$8.0 million), ODA (US$0.5 million) and UNDP (US$5.30 million).

The ICR was prepared by MohiuzzamanQuazi, Transport Engineer/Task Manager (SAIBG), and SubhashSeth, ConsultantHighway Engineer (TWUTD), and reviewed by Arun Banerjee, Manager (Energy and Infrastructure Unit - SAIBG), Stein Lundebye, (Senior Transport Engineer - SAlIN), Jaswant Channe (Consultant, SAIIN), Mrs. Marie Robinson, (Chief- SA1IN) and Fakhruddin Ahmed, (Acting Director - SA1). The borrower's comments are includedas appendixto the ICR.

Preparation of the ICR began during the Bank's Supervision Mission carried out in October 1996. It is based on material in the project files. The borrower contributed to preparation of the ICR by preparing their own evaluation of the project's execution, and commentingon the draft ICR.

EVALUATIONSUMMARY

Introduction

1. Bangladesh is one of the poorest countries in the world with a per capita income of about US$240. Its economy is affected by major transportation constraints caused by a combinationof geography, nature and climate. Most of the land area is flat, low-lying and criss-crossed by rivers which are major obstacles for on land transport in the country. In addition, Bangladeshis prone to natural disasters including abnormal flooding and cyclones. Transport demand in the country has grown at a much faster rate than GDP since the mid 1970s - more than 8% per annum for passengers and 6% per annum for freight traffic, compared to a GDP growth rate of about 4% per annum during the same period. The Road Rehabilitation and MaintenanceProject (RRMP-I), successfullycompleted on December 31, 1996, emphasizedan integratedprogram for the modernization,rehabilitation and maintenance of roads to support the Government's efforts to restore its road network to a maintainable level. Becauseof the extent of the needs and GOB's limited absorptive capacity at the start of project in 1987, the RRMP focused on the major trunk roads and bridges in the northwestern part of Bangladesh, which is a food surplus area.

Project Objectivesand Description

2. The objectives of the project were to: (a) reduce transport costs of passengers and goods, in particular for food products, by restoring the most important major trunk roads in northwestern parts of Bangladesh to maintainable condition; (b) introduce institutional and technical improvementsin the programmingof works, the administrationand maintenance of the road system and in technical standardsand materials;and (c) upgrade the capabilitiesof the local contractingindustry to undertakelarger road works as an alternativeto inefficientand very small size contracts.

3. The projecthad the followingcomponents: (a) the civil works programincluded 305 km of road rehabilitationand 335 km of deferredmaintenance on importantmain and trunk roads and (b) an institutionaldevelopment program which included: (i) preparation of a Road Master Plan (RMP)for identifyingroad projectsand rankingthem in terms of priority;(ii) implementationof a Road MaintenanceAction Plan (RMAP)for improvedroad maintenance;(iii) carryingout a Road Materialsand Standard Study (RMSS)to establishtechnical standards;and (iv) preparationand implementationof an actionplan to strengthenthe domesticconstruction industry.

4. All the objectives were in line with GOB policies and IDA's strategy for sector development,which aimed at lowering overall transport costs and increasingefficiency of the transport sector. The project civil works componentsand institutionaldevelopment program were well linked to the project objectives. The first objectiverightly emphasizedlowering of transport costs on major trunk roads which is essential for the developmentof a competitive economy. The second objective,to introduceinstitutional and technical improvementswas very importantfor Roads and HighwayDepartment (RHD) because its organizationalcapacity to plan and prepare maintenanceprogram was very weak at the start of the project and the Government was embarking on a major effort to upgrade the country's road network. Similarly the third objectiveof upgradingcapabilities of the domesticconstruction industry was absolutelynecessary iii to implementroad works through large contractsas an alternativeto very small contracts, which RHD had previouslyused.

InplementationExperience and Results

5. The project was successful in achieving its principal objectives. The objective of lowering transport costs was substantially achieved by completing all the agreed road rehabilitationworks in quantity and quality by their scheduledtarget dates. The objective of strengtheninginstitutional and technicalcapacity was only partiallyachieved due to a lack of full commitment and leadership on the part of RHD. The objective of upgrading domestic constructionindustry was substantiallyachieved. In general, the physical and private sector development objectives were substantially achieved; institutional objectives were partially achieved, and environmental and sector policy oriented objectives were achieved to a considerableextent even thoughthese objectiveswere not applicableas part of the project. The improved roads significantlyreduced the vehicleoperating cost, maintenancecost and passenger travel time, thus providingsubstantial benefit to the users and providersof road transport.

6. The physical work under the project was divided into two tranches. Under Tranche I contracts, 136 km of road rehabilitationwork was completed, although abnormal (100 year return) floods in 1987 and 1988 led to some cost overruns and implementationdelays. Under Tranche II contracts, 149 km of road rehabilitationwas completed, compared with 169 km agreed at appraisal. Rehabilitationof the remaining20 km was not found justifiable due to the uncertaintyin fixing the alignmentof the road which was to link the proposedbridge over river Padma, for which the site had still not been finalized.Tranche H contracts were completed on time and showed financialsavings becausemost of the contractorswere mobilizedearly. Only 53 km of deferred maintenance works were completed, compared with 335 km agreed at appraisal. The scope of works for the remaining282 km of roads was substantiallychanged since the 1987 and 1988 floods caused so much damage that these roads could not be repaired through maintenanceand had to be rehabilitated. As a result of the floods, an IDA-financed Flood RehabilitationProject (Cr.2048-BD)was approvedand implemented,which included the necessary road rehabilitationworks. The two-tranche approach for rehabilitationworks was considerednecessary because: (a) RHD had limited managerialand financialcapacity; and (b) the availabilityof constructionmaterials and skilled manpowerwas also very limited.

7. The institutionaldevelopment component included the following: (a) to improve road investmentplanning, the preparationof Road Master Plan (RMP) was carried out under UNDP financing. The RMP has proved very instrumental in identification of prioritized and economicallyviable projects. The main objectiveof RMP was to assess the optimal investment balance between constructionand maintenanceof national and regional roads. The RMP is regularly updated; (b) to strengthenmaintenance management of RHD, pilot testing was carried out in the northwest project area for implementingthe recommendationof UNDP financed maintenance study executed by ADB. The results were not very encouraging because the methodology adopted for maintenance management was outdated compared with modem methods which are more efficient and cost effective. However, with the support of ODA financing,under a follow-onIDA project (SecondRoad Rehabilitationand MaintenanceProject - RRMP-II), a modem maintenance management system based on Highway Design and MaintenanceModel (HDM) analysis is presentlybeing implementedwith the support of foreign consultants; (c) to develop geometric and structural standards for road pavement, a Road iv MaintenanceStandards Study (RMSS)was carried out under EEC financing. The consultants have produced an excellent report and its recommendations are being reviewed for implementationunder RRMP-II, (d) to developthe constructionindustry, a study was carried out and based on its recommendationit has been possible to reduce the import duty on road constructionequipment significantly. Formation of joint ventures between foreign and local contractors; provisionof domesticpreference to local contractors and reductionof import duty on equipmenthelped the local contractorstremendously. The capacity of local contractors has enhancedto such an extent that several local contractors will now be able to compete with the internationalcontractors both in Bangladeshand in other neighboringcountries.

8. The project benefits in travel time reduction, loweringof transportationcosts, enhanced road safety facilities derived from the completionof road rehabilitationworks are substantial. However, the long-termsustainability of physicalworks will only be possible if GOB continues to show a strong commitmentin the planningand implementationof road maintenanceprograms. The goal of the InstitutionalDevelopment Component (IDC) under the RRMP-IIis to provide a safe, cost effectiveand well maintainedroad network. Given RHD, with support of IDC under RRMP-II, has adequate technical, financial and institutionalcapacity, the sustainabilityof the road network in future is no longer a concern. The Bank performancewas satisfactoryin the identification and preparation phase. During project implementation, the Bank-Borrower relationshipwas beneficialand productive. The Bank performance in supervision was highly satisfactory in both quality and quantity. The borrower performance has been rated as highly satisfactoryfor the implementationof civil works componentand satisfactoryfor implementation of the institutionaldevelopment program. The project outcome is satisfactory. Based on final constructioncosts (increaseddue to the change in scope of work of the 1987-88flood, see para. 12), the sub-projectsproduces an EIRR of 17%, comparedwith 38% at appraisal.

Key Lessons Learned

9. The key lessonslearned from the project are as follows:

X An efficient and effective maintenancemanagement system needs to be in place to ensure sustainabilityof road improvements. This requires substantialchanges in the procedures for maintenance planning, funds allocation, implementationmodalities, accountability of expenditures incurred, and monitoring of results achieved. New procedures and capabilitiesare being developedunder the on-going follow up Credit, but their success will largely depend on strong leadership, organizationalchanges, and commitmentof both GOB and RHD staff to maintenanceof national and regional road network. In this regard, the institutionaldevelopment component of the on-going RRMP-II is focusing on institutional changes in RHD towards strengtheningtheir maintenancecapabilities.

* To ensure the integrity of road networks, the issue of vehicle overloading and axle load control is an issue of major concern. This needs coordinated efforts from all concerned agencies in both the public and private sectors. The GOB needs to review its legislation and take appropriatemeasures in providing adequateinstitutional, financial and commercial arrangementsto ensure effectiveenforcement of axle loads. * With roads improved under the project, the speed of the vehicles has increased and so correspondinglyhas the number and severity of road accidentsand fatalities on some inter v urban sections of the project roads due to lack of enforcement. To improve road safety the following actions must be undertaken: (a) carry out road safety audits at the planning and design stage of road rehabilitationworks; (b) develop a comprehensiveroad safety action program with participatoryapproach of all governmentalagencies and NGOs, and (c) GOB to start implementingremedial measuresat accidentblack-spots on major roads on priority basis.

* There is also a need to streamlinethe procurementprocessing of GOB for the award of both consultancyand constructioncontracts, which on many occasionshas caused long delays in awardingof the contracts.

* Supply of bitumen from the Governmentrefineries was often inadequate. The GOB should explore the possible options of increasing the production in order to meet the growing demand for bitumen; meanwhilethe importationprocedures must be simplified to allow augmentationof bitumen supplies produced in the country. The possibilityof the use of alternate "bitumen emulsion"materials on road works needs to be thoroughlyinvestigated.

* The cumbersome bureaucratic procedures for custom clearance to import materials and constructionequipment into the country cause tremendousdelays and heavy losses for both the local and foreign constructioncompanies based in Bangladesh. There is a definite need to continue to improve, facilitateand expeditecustom clearanceprocedures for contractors attemptingto import materialsand constructionequipment from foreign countries. - To ensure full benefits of the training sub-componentunder the institutionaldevelopment components, it is important to develop a comprehensive training program in close consultationwith the borrowers. I

PART 1: PROJECTIMPLEMENTATION ASSESSMENT

A. STATEMENT/EVALUATIONOF OBJECTIVES

Background

1 The maintenanceand modernizationof the country's road network remainsa critical factor in the economicdevelopment of Bangladesh. It is one of the poorest countries in the world with a per capita income of about US$240. Its economy is affected by major transportation constraints caused by a combinationof geography,nature and climate. Most of the land area is a low-lying, nearly flat, fertile, alluvialflood plain, and criss-crossedby rivers which are major obstaclesfor land transport. In addition, Bangladeshis prone to naturaldisasters includingabnormal flooding and cyclones. These constraintslead to lower efficiency, higher transport costs and unreliability, with major adverse consequencesfor the economy such as increasedmarketing risks, quality deterioration, lower prices for farm products, and failure of delivery schedulesin exports. IDA's report on AgricultureDiversification (May 1995) clearly identifiesinadequacy of transportinfrastructure as a major constraintfor economicgrowth.

2. Transport demandin Bangladeshhas grown at a much faster rate than GDP since the mid 1970s- more than 8% per annum for passengersand 6% per annum for freight traffic, compared to a GDP growth rate of about 4% per annum during the same period. The Governmenthas followeda consistent strategy in recent years to improvethe highway network in order to meet the transport demands, which have been growing faster as the country continuedto move from a subsistenceeconomy to a more market- based economy, and with more industrial and export related activities. The Road Rehabilitationand MaintenanceProject (RRMP), successfullycompleted on December31, 1996, emphasizedan integrated program for modernization,rehabilitation and maintenanceof roads to support the Government'sefforts to restore its road networkto a level at which it can be maintainedby normal procedures. Becauseof the extent of the needs and GOB's limited absorptivecapacity at project start in 1987, the project focused on the major trunk roads and bridges in the northwesternpart of Bangladesh,which is an area of surplus food production. The current transportdemands, however, would require much greater effort than in the past in dealing with the country's major transportbottlenecks and in removing the existing physical and organizationalconstraints. The opening of the Jamuna Bridge expected in June 1998, will generate substantialtraffic on the projectroads.

Statementof Objectives

3. The objectives of the RRMP, as stated in the Staff Appraisal Report (SAR) were to:

(i) reduce transport costs of passengers and goods, in particular agricultural products, by restoringthe major trunk roads in northwestBangladesh to maintainableconditions;

(ii) introduce institutional and technical improvements in the programming of works, administration and maintenance of the road system and in technical standards and materials;and,

(iii) upgrade the capabilitiesof the local contractingindustry to undertakemajor road contracts as an alternativeto small and inefficientsize road contracts. 2

4. To achieve these objectives, the project had the following components:

(a) The civil works program included: (i) carrying out a two-phased program of rehabilitation/ reconstruction of about 305 km of roads and bridges in northwestern Bangladesh; (ii) carrying out a program of deferred maintenance works on about 335 km of other major roads in northwestern Bangladesh; and (iii) preparation of detailed engineering studies and supervision of the project civil works;

(b) The institutional development program included: (i) preparation of a Road Master Plan (RMP) for identifying future projects for road construction, rehabilitation and maintenance and ranking them in terms of economic priority; (ii) implementation of a Road Maintenance Action Plan (RMAP) for improved road maintenance which included the provision of funds for road maintenance activities, maintenance by contract and related training of Roads and Highway Department (RHD) staff, carrying out a Road Materials and Standards Study (RMSS) and the establishment of a Planning and Monitoring Cell; and (iii) carrying out a Construction Industry Study (CIS) and, based on its findings, preparation and implementation of an action plan to strengthen the domestic construction industry.

5. The project component relating to carrying out of 335 km of deferred periodic maintenance was significantly modified due to the occurrence of severe floods in the years 1987 and 1988. As a result of floods, most of the project roads included in the periodic maintenance program were damaged to a large extent, which necessitated the formulation and implementation of a separate IDA-financed Third Flood Rehabilitation Project (FRP). The FRP approved on June 1989 and implemented during the years 1989-94, focused on, inter alia, rehabilitation of the affected roads. Out of the 335 km of periodic maintenance originally planned under RRMP, 282 km were seriously damaged by floods and these were rehabilitated under FRP. Therefore the periodic maintenance works on the remaining 53 km not affected by the floods were carried out under RRMP. Due to floods, the scope of work on other project roads selected for road rehabilitation was also increased.

Evaluation of Objectives

6. All the objectives were in line with the Government's policy and IDA's strategy for sector developmentincluding lowering of overalltransport costs and increasingefficiency of the transport sector. The project civil works and institutionaldevelopment components were well linked to the project objectives and mainly focused on: (a) restoring, through rehabilitationand maintenance, priority road network in the northwestern region to a maintainablecondition; (b) strengthening the institutions concernedwith road transport infrastructure; (c) establishingan effectiveroadway maintenanceprogram in the region; and (d) training RHD staff in planning, design and supervisionof road works. The project objectives were clear, realistic and achievable within the limited management capacity of the implementingagencies.

7. The three project objectives were stated in order of priority. The first objective rightly emphasizedlowering of transportcosts becauseroad transport consistentlyincreased its share of both the passengersand freight traffic. From about 35% of the total ton-km in 1974/75, the road transport share rose to about 61% in 1992/93. The passengertraffic share also rose from 54% to 75% during the same period. The objective of reducing transport costs on most important major trunk roads: 267 km long 3 Highway N-5 between Nagarbari and Saidpur, 197 km long Highway N-6 between Kashinathpurand Nawabganj,and 37 km long Highway N-74 between Khushtia and Dashuria, was most demandingand very timely for RHD. Project preparation work confirmed that the existing pavement showed high deflections and rehabilitationworks, if carried out, would bring the following benefits: (a) vehicle operatingcosts savings, about 85% of the project benefits; (b) road maintenancecost savings, about 4% of the project benefits; and (c) passengertime savings,about 11% of the project benefits. The inclusion of deferred periodic maintenance program for priority national and regional roads was also very appropriateto achieve the objectiveof loweringtransport costs becauseit can slow pavementdeterioration and allows rehabilitationto be postponedfor a few years.

8. The second objective, to introduceinstitutional and technical improvements,was very important for RHD because its organizationalcapacity to plan, program, budget and financialmanagement was very weak, and the GOB was unable to properly identifyand implementprojects to be financed in the road sub-sector. At the time of the project start, routine and periodic maintenancewas generally inadequate and more than one third of the roads and bridges were in poor condition and needed urgent repairs. Thereforethe institutionalobjectives of RRMP-I were to prepare RMP and RMAP, to carry out a Road Materials and Standards Study, to improve planning, management and training with the support of appropriate technical assistance programs were very crucial for the enhancementof managerial and technicalcapabilities of RHD.

9. Similarly the third objective of upgrading capabilitiesof the domestic construction industry was absolutelynecessary to: (a) undertakeroad works through large contracts as an alternativeto small and inefficientcontracts; (b) identifychanges needed to develop a more efficient industry; (c) increase the benefits to Bangladesh generated by construction projects, through local contractors for which the contracts were generally implementedby foreign contractors. Given the government's bureaucratic procedures and limited institutionalcapacity of RHD, project objectives at (i) and (ii) (para 3) were ambitious. Project design was appropriatein terms of formulatingproject componentsand the number of agencies responsiblefor implementation. Co-financiers(OPEC Fund and UNDP) participatedin project execution. A good analysis of all the possible risks was carried out at the appraisal stage and actions taken to mitigateall the probablerisks. Agreementsto all actions critical to project success were reached with the GOB at the time of negotiationsand credit effectiveness.

B. ACEIEVEMENT OF PROJECT OBJECTIVES

10. The project was successful in achieving its principal objectives. The objectives of lowering transport costs for passengers and goods were substantially achieved by completing most of the rehabilitationworks on the major trunk roads. The objectiveof strengtheninginstitutional and technical capacity in planning and programmingof roadwork, maintenancemanagement of the road network, and improvementof technicalstandards was partiallyachieved. The objectiveof upgrading the capabilitiesof domestic contracting industry in implementingroad works was substantially achieved, although the objective of gradual phasing out of the inefficientforce account works was only partially achieved. A detailedoverview of the achievementof objectivesis provided below under the following headings: (i) physicalobjectives; (ii) institutionalobjectives; (iii) sector policies; (iv) private sector development;and (v) environmentalobjectives. 4 PhysicalObjectives

11. RehabilitationWorks: These works were carried out in two tranches because: (a) RHD had limited managerial and financialcapacity to implementthe project in parallel with other projects in the sector; (b) the availabilityof skilledmanpower and constructionmaterials was limited; and (c) tranching permittedmaximum involvement by the local constructionindustry. Under Tranche I all 136 kIn of road rehabilitationworks were completedby the target date. Under Tranche II, 149 km were completed comparedto 169 km planned. The completionof the remaining20 km was not found justifiablebecause this particular section of the road was supposedto connect to a bridge over the river "Padma" (Ganges) for which the exact site could not be finalizedduring the project implementationperiod. The 305 km of completedwork included: (a) 224 km of NationalHighway No-5, section from Nagarbarito Pirganj; (b) 68 km of National Highway N-6 - section from Kashinathpurto Pabna, which includes the 5 km long Pabna Bypass; and (c) 13 km of National HighwayN-74 - Paksey Ferry Road. The road rehabilitation works comprised reconstructionto meet adequate technical standards, widening of embankmentsand pavement, laying of bituminousoverlays and wideningor reconstructionof bridges. The quality of the completedworks was acceptableand helped improve road safety, ease traffic congestion, and provided good riding quality.

12. During 1987 and 1988 heavy rains and flooding occurred in the project area. Several portions of the existing highway (Highway N5) submerged and many drainage structures washed out. The flooding over the road also caused considerable scour of the road embankments. Some unavoidable delays were experienced in the construction of Tranche-I contracts which required re-design and revised drainage implementationprocess. The cost for six contracts (due to increased scope of work and delay in the start of work) under Tranche-I increased between 8% to 50% and the earthwork quantity increasedbetween 18% to 92% comparedto the bid estimate. These substantialcost increases reduced the IRR of the project (see para. 8). Due to favorable weather condition all the Tranche-II contracts were completedwithin the time scheduleand within the bid amounts.

13. Deferred MaintenanceWorks: Only 53 km of deferred periodic maintenance works were completed,compared with the 335 km agreed at appraisal (see para 5 for details). National and regional roads were selected based on economic priority whose maintenancewere long neglected on account of financial constraints and had created a backlog of periodic maintenance. The implementationof the deferred maintenance works was considered a necessary complimentto the program of rehabilitation works, and it helped slow pavementdeterioration and prolongedthe serviceabilityof the roads.

14. AdditionalWorks: Due to the reduction in the scope of deferred maintenance work, there was some savings in the credit. Some part of the savings were utilized to construct 89 No. parking areas for bus stops along with project roads at a cost of Tk.48 million (US$1.1 million equivalent). These parking areas are expected to improvethe road safety situation within the project area.

InstitutionalObjectives

15. Road MaintenanceAction Plan: To strengthenthe maintenancemanagement function within RHD, the project carried out a road maintenanceaction plan (RMAP) as recommendedby a UNDP financed Maintenance Study, executed by ADB. As part of RMAP, a pilot study related to road maintenancewas tested in RajshahiDistrict of the project area to separate maintenancefrom construction activities. The results of the study were not very encouragingsince the pilot project had been formulated on the basis of the study, and was not based on the most modern techniques of managing road 5 maintenance, which are more efficient and cost-effective. This situation is in the process of being correctedby RHD who have now started implementinga modem maintenancemanagement system, based on annual road condition and traffic surveys and allocationof maintenancefunding on the basis of a HighwayDesign Model (HDM). This work is in progressunder the follow-upRRMP-II.

16. Road Materials and StandardsStudy: Road standards being used by RHD at the project appraisal stage were not found appropriatein terms of both geometric and structural parameters of the pavements for various types of roads classifiedas national, regional, secondary and feeder roads. As a result a study on road material and technicalstandards was carried out during project implementationwith the following key objectives: (a) develop pavement construction and maintenance techniques and to prepare appropriatetechnical guidelinesfor RHD staff; (b) develop a catalogue of pavement structures for Bangladesh;and (c) draft an uniform set of road constructionand maintenancestandards (geometric and other essential parameters). The consultants produced an excellent report which is very comprehensive. Unfortunately,RHD did not make much use of the study recommendationsdue to lack of commitmenton part of RHD management. Under the follow-upRRMP-II, RHD is making efforts to review and implementthe recommendationswith the support of foreign and local consultants. A revised and condensedmanual has been producedand RHD has agreed to implementits recommendationsto the extent that RHD's managerialand technicalcapacity permits.

17. Training: RHD staff were trained by the supervision consultants in planning, design and supervisionduring implementationof both the rehabilitationand the deferred maintenanceworks. The trainingprogram includedon the job trainingas well as class room courses. Some local contractors were also trained.

Sector Policies

18. Road Master Plan: In the past, road expenditures on both new capital investments and maintenancehad been inadequateand there were no well defined priorities or criteria for the allocationof fundingfor investmentand maintenanceworks. In recognition,a study was carried out under the project with the support of UNDP financing. A five year road developmentplan was prepared which has proved very instrumental in identifying and prioritizing road projects, which are economically viable for implementation. The main objectives of the RMP were: (a) to find the optimal investmentbalance betweenrehabilitation of nationaland regionalroads; (b) to find the optimal balance betweeninvestments and maintenance; (c) to define the basic grid on which the highwaynetwork should develop and for each segmentof the grid, the optimal phasing of investmentsand maintenanceover time; and (d) to provide data to the Planningand MonitoringCell (PMC)for preparingand updatingan inventory of RHD roads. An HDM unit has consequentlybeen establishedin RHD and one of its main functions is to update the RMP at regular intervals.

PrivateSector Development

19. With the general objectiveof developinga more efficientdomestic contracting industry a study was carried out with the followingkey objectives: (a) to prepare draft legislationwhich would recognize constructionas an industry and to extend to it the coverage of duty and taxation regimes which apply to other industries; (b) to prepare draft legislationto introduce modem contracting procedures; (c) to establisha consolidatednational registry for civil and buildingcontractors; (d) to assist contractors in the establishmentof an effective contractor's association;and (e) to identify the major constraints which adversely affect efficient operationof local constructionenterprises. The objectives were substantially 6 achieved. Import duties on road constructionequipment were reduced significantlywhich contributedto lower the overall road constructioncosts. Furthermore,the capacityof a number of local contractorswas enhanced to such an extent that some local contracting companies are now able to compete with the international contractors. The objective of promoting the private sector in carrying out periodic maintenanceworks financed under GOB's recurrent budget and supervisedby RHD, was only partially achieved because RHD has not been able to maintain the quality of work to acceptable technical standards. This objectiveis being pursued under the follow-upof RRMP-II.

Environmentaland SocialObjectives

20. Given that all the road rehabilitationand maintenanceworks were carried out within the existing road reserve, no specific environmentalobjectives were required to be achieved under the project. However, the project contributedto the generalenhancement of the environmentin the project area by the provision of the following measures: (a) constructionof new and improved culverts to improve the drainage system; (b) comprehensivetree planting along the road embankments;and (c) improvingroad safetyby constructinga number (32) of new bus lay-byesin the urban areas along the project roads.

Complianceof Covenants

21. There were 17 covenants under the project, of which 12 were complied with, 5 were not fully complied with. Of these 5 covenants, 3 of them related to the type of sectoral/cross-sectoral policy/regulatory/institutionalaction; the other 2 related to management aspects of the project and accounts/auditsand flow utilizationof projectfunds. Stepsare being taken under RRMP-11to improveon these short comingsof RHD.

C. MAJORFACTORS AFFECTING THE PROJECT

22. Factors not Generally Subject to Government Control: The devastating floods of 1987-88 seriously delayed the start of the Tranche I rehabilitationworks and greatly increasedthe scope of both the rehabilitationand deferredmaintenance works.

23. Factors Generally Subject to GovernmentControl: There were some delays in: (a) customs clearanceof constructionequipment and spares, (b) relocationof public utilitiesand (c) decision-making in processingof contract awards. This delayed completionof Tranche I rehabilitationcontracts by about 18 months.

24. Factors Generally Subject to Implementing Agency Control: An additional four periodic maintenancecontracts were tendered in 1995. However, due to delay by GOB in decision on awarding the contracts,only one contract could be awarded.

25. Cost Changes: The contract amount for the Tranche I rehabilitationworks was TK 1,594 million and the amount of the final payment was TK 1,982 million, an increaseof 24.3%. The large majority of this increase was on account of additional scope of work (mainly additional bridges) needed for the existingroads as a result of the damagesdue to the severefloods in 1987-88. The contract amountfor the Tranche II rehabilitationworks was TK 3,247 million and the final payment is expected to be TK 2,948 million, a decrease of 9.2%. This savings is mainly due to reductionsin the General and Miscellaneous Items in most of the contracts. Despitechanges in costs in some project components,there was no overall 7 cost overrun because savings under some components were reallocated to other components. The increasedcost in the civil works due to flood damagehad an impacton loweringof the EIRR.

26. ImplementationDelays: The credit was signed on September2, 1987, and was declared effective on February 25, 1988, about three monthsbehind schedule. The civil works for Tranche I rehabilitation were given notice to proceed (NTP) on March 1, 1988. However, due to the floods in 1987 and 1988, the contractor's mobilizationwas slow and additionaltime was required for the redesign of the drainage structuresproposed to be constructedunder the project. Time extensionsranging from 6 to 18.5 months to be accorded. This in turn delayed the implementationof the Tranche II rehabilitationworks. Tranche II rehabilitationcontracts were signed on January 31, 1993 and the contractors were given notice to proceed in March 1993. These contracts were completed well within the contract periods, with the exception of one bridge which experienced delays due to high water levels maintained by a newly constructed irrigation embankmentby BangladeshWater DevelopmentBoard (unforeseenat the time of tendering). The Borrower requested an extension of the scheduledcredit closing date to December 31, 1996 to cover completionof this bridge and replacementof two washed out culverts (completedunder Tranche I) with two bridges. These culverts were washed out during severe localizedfloods in 1995due to diversion of water flow created by the constructionof new flood protection embankmentby Water DevelopmentBoard.

D. PROJECTSUSTAINABILITY

27. The benefits in travel time reduction, lowering of transportationcost and enhanced road safety derived from the completionof road rehabilitationand periodic maintenancecontracts are substantial. However, the long term sustainabilityof physical works are likely only if the GOB continues to show a strong commitment in the planning and implementationof the road maintenanceprogram. At credit closing, RHD does not have a separate road maintenancedivision, and it is not clear if the completed roads have been includedin the RHD maintenanceprogram, which is yet to be established. However, the GOB recognizes the need for improved maintenanceand has substantiallyincreased the maintenance budget in recent years, although the budget allocationsare not based on a prioritized road maintenance program. Under the follow-upIDA projectRRMP-II, the GOB has introduced,with ODA-financing,an IDC whose basic goal is to strengthenthe institutionalcapacity of RHD to ensure a safe and maintained road network. Under the IDC there are nine sub-components,including a separate componentexclusively aimed at improvingRHD maintenancemanagement. Under the maintenancesub-component RHD, with support of the foreign consultants, has placed special emphasison the following: (a) to carry out road conditionsurvey and traffic count surveys every year; (b) to organize training program for improved road maintenancein every zone; and (c) to prepare a prioritizedmaintenance program at the HDM circle at headquarters based on economic analysis. It is believed, therefore, that RHD is in a position to establisha maintenancemanagement system and the sustainabilityof the project roads can, therefore, be achieved.

28. The overloadingof pavements beyond the legal axle load limits on certain completed roads section is a critical issue in as far as the sustainabilityof the project roads is concerned. On IDA's recommendations,and continuousfollow-up during project implementation,RHD will purchase mobile weigh bridge equipmentand try to enforceaxle load limits on projectroads more vigorously. E. BANK PERFORMANCE

29. Identificationand Preparation:The project was identified in discussionsbetween GOB and the IDA. The project design was consistent with the Government's development priorities and IDA's assistance strategy for the country. The project also met the increaseddemand for the road transport sector because it focused on the country's need for an integrated program for road construction, modernization,rehabilitation and maintenance. The selectionof the project area in the northwestregion of Bangladeshwas most plausibleand appropriate,given the fact that a parallel Asian DevelopmentBank (ADB)project covering the most importantsections of the major trunk roads in the south and east. An agreementwas reached with GOB and ADB on a division of the roads to be selected for carrying out feasibilitystudies and financed on a common approach for maintenancestandards, institutionalmatters and cost recovery issues. The feasibilitystudy and detailedengineering design, includingpreparation of bidding documents for Tranches I and II, and deferred maintenanceworks were carried out with the support of consultants engaged under UNDP financing, with IDA as executing agency. Bank's performancein dealing with the GOB, UNDP, ADB and the consultantsduring project identificationand preparationwas highly satisfactory.

30. Appraisal: The Bank reviewed the project reports prepared by the consultants during the appraisal stage thoroughly and correctly selected the most economically viable sub-projects for rehabilitationand deferredmaintenance works. The need for splittingthe works in two tranches was very thoughtfuland appropriate,given the GOB's limited implementationcapacity and to permit the maximum involvementof local constructionindustry. In designingthe IDC, the Bank correctly addressedthe key issues of: (a) improved plaming and programmingof road works; (b) preparation of long-termroad master plan; (c) implementationof a road maintenanceaction plan; and (d) to carry out Materials and Standards Study. The IDC did not place sufficientemphasis on the design and implementationof a trainingprogram. The project includedtraining of RHD staff with the support of supervisionconsultants only but did not clearly define the level of staff to be trained and the areas of training. Althoughthe SAR did not specificallymention the trainingof contractors,a few contractorswere also trained. The Bankdid not pay adequate attention to road safety issues and poverty reduction issues were also not dealt with explicitly, as these issues were not fully emphasized at the time of project preparation. The implementationstrategy for the pilot test scheduled to be carried out under the proposed RMAP was neither adequatelyfocused nor clearly defined. As a result, no conclusionscould be drawn from the pilot project component. Overall, the Bank's performancein this aspect was mixed, very satisfactoryin the appraisalof civil works componentand marginallysatisfactory for the other components.

31. Supervision: The quality of Bank supervisionwas very professional,objectively oriented, and based on a solid understandingof the Borrowers institutionalcapabilities and the Bank's policies and procedures. During project implementation, the Bank-Borrower relationship was beneficial and productive. Project implementationprogress was reported adequately. Implementationproblems were correctly identified,adequately assessed and provided appropriateperformance ratings in the supervision Form 590. Credit covenants were enforced and remedies exercised. Sufficientadvice was given to the implementingagencies and the follow up actions were more than adequate. The timing of supervision missions were appropriate and the time spent in the field was sufficient. On the whole the Bank's performancein supervisionwas highly satisfactoryboth in qualityand quantity. 9 F. BORROWER PERFORMANCE

32. Project Preparation: The project was prepared with the support of consultants and the borrower's performance in reviewing the project proposal with respect to technical, economical and implementationarrangements was satisfactory. The rehabilitationand the deferred maintenanceworks on national and regional highwayswere selectedbased on economicevaluation, which was found justifiable and acceptable. The selectedproject roads were of high priority and had deterioratedto the extent that the major repairs needed were beyondthe institutional,financial and technicalcapacity of the RHD. The borrower's performance in the preparation of the institutionaldevelopment program, particularly the preparation of RMP, carrying out of Road Material and StandardsStudy, and in implementingthe road maintenanceaction plan on a pilot basis, was consistentwith RHD needs. Even with capacityconstraints, the borrower's role in monitoring the preparation of detailed designs and contract documents was significant.

33. hnplementation Performance: The civil works componentwas implementedby the Additional Chief Engineer (RHD) who establishedhis office in the Northwest region (project area) and reported directly to the Chief Engineer (RHD). The institutionaldevelopment component of the project was implementedby the AdditionalChief Engineer (SpecialProjects), with the exceptionof the RMSS study which was implemented by the Additional Chief Engineer (Planning and Development). The ConstructionIndustry Study was supervisedby the Ministryof Planning. Althoughthis arrangementfor project implementationwas found satisfactory, lack of ownership and proper coordination among the various agencies involved hampered the progress of the institutionaldevelopment components of the project. RHD's performance in managing the civil works component of the project was highly satisfactory. Most of the civil works were completed within the target dates and the quality of the completedcivil works was found acceptable. Some delays were experiencedin the award of Tranche II contracts due to dealing with contractor's complaints, challengingGOB's decision to award only one contract to each contractor. However, this was a learningexperience for RHD and it has since adopted corrective measuresby awardingmore than one contract to the successfulbidders. The performanceof consultantsand contractors engaged in implementationof project activities was found satisfactory by RHD. However, the consultantstraining program was not very effectivedue to lack of interest of RHD staff outside the project area. The availability of GOB counterpart funding was timely and the implementingagencies showedadequate commitment in complianceof the major credit covenants. At the beginning of the project, GOB's counterpartfunding was supplementedby USAID support through the PL-480 program. Recent axle load surveys have shown excessive overloadingthat may significantly reduce the design life of the road improvements.However, RHD is planningto use mobile weigh bridges to control everloading and to strengthen enforcementof axle-load limits on its road network. The Borrower complied with IDA guidelines on procurementand disbursement, although there were some extendeddelays that occurred in submittalsof audit reports. Overall, the borrower's performanceduring implementationwas satisfactory.

G. ASSESSMENTOF OUTCOME

34. The project achievedmost of its major objectives,substantially or partially, despite the difficulties that occurred due to the major floods of 1987 and 1988. Besidessignificantly reducing the transportation costs on National Highways N-5 and 6, the rehabilitationworks implementedunder the project also contributedin reducing traffic congestionand providedgood riding quality. The constructionof bus lay- byes adjoiningthe road pavement greatly contributedin improved road safety. Provision of additional drainage structuresand tree plantationalong the sides of the roads helped in improvingthe environment. 10 The institutional development program helped in the preparation of long-term RMP and establishment of technical standards. In implementing the RMAP the outcome was less satisfactory because its results could not be replicated to improve maintenance management. The outcome of RMP proved very beneficial in identification of road investment and updating of road inventories. The results of Road Material and Standard Study was very satisfactory, though it could not be implemented due to inadequate organizational capacity of RHD. The construction industry received a powerful impetus as a result of the project. The customs duty on road construction equipment was significantly reduced; the cumbersome bureaucratic procedures for custom clearance were simplified and delays in the processing time were also reduced. Several local construction companies prequalified for international bidding and a number of new contractors have emerged. The training of contractors was successful, though the quality of maintenance works through contracts still remains a major issue. Given the substantial outcome in the case of civil works component and marginal outcome of the institutional development program, the overall assessment of the project outcome can be rated as satisfactory.

35. Economic Re-evaluation: Table 8 summarizes the economic re-evaluation of all sub-projects, except deferred maintenance works. Due to the 1987-88 floods, the scope of deferred maintenance works was substantially reduced and therefore it was not considered appropriate to carry out the economic reevaluation for these sub-projects. Based on final construction costs and most probable estimates of maintenance costs, investments made on road rehabilitation projects for National Highways N-5, N-6, and N-74 produced EIRR of 17, 14 and 13% respectively, compared with 34%, 30% and 28% respectively. Based on final construction costs, the project produced an overall EIRR of 17%, compared with 38% at appraisal. The reason for lower EIRR than the appraisal is the cost overrun, because the scope of works was increased due to severe floods of the year 1987-88 (see para 12 for further details). The computed ElRRs also underestimate the full benefits of the project as they do not include benefits due to increased traffic safety, quality of service and convenience to road users on the improved facilities, which are a substantial outcome of the road project improved under the rehabilitation program. The existing traffic levels were obtained through traffic count surveys and the growth rate of 10% annually have been assumed for the computation of benefits. Overall, the final EIRR on project completion is satisfactory as even with the higher construction costs positive rates of return were generated. The ultimate beneficiaries of the completed projects will be the road users who, due to diversity of the traffic using the road network, come from a wide range of sectors and income groups.

H. FUTUREOPERATIONS

36. Since most of the civil works include rehabilitation and deferred maintenance on existing national and regional highways, no formal plan of operation was established. However, to ensure routine and periodic maintenance of the improved roads, RHD has initiated under the follow-on IDA-financed RRMP-II, a comprehensive IDC with ODA financing. The IDC is aimed at, inter alia, strengthening the institutional and technical capability of RHD, and to introduce maintenance management with the support of foreign and local consultants. Since the start of RRMP-II in 1994, RHD and IDC have succeeded in training staff in the field divisions to carry out road condition surveys every year and prepare maintenance programs at headquarters, based on the HDM. In addition, IDC has also introduced a bridge management system and has trained RHD staff in the preparation and implementation of a bridge maintenance program. The HDM circle with the support of IDC consultants, have introduced a Geographical Information System (GIS), which should help in the planning and preparation of future road investment and maintenance programs. The IDC is a large project component comprising 9 sub-components, and its implementation is in progress to achieve the common goal of ensuring a well maintained and safe road network. Therefore, RHD has made all necessary arrangements, including technical planning, collection 11 of field data, budgetary provisions, and trained staff to carry out the road maintenanceof completed roads.

37. Basic performance indicators needed for the operational phase of the project including internationalroughness index (IRI), classifiedtraffic counts, road condition surveys, axle-load surveys, road accidentsbased on computerizedanalysis, would be monitoredby RHD for the followingpurposes: (a) preparation of maintenanceprogram; (b) improvementof road safety; and (c) lowering vehicle operatingcosts. Given that RHD, with support of IDC under RRMP-II,has adequatetechnical, financial, and institutionalarrangements in place, an efficientand effectiveoperation of future projects is no longer a concern. At the same time since institutionalimprovements are a long-termand continuousprocess, follow-upprojects must alwaysplace great emphasison RHD's institutionaldevelopment programs.

I. KEY LESSONS LEARNED

38. The key lessons learnedfrom the projectare as follows:

* To avoid long delays in relocation of public utilities interferingwith the project civil works, GOB should ensure that all public utilities are relocatedprior to the award of the contracts.

* RHD requires an efficient and effective maintenance management system to be developed and maintained to ensure sustainability of road improvements. This will require substantial changes in procedures for maintenance planning, funds allocation, implementationmodalities, accountability of expendituresincurred, and monitoringof results achieved. New procedures and capabilitiesare being developed under the on-going follow up Credit, but their success will largely depend on strong leadership, organizational changes, and real commitment of both GOB and RHD staff to road maintenanceactivities.

* Due to the new road improvements,the speed of vehicles has increased, which has resulted in increasingthe number of fatalities and serious personal injuries and road accidents. To improve road safety, the followingactions must be undertaken: (a) carry out road safety audits at the planning and design stage of road rehabilitationworks; (b) implementa comprehensiveroad safety action program with participatoryapproach of all governmentalagencies and NGOs; and (c) strict enforcementof speed limits.

* Supply of bitumen from the Governmentrefineries was often inadequate. GOB should explore the possibleoptions of increasingthe productionin order to meet the growingdemand of bitumen; meanwhile the importationprocedures must be simplifiedto allow augmentationof bitumen suppliesproduced in the country. The possibility of the use of alternate "bitumen emulsions" on road works needs to be thoroughlyinvestigated.

* The cumbersomebureaucratic procedures for customclearance to import materials and construction equipment into the country cause tremendousdelays and heavy losses for both the local and foreign 12 constructioncompanies based in Bangladesh. There is a definite need to continue to improve, facilitate and expeditecustoms clearance procedures for contractorsattempting to import materialsand construction equipmentfrom foreign countries, and streamlinethe procurementprocessing for award of contracts.

* To ensure full benefits of the training sub-component under the institutional development components,it is important to develop a comprehensivetraining program in close consultationwith the borrower. The training program must include major activities, qualification of the participants, and clearly defined implementationprocedures.

* The staging of the project civil works in two trancheswas very effectivesince it benefitedboth RHD in buildingtheir institutionalcapacity and the local constructionindustry in their gradual development. 13

PART II

STATISTICAL INFORMATION

Table 1: Summary of Assessments Table 2: Related Bank Loans/Credits Table 3: Project Time Table Table 4: LoanlCredit Disbursements Table 5: Key Indicators for Project Implementation Table 6: Studies Included in Project Table 7: Project Costs Table 8: Project Financing Table 9: Economic Costs and Benefits Table 10: Status of Legal Covenants Table 11: Compliance with Operational Manual Statements Table 12: Bank Resources: Staff Inputs Table 13: Bank Resources: Missions 14

TABLE 1: SUMMARYOF ASSESSMENTS

A. AchievemenLQf Substantial Partial Negligible Not applicabk objectives

Macroeconomicpolicies 0 O O 0 Sector policies 0 [H Financial objectives 0 O 0l 0 Institutionaldevelopment 0 0 0 0 Physical objectives 00 0 0 Poverty reduction 0 0 E E Gender concerns 0 O O 0x Other social objectives 0 0 0 0 Environmentalobjectives 0 O 0 03 Public sector management 0 0 0 0 Private sector development E 0 O O

B. Project sustainability Likely Unlikely Uncertain 0 0 a

C. Bank Performance Highly satisfactory Satisfactory Deficient Identification 0 l 0 Preparation assistance E 0 El Appraisal O 0 O Supervision 0 o o

D. Borrower performance Highly satisfactory Satisfactory Deficient Preparation 0 0 0 Implementation E0 0 Covenantcompliance [R0 E

E. Assessmentof outcome Highly Satisfactory Unsatisfactory Highly satisfactory unsatisfactory 0 0 0 0 15

TABLE2: RELATEDBANK L,OANS/CRDIF)TS

Loam/Credit Purps Year of Approval Status

Preceding Operations

1. Credit 408-BD Constructionof Feni Bypass 1973 Completedin 1979 First Highway Project

2. Credit 964-BD Constructionof ChandiBypass 1979 Completedin 1987 SecondHighway & ComillaBypass after a difficult Project implementationperiod.

3. Credit 1301-BD Strengtheningof Feni Bypas 1982 Completedin 1986. Supplemental

Following operations

1. Credit 2569-BD Constructionof JamunaBridge 1994 Ongoing Jamuna Bridge Project

2. Credit 2638-BD Initiatephysical Road Master 1994 Ongoing SecondRoad Plan Rehabilitation (a) 168km of rehabilitation and Maintenance (b) 100 km of widening Project (c) 1,800 km of periodic maintenance (d) technicalassistance ______==(e) institutional development _ .. 16 TABLE3: PROJECTTIMETABLE

Steps in project cycle Date Planned Date Actual

Identification (ExecutiveProject Summary) October 1981 June 23, 1983

Preparation February 1982 January 22 - February 5, 1985

Appraisal October 2, 1986 January 7 - 23, 1987

Negotiations May 11, 1987 May 13 -19, 1987

Board Presentation April 14, 1987 June 23, 1987

Signing June 1987 September2, 1987

Effectiveness October 1, 1987 February 25, 1988

First tranche release October 1, 1987 September20, 1987

Secondtranche release October 1, 1989 January 31, 1993

Project Completion December31, 1995 September30, 1996

Loan Closing June 30, 1996 December31, 1996

TABLE4: LOAN/CREDITDISBURSEMENTS: CUMULATIVE ESTIMATED AND ACTUAL (US$ MILLIONS)

FY88 FY89 FY902 FY9 FY92 FY93 FY94E FY95 FY96 FY97

Appraisal Estimate 2.90 11.3 27.80 51.60 73.50 89.7 98.60 101.3 102.0 102.00

Actual 4.85 7.03 16.82 25.12 33.18 46.0 62.79 79.47 94.47 96.50

Actual as % of estimate 167 64 61 49 45 51 64 78 93 95.00

Date of final disbursement Source of actual disbursement: Roads & Highways Department 17

TABLE 5: KEY INDICATORSEIPLEMENTATION FOR PROJECT (SEE FOOTNOTE "A" BELOVV

Civil Works (by December 31, 1995) 1. Road Rehabilitation: 136km (Tranche 1) 1. Completed May 1993. 2. Road Rehabilitation: 169km (Tranche 2) 2. Reduced to 149km. Completed June 1996, except one bridge (completed September 1996). 3. Deferred Maintenance Works: 335km 3. 53km Completed September 1993. This work (see foot note 'B" below) was reduced due to the 1987 & 1988 floods. 4. Additional Deferred Maintenance 4. Additional maintenance utilizing savings Works: 20km (by April 30, 1996) from loan. Completed May 1996. 5. 1995 Flood Repairs (of Tranche 1) 5. Construction of two additional bridges under Two Bridges (by June 15, 1996) Tranche 2. Completed August 1996.

Institutional Development Program 1. Road Master Plan (based on HDM) 1. Completed 1992. 2. Road Maintenance Action Plan 2. Agreed with RHD. 3. Road Materials and Standards Study 3. Completed 1992. 4. Improve Planning and Management 4. Cells Established. 5. Reorganization of RHD 5. Completed October 1992. 6. Construction Industry Study (See foot note "C" 6. Revised January 1993. below) 7. Completed November 1993. 7. Road users Charges Action Plan 8. Several on-the -job and overseas training was 8. Training for RHD staff organized 9. Training for Contractors 9. Contract management courses were organized

(A) Key performancemonitoring indicators were not specified duringappraisal, however to evaluateproject performancethe above indicatorshave been selected.

(B) The scopeof work for carrying out deferred maintenancewas reducedbecause most of roads were seriouslydamaged due to severe floods of the year 1987-88and were in need for immediaterehabilitation. The rehabilitationworks on such roads were carried out under a separateIDA-financed project "Flood DamageRestoration Project".

(C) Constructionindustry study completedand its recommendationsare being implemented.Based on the recommendationsthe import duty on road constructionequipment has been significantlyreduced, which road constructionindustry has benefitedfrom and this has also contributedto a reductionin the overallcost of road works in Bangladesh. 18 TABLE 6: STUDIES INCLUDED IN PROJECT

Study Purpose s defnned at Status Impat of'study appraisallredefined

1. Road Materials To develop geometric and Completed Its recommendations are being reviewed and Standards structural design standards for by RHD with the support of foreign Study road pavement consultants under the on-going project RRMP-II.

2. Construction Identification of the constraints Completed The skill and capacity of domestic Industry Study which adversely affect contractors have increased substantially. operation of construction enterprises

3 Road Master To improve investment Completed The findings of the study proved very Plan Study planning for identification of instrumental in the preparation of lending economically viable road programs by the donor community projects

TABLE 7: PROJECT COSTS

Appaisal Esimate (USSM) Actual(US$M)

Item Local Foreign Total Local Foreign Total Costs Costs Costs Costs

1. Civil Works 71.2 40.6 111.7 84.35 50.24 134.59

2. Institutional 1.4 3.6 4.9 1.4 3.6 5.00 Development Program

3. Physical 7.3 4.4 11.7 5.97 - 5.97 Contingencies

4. Price 26.7 2.7 29.3 11.04 5.13 16.17 Contingencies

TOTAL 106.4 51.2 157.6 102.76 58.97 161.73

Source of actual figures: Roads & Highways Department 19

TABLE 8: PROJECT FINANCING

Appraisl Esti-teaSM Actual (USM

Source Local Foreign Total Local Foreign Total Costs Costs Costs Costs

IDA 58.2 43.8 102.0 46.43 55.57 102.00

OPEC 4.6 3.4 8.0 4.6 3.4 8.00

ODA 0.1 0.4 0.5 0.1 0.4 0.50

UNDP 1.7 3.6 5.3 1.7 3.6 5.30

GOB 41.8 - 41.8 51.73 - 51.73

TOTAL 106.4 51.2 157.6 102.76 58.97 161.73

TABLE 9: ECONOMIC COSTS AND BENEFITS

Appraisal Re-evauation

Rehabilitation Length AADT1996 EIRR AADT1996 EIRR Km

N5 219 2550-3250 34% 1812-2855 17%

N6 61 975-1725 30% 1543 14%

N74 5.2 1725 28% 1543 13%

Total Project 285.2 38% 17%

Note: The deferred maintenance component of the project was not implemented fully. 20

TABLE 10: STATUS OF LEGAL COVENANTS

Agreement 7 70tV ; f Presedi0esent0i000 0Oi 00ltigilCovenantt Revisd Descriptionof Covenant Sec i Tytion]pe Status Frlfillm ent Fulfillment Comments

______Da~~~~ Date~~~~~te ______DCA 3.01(a) C Dec. 31, Rehabilitation and 285 km completed Schedule 2 Part 10 1995 reconstruction on about 305 Oct. 1996 A.1 km of roads and bridges in NW Bangladesh 3.01(a) 10 CP Jan. 31, Deferred maintenance 53 km completed Schedule 2 Part 1992 works on about 335 km of Sept. 1993 after A.2 roads in NW Bangladesh scope revised due to 1988 flood 3.01(a) 5 C Conditions Supervision of the project Complied with 6.01(d) of civil works and detailed Schedule 2 Part Effectivenes engineering studies A.3 s _ 3.01(b) 5 CP Conditions Appoint and retain a Initially appointed 6.01(b) of Project Coordinator but not retained Schedule 4 Item Effectivenes I(a) s 3.01(b) 5 C Conditions Appoint and retain a Complied with 6.01(b) of Project Civil Works Schedule 4 Item Effectivenes Director I(b) s 3.01(b) 12 C March 31, Commence Road Master Road Master Plan Schedule 4 Item 1988 Plan Finalize and ensure completed in 1992. 2 that all investments RMP is being substantially follow the followed Road Master Plan 3.01(b) 12 C N/A Commence implementation Complied with Schedule 4 Item of the agreed Road 3 Maintenance. Acting Plan and ensure budgets will be used exclusively for ______maintenance 3.01(b) 12 CP N/A Dec. 31, Agreement on action plan Revised study 6.01(e) 1992 and initiation of its completed Jan. Schedule 2 Part implementation for 1993. B.3 construction industry Implementation Schedule 4 Item development slow. 4 3.01(b) 5 C N/A If land acquisition process Complied with Schedule 4 Item not completed, the 5 alternative design on existing acquired land will be adopted. 3.01(b) 12 CP June 30, Dec. 31, Prepare (by June 30, 1989) Study completed Schedule 4 Item 1989. 1992 and updated (by Dec. 31, Nov. 1993. 6 1992) of road user charges Implementation study, agreement on a slow revised schedule of charges and its implementation 3.01(B) 12 C N/A Commence Road Materials Complied RMSS in Schedule 4 Item and Standards Study & 1992. 7 carry out such findings Implementation slow 3.01(b) 5 C N/A Ensure that all contracts for Complied with Schedule 4 Item maintenance, the bidding 8 documents and evaluation methodology used will follow the model prepared by the supervisory consultant 3.02 3 C N/A Procurement of goods, Complied with Schedule 3 works and consultant services to be governed by l______Schedule 3 of the DCA 21 Agreement Covenant Present Revised Descriptionof Covenant Section Type Status ulfillr nt Fulfillment Comments .______,__ .__:_ Date Date 4.01 1 & 3 CD Audited Maintain project records Reply to IDA within nine and accounts and submit queries often months of audited account with delayed fiscal year opinion of auditor to IDA end. 6.01(a) 4 C Conditions All conditions precedent to Complied with of the effectiveness of the Effectivenes OPEC Fund loan s Agreement have been fulfilled 6.01(c) 10 C Conditions Entered into contracts for Complied with of carrying out Phase I of the Effectivenes rehabilitation works s 6.01(f) 5 C Conditions Project Proforma for Complied with of Project approved by Effectivenes Borrower s

Covenant types: I = Accounts/audits 7 = Involuntary resettlement 2 = Financial performance/revenue generation 8 = Indigenous people from beneficiaries 9 = Monitoring, review and reporting 3 = Flow and utilization of project funds 10 = Project implementation not covered by categories 1-9 4 = Counterpart funding 11 = Sectoral or cross-sectoral budgetary or other resource allocation 5 = Management aspects of the project or executing agency 12 = Sectoral or cross-sectoral policylregulatory/institutional action 6 = Environmental covenants 13 = Other

Present Status: C = Covenant complied with CD = Complied with after delay CP = Complied with partially NC = Not complied with 22

TABLE 11: COMPLIANCE WITH OPERATIONAL MANUAL STATEMENTS

No significance lack of compliance with any applicable Bank Operational Manual! Statement (OD or OP/BP) was noticed

TABLE 12: BANK RESOURCES: MISSIONS

Stageof projectcycle Planned Revised Atual

Weeks US$ Weeks US$ Weeks US$

Through appraisal 106.80 261.30

Appraisal-Board 39.60 70.70

Board-effectiveness }

Supervision } 173.40 283.60

Completion 6.2 7.4

TOTAL 333.2 623.00 23 TABLE 13: BANK RESOURCES: MISSION

______Performance Rating Stage of Month/ Number of Days In Field Specialized Implementation Development Types of project cycle Year Persons staff skills Status Objectives Problems represented

Through 04/1986 2 15 TE, HE Appraisal 09/1986 3 16 TE, HE, LEG

Appraisal 01/1987 2 16 TE, HE, LEG - through Board Approval Board 10/1987 1 22 HE Approval to Effectiveness Supervision 04/1988 2 15 HE i 1 F

06/1989 2 13 HE I 1 -

03/1990 4 14 TE, HE,HE 1 1

08/1991 2 12 TE 2 1 M

0811992 3 16 TE,THE 2 1 M

12/1992 5 22 TE,TE,HE 2 1 C

08/1994 3 12 HE,HE HS S C

12/1994 2 12 HE,HE HS S C

05/1995 3 20 HE,HE,HE HS S C

11/1995 3 20 HE,HE,HE HS S C

05/1996 3 22 HE,HE,HE HS S C

Completion 10/1996 4 25 HE,HE,HE HS HS

Notes: Ratings: Minor Problem: I Highly Satisfactory: HS Moderate Problem: 2 Satisfactory: S Major Problem: 3 Unsatisfactory: U Highly Unsatisfactory: HU Specialization: Transport Economist: TE Highway Specialist: HE Legal Expert: LEG

Problems: Financial Problem: F; Management Problem: M; Covenant Problem: C ANNEX A

BORROWER CONTRIBUTION TO THE ICR Annex-A

THE PEOPLE'S REPUBLIC OF BANGLADESH

ROADREHABILITATION & MAINTENANCEPROJECT

CREDIT NO.1827-BD

BORROWER'SCONTRIBUTION TO IMPLEMENTATIONCOMPLETION REPORT (ICR)

MINISTRYOF COMMUNICATION ROADS & RAILWAY DIVISION I

INTRODUCTION

1. The people's Republicof Bangladeshhas a Populationin excess of about 120 million people and has an economy which is largely dependenton agriculture.Bangladesh's surface transport system severely constrained by geography and climate,and air transporthas so far had limitedimpact. The country consistsmainly of a flat alluvial Plain land. North-West Bangladesh,bounded by the Padma/GangesRiver on the south, the Jamuna/ Brahmaputra River on the East and the border with India on the North and west is an importantfood surplusarea of the country and depends on road and river transportto moveproduct to the other areas.

2. IDA has supportedthis sectorwith three previousprojects. The First one Credit408-BD had included Constructionof the Feni Bypass satisfactorilycompleted but it had a premature pavementfailure under unexpectedaxle loadings soon after completion,in part due to poor design and workmanship.Credit No. 964-BDprovided for constructionof ChandinaBypass and ComillaBypass completed in 1987 after a difficult implementationperiod. CreditNo.1301 -BD providedfor strengthening of Feni Bypass in Year 1982 and completed in 1986. The ongoing Second Road Rehabilitationand Maintenance Project, Credit 2638-BD (SDR 103.90million) which becomes effective in September1994, is dealing with the rehabilitationand maintenanceof importantroad link and substantialinstitutional development.

3. The parameterswhich the report includesare (A) An assessmentof the project objectives,design implementationand operationexperience; (B) Benefits derived from the project; (C) Major factors affectingthe project (D) Bank's performance; and (E) Borrower'sPerformance The last part of the report will deal with conclusionsand recommendation if any form the lessonslearned from the project.

A. An assessment of the Project Concept

4. The Country's inadequateroad networkwas in dire need of an integratedprogram for construction,modernization, rehabilitationand maintenance, to meet the burgeoningdemand for road transport. Because of the extent of the needs and GOB's limitedabsorptive capacity,the project focusedon the major trunk roads and bridges in the Northwest Bangladesh, which is an area of food surplusproduction.

The main objectivesof the Project

5. The main objectivesof this project are as follows:

(a) To reduce transportcost of passengersand goods,in particularfood-related products, by restoringthe most important majortrunk roads in the northwestof Bangladesh,the main foodsurplus region, to maintainablecondition;

(b) To introduce institutional and technical improvements in the programming of works, the administration and maintenanceof the road systemand in technicalstandards and materials;and

(c) To upgradethe capabilitiesof the local contractingindustry to undertakeroad works as an alternativeto inefficient force accountworks.

Initial Operation

6. The initial operation under the credit started in early January 1988, as the credit was only effective in December, 1987. Prequalificationof contractorsto under take the Civil works was completedby January 1987 followedby invitationto bid. After receivingtenders were submittedto the Govt. of Bangladeshin April 1987.The contractswere awardedto the low biddersin August 1987,with Noticeto proceedissued on March 1, 1988.

Rehabilitation or reconstruction of about 305 Km. roads and bridges in North-West of Bangladesh.

7. Rehabilitationor reconstructionof the major trunk roads in the North-westof Bangladeshwas required to bring the roads to maintainablecondition to reduce transportcost of passengersand goods. The rehabilitationor reconstructionworks were carried out in two phases (trenches) and was scheduled to be awardedtwo years apart. This approach was primarily adoptedas: 2

(a) GOB had limited absorptive and financial capacity to implement the project in parallel with other projects in the sector.

(b) Skilled manpower and construction material are limited.

(d) The average price per kilometer of work may be minimized.

8. The Phase-I Contracts for 136.4 Km were awarded in August, 1987 and the Notice to proceed was issued on March 1, 1988. The major flood of 1987 and 1988 damaged most of the existing drainage structures, as a result the Consultant had to reasses the requirement of additional drainage structures. Best on the assessment additional drainage structure were included in the civil works contracts which resulted in the completion of the Phase-I works by about one year. Subsequently award of Phase-II works were delayed by one year. Contracts totaling 149 Km were awarded in March 1993 and most of the work was completed ahead of scheduled completion date.

9. The Scope of works for Phase-I was as follows

Phase -I Detailed Description Project # Project Name HWY # From (Km) To (Km) Length (Km) 1/1 Hatikamrul N5 48+500 78+000 29.5 1/2 Sherpur N5 78+000 110+800 32.8 1/3 Bogra Bypass N5 110+800 120+000 9.2 1/4 Mohastan N5 120+000 128+260 8.3 1/5 Gabindaganj N5 128+260 156+460 28.2 1/6 Pirgonj N5 156+460 184+900 28.4 Total 136.4

10. The Scope of Works for Phase-l1 was as follows:

Phase -II Detailed Description Project Project HWY From (Km) To (Km) Lengh (Km) Name/Section l_l 2/lA Bera N5 0+000 25+000 Ataikula N6 0+000 1+000 26.000 2/lB Bera N5 25+000 49+311 24.311 2/2 Rangpur N5 148+900 217+207 32.307 2/3A Ataikula N6 1+000 20+000 19.000 2/3C Ataikula N6 20+000 35+000 15.000 2/3B Pabna-Bypass N6 35+000 46+600 11.600 2/4 Dasuria N6 & 74 7+400 12+600 20.745 Dasuria N6 0+000 15+545 Total 148.963

DeferredMaintenance work.

11. The project included financing for a program of about 335 km of deferred maintenance of national and regional roads of economic priority of Northwest.

12. The principle objectives were the systematic and effective maintenance of some sections of roads (selected) to be rehabilitated after about 3 to 5 years when time and money become available. 3 13. Unfortunately,the seriousmonsoon floods of 1987and 1988greatly complicatedthe Periodic MaintenanceProgram (PMP)works by causing a lot of PMP related road damaged,and changingthe priorities of the works that was proposed by the consultantsearlier.

14. A flood rehabilitationproject (FRP) under IDA CreditNo. 1876-BD took over most of the roads schedule for PMP works and the PMP componentwas not required any more. Only two section of the roads i.e Bogra -Natore and Bogra- Santhaharroads were eventuallyincluded for PMPsince this sectionof roads were not coveredunder FRP.

Supervisionof the work and detailedEngineering studies.

15. An agreementwas reached by GOB with the Annual DevelopmentProgram (ADP) on a division of the roads to be studied and financed and on a common approachto the standards of maintenance, institutionalmatters and cost recovery issues on July 5,1985, a contractwas signed with consultantsSnowy MountainsEngineering Corporation (SMEC), Australia, for feasibilityand Engineeringstudies for this project with UNDP financing(BDG/84/047, amount US$ 650000) and the Bank as executingagency, Thereafter,the UNDP financingwas increasedto US$ 1,480,000and the SMEC Contract amended to cover a second phase, which extended the study to include detailed Engineering for road rehabilitation work, bidding documentand procurementassistant to GOB as well as a study of requirementon roads scheduledfor deferred Maintenance works.

16. On 20th February 1988,a contractwas signed with consultantLouis Berger InternationalInc, (LBII) USA, & SARM Associates,Bangladesh for supervisingthe project work and to review and if necessary ,updatebidding documentsfor phase (trances)-II.The consultantwas also involvedto carry out the detailed Engineering and supervise the deferred maintenance work and implementthe training program of RHD staffs for planning, organizingand supervising of maintenancework carried out by the Contractor.

17. This Consultantwas also responsibleto carry out a revision of the detailed engineeringand bidding documents for reconstructionworks of N6 Pabna-Rajshahi(130 Km) and N74 Pabna-Kushtia(37Km) in order to incorporateany lessons learnedfrom the basicallysimilar works of the project and formthe trial Sectionwhich had been included:

DesignConsideration:

(a) Roadway:

18. Based on roughness and deflection surveys conductedduring the detailed design process followed by additional investigationson the existingcondition of the roadway carriedout by the ConsultantsLouis Berger International, Inc. (LBII), it was confirmedthat most of the roadway of Phase-I requires rehabilitation(reconstruction) and only 5 to 7 Km. of the existed roadway was consideredsuitable for overlay. The initial design parameterswere confirmed as adequate. Vertical alignmentprofile was increasedwhere requiredbased on 1988 flood levels.

19. pavement design for all of the Phase-II contracts adopted the full depth & full width reconstruction. The reconstructioncross section format for Phase-I & Phase-II contractsare similar except for individual layer thickness. Both design's are adequate in terms of Road Note's Chart 3 for T4 Traffic and S2 subgrade with Total thickness that are not significantlydifferent, but the refinementof the layeringin Phase-II is expectedto optimizestrength progressionin Phase-IT to optimizestrength progression from bottomto top givingbetter economics.

20. It was the declaredintention of the design Consultant(SMEC) and the IDA to preparerecommendations for pavement revisionbased on the resultsof Phase-I,Pavement Trial for incorporationin to the Phase-II,design. It was, perhaps, optimistic to the Phase-LI,design. It was, perhaps, optimisticto expect results from the Trial in a such a shortspace of time. However,the only changein pavementmaterials for Phase-IIconstituted the adoptionof lime stabilizedsubbase for two contractseventually reducedto one (contract2/1B) because of the reluctanceat that time of the contractorfor 2/1A to undertakethe stabilization.

(b) Drainage:

21. The drainage design for the projects included Phase-I (SMEC)were performed with the understandingthat major influenceon the future drainageof these roadwayswould be affectedby existing and proposed flood control Facilities.These facilitieswere in the form of dikes, polders constructed,and to be constructed,as part of two major irrigation and drainage 4 schemesbeing planned and carriedirrigation and Rural DevelopmentBoard (Pabna Irrigationand Rural Developmentproject (PIRDP)and SirajgonjIntegrated Rural DevelopmentProject (SIRDP). The constructionof these flood controlprojects was believedto allow Phase-Idesign to be conservativein theirconcern for the threat of further floodingwithin the project limits.

22. As a result of the 1988 floodssignificant damaged to numberof drainage structuresand bridgeswas experiencedand more seriously,a number of water controlstructures that were expectedto adequatelyrestrict future floods flows either failed or were seriouslydamaged. A drainagere-design was carriedout by LBII and a report was issued in February 1989, in order to mitigatethe problems.

Implementation:

(a) Design:

23. The full depth reconstructionprocedures adopted for Phase-IIappear quite satisfactoryas opposed to a proportionof the Phase-I contract works where the base of the original pavement was incorporatedand the roadway rehabilitated with additionalaggregate base, any necessarywidening and new full widthsurfacing. Although it mightnot appear convincingthat, after many years of natural consolidationand traffic compaction, the intensive survey of subgrade CBR on which the pavement design has been carried out , the layering changes existed and the non-uniformityof the pavement layers, the implementationof reconstructionappear to have merit.

(b) The length and duration of Contracts:

24. The average length of the Phase-II,contracts is about 21 Km. and with the exceptionof one small contract, contract periodswere either2.5 or 3 years. Such arrangementsproved quite gainful in completing the different contractswell aheadof the scheduledcompletion dates.

25. An examination of asphalt plant operation demonstratesthe point that contracts of longer lengths and shorter completiondates could be feasible. There were six plants in use in Phase-IIof the project. Most were batch-mix plants, and had outputsin the range of 80-120T/hr. The total premixdemand for Phase-IIwas around 200,000tons spread over the full 3 yearsperiod. This figure equatesroughly to one year's full outputcapacity of one plant and this can be regarded as running at only 10-15%of capacity.

Road Master plan

26. Road master plan (based on HDM) was completed in 1992. HDM has in the initial stage to identify future road investmentand rankingthem internsof economicpriority.

Road Maintenance Action plan

27. Road Maintenanceaction plan has been preparedand IDA has agreedwith RHD. Most of the elementsof this action plan are in the mid stage for implementingsatisfactorily.

Action plan to strengthen the construction industry.

28. A through investigationabout the constraints,the industryis facingwas done and an action plan of measures for its developmentwas prepared by bringingto Bangladeshinternational practices in the industry. The action plan was reviewed with IDA and revised in January 1993.The agreedaction plan is now in the stageof implementation.

B. Benefits Derived from the project

29. There are a number of benefits which emanatedfrom the projects. The first and foremost is the rehabilitatedroad sections thus reducing tremendouslythe vehicle operatingcosts and increasingthe user benefit. Journey times have been reduced to a great extent and Productsmovement have been eased.

30. The objectivesof the road rehabilitationand maintenanceproject have been fulfilledto the greatest possible extent. Traffic conditionsof HWYN-N5, N6 (Part)& N74 (Part)have greatly improvedwith the replacementof all narrow culverts 5 and most of the narrowbridges . Thetraining in respect of programmingof works, the administrationand maintenanceof the road system improvedthe technical capabilityof RHD personneland offered the knowledgein emergingtrend in technology in Highwaysector.

31. The basis of the SecondRoad Rehabilitation& MaintenanceProject was conceivedbefore the starting of this project. The study (Feasibility and detail engineering)of N6 Pabna-Rajshahiand N74 Paban-Khustiawas performed before the starting of the project. But revision of detail engineeringof the said roads was carried out during the implementationof this projectand the outcome of these studies are clearly visiblebenefit to the borrower.

32. The assistanceto the Local ContractingIndustry enabled the borrowerto improvethe local constructionindustry. The objectives of this componentwere to improve the road maintenanceworks executing system by introducing 'contracting' rather than 'force account' and this can only be done by increasingthe capabilitiesof the localcontracting industry.

C. MAJOR FACTORSAFFECTING THE PROJECT.

33. The factors which were mainly affecting the project were as follows:

(a) Devastatingflood in 1987 and 1988.

(b) Delay in removalof trees, delay in Customclearance, delay in shiftingof under groundtelephone cables in Phase-I

D. BANK'S PERFORMANCE

34. During the implementationof the project the Bank staffs and managementas a whole were very cooperative.The project was supervisedby two task managersduring its lifetime. Organizationalchanges in the Bank did not affect the performance of the Bank on the project. The Bank's performance in identifying the project was excellent. The Bank's concurrencein investingin drainagere-design in flood affectedroad and bridgeswas appreciable.The Bank's performancein coordinatingthe various donor agencies was quite good. The resident office based in Dhaka through its official has been providingCo-operation, assistanceand necessaryinformation form time to time for the successfulcompletion of the project The Bank's missionvisit for monitoringthe project has been quite good in providingsuggestion and advice for the successful completion.

E. BORROWER'S PERFORMANCE

35. Borrower'sPerformance are as follows:

(a) Co-ordinationand accountabilityshould be improvedin orderto avoidthe delay amongthe various offices of the Ministriesof Bangladesh.

(b) The IDA'S guidelines on the procurementof civil works and Consultingservices have been fully followedby the borrower.

(c) The project CivilWorks Director always provided latest status of the project pertainingto its physicaland financial progress.

Key Lessons learned that may be relevant In the future.

36. Over all, the Borrowerlearned a numberof lessons relevantfor the future duringthe implementationof this project. Key lessonslearned are as follows.

(a) Co-ordinationamong the concernedMinistries should be improved.

(b) The acquisitionof land, includingrelocation of utilities,should be completedbefore the start of the Construction works. 6

(c) MOC/MOF(NBR) shouldclosely coordinate to ensuretimely clearanceof importedequipment and materials requiredunder the contracts.

(d) The Engineerand the contractorare requiredto submitthe lists of the constructionequipment required for the projectwell before the start of the projectso that approvalfor the customsclearance could be obtained in time.

(e) The Engineershould submitthe detail propertyacquisition and removalof forestcover during and after survey and process for the acquisitionshould start beforethe start of the project.

(f) Specificationsof the works shouldbe suitedto the local conditions.

(g) Measuresshould be taken to minimizethe accidentsin highways.

(h) Local contractorscan perform fairly good at low cost as seen in the case of IDA financed HWYN-N6 Ataikula Section.

(i) Maintenanceof project Roadafter its completionshould be consideredas top most priorityto get full benefit of completedroad.

(j) RHD's Supervisionstrength & their remunerationshould be in conformitywith that of consultant's supervisionstrength & remuneration.

Key Lessonslearned in respectof Design a) PavementDesign

37. Payment Designs using Estimated standardAxle Load as verified during design periods., with traffic forecast and estimated traffic growth on an average annual basis over 10 to 20 year periods are proving to be ineffective due to unpredictableincrease in singleaxle loads.

38. Stricterlegislation and implementationsare indispensablefailing which the roads tend to fail prematurelyand results in highermaintenance or reconstructioncosts. Slowmoving CycleRickshaws, Rickshaw Vans and bullock carts invariablyuse the asphaltconcrete surface course, thus forcingthe heaviercommercial Vehicles to the mid portion of the carriageway.As a result, traffic tends to straddlethe center line, so localizingthe structuralstresses. It is importantthat considerationis vital for separatepaved lanes for slow movingtraffic near villageswhere ribbon developmentsexist. b) Drainageand waterwayCriteria:

39. The Criteria followedto design bridges and drainage facilitiesneed a vigorous analysisand systematiccoordination with the BWBD, and BADC, in order to determinethe possibilityor the extent of flooding in a given project area. Many failures or overtum of drainagestructures have been the resultof inaccurateassumptions or unusualcircumstances.

C) PeriodicMaintenance:

40. The systematicand gainfuluse of constructionmaterials, the use of modem and intemationallyaccepted techniques for the maintenance works, the detailed analysis, Data base, maintenance management skills, contractor development, equipmentand most importantlythe qualitycontrol and close supervisionwere found to be positivemanifestation which could be readily appliedin Bangladesh. ANNEX B

ECONOMIC RE-EVALUATION Annex-B

ECONOMIC RE-EVALUATION OF RRMP

RRMP-I was broken down into two componentsknown as Phase-I and Phase-2which were scheduled to be started in mid 1987 and mid 1989 respectivelyand last for three years in each case. As it turned out Phase-I contracts were all delayed whilst Phase-2 did not start until 1993 and has only just finished. All Phase-I contracts were on the N5 whilst Phase-2consisted of contracts on both roads.

The re-evaluationwas conductedfor each individualcontract and the results aggregatedto give project wide comparisonswith the SAR. Two contracts were not included:2/lA as it is still not finished and 1/3 (Bogra bypass) as it was not a rehabilitationproject and should have not been included in the appraisal study as such.

The analysis was conducted using the HDM model and considering each contract as one link. Construction costs were obtained from the completion report for Phase-I and from the Office of the Project Civil Works Director(PCWD) for Phase-2. Maintenancecosts are RHD standardrates.

Traffic data was obtained from the 1995/1996RHD National TrafficCensus conductedunder the ODA's IDC project and validated with three additional counts conducted specially in November 1996 by the PCWD.

Road geometrydata was obtainedfrom as built drawings. Conditiondata was assimilatedfrom the Road MasterPlan and 1995/1996Road ConditionSurvey (IDC).

The analysis was conductedover a twenty year design life and all costs were expressed in 1996 prices discountedat 12 per cent. In the first case the HDM model was run using the best estimates of values in the SAR to validatethe methodology. The results of this run were in line with the SAR findings and all schemes were feasible. Traffic and construction values were then changed according to the post constructiondata collected and HDM was re-run. Two runs were conductedto reflect current uncertainty regardingtraffic growth rates. The first used a rate of 8 per cent per annum and the second a higher rate of 10 per cent. The results are presentedin Table 1.

Table 1 Results of EconomicRe-Evaluation

Appraisal Re-evaluation Rehabilitation Length Km AADT 1996 EIRR AADT 1996 EIRR N5 219 2550-3250 34% 1812-2855 17% N6 61 975-1725 30% 1543 14% N74 5.2 1725 28% 11543 13% ria--:i a<.1.-. .<.'. - -.. . ! -.- Note: The maintenanceelement of the project was not implemented.

The results show that the rehabilitationprogram as a whole was economicallyviable, with an EIRR between 14 and 17 per cent. Schemeson the N5 generatedhigher returnsthan the N6, principallybecause the traffic volumesare higher on the N5. 2 There aretwo principle reasons for the poor performanceof the contracts compared with the appraisal forecasts;increase in constructioncosts and variationsin traffic volumes.

Phase 1 contracts started on time but were delayed by the very severe 1988 floods (a hundred year flood) which resulted in severe embankment erosion and damage to pavements. This obviously delayed completionand entailed cost over n s due to re-instatementworks. Despite this all Phase 1 contracts were still economicallyviable. Actual traffic flows on the N5 were about 19 per cent lower than those forecastedwhich also accountedfor the lower returns. As traffic growth rates were accuratelyforecasted (between 5 and 10 per cent per annum) this is probably due to incorrect counts during the feasibility study. These problemsare common to all projects in Bangladeshwhere unreliablecounts, coupled with a poor understandingof temporal variations in traffic flow, often lead to erroneous traffic forecasting. These problemsare being addressedin the InstitutionalDevelopment Component of RRMP-II which has started a national traffic census and is introducingautomatic traffic countersfor importantroutes.

The Phase 2 contracts generatedless economic returns than Phase 1 and two were marginal. As traffic forecastswere more accuratethan for the Phase 1 roads this was mainly due to much higher construction costs than those predicted in the appraisal. In fact contract bid prices were almost double (in real terms) those on Phase 1, probablydue to new specificationsfollowing the 1988 flooding.

Overall, the project was well conceived and robust as it still generated a viable rate of return despite severedamage from some of the worst floods in recent times. ANNEX C

ICR MISSION'S AIDE-MEMOIRE September22, 1996

BANGLADESH ROAD REHABILITATIONAND MAINTENANCE PROJECT (CREDIT 1827-BD)

WORLDBANK SUPERVISIONMISSION - SEPTEMBER08-OCTOBER 03, 1996

AIDE-MEMOIRE

I. INTRODUCTION

1. This aide-memoirerecords the findingsof a World Bank Missioncomprising of Messrs.M. Quazi, Task Manager(SA1BG), S. Lundebye, TransportEngineer (SA1IN), J. Channe(Highway Engineer/Consultant), SA1IN and S. Seth (Consultant)(TWUTD). The missionwas assistedby Mr. A. Banerjee,Unit Chief,Infrastructure and Energy, from the World Bank's ResidentMission in Bangladesh. A wrap-upmeeting was held at Ministryof Communications(MOC) on October03, 1996, chairedby Mr. WaliulIslam, Secretary, Roads and RailwaysDivision (RRD) and attendedby representativesfrom Ministryof Communications, Ministryof Finance,Planning Communication, World Bank and other agencies.

2. The missionwishes to expressits appreciationfor the cooperationand hospitality extendedto it by the Roads and HighwaysDepartment (RHD) and the Roads and Railways DivisionRRD) of the Ministryof Communications,and their SupervisionConsultants (Louis Berger InternationalInc/Sarm Associates) (see Annex-I for list of officialsmet).

3. The mission'sfindings are based on discussionswith the Governmentofficials and a field visit to the project sites. The conclusions,recommendations and next steps are summarized below. This aide-memoirereflects the mission'sviews and is subjectto review and confirmation by IDA's Management.

II. FINDINGS

4. GeneralProgress

The missionis pleasedto note that despitedisruptions to work progressdue to politicalturmoil during the beginningof the year, all projectworks are now almost completewell ahead of the extendedcredit closingdate of December31, 1996. Constructionof Bera Bridge under Contract 2/1A willbe completedby the end of September1996. Additionalworks for the constructionof two bridgesreplacing the flood damagedbox culvertsis now completed. A. PHASE H: REHABILITATIONWORKS

5. ContractsNo. 2/lB. 2/2. 2/3A!2/3B, 2/3C and 2/4:

All abovecontracts have been completedto the satisfactionof the Engineerand are being maintainedby the contractorsunder the 'Defect LiabilityPeriod'.

6. Contract2/1A:

Works for Bera Bridgeis expectedto be completedby September30, 1996. Works on the bridge approachesfor Nagarbaribridge and Kashinathpurbridge were completedin end May 1996 and allworks includingpavement, has been completed.

7. Additional Works - Road Side Improvement

With the savingsunder the credit, 30 parkingareas along the built up areas of Phase-I and Phase-IIroads of RRMP-I have been completed. The mission,during their field trip, observedthat some of these parking areas are used for dryingpaddy and are not being fully utilizedfor the purposethey are constructed. The missionrecommends that RHD/MOCshould coordinatewith BRTA and PoliceDepartment, Bus Owner Associationand the local leadersto resolvethis problemas soon as possibleto improvethe situation.

8. Contract No. 4 - Periodic Maintenance -

RHD had tendered four periodicmaintenance contracts to be constructed from the credit savings,but due to delaysin the evaluationof bids, only ContractNo. 4 was awarded. The proposed slurryseal for the pavementdue to overloadingwas found to be adequate. Subsequently,the consultantscarried out a detailedfield investigationand recommended:(i) an A. C. Overlayof 25mmfor sectionsof road with majorcracking; (ii) a seal coat and an A. C. Overlayof 20mmfor sectionswith minorcracking, and (iii) an A. C. overlayof 20mmfor sectionsof road with finecracking. The work has been completedsatisfactorily by the end of May 1996.

9. Restorationof Flood DamagedCulverts

Due to floodsin September/October1995, two box culvertswere washed out between Rangpur and Bogra sectionfor the road betweenSta. 156+00and Sta. 157+00. At these locationstwo 40 meters long bridgeswere proposed. The contractorworked in double shifts,the missionis pleasedto note that the bridgeswere completedmuch ahead of the extended credit closingdate. 10. VariationOrders (V.O.)

0 The missionhas requestedPCWD and the SupervisionConsultants to finalizeall VariationOrders and finalbills for the completedworks beforethe end of credit closingdate. Finalizationof V.0. for the speed boat purchasedunder the projectis still awaitedfrom GOB althoughapproval was given by WorldBank and the ChiefEngineer of RHD in 1994.

C. ROAD MAINTENANCE

11. The mission,in their previoussupervision missions, expressed their concem regarding the lack of routine maintenanceof hard shoulderson part of Bogra-Natoreroad. The missionis pleasedto note that GOB has carriedout somepreventive measures (periodic and routine maintenance)for Bogra-Natoreroad beforea comprehensiveperiodic maintenance is carriedout under 3rd year programof RRMP-IIor the proposedRRMP-HI. The missionrecommends that RHD should immediatelyprepare a maintenanceaction plan for RRMP-I with the help of the HDM unit to avoid deteriorationof costlypavements.

D. PROJECTCOST AND FINANCING

12. It is expectedthat an amount of US$7.8million will be savingsfrom the credit. The financialstatus of the projectis given in Annex-H. Annex-HAgives summaryof costs for differentcontracts under Phase-I,Phase-II and periodicmaintenance works. Annex-HIBgives categorywisedisbursement required till the end of the projectand possiblesavings under the credit.

E. AUDIT

13. There are manyoutstanding audit queriesover the last few years;the missionhas requestedPCWD to discusswith the audit departmentand resolve the outstandingissues as soon as possible. Duringthe field visit to the projectsites of RRMP-I,a samplecheck was carriedout for the withdrawalrequests and statementof expendituressent to IDA for disbursementunder the Credit 1827-BD. It was found that the disbursementsfor civilworks contracts costing more than US$50,000have been madethrough proper withdrawalrequests and the supportingdocuments are maintainedin accordancewith the financialcovenants of the Credit Agreement.

F. IMPLEMENTATIONCOMPLETION REPORT (ICR)

14. The missionhas revieweddraft evaluationreport receivedfrom the RHD, which is about 10 pages. The missionrequests RHD to prepare its evaluationsummay not more than 3 pages, which would be attachedunedited to the final ICR. The Consultantshave still not completedtheir part and RHD is requestedto followup withthe consultantand send the comletedraft report by October 31, 1996. RHD is also requestedto reviewthe economicre- evaluationfor completedroad works preparedby the consultantsand send to IDA with their commentsby November30, 1996. G. PAYMENTTO CONTRACTOR

15. The missionis concernedto note that althoughthe credit closingdate has been extendedto December31, 1996,at the requestof GOB, no provisionhas been made in FY97 ADP for the project. As such contractorspayment can not be effecteddue to lack of GOB counterpartfunds. The missionstrongly recommends to resolvethis issue immediatelyto avoid further delaysin paymentto the contractors.

16. ConsultancyServices: The Team Leaderof the consultantshould settle issuesrelated to variationorders, as built drawingsand final billswith GOB and IDAbefore demobilizationof the consultant.

III. NEXT STEPS

17. RHD should submitquarterly status reports on maintenanceactivities undertaken on routine maintenance(crack sealingsurface repair works, shoulderand side slope maintenance)of RRMP-I,Phase I roads.

18. RHD to submita report on outstandingaudit queriesto IDA beforeDecember 31, 1996.

19. RHD/Consultantto finalizeall outstandingvariation orders before the end of the Credit ClosingDate.

20. RHD shouldprocess all the outstandingbills before the end of the Credit Closingdate.

21. RHD/Consultantshould completeall "as built drawings"as soon as possible.

22. RHD to finalizeImplementation Completion Report includingeconomic re-evaluation for completedroad works beforeNovember 30, 1996. Annex-I Page 1 of 1 ROAD REHABILITATION AND MAINTENANCE PROJECT CREDIT 1827-BD

LIST OF OFFICIALS MET

Ministry of Communications Roads & Railways Division

Mr. Waliul Islam Secretary Mr. M. Abul Kasem Joint Secretary

Roads & Railways Division

Mr. Tuhur Ahmed Chief Engineer Mr. Mahtabuddin Ahmed Project Civil Works Director Mr. Anwarul Islam Superintending Engineer

Ministry of Finance

Mr. Mahbub Kabir Additional Secretary, ERD

Louis Berger International Inc. (LBII)

Mr. Vincent Templeman Team Leader Annex-HA ProjectCost for RRMPPhase-I

Rehabilitation (13 .4 kn) Contract Contractor ContractAmount RevisedAmount Remarks (Tk) (Actual) 1/1 F. F. Cruz & Co/ 394,925,785.00 592,335,161.00 Main cost increase due to floods M.A. HossainJV of 1987 and 1988 1/2 F. F. Cruz & Co/ 328,689,805.00 398,816,947.00 Main cost increase due to floods M.A.Hossain JV of 1987 and 1988 1/3 National Civil 144,243,381.00 186,257,394.00 Maincost increasedue to EngineersLtd/ M.A. roadwaycenterline shift Jabbar 1/4 Saiwhan Corp. 100,113,912.00 107,659,836.00 Main cost increasedue to floods of 1987 and 1988 1/5 Sanwhan Corp 318,476,109.00 351,595,007.00 Main cost increase due to floods ______of 1987 and 1988 1/6 SamwhanCorp 307,512,420.00 345,816,148.00 Main cost increase due to floods of 1987 and 1988 Sub-Total 1,593,961,412.00 1,982,480,493.00 Over.388,519,081.00

Periodic Maintenance(52.4 km) |RMIP-1/1 M/s Khan Brothers 9,649,649.00 10,612,260.81 VO issued for 10%of contract amountto increase scope of work RMP-1/2 M/s Khan Brothers 8,768,029.00 9,644,013.43 VO issued for 10%of contract =______I _amount to increasescope of work RMP-2/1 Haque & Chowdhury 12,511,014.63 15,013,080.36 VO issued for 20% of contract ______lConst. Company Ltd. l _I amount to increase scope of work RMP-2/2 Haque & Chowdhury 8,831,633.22 10,597,874.36 VO issued for 20o of contract ___===___ Const CompanyLtd _ amountto increase scope of work Sub-Total 39,760,32515 45,867,228.96 Over: 6,106,903.11

Total l _l 1,633,721,737,85 2,028,347,721.96 Over.394,625,984.11 Source:LBII/SARM RRMP Phase I Final Report (April 1994)

Project Costfor RRMP Phase-lI

Rehabilitation (148.9 kIn) Contract Contractor ContractAmount (Tk) RevisedAmount Remarks (Estimated) 2/lA Nirmal-CRBEC 628,892,502.40 596,300,000.00 1 2/lB Samwhan/MA 707,929,339.60 631,200,000.00 1 2/2 BDC-NCE-PEB 613,301,223.29 599,900,000.00 1 Two additional bridges 2/3A Abdul Monem Ltd 330,767,432.49 292,000,000.00 1 2/3B Ansal-Pubali 250,491,700.11 232,100,000.00 1 2/3C IRCON 316,921,420.24 256,300,000.00 1 2/4 China Harbour 398,745,236.59 339,900,000.00 1 Sub-Total ___3,247,048,854.72 2,947,700,000.00 _f Note 1: AdditionalWork - Bus/TruckLaybyes & Market Widening

PeriodicMaintenance (20.0 kIn) AWPMP4 Samwhan/MA 44,475,600.00 38,827,259.29 Funded from savings Total 3,247,048,854,72 2,986,527259.29 Savings:260,500, 000.00 Annex-IIB Page 1 of 1

Disbsursementsfor Credit 1827-BD

Category DCA Amount EstimatedTotal (SDR) to Complete (1) Rehabilitation Works:

(a) Phase I 22,100,000.00 26,736,313.76

(b) Phase II 39,000,000.00 36,832,436.00

(2) Deferred main- 3,200,000.00 1,079,741,00 tenance works:

(3) Technical Assistance 6,100,000.00 7,849,877.00 fellowships and training

SA Special Account 0.00 0.00

(4) Unallocated 7,700,000.00

Total 78,100,000.00 72,498,367.76 ANNEX D

MIAP

IBRD20236R 88t\ ~~~~~~~~~~~~~~~~~~~~~89° 90 880 890 BANGLADESH NEPAL ROAD REHABILITATIONAND MAINTENANCEPROJECT

f a b. dhpQ PROPOSEDPROJECT EXISTING: / Tetulio7 Road Rehabilitation National Highways Tet_. ~a ,/ - - Deferred Maintenance Program Regional Highways ...... Feasibility Study Completed - - - Other Roads

PANCHAGARf ., L\4tgr ~~~~To be Studied --- * Railroads (.SR5POi , G Contract Numbers Rivers _A/warioda ''s (?TuhCl;;< \\ s l @1i District Headquarters

g /'llporo .L>" Ra (isl ( > \t ahurungomor - - District Boundaries rolpara 3 ue _ ,hhodr WoliadrngD igafli)Oo omor Da a- International Boundaries

-26. Ransaskoil URGAON >Jaidkokso. \igi * Ngeswet r 26 2\ oo -*,rA | \ <~~~~~~~~~INLPHAMARI AdlAdtm.r; -Phulb.r, > m

Horipur . \ \ 9 gonha LAL RHAT ¢

The boudaries, coors r RANG A ~~~~~~~~~~~otherinfo-tio- shown a / Raisrhot on ~~~~~~~~~~~~~~~~~~~~~this-s do n_t i ply, on the port of The Nord BoIk Group. rgo~~~~~~~j ,,~~~~nyl,udgment -n tlhe legal Sttu of any trrtory.

INDIA .A * * mpur _ o\_,* \ XA 0 XHoim_u I ) ~~~~~~~~PonchbbOz lsbri 17& f s

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i > PRO;ECT' '& LX Brto'geS{Ot kBNA KSonthiZ i~~~~~~~T

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! 5 o~~~fStna! t ) PO9RKX\ Hodi~~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~MY19

IMAGING

ReportNo.: 16809 Type: ICR