Document of The WorldBank

Public Disclosure Authorized FOR OFFICIALUSE ONLY

Report No: 22334

IMPLEMENTATIONCOMPLETION REPORT (IDA-22960)

Public Disclosure Authorized ON A

CREDIT

IN THE AMOUNTOF SDR 44.4 MILLION(US$60.0 MILLION EQUIVALENT)

TO TBE PEOPLE'SREPUBLIC OF

CHINA

FOR A

SHANGHAIMETROPOLITAN TRANSPORT PROJECT Public Disclosure Authorized

JUNE 29, 2001

This documenthas a restricteddistribution and may be used by recipientsonly in the performanceof their 7 officialduties. Its contentsmay not otherwisebe disclosedwithout World Bank authorization. Public Disclosure Authorized CURRENCYEQUIVALENTS (ExchangeRate EffectiveDecember 31, 2000) Currency Unit = Yuan (Y) Y 1.00 = US$ 0.120817 US$ 1 = Y 8.2770

FISCALYEAR January 1 - December 31

ABBREVIATIONSAND ACRONYMS

ATC - Area Traffic Control BAA - Barton AschimanAssociates CBD - Central Business District CCTV - Close Circuit Television ETC - Electronic Toll Collection IRR - Inner Ring Road MV - Motor Vehicle NBF - Non Bank Funded NMV - Non-Motor Vehicle NSC - North-South Corridor NUTI - NorthwesternUniversity Traffic Institute PDR - Preliminary Design Report PGS - Parking Guidance System PT - Public Transport TA - Technical Assistance TMP - Traffic Management Program TMS - TrafficManagement and Safety SMCC - ShanghaiMunicipal Construction Commission SMEAD - ShanghaiMunicipal Engineering Administration Department SMEC - SnowyMountain Engineering Corporation SMECC - ShanghaiMunicipal Engineering Construction Company SMG - ShanghaiMunicipal Government SMTAB - ShanghaiMunicipal Transport Administration Bureau SPSB - ShanghaiPublic Security Bureau TrafficPolice Patrol and GeneralBrigade STC - Shanghai Transit Company STERI - ShanghaiTraffic EngineeringResearch Institute (STERI) of SPSB SUPDRI - ShanghaiUrban PlanningDesign and ResearchInstitute VMS - Variable Message Signs

Vice President: Jemal-ud-din Kassum, EAPVP | CountryManager/Director: Yukon Huang,EACCF SectorManager/Director: JitendraN. Bajpai,EASTR Task TeamLeader/Task Manager: EdwardB. Dotson FOR OFFICIAL USE ONLY

CHINA SHANGHAI METRO TRANSPORT PROJECT

CONTENTS

Page No. 1. Project Data 1 2. PrincipalPerformance Ratings 1 3. Assessmentof DevelopmentObjective and Design, and of Quality at Entry 2 4. Achievementof Objective and Outputs 6 5. Major Factors AffectingImplementation and Outcome 10 6. Sustainability 12 7. Bank and BorrowerPerformance 12 8. LessonsLearned 14 9. Partner Comments 20 10. AdditionalInformation 31 Annex 1. Key PerformanceIndicators/Log Frame Matrix 32 Annex 2. Project Costs and Financing 35 Annex 3. EconomicCosts and Benefits 37 Annex 4. Bank Inputs 39 Annex 5. Ratingsfor Achievementof Objectives/Outputsof Components 41 Annex 6. Ratingsof Bank and BorrowerPerformance 42 Annex 7. List of SupportingDocuments 43 Annex 8. BeneficiarySurvey Results 44 Annex 9. StakeholderWorkshop Results 45

Map: IBRD 31441

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.

Project ID: P003565 Project Name: SHANGHAI METRO TRANS TeamLeader: EdwardB. Dotson TL Unit:EASTR ICR Type: Intensive Learning Model (ILM) of ICR Report Date: June 29, 2001

1. Project Data

Name: SHANGHAI METROTRANS LIC/TFNumber: IDA-22960 Country/Department: CHINA Region: East Asia and Pacific Region Sector/subsector: TU - Urban Transport

KEY DATES Original Revised/Actual PCD: 06/22/1988 Effective: 01/15/1992 01/15/1992 Appraisal: 05/29/1989 MTR. Approval: 09/10/1991 Closing: 06/30/1998 06/30/1999

Borrower/lImplementing Agency: People's Republic of China/Shanghai Municipal People's Government OtherPartners: InnerRing Road ConstructionCompany, Traffic ManagementDivision of the ShanghaiPublic SecurityBureau, ShainghaiMunicpality Engineering AdminstrationDepartment, Shanghai City Planning and DesignInstitute and ShanghaiUrban ConstructionDesign Institute.

STAFF Current At Appraisal VicePresident: Jemal -ud-dinKassum Russel J. Cheetham CountryManager: Yukon Huang Shahid Javed Burki Sector Manager: Jitendra N. Bajpai Daud Ahmad TeamLeader at ICR: EdwardDotson Ms. Carrolle Carr ICR Primary Author: Edward Dotson; Ephrem Asebe Asebe This projectwas the first of two metropolitantransport projects providing assistance to Shanghai MunicipalGovernment (SMG), with similarobjectives and design,overlapping implementation periods and the same implementingagency. The secondproject is the SecondShanghai Metropolitan Transport Project (SMTPII: ID-P003622).Given their similarities,a singleassessment has been made coveringthe two projects,but separatereports have been printed. These containthe same text and annexes,except for sections 1 and 2, and Annexes2, 4, 5 and 6. 2. Principal Performance Ratings (HS=HighlySatisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely,HU=Highly Unsatisfactory, H=High, SU=Substantial,M=Modest, N=Negligible) Outcome: S Sustainability. HL Institutional Development Impact: H Bank Performance: S Borrower Performance: S

QAG (if available) ICR Quality at Entry: HS S Project at Risk at Any Time: No 3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 OriginalObjective: The two metropolitan transport projects (SMTP I & II) providing assistance to Shanghai Municipal Government (SMG) had similar objectives. For SMTP I, the original objective was to provide the basis for developing an efficient transport system in the Shanghai Metropolitan Region by: (a) increasing capacity, reducing congestion, and improving efficiency in the Shanghai urban transport network, and (b) improve the planning, programming, financing, and management of the urban transport system in Shanghai.

The project represented the first stage of a long-term program intended to upgrade and develop the urban transport infrastructure of Shanghai to meet the needs of a developing economy.

For SMTP II, the original objectives of the project, in support of the economic and social development of Shanghai, were: (a) to enhance economic productivity by improving the operational and economic efficiency of the urban transport system; and (b) to strengthen public sector management capacity by improving the planning and management of the urban transport system. SMTP I was the first urban transport project undertaken by the Bank in China. In 1991 at the time of the appraisal update of SMTP I, roads occupied 5% of the land surface of Shanghai (compared to 15% in similar cities in other countries); average traffic speeds were 15 km/br with bus speeds at 8 km/hr; the vehicles fleet was 200,000 (53% trucks), the bicycle fleet 6.5 million and the bus fleet 5500. Five different entities were responsible for transport, and the ad hoc transport planning task force had just been turned into a pernanent transport planning institute. The SAR stated that the road network did not have sufficient capacity to accommodate existing, let alone future vehicle flows. Viewed against this background, the project objectives were clear and well related to the analysis of the issues in the sector. They represented a balanced emphasis on physical works and institutional capacity building in the sector.

The SMTP II objectives represented a logical extension of the SMTP I objectives into economic development and city management, reflecting the broadening of the dialogue between the Bank and the Shanghai Municipal Government (SMG). In 1990, with Bank assistance, a process was begun to articulate Shanghai's comprehensive reform policies, establish detailed action plans for implementation of reforms, and link the future expenditure program and institutional development of Shanghai to the reform program. In 1991, SMG launched the Shanghai Economic Reform Action Program (SERAP), and it was agreed that future Bank lending to Shanghai should be linked to the implementation of the SERAP. Municipal infrastructure reform was one of the six activities in SERAP. Within this activity, the key areas of reform were: (a) price reform aimed ultimately at full cost recovery for urban services (b) strengthening autonomy of public utility agencies (including Shanghai Transit) (c) enabling the use of enterprises as contractors to provide services such as public transport (d) regulation and guidance by updating and strengthening spatial planning, integration of infrastructure investrnent with spatial planning, and strengthening of planning, programming and budgeting procedures.

-2 - SMG placed great emphasis in SERAP on the expansion of the city into the Pudong area, located on the east side of the Huangpu River. A key factor in developing Pudong was the improvement of the transport across the Huangpu River. The Inner Ring Road (IRR) proposed for the Puxi area west of the Huangpu River, was to be extended via the Nanpu and Yangpu bridges in Pudong. Besides providing arterial road access to Pudong, the function of the IRR was to divert through-traffic away from the established city center in Puxi, and provide a link with regional routes from the surrounding provinces of Jiangsu and Zhejiang to Shanghai Port. The Bank financed the IRR, while the Asian Development Bank provided some finance for the bridges.

Apart from resettlement, environment, and the Project Implementation Unit, conditions in the implementation program of the project agreements related to transport investment plans, traffic management, reform of the transit company, motor vehicle emission control strategy, and technical assistance. The topics covered under project conditionality were appropriate and did not appear unrealistic at the time.

3.2 Revised Objective: The original project objectives were maintained throughout implementation.

3.3 OriginalComponents: SMTP I Project Components:

A. Major Road Investments (Inner Ring Road Stage 1, US$131.9 million or nearly 90% of total project cost of SMTP I). These investments were the core of the project and were designated for major road construction along the existing ZhongShan Inner-Ring Road, a high-volume bypass route encircling the old central city. The credit supported the construction of a 5.5 km viaduct over Zhongshan Road, with associated surface improvements. The viaduct was designed as a high speed arterial while the surface road was to be upgraded to four motor vehicle lanes with segregated NMV lanes.

B. Traffic Safety and Management (US$11.7 million or nearly 8% of the total project costs). The credit would finance traffic management and safety measures including the introduction of a 1.1 km busway and 19 km of non-motorized vehicle roads.

C. Technical Assistance (US$4.6 million or about 2% of the total project costs). TA was designed to strengthen the municipality's capabilities for planning and implementing urban transportation measures, effecting improvements in traffic and safety, and improving bus operations.

SMTP II Project Components:

A. Construction of the Inner Ring (IRR) Stage 2 (US$574.6 million or 87% of SAR project cost estimates). The loan would finance the construction of a further 22 km of Inner Ring Road on the west bank of the Huangpu River.

B. Traffic Management and Safety (US$44.9 million or 6.5% of the total SMTP II SAR estimates). This component was to extend the traffic management plan started under SMTP I.

C. Public Transport Investments (US$36.5 million or 5.5% of SMTP II SAR estimates). This is to construct and equip two bus depots and one bus interchange for Shanghai Transit.

-3 - D. Technical Assistance (US$1.1 million or 1% of the costs of SMTP estimates) The TA was to support project implementation and to give further support to transport planning institutions.

3.4 Revised Components: SMTPI. A Major Road Investments. (i) Inner Ring Road viaduct works in SMTP II of contract 2.7 and the corresponding ground level works of contract 1.13 and 1.14 were transferred to SMTP I. Ramps were added to the viaduct. This extended the length of Zhongshan Road works under SMTP I from 5.5 km to 7.4 km. Works included the refurbishing of #3 Bridge. (ii) Ramps at Zhoujiang Road and Jinshajiang Road were added after completion of the IRR viaduct to improve traffic flow.

B. Traffic Management. The NS Corridor (NSC) Program was deleted from the TM component.

C. Technical Assistance. Some minor modifications were made. The availability of funding from the French Government to support strategic planning and feasibility studies permitted a reallocation of SMTP 1 project finds for expansion of Institutional Development of transport planning capabilities.

SMTP II.

A. Construction of the Inner Ring (IRR) Stage 2. The share of IBRD contribution in Category I, Civil Work Schedule I, in the original Loan Agreement was amended as of January 1994, from 38% to 53% to accommodate change in exchange rate of 5.7 to 8.2 RMB to USD.

B. Traffic Management Various detailed changes were made to the schemes included in this component.

C. Public Transport. Construction of the new depot at Yinhang was replaced by construction of a multi-story garage and routine maintenance facility within the confines of the Siping road depot.

3.5 Quality at Entry: Neither project was ever selected for review by the Quality Assurance Group (QAG).

Strategies. Both projects were presented to the Board before the first CAS was prepared for China. The World Bank urban transport policy prevailing at the time of preparation was published in 1986. This emphasized the importance of managing demand for road use, improving efficiency by traffic management and self supporting bus services to secure economically efficient urban movement, while acknowledging that expansion of road capacity may be unavoidable when the demand for urban transport grows rapidly. The Bank's urban sector lending strategy in China was to (a) assist the governmentin planning and prioritizingneeds for urban servicesand to prepare cost effective projects (b) help strengthen institutions(responsible for planning,preparing, constructingand operating urban services) through support for organizationalimprovement and staff training (c) promotesound financialand cost recoverypolicies for urban services (d) help develop sector policiesand strategiessupportive of China'soverall reform program.

- 4 - In the areas of urbanplanning, finance, and management,China was lookingto the Bank for transferof knowledgegained in other countries.The two projectswere consistentwith these strategiesand the ShanghaiEconomic Reform Action Plan. Countryand SectorKnowledge. TheBank startedbuilding a body of countryand urban sectorknowledge in China from 1981,coupled with a seriesof studiesto provideinformation on the urbantransport sector in Shanghai. These studiesprovided an adequateunderpinning of the project. Lessons of Experience. SMTP 1 was the first Bank urbantransport project in China, and so there was no China specificexperience to draw on. Experiencefrom a review of 15 PCR/PARin other countrieswas used. The main relevantlessons related to * weakinstitutional capacity - which was addressedthrough TA * weak enforcementof traffic regulations- which was addressedby making traffic managementschemes "selfenforcing" and by involvingthe SPSB (trafficpolice) in their design * inefficientpublic transportoperations - which were addressedthrough TA, and * lack of considerationof environmentalimpacts - whichwas acknowledgedas a potentialcause for concemas motorizationincreased, despite increased political awareness Appropriatenessof ProjectApproach. When SMTPI was identifiedon May 1988,SMG presentedthree large infrastructureprojects for possibleBank group funding. Giventhat the clientwas new to the Bank, the Bank team selectedpart of one of the projects(the IRR) for SMTP 1. Trafficmanagement (in line with sectorpolicy) and TA for capacitybuilding and improvingPT (in line with lessons learned)were added. When it became clearthat the client had the institutionaland engineeringcapacity to undertakemajor civil works,the remainderof the IRR was includedin SMTPII. This approachwas entirelyappropriate in the circumstances. BorrowerOwnership. The Borrowerwas highlycommitted to the IRR componentof both projectswhich they saw as an essentialelements in their strategyfor the developmentof Pudong.There was Borrower ownership,but with a lesserpriority attached, to the ATC systemand the PT investments. PartnershipArrangements. The projectswere preparedwith assistancefrom fundingprovided by the French and US Govenmuents.SERAP was preparedby SMG with assistancefrom the Bank, UNDPand the Ford Foundation. The Nangpuand YangpuBridges at eitherend of the Bank financedsections of the IRR,were part financedby the ADB. TechnicalAspects. In depthplanning, feasibility, and technicalstudies and economicanalyses, funded by SMG or bilateraldonors wereundertaken at the request of the Bank duringthe preparationof both projects. Thesecovered urban development,finance, public transport, traffic management,road safety, road maintenanceand the designof the ring road. The extentof the studiesreflected in part the uncertaintiesof doingbusiness with Chinaas a new Bank client. While the key issue of the fuctional designparameters (including the number of lanes)of the IRR was discussedbetween the Bankand SMG duringpreparation missions, analysis is inadequatelypresented in the two SARs. It was generallyassumed that land cost and availabilitylimited the IRR to 2 x 2 lanes and that traffic demand in excess of this capacitywould be met by othernew roads, specificallythe Second/OuterRing Road. Howeverinadequate capacitywas seen as a risk. Greaterdiscussion of IRR functionaldesign optionsin the SAR was a weaknessin the technicalanalysis. The PAD structurefacilitates the discussionof such issuesin a way that the SAR structuredid not. Economic Evaluation. This followedstandard methodology of estimatingbenefits from the IRR as vehicle operatingcost (VOC)and time savingswith and withoutthe project. At the time the evaluationwas consideredan exampleof good practice. FinancialAnalysis. This analysisverified the financialcapacity of SMG to provide counterpartfunds and repaythe creditand loan. There was discussionof operatingcost recoveryfrom user fees (not just public transportfares). No attemptto calculatethe coverageof project costs or of the SMG transportprogram from user fees.

-5 - Povertyand SocialAspects. The projectwas not intendedto addressdirectly poverty reduction or gender issues. Preparationfor resettlementwas carriedout in accordancewith Bank guidelineson involuntary resettlementby dedicatedstaff within a legalframework, well organizedinstitutional network, and well defined compensationpolicies. The qualityof the RAP was quite good sincethe scopeof impactsand the amount of entitlementchanged little during implementation. The only resettlementdrawback foreseen was the increasedcommuting distance for mostresettled residents. EnvironmentalAspects. In general,the EA addressedadequately the environmentalimpacts, but did requirestrengthening in someareas. Measuresto mitigateimpacts adjacent to the IRR includingnoise barrierswere adequate,as were proposalsto reducethe pollutionat sourcethrough a Motor Vehicle EmissionControl Strategy (including cleaner engines and fuels),which was includedas a project condition. The third mitigationmeasure proposed - land use changesalong the IRR throughredevelopment - appeared realistic. Environmentalpolicies and institutionalcapacity were adequatelyassessed, which resultedin TA being proposedto supportthe preparationof a MVECS.There was little if any consultationor disclosure, as was currentBank practice at the time. The projectsalso predatedthe assignmentof environmental category. Due to the environmentalimpacts and resettlement,the projectswould have been classifiedas Category'A'. FinancialManagement. No assessmentwas made of FinancialManagement Systems. Procurement.The procurementarrangements for the projectstook into accountexperience from previous Bank financedprojects and used modelbidding documents developed for China. Intemationalprocurement was to be undertakenby IntemationalTendering Companies (ITC) experienced in BankICB. Policyand InstitutionalAspects. As discussedearlier, as these were the first two urban transportprojects undertakenin China,extensive analysis was undertaken of these aspects. The only weaknessesforeseen were in technicalareas that were relativelynew to SMG, and for which TA was includedin the projects. ImplementationArrangements. No projectimplementation plan was prepared,but the Borrowerdid providerealistic implementation schedules for both projects. The first year programwas ready for implementation.Project management arrangements were clear,with a ProjectImplementation Unit having overallresponsibility for projectmanagement, and sub-PIUdealing with each component. TA was providedto assist the PIU in the initialyears. RiskAssessment and Management. The risks identifiedwere purelytechnical. They includeddelays in demolition,resettlement and construction,inadequate IRR capacity,inadequate traffic engineeringat viaductinterchanges, inadequate or delayedtraffic management measures.

4. Achievement of Objective and Outputs 4.1 Outcome/achievementof objective: While the two projects sharedtwo sirnilarkey objectives,each had specific objectives,which are discussed separately. Increasing capacity in the urban transport network The construction of the elevated ring road and the associatedimprovements to the groundlevel roads increasedthe physicalcapacity of the road systemby up to 90,000vehicles/day on the most heavilyused sections. Otherroads built during the time period of the projects,notably the N-S ChengduRoad viaduct and the E-W Henan Roadviaduct also addedroad capacity. The traffic managementschemes increased the practicalcapacity of the existingroad network, but to a lesserextent than envisaged,due to a reductionin the numbersof schemesimplemented. Thebus depots facilitatedincrease in publictransport capacity (bus numbersand route length increasedby over 250%)and operatingefficiency, and elimninationof the operatingsubsidy.

Reducing congestion. Overallcongestion along the ring road corridorand withinthe CentralBusiness Districtin Puxihas been reduced. Despitean almostninefold increase in vehicletrips to/from/withinthe CBD,the networkvolume/capacity ratio has fallen(from 0.8 to 0.75). Crosstown travel speedshave

- 6 - increasedfrom 12 kmlhr to 24 km/hr on some trips,and from 18 kin/hrto 29 km/hr on others,resulting in time savingsof up to 50 minuteson 20 km trips. However,the 2 x 2 lane (withoutemergency lanes) configurationadopted for the elevatedroad has proved insufficientfor the traveldemand. Year 2000 flows are doublethose predicted in 1991 and the designcapacity is being exceededin some sections.Thus congestionis startingto re-emergeat peak times on somesections and someramps of the ring road. This is being addressedoperationally through monitoring, ramp controland more effectivetraffic management where the ramps meetthe groundlevel roads.

EnhanceEconomic Productivity. Economicproductivity, measured by Gross RegionalProduct increased dramaticallyduring the projectfrom 8.94 Billionin 1991to 40 BillionRMB in 1999. The extent to which the IRR and other investmentscontributed to this increase,or that the overallinvestment in transport contributed,is difficultto quantify. Improvementswere realizedin the operationalefficiency of the various elementsof the urbantransport system - the overallroad network(as measuredby the sort of increasesin operatingspeeds and throughputindicated above). For the bus network,staff per bus were reducedto 5: 1, operatingsubsidies were elimninated,while servicewas expanded. Improvementswere also realizedin economicefficiency as trips/headincreased by 25% whileaverage trip time increasedby only 10%.

Improve planning, programming, financing and management of the urban transport system. Thereare two ways to judge the achievementof this objective- by lookingat the individualcomponents of the system,and then the systemas a whole. In terns of transportplanning, the results are highly satisfactory. The ShanghaiCity ComprehensiveTransport Planning Institute (SCCTPI) received TA supportin both projects. SCCTPIhas grownin capacityand statureto the point where it is now providingconsulting services(with limitedBank guidance)on recentlyprepared Bank urban transport projects in China (Urumri and Shijiazhuang).It recentlycompleted the 2020 TransportStrategy for Shanghai. The methodology includedseparate studies on the highwayand rail networks(modeled on the HongKong approach),as well as considerationof multipleoptions. SMG is in the processof developingdetailed transport policy for 2020, basedon the Strategy,with the assistanceof Europeanconsultants.

Programmingandfinancing - Programmingof works is stillundertaken based on the Nationalfive year plans. Financingis still from a varietyof sourceswith no requirementfor sectoralcost recovery. The resultstherefore in terms of these items are less than satisfactory.

TransportSystem Management. The resultsare satisfactory.The trafficmanagement components and TA achievedthe principalobjective of providingthe basis for developingan efficienturban transportsystem. Evidenceof a changeof attitudestowards traffic managementis clear togetherwith its enhancedstatus. An understandingof the broaderrange of activitieswhich comeunder the umbrellaof trafficmanagement was gained.The flexibilityof trafficmanagement was recognizedand fully exploited. The traffic managementstrategy developed under the componentand endorsedby SMG was incorporatedinto the latest ShanghaiMaster Plan.

Therehas been a significantchange in statusand image of trafficmanagement. There is more awareness of the scopeof traffic managementplanning and design- and notjust the police remits of operationsand enforcement.The TA was particularlysuccessful with regardto the traffic police (SPSB). Not only did staff becomeexposed to traffic managementplanning and designissues, but theirparticular operational remitswere enhancedby overseastraining. Many of the ideasput forwardin the projectwere subsequently appliedelsewhere in Shanghai. There is now bettertemporary traffic management during construction. The use of Area TrafficControl to improvethe efficiencyof the road systemwas very successful.

- 7 - Howeverto date there appearsto be limitedawareness of the need for traveldemand management, starting with parkingpolicy. However,it is understoodthat this is one of the topicsto be addressedin the transport policy studiesrecently commissioned by SMG frominternational consultants.

For PublicTransport, the results are highlysatisfactory. In early 1996,the ShanghaiPublic Transport Company(SPTC) was reorganizedinto ShanghaiPublic Transport General Company, an umbrella company,and 13 operatingcompanies, all of which were to be financiallyand operationallyindependent. A ShanghaiPublic TransportLimited Joint-Stock Company was establishedto hold the state-ownedassets for all 13 companies. The city's municipalfinance bureau then contractedwith each of the 13 companies on an area basis, includingprovisions for subsidies.These allowed subsidies to be given on a declining basis for lossesincurred over the three year period(1996 to 1998). The savings from operatingsubsidies were redirectedto increasedcapital investment. A passengertransport management division was establishedunder ShanghaiPublic Utility Bureau in orderto regulatethe passengertransport sector and managethe tenderingof all new bus routes to the 13 companiesand 100 or so other eligiblepublic transportcompanies. In other words,the 13 operatingcompanies compete amongst themselves and with other operatorsfor the operatingrights to new routes. More recentlythis divisionhas been separatedout from the PublicUtilities Bureau and a PublicTransport Management Office has been created.

VehicularAirQuality Management. The resultsare highlysatisfactory. A leadinggroup for emissions controlwas established. The Chairis the DeputyDirector of SEPB. A actionplan was developedand Shanghaiis fiveyears ahead of other citiesin China in this field. Specificactions that have been taken includeintroduction of unleadedfuel in October 1, 1997, and the introduction(in 1998two yearsahead of nationalstandards) emission standards for new lightduty vehicles. Competitivebidding is underwayfor a demonstrationproject for the implementationof a centralizedInspection and Maintenance(I/M) systemfor lightduty vehicles. Emissionstandards for dieselvehicles are at an advancedstage of preparation.

Strengthen public sector management capacity. Overall the results look satisfactory. However, managementof the street and elevatedhighway networks is under separateagencies. It is acknowledgedby SMG that bettermanagement and traffic controlsystem integration is needed,particularly for incident management.

Improvingefficiency. The works and equipmentin the trafficmanagement components directly improved the operatingefficiency of the street network,as the falls in cross-towntravel times show. Howeverthe efficiencygains were less than would have been expectedas the extentof trafficmanagement was less than planned. In particular,measures for non-motorvehicles (bicycles) that were implementedgenerally resulted in efficiencygains for MV traffic only. Worksand equipmentin the publictransport components improvedthe efficiencyof operationof the bus system. Howeveras few on streetbus prioritymeasures were implemented,the improvementswere less than anticipatedat appraisal.The creationof a primary road network(comprising the ring road and the N-S and E-W viaducts)catering for longerdistance intra-urbanmovements further raised the overalloperating efficiency of the road networkby segregating longerdistance traffic from shorterdistance access and local traffic and bus traffic, permittingeach type of networkto performnthe functionsfor which it was intended. TA for STC reformand the developmentof pavementmanagement systems improved the efficiencyof bus operationsand road maintenance.

Resettlement. Based on a recent survey,most resettledhouseholds were generallysatisfied. Most agreed that the resettlementhad helped them to increasetheir livingspace and housing quality,and improvetheir livingenvironment. The time for commuting(which was the main concernat appraisal)had reduced with the improvementof servicesby ShanghaiTransit. For most resettledpeople the objectiveof restoringtheir livingconditions and livelihoodhad been achieved.

- 8 - 4.2 Outputs by components:

ShanghaiInner Ring Road Civil Workswere satisfactorilycompleted in two stagesand open to traffic aheadof scheduleand withinoverall budget, although some contracts of sub-componentsexperienced cost overrunsexceeding 15%. The qualityof the civil workswas generallyof a high standard. The completed IRR civil works has met the physicaltargets set under SMTPI and II. A total of 29 km of elevatedroad and associatedground road, 41 ramps,and 4 interchangeswere completed.The elevatedroad is a four-lane dual carriagewaywith a design speedof 80 km per hour and a traffic capacityof 3,005vehicles per hour inI each direction.The groundlevel road, rangingin widthfrom 40 to 50 meters,is a four lane dual carriagewaywith a design speedof 40 km per hour and a designcapacity of 1,650vehicles per hourin each direction. The groundroad has non-motorizedvehicle lanes and foot pathsin both directions.The ramps are two lanes. Gonghexinroad interchangeand Lubanroad interchangeconnect the elevatedIRR and north-southelevated road. The westemYanan interchange connects the Inner Ring Raodviaduct and theYananRoad viaduct. The IRR is equippedwith monitoringand trafficaccident rescue systems.

SMTPI & II. TrafficManagement and Safety Components.In terms of resourceallocation (with US$56.7 or 7% of the total cost)it is secondonly afterIRR cost. In terms of implementationthis was the most complexpart of the project.Implementation require the creationof traffic managementcoordination team which soughtto bringtogether members from differentagencies. The componentwhich was in both SMTFP I & II was satisfactorilycompleted but after a protracteddelays and substantialmodifications. The delays in implementationof this componentwas a key factorin the extensionof SMTPI and II closingdates. As the same problemhas arisenin other projectsin China,it would be prudentto include loan conditionson the implementationschedule for trafficmanagement works in futureprojects.

Non-Motor Vehicle Programs.The delaysand accidentscaused by motor vehiclesconflicting with non-motorvehicles (NMV) were major problemthroughout Shanghai's urban area. In accordancewith NMV actionprogram two way NMV only routeshave been establishedbut their performnanceremained less than satisfactorydue to lack of lane discipline,lack of respectfor traffic signalsat junctions, uncontrolledparking of vehiclesconflicts with pedestrianand divertedtraffic from major construction works, pedestrianjay walkingat traffic lightjunctions, etc. Lack of channelizationwas a major problem. On the whole the NMV programhas helpedmitigate these conflictsby creatingan exclusivenon-motorized vehicle route passingin and around CBD,approximately 19.4 km in length.

TechnicalAssistance of SMTP Iand II The technicalassistance components of SMTPI & II were complementary.They were completedsuccessfully and generallyas specifiedin the SAR.The availability of fundingfrom the FrenchGovemment to support strategicplanning and feasibilitystudies, permitted a reallocationof SMTP 1 project fundsfor expansionof InstitutionalDevelopment of transportplanning capabilities. TheseTAs have servedan importantmeans of transferof technology.

4.3 Net Present Value/Economic rate of return: The post constructioneconomic appraisal of the InnerRing Road wasundertaken following the same methodologyused at appraisal.The main differenceswere an overallcost increaseof 21%, a shorter constructionperiod (three yearsinstead of four),and the possibilityto includenetwork benefits. The principalbenefits in the "withproject" case comparedto the "withoutproject" case included(a) savingsin vehicleoperating cost of traffic on the ring road and (b) savingsin passengertime of traffic usingthe ring road, and (c) vehicleoperating cost savingsand time savingson the centralcity network(within the ring road) and on the rest of the network. At appraisalbenefits in stream(c) were omittedfrom the calculation as a traffic modelrobust enoughto give reliable estimateswas not availableat the time. The recalculated

-9- Economic Intemal Rate of Return (EIRR) estimated to be 27.6% taking both stages of the IRR in SMTP I & II together. The NPV @ 12% discount rate is 61 Million RMB, and the Benefit Cost Ratio is 2.6. At appraisal, the EIRR estimates for the Inner Ring Road for Stage I and Stage II respectively were 18% and 15%, which would drop to 16.5% and 14% with a 15% cost increase. Removing the network benefits brings the recalculted EIRR down to 14%, close to the appraisal estimates with a 15% cost increase.

4.4 Financial rate of return: Not applicable

4.5 Institutional development impact: One objective of each project was concerned with institutional development. As noted above, the achievement of these objectives was satisfactory. In the nine years spanned by the implementation of the two projects, institutional development has been substantial. Competitive bidding for both NCB and ICB procurement by SMG agencies is now standard practice. Foreign consultant services are used to provide advice on policy. The regulator and operator functions of the public transport system have been separated. The vertically integrated monopoly bus operator has been split into a total of 13 separate commnercialized operators, capable of competitive tendering for service provision without operating subsidy. Institutions capable of undertaking transport modeling and traffic management exist.

5. Major Factors Affecting Implementation and Outcome 5.1 Factors outside the control of government or implementing agency: The Chinese economy grew in the 90's faster than envisaged. The Government exerted substantial management influence on the economy, but was not able to completely control it. As a result the vehicle fleet and travel demand increased more than envisaged.

5.2 Factors generally subject to government control: The key factor subject to central government control was the change in exchange rate. The economic growth in Shanghai produced a pressure for redevelopment which in theory was within SMG ability to control. In practice, the institutional framework to manage such redevelopment was not developed. This made it very difficult to design and implement TM schemes.

Land acquisition for Yinhang Depot. The sub-component was not implemented because of difficulties in land acquisition and resettlement. The site was changed from the one identified in SAR to the current Spring Depot of Shanghai No.1 Bus Company.

Construction schedules for the IRR were accelerated from those originally established at appraisal, with some cost increases as a result.

Bankfunding ratio at 15% for TM was lower than the 24% used for the IRR and PT components. Combined with the importance attached to the construction of the IRR, this provided less encouragement to the TM team than to the IRR team to solve the problems that arose.

Role of the Leading Group. This group provided high level policy support for the project, and had a responsibility for implementation policy and issues. Even so, it does not appear to have been used during project implementation to resolve specific project design or project management issues that could not be resolved by the PIU. This applied particularly to the differences of view in the traffic management component on the priorities to be accorded to different categories of traffic (MV, bus, NMV, and pedestrians), which were one of the factors slowing implementation.

- 10 - 5.3 Factors generallysubject to implementingagency control: Focus on the IRR construction. The objectivesof the ShanghaiMunicipal Engineering Construction Company(SMECC) was to complete the IRR. There was a lack of considerationabout how the IRR wouldoperate. This was evidentin the early lack of concernabout the interfaceof the IRR with the ground level road network,particularly the at-gradejunctions where on- and off-rampsconnected. SeveralBank missionsraised this issue throughoutthe projectand expressedconcern about junction designs. Ultimately, innovativetraffic management measures focusing on multi-phaselane-control signalling solved these problems. Ownershipof the TM component. TA wasprovided before and duringthe projectsto assist the Shanghai agenciesprepare and implementthe schemes. The consultantshad to try to form a partnershipwith Shanghaiteam but this was hard to achievesince local expertisewas lackinginitially. Whilethe counterpartworking relationships were very close, there was probablynot a true partnershipestablished. This may have resultedin undue consultantinfluence on the contentof the proposals. In retrospect, Shanghaiagencies may never have fully ownedthe proposals. Output of TAfor STC. The outputfrom this TA was consideredby STCnot to have been of great value in detailingtheir reformproposals. In theoryagencies should be able to ensurethat outputsare of value.In practicethis is difficultin policy areas,and whereagencies have limitedexperience of dealingwith consultants,particularly foreign consultants.

5.4 Costsandfinancing:

Total Appraised and Actual Costs of SMTP I and II Projects by Component (in miDlionUS Dollar)

SMTPI & II Component Appraisal Actual/latestEstimates %of Appraisal total SMTP I SMTP II Total SMTP I SMTP Total to Actual total II of SMTP I &1I A. Inner-Ring Roads of Stage I & 2 131.93 574.67 706.6 146.38 524.65 671.03 95% B. Trafficmanagement and Safety 11.74 44.89 56.63 14.13 25.29 39.42 70% C. PublicTransport Investments 0.00 36.46 36.46 0.00 30.44 30.44 83%c D. TechnicalAssistance 4.58 1.1 5.68 4.28 1.66 5.94 105%

Total 148.25 657.12 805.37 164.79 582.04 746.83 93%

Total Appraised and Actual Costs of SMTP I and II Projects by Component (in million of Chinese Yuan)

SMTPI & II Component Appraisal Actual/latestEstimates % of Appraisal total SMTP I SMTP 11 Total SMTP I SMTP II Total to Actual total of SMTPI

A. Inner-RingRoads of Stage I & 2 688.68 3,275.6 3,964.28 1.138.97 3,641.89 4,780.86 121% B. Trafficmanagement and Safety 61.30 255.9 317.2 87.41 207.52 294.93 93% C. Public TransportInvestmnents 0.00 207.8 207.8 0.00 250.90 250.9 121% D. TechnicalAssistance 23.94 6.5 30.44 34.27 13.90 48.17 158%- Total 773.92 3,745.7 4,519.62 j 1,260.65 4,114.21 5 119% Ratiobetween costs in Y to US$ 5.22 5.70 5.65 J 7.65 7.68 7.196

The tables providea comparisonof the appraisalestimates of SMTP I and SMTP II costs with Bank Staff actual/latestestimates.

-11 - ProjectFinancing.

IDA credit financed 40% of SMTP I total project cost of US$148.3 million equivalent. The total amount of SDR credit was US$44.4 million or US$60.00 million equivalent at appraisal. Due to the appreciation of the SDR relative to US Dollar, the total credit became US$ 62.99 million. A total of US$61.27 million was disbursed and the balance US$1.72 (SDRI.25 million) was cancelled. IBRD loan financed 20.3% of the total SMTP II cost of loan was US$150 million. The total disbursed is about US$148.0 million.

6. Sustainability 6.1 Rationalefor sustainabilityrating: All components are likely to be physically sustainable. The capacity and efficiency gains through road construction, traffic management and public transport reform are also sustainable. So too are the public sector management capacities. The major question mark is whether the overall road conditions are sustainable. Given that congestion is already apparent at certain locations and certain times on the ring road the answer is clearly that without other measures, the gains in travel times over the past ten years will be eroded over the next ten. More sophisticated management of the road system and redistribution of traffic by further construction (as was envisaged in both SAR) will certainly help. Continued increases in the capacity and quality of public transport will also decelerate the rate of increase of demand. But demand management will become necessary, starting with parking management and in the not too distant future, some form of area pricing scheme within the ring road.

6.2 Transitionarrangement to regular operations: With the exception of the Inner Ring Road, the facilities and equipment funded under the project were designed and implemented by the SMG agency with corresponding operations and maintenance responsibility. The Shanghai Viaduct and Bridge Maintenance Company was set up especially for the operation and management of the IRR, the N-S viaduct and the Yanan Road viaduct. The Traffic and Patrol Police General Brigade of the Shanghai public Security Bureau is responsible for traffic management of the IRR viaducts and the ground level roads, as well as the various traffic management schemes. The Shanghai Public Transport Holding Company owns the new two depots which it leases to the operating companies. The Environmental Protection Bureau is responsible for the implementation and firther development of the MVECS.

7. Bank and Borrower Performance Bank 7.1 Lending: The Bank performance during preparation can be considered highly satisfactory. Both projects were comprehensively prepared by highly experienced teams. SMTP I was identified in May 1988 and appraised in October 1989. Work was interrupted by events in China in mid 1990, and so the appraisal findings were updated in February 1991. The first project was approved by the Board in November 1991. The second project was formally identified in July 1991 and appraised in February 1993. While a number of team members were common to both projects, the task managers were different, due to circumstances beyond management control.

The first project was prepared at a time when the Bank was just starting urban transport work in China, and during a period when China was starting to embark on major reforms and to really open up to the rest of the world. The economic, sector and technical work undertaken was thorough and comprehensive. For the initial stages of a dialogue with a city these analyses perhaps attempted to cover too many sector issues.

- 12 - Thepreparation of the secondproject usedthe same analyses.These weresupplemented by technical studiesin transportmodeling and TM supportedby TA fundedunder SMTP I.

7.2 Supervision: Bank performanceduring supervisioncan be rated as satisfactory,although in terms of missionspacing, irregular. There were three task managers,all specialistsin urban transport. The first, who was the task managerat appraisalof SMTPII, died in mid 1996. He was replacedquickly by the secondtask manager who had participatedin the appraisalof both projects.After two missionsthe secondtask managercould no longertravel for medical reasons. The third task manager(who participatedat the appraisalof SMTP II) took over in late 1997. SMECCcommented that communicationwith the Bank sufferedduring this period, and problemswere causedby lack of timelyfeedback. Missionspacing from late 1997 was adequateto review progresson the outstandingactivities, largely related to the traffic management.

No supervisionplan was preparedfor SMTP I.. A supervisionplan was prepared for the SMTPII project which calledfor 8 missions(two per year) startingin March94. The Bank conducted14 missionsfor the SMTP-Iand 15 missionsfor SMTP-II. This largernumber of missionswas called for by the durationof the projectwhich was longerthan planned.The project supervisiontook a total of 130 staff-weekswhich appears to be reasonablecompared to other similarprojects in Asia. (The averagefor the East Asia Region is 8 staff weeks/yearand 12 staff weeksfor an ICR. Adoptingthese averageswould have resulted in a total of 144weeks of supervision).

The qualityof the dialoguebetween the Bank staffand the ChineseProject staff, as well as the guidance given by the Bank staff was well appreciatedby the Chinesecounterpart. However the changesof Bank task managerduring the year 1996-97,made communicationand problemsolving more difficult.This was most evidentfor the TMS componentwhich was not beingimplemented as fast nor as effectivelyas planned.

7.3 OverallBank-performance: Based on the abovecomments, the IDA/Bankperformance is rated as satisfactory.Despite changes in task managers,supervision was comprehensivein coverageand focusedon achievementof development objectives. The Bank was responsiveto Borrowerrequests for changesin projectcomponents, although sometimesthe responsetime wasperhaps not as speedyas it shouldhave been. Early advice wasgiven to the Borroweron the scopeof the ICR,and the definitionand measurementof performanceindicators linked to the objectives.The one failing was in the irregularspacing of supervisionmissions after the completion of the IRR. It is felt that this irregularityhad an adverseimpact on the natureof the traffic management schemesimplemented.

Borrower 7.4 Preparation: The Borrowersperformance during preparationwas highly satisfactory. SMTPI was the first project SMG had undertakenwith the Bank, at an early stage in the Bank dialoguewith the Governmentof China. Thus the Borrowerwas not only havingto cometo grips with Bankrequirements, but more generallywith the details of the westernbusiness model and westemapproach to policy formulation,planning, scheme designand projectmanagement. The learningrequired was broadenedand deepenedwith the increased scopeand complexityof SMTPII.

The Borrowersprimary interest was in buildingthe IRR by a givendate, but this did not prevent considerationand afterdiscussion, acceptance of other components.The need for Bank reviewof designs and discussionof designparameters was not clearlyunderstood. Therewas an understandablereluctance

- 13 - to have discussionsthat were meaningfulto the Bank team on mattersthat had alreadybeen endorsedby SMG. This meant that discussionson technicalmatters (such as for the IRR on the number of lanes or the ramp locations)did not fully addressconcerns expressed by the Bank team on the design of project sub-components.In the public transportcomponents the SMG team was reluctantfor the Bankteam to becometo involvedin reform at the start of the designof the reformmeasures.

7.5 Governmentimplementation perfornance: The Governmentin this instancemeans the ShanghaiMunicipal Government (SMG), since the Government of Chinahad little involvementin the project,beyond on-lending the loan to SMG. The SMG Leading Groupwas responsiblefor the overalldirection of the project,including project implementation policy and issues. However,once the IRR was completed,the leadinggroup did not appear to have been much involved. Despiteits mandate,the leadinggroup was not used to provideguidance to resolvethe continuingdifferences of view of differentagencies within the traffic managementcomponent. This suggeststhat the leadinggroup did not see its role as being to take decisionson mattersthat involved severalagencies, or projectmanagement decisions that were outsidethe powers of the PJU.

Overall Rating is satisfactory.

7.6 ImplementingAgency: The implementingagency performance was satisfactory.The same SMECCunit was responsiblefor the preparationand implementationof both projects. This ensuredthat knowledgegained at each stagewas retainedand expandedupon. It would have been rated as highly satisfactorybut for a numberof small dips in performnance,viz: intermittentquarterly reporting, and in later years, not sufficientlyproactive managementof remainingfunds to ensurethey were all properlyused. There was one incidenceof procurementnot followingBank guidelines, due to staff being unfamiliarwith them, but not sufficientfor misprocurementto be declared. SMECCwas also not as proactiveas it could have been in project managingand in sendingto the leadinggroup for a decisionmatters deemed beyond its responsibility.The performancein preparingthe SMG contributionto the ICR went beyondhighly satisfactory into the realms of best practice. A detailed,insightful and well written91 page document(plus annexes)was prepared. It is unfortunatethat Bank requirementsdo not pennit more than a summaryof the key sectionsto be presentedin Section9.

7.7 Overall Borrowerperformance: Overall performanceis satisfactory.

8. Lessons Learned Lessonswere learnedat all stagesof the project,and have been incorporatedinto the preparationof subsequentBank urbantransport projects in China. Theselessons have helpedshape the recentlyprepared Urumqiand Shijiazhuangprojects. Clientswho preparedthese projectsalso visitedShanghai to leam for themselves,and participatedin the stakeholderworkshop. The lessonscover the main project components, as well as engineeringdesign, construction and procurement,monitoring and evaluation,Bank/Borrower interaction,the role of the LeadingGroup, and projectmanagement. They incorporatethe key conclusions of the workshop.

8.1 Road Network

(i) Road space management and network planning. From the time of identification of SMTP I through the appraisal of SMTP II, SMG focused heavily on the proposed major investments in road infrastructure. The Bank team discussed at length and in depth the value of complementing the Ring Road

- 14 - investmentwith trafficmanagement, facilities for cyclistsand pedestrians,and publictransport. The Bank team was concernedthat the N-S and E-W (Yanan)viaducts would encourage car traffic into the central area,within the IRR, overloadthe street network,and would be too destructiveof the urbanfabric and unaffordable,and so argued againstthem. With hindsight,the Bank wouldprobably have had greater impact if it had acceptedthe basic SMG conceptof a "ring and cross"viaduct network and then worked with the city agenciesto producea more efficientnetwork design and to integrateit with a more effective trafficmanagement strategy.

(ii) PrimaryRoad Capacity. Due to fundingconstraints and the amountof resettlement,the IRR viaductwas proposedas a 2 x 2 lane road with no emergencylanes. With hindsight,this is not wideenough for currentrequirements. Learning from this, SMGbuilt later projects (N-Sviaduct and E-W Yanan Viaduct)with 2 x 3 lanes. Assumptionsabout trafficgrowth, at appraisal,were deliberatelyconservalive, probablytoo conservative.The optionof buildinga 2 x 3 laneIRR viaductshould have been givenmore consideration.However, it can also be argued (as it was at appraisal)that the proposedOuter Ring Road will relieve the IRR. Also, the rapid and efficientconstruction of a smallerroad obviouslybrought some benefits to the city comparedto the costs and delayswhich wouldhave been associatedwith the constructionof a larger facility.

(iii) Betterplanning and designof roads. A betterfunctional classification of roads is requiredand road design standardsneed to be revised so that they are basedon appropriatefunctional classifications. Greaterprovision for pedestriansand cyclistsshould be made, with particularconsideration for safety.

(iv) ShanghaiCentral Area Network. Now that the 3 E-W and 3 N-S arterialroutes are built in the central area withinthe ring road, there is a need to upgradethe rest of the networkto providea better grid, while takingaccount of historicbuildings. There is also the need to irnprovethe connectionsbetween the elevatedroad systemand the groundlevel roads.

8.2 EngineeringDesign, Construction and Procurement

(i) Qualityof basic engineeringdesign. BecauseShanghai was a new client,the Bank teamswere initiallycautious about requiring engineering design reviews for the ring road. It quicklybecame apparent that the ShanghaiDesign Institutes had the highwayand structuralengineering design expertiseto prepare the drawingsand the technicalparts of biddingdocuments to internationalstandards. However,as SMECCnotes, it was the first time the ShanghaiInstitutes had designeda large elevatedroad. Becauseof their lack of experience,and the tight constructionschedule, there were someshortcomings in the design. For example:rubber joints were adoptedfor the viaductsurface which are now damnagedand create difficultiesfor maintenance,emergency lanes werenot providedand, drainageis not adequateduring heavy rainfall. In additionthe monitoringequipment on the viaductdoes only that,and does not controltraffic flow.

(ii) FunctionalDesign shortcomings.Functional design skills were not as advanced. The lackof skillslacking negatively affected the locationof ramps,and the design of the junctionsunder the ring road, particularlywhere ramps were located. Someof theseskill have been acquiredduring the courseof the project. SMECCnotes that the additionalramps at ZhoujiazuiRoad and JinshajiangRoad were required becauseof insufficientplanning before construction. Also, someramps are too close to groundlevel cross streets. This results in seriousweaving between the endsof the ramps and the groundlevel junctions. (Thisproblem has been resolvedin part by cleveruse of traffic signalphases).

- 15 - (iii) Speedand qualityof construction.As with engineeringdesigns, because Shanghaiwas a new client,the Bankteams were initiallycautious when establishingthe constructionschedules for the ring road, and the supervisionarrangements to ensureconstruction quality. The speedand qualityof constructionof the cable-stayedNanpu bridge initially mitigated these concerns. Also, the speed of the constructionof the IRR in SMTPI demonstratedthat once an agencydetermined a schedule,they could adhereto it withoutsacrificing construction quality. The aestheticquality of the structuralfinishes also improvedwith successivesub-components.

(iv) Constructionschedule and cost increase.After appraisal,SMG set a goal of finishingthe IRR in 1994. In order to meet this objective,the design and constructiontimes had to be reducedby SMECC fromthe alreadytight schedulesagreed with the Bank. The net result was cost increasesof the orderof 15%.

(v) Adoptionof marketbased competitive bidding. The implementationof the SMTP illustratedto the SMGthat marketbased methods can makea projectmore effectiveand efficient. The biddingprocess was very beneficialand stimulatedthe paceof reform of related designand constructioncompanies. A fair and competitiveconstruction market is emergingin Shanghai. Competitivebidding is now standard practice on SMG contracts.

8.3 Trafficmanagement

(i) Thereis a need to integratethe institutionsdealing with trafficengineering and to developa comprehensiveapproach to traffic management. - Advantagewas not taken of the opportunityto developinnovative and appropriatedesign measuresfor NMVs,but the conceptof separatingMV and NMV flows is now accepted. Completeseparation will take a long time. 3 The opportunityto developbus priority measureswas deferredbecause of the focus on road infrastructurefor MVs. * Coordinationbetween the TMS and the new road infrastructureneeds to be stronger(for example,better designof the groundlevel junctions under the IRR; integrationof IRR monitoringequipment and ATC).

(ii) Thereis a need for two discretetraffic management activities within a project. The first is essentiallya independenttraffic engineering component, independent of any new infrastructureproposals. This can be implementedfrom the start of the projectand independentlyof new road constructionso that benefits are realizedwithin a short timneframe and proposalsare not renderedobsolete. The second activityshould be integratedwith the designof the new infrastructurecomponents.

(iii) TrafficImpact Analyses (TIA) shouldcomplement the designof Traffic Management Schemes.(TMS). TIA is requiredin additionto trafficmanagement. The pace of developmentresults in the traffic managementschemes being rapidly superseded by new infrastructure,new land uses, growing trafficvolumes and constantlychanging traffic patterns.

(iv) Financingtraffic lights serves a purpose. Havinga large identifiableinvestment in traffic signals and ATC at the heart of TMS componentwas justifiable to focus attentionon traffic management.

(v) Loanconditions may be helpful. Thejudicious use of more loan conditionsmay be worth consideringto ensurethe timelyimplementation of trafficmanagement schemes.

- 16- (vi) Increasingthe Bank'seffectiveness. Bank staff need to present a very clear and consistent pictureof the type of traffic managementpackage, and specificmeasures, that wouldbe acceptable.This was attemptedin Shanghai,but the clarityeroded over the years.

8.4 PublicTransport Reform.

(i) Pace of reform. The projectfacilitated a great deal of reform,of pricing, and of the structureof the sector. Howeverthe paceof reform is govemedby local agenciesand nationalpolitical conditions. Thus Bank efforts(including investments) should be directedtowards assistancewith the formulationand implementationof reform.

(ii) Privatesector participation. Wholesale privatization of companies,cost basedcompetitive tenderingfor servicesupply, reducing labor surplusto benchmarkedoperational requirements, and major privatesector participation are not politicallyacceptable at the present time in China. Thus provisionof public transportis likelyto remaina largelya publicsector activity for the foreseeablefuture. The initial thrustof Bank supportshould therefore be directedto the separationof the intrinsicpublic sector responsibilitiesof servicespecification and planning,from the cormnercialsupply functions, which are likelyto initiallyremain with the State Ownedbus companies,but which can later be privatized.

(iii) Use of foreignexperience. Some foreign experience is relevantto the currentreform programs in China. The key is to adapt this experienceto localconditions, and to acknowledgethat the initial conditionsand stimulusfor reformvaries from placeto place. This adaptionrequires knowledge sharing and teamworkbetween foreign experts and staffof local agencies,and locally generatedsolutions to reiform issues.

(iv) Reformtakes time. The process to date in Shanghaihas taken 10 years. This compareswith 15 years for completereform of the systemin London,a city of similarpopulation and bus fleet.

(v) ModalIntegration. Greatercoordination of modes is stillneeded, particularly the integrationof rail and bus networks,with better interchangesbetween these modes.

8.5 Publictransport priority:

(i) Plan for Bus Priority. The projectfocused rightly on reform of STC(a governmententerprise), which is a key to sustainabledevelopment of the role of bus services. However,the prioritygiven to the MV in the road infrastructuretranslated into limitedphysical priority being given to buses. This in turn may have been a factor in the reductionin the modalshare of buses. Futureprojects should consider more precise and realisticplans for publictransport priority.

(ii) Puttingpublic transport first. This is the currentSMG policy,but peopledo not knowhow to put this policy intopractice. SMG shouldclarify what this policy meansso that bus companiescan better servepassengers and trafficmanagement agencies will be encouragedto introducebus lanes and signal prioritiesfavoring buses.

- 17 - 8.6 Transport Planning

(i) Integrated Planning is critical. SMG recognizes that comprehensive transport planning in advanceof constructionis criticalfor city transportation.Transport plans shouldnot be ends unto themselves,but shouldsupport economic development through integrated planning of transportand land use. The emphasisshould be on movingpeople and goods,not infrastructuredevelopment. Plans should also be more closelyrelated to the resourcesavailable.

(ii) Modal Splitforecasting. The overallnumber of daily trips grew more or less as anticipated. However,the traffic on the new road infrastructuregrew much fasterthan anticipated.The modalshare of car and motorcycletravel quadrupled between 1991 and 1998from 3% to 12%of all trips. Over the same period,the modal shareof public transport,even with the additionof the metro,decreased significantly from 26% in 1991to 15%in 1998. The forecastsmade in 1991 for the year 2000 were for 6% of all trips in cars and taxis and 30% on public transport. This evolutiontowards a lower shareof public transportin favor of a bigger share of privatemeans of transport,if it wereto continue,could lead to a strongincrease in road congestionand a loss of productivity

(iii) Bicycleusage. Contraryto the 1991 forecastswhich showedNMV usageremaining stable at 33%, NMV usage grew to 42% by 1998. Walkingas a mode of transportremained stable at 30% of all trips. Coupledwith the declinein publictransport usage, this suggeststhat a clear choice is beingmade betweenthe use of publictransport and the use of bicycles,with a preferencefor use of bicycles. This trendneeds to be researched,carefully modeled and the implicationsdiscussed. Bicycleswill stillbe an importanttravel mode for Shanghairesidents for sometime.

(iv) Use of a probability approach for future economic evaluations of large investments in urban transportinfrastructure. The IRR viaductproved to have insufficientcapacity, and retrospectivelyit appearsthat it would have been betterto build a largerfacility. The motorizationrate was fasterthan forecast. Assumptionsat appraisalwere deliberatelyconservative. To prevent under-designin the future, economicanalysis of large investmentprojects should utilize a probabilityapproach, to determninethe sensitivityof valuesand assumptionsto the proposedcapacity and benefits.

8.7 Monitoring and Evaluation.

(i) The projectdid not plan nor budget for any evaluationstudy, or the collectionof datawhich might have been used to evaluatethe outcomeof the project. The identificationof key performanceindicators, within a logicalframework, was not yet mainstreamedat the time of projectpreparation. The studies undertakenfor the preparationof the ICR partly filled this gap.

(ii) SMECCnoted that sufficientattention was not paid to data management. Duringthe 10 year long project implementationperiod, relevant data was kept separatelyby variousunits and staff. Sincethere was not a central data system,it took a long time to pull togetherthe informationrequired for the ICR.

- 18- 8.8 Bank/BorrowerInteraction

(i) Need for goodcommunication. Communication is more than having good translators,although that helps. Good communicationalso requiresthe Bankto gain an understandingand respectof the culture and operatingpractices of the Boffowerand implementingagencies. The key lessonin improving communicationof ideas,knowledge and experienceis to includein the projectteam local technical specialistswho speakChinese, and technicalspecialists with experienceof China.

(ii) Need for participationby all interestedagencies. The experiencein Shanghaiis no differentto the Bank'sexperience in everyother country. To developa sustainableproject requires the active participationand ownershipfrom all relevantinstitutions. Implementing agencies need to be fullyinvolved with the designof eachproject component. Agenciesalso need guidanceon how to work in partnership with internationaland local consultantsfor the transferof knowledgeand ownershipof consultant generatedproposals.

(iii) Need to strengthenBank supervision. The Bank shouldhave provideda higherlevel of supervisionto complementthe large resourcesinput to projectpreparation. This supervisionhas to be at regularintervals and with a consistencyof approachif it is to supportthe work of the local agencies.

8.9 ProjectManagement

Whileproject management was generallyeffective some improvements would have been possible.Most obviously,project components were plannedand implementedby the differentagencies and there was only limitedcoordination and communicationsbetween them. Also, the domesticformalities for the approvalof all the sub-projectswere managedby the relevantsector agencies over which the SMECCPIU had limited control. In addition,limited technical personnel and unclearresponsibilities restricted the overallability of SMECCto effectivelymanage the planningand implementationof sub-projects.

8.10 Leading Group (Project Steering Group)

(i) The close attentionof the municipalgovernment was criticalto the project's success. Continuous input and supportfrom SMG in termsof policy,human resources and financeprovided a soundbasis for smoothpreparation and implementation.

(ii) A strongLeading Group, which is knowledgeableabout the localtransport situation and keen to learn from the best internationalpractice (through cooperation with the Bankand foreign consultants)is criticalfor the smoothdesign and implementationof the project.

(iii) As new projectsare prepared,the Bank shouldtry to ensure that the proposedinstitutional arrangementsgiven the LeadingGroup the authorityto make decisionsaffecting the progressand designof the projectwhich are outsidethe limitedrole and responsibilitiesof the ProjectOffice (i.e. decisionswhich requireinter-agency cooperation).

(iv) For all futureprojects, the LeadingGroup should have greaterresponsibility for the settingand implementationof transportplanning and managementpolicies.

-19 - 8.11 FutureChallenges (identified during the workshop).

(i) Pace of Change. This makesplanning particularly difficult, as the experiencewith the RingRoad has shown. It makes accurateforecasts more importantbut also more difficult. Also, it highlightsthe need for flexibilityand continuousplanning so that works are not renderedobsolete by increasesin traffic. It also underlinesthe need for a good strategicplan when trying to assessthe value of individualprojects.

(ii) ProjectInvestment Approval Procedures used in Chinaare generallysatisfactory and simpler than Bankprocedures. TheseGovernment procedures are being simplifiedeven further,but more public participationis requiredand is beingintroduced. There is also a need for better integrationbetween the activitiesof the municipaland districtsgovernments.

(iii) Environmentand SustainableDevelopment. Sustainable development, environment and the qualityof life are now importantpolicy issues in all citiesin China. Environmentalconsiderations (costs and benefits)should therefore be givena higherprofile in the evaluationof projects. However,there is a need to raise public awarenessof environmentalissues. The choice of the most appropriatemechanisms to reducepollution from cars - emissioncontrol devices, tax policies,better control of certaintypes of vehicles,better traffic management,travel demand management is a challengein itself

9. Partner Comments (a) Borrower/implementingagency: The implementingagency SMECC has writtentwo sets of commentson behalf of the ShanghaiMunicipal Government. Belowis their paperentitled "Implementation and Assessment"presented at the ICR StakeholderWorkshop by SMECC(with minor edits to reducerepetition of factualmaterial presented elsewherein the report). A more comprehensiveand detailedset of commentsof some 90 pages(excluding attachments)entitled "ImplementationCompletion Report" is availablein the project files.

1. GENERALDESCRIPTION

The 90s on 20th centurywas a criticalperiod for implementationof the national"Eighth and NinthFive YearPlan", for promotionof furtherreform and openingand for the changesof strategicposition of Shanghai. With the policy of developingPudong from the CentralGovernment in 1990,Shanghai MunicipalGovernment (SMG) made the decisionto take this opportunityto developboth sides of the HuangpuRiver. And Shanghaiwill be graduallybuilt into the lead of Yangzi Rivervalley and one of the internationalmetropolises of world economy,finance and trade. In orderto realize the great target, SMG decidedto put a huge amount of investmentto infrastructureconstruction so as to createfavorable surroundingsfor more investmenthome and abroad and good conditionsfor economicdevelopment of Shanghai.

To supportthe economicreform in Shanghai,the WorldBank basedon investigationsby localand foreign expertsand cooperationof SMG, confirmedas early as in the late 80s a programto assist Shanghai MetropolitanTransport Project (SMTP).

- 20 - 1.1 Objectives

The Projectwas implementedin two stages,and was intendedto help Shanghai (a) raise the economicproductivity through the improvementof operationand economicbenefit of the urban transportsystem; (b) enhancethe managementcapability of the publicfacilities through the improvementof the planning and managementof urban transportsystem.

1.2 Elementsof the Project a. To build the inner ring road,one of the urbanbackbone transportation infrastructures in Shanghai, so as to improveand mitigatethe traffic pressurein centralarea of the city; b. Seeingfrom the angle of traffic engineering,traffic control measures and reducinghidden traffic accidents,to improvetraffic managementand safetyfrom central businessdistrict (CBD) to centralarea of the city; c. To improvethe operationof public transportby meansof study on public transportreform and investmentto the constructionof some stopsand depots; d. To strengthenthe capabilitiesof urbantransport planning, management and road maintenance institutionsthrough providing consulting service of foreignexperts and related equipment.

1.3 Durationof the Project

From 1991 to the closingdate of December31, 2000, the Projectlasted ten years.

2. PROJECTIMPLEMENTATION AND ASSESSMENr

Duringten year's implementationof the Project,the foreignexchange in China changedfrom fixed rate to floatingrate undercontrol after 1994so as to meet the furtherreform and opening. The exchangerate of RMB and US dollarswas raisedfrom $1 = Yuan 5.2 to $1 > Yuan 8.0, whichresulted in a large remainig sum of funds under SMTP fromthe SAR estimate. Since 1991, SM startedto prepare new generalurban plan. And then comprehensivetransport plans for Shanghaiwere in successionpresented, which provided new bases for all-roundimplementing the objectivesand componentsof SMTP.

Facing the abovementioned changes, both Shanghaiand the Bankagreed to make adjustmentand modificationto the Projectso as to betteruse the loan surpluson principleof keepingobjectives in SAR unchanged,enable the implementationof componentsunder SMTPto reflectthe strategy, comprehensivenessand realityof new generalplanning and strengthenthe objectivesof SMTP.

The detailsare presentedin the followingparagraphs.

2.1 Inner Ring Road (IRR)

In the new Shanghaiurban plan, IRR is one of three importantring roads in Shanghai(the othertwo ring roads are OuterRing and SuburbRing Road). Circlingthe center of Pudongand Puxi, IRR goesthrough nine districtsincluding Yangpu, Hongkou, Zhabei, Putuo, Xuhui,Luwan, Huangpu (former Nanshi) and PudongNew District,with the total lengthof 48 km. IRR covers Puxisection, Pudong section,Nanpu Bridge and YangpuBridge, which is the first all-roundimplemented express artery in Shanghai.

- 21 - Puxi sectionruns betweenNanpu Bridge and YangpuBridge, with the total length of 29.2 km and including40 m wide groundroad (for standardsection) and 18 m wide elevatedroad (for standardsection). The elevatedroad is designedas two-waytwo-lane closed rapid road with the speedof 80 km/h. While the groundroad is of two-waytwo-lane MV with the designspeed of 40 km/h and two-wayone-lane NMV road on both side. In addition,bus bay is providedfor stops alongthe road. Four interchangesincluding CaoxiRd, West YananRd, GonghexinRd and LubanRd are providedalong the road and 41 up and down ramps are arrangedfor the main junctions.

The constructionof all 29.2 km long elevatedand groundroad in Puxi is includedin SMTP. The implementationagency and ProjectImplementation Unit (PIU)is ShanghaiMunicipal Engineering ConstructionCompany (SMECC).

Based on a seriesof preparation,the first stage of IRR Puxi sectionunder SMTP started in October 1991 and completedin December1993. Stage 1, including5.5 km long elevatedroad and groundroad, opened to the traffic after 26 monthsconstruction and made the social efficiencyyield well in time. Stage2, covering23.7 km elevatedand groundroad, startedin February1993 and finishedat the beginningof December1994, which went through22 monthsconstruction and was put into operationon December7, 1994. The total constructionduration of IRR is 38 months,with the good quality rate of 100%for Stage 1 and 93.3%for Stage2 respectively,which expressedthe organizationcapability and workingefficiency in large scale engineeringconstruction in Shanghai..

The implementationof [RR has the followingfeatures: a. Constructionmanagement Two-levelmanagement was adopted. IRR was listed as No. I Projectby the governrmentat that time and the municipalengineering headquarter and 8 district sub-headquarterswere set up. Under the leadershipof municipalengineering headquarter, district sub-headquarters were responsiblefor land acquisition,demolition, resettlement, traffic organizationduring construction and coordination of affectedresidents in variousdistricts along the route of IRR. Such a measureof joint efforts with individualresponsibility was of great importanceto speedingup the progressof construction, creatinggood environmentof construction,promoting the districtdevelopment and strengthening the idea of district's involvementin the project. bc. Procurement The implementationof works and procurementof main goodsincluding bitumen, steeland equipmentwas executedvia IntemationalCompetition Bidding (ICB) procedureand National CompetitionBidding (NCB) procedure in accordancewith the Guide of Procurementspecified by the WorldBank with the principleof open,fair andjust. There are 65 contractsin total under Stage I and 2, of which 23 are ICB including14 civil works and 9 goods contracts,and 42 are NCB covering41 civil works and I goodscontracts.

7 constructionenterprises or joint venturebetween home and abroad with nationalfirst level certificateimplemented the constructionof viaductand groundroad underIRR throughICB biddingprocedure. And 28 excellentmedium-scale construction enterprises executed minor works via NCB bidding. The involvementof excellententerprises ensured the contractsto meet the requirementof investmentcontrol, construction progress and quality specifiedin contracts.

- 22 - c. Constructionsupervision In accordancewith the internationalcustom, SMECC appointed Engineer to the constructionsite, which formed three-level site management of Employer (SMECC) -- Engineer -- Contractor. The comprehensiveand wholeprocess management of the projectwas executedby meansof progress, qualityand investmentcontrol and organizationcoordination. d. Qualitycontrol Underthe unifiedcontrol of Engineerauthorized by SMECC,a three-levelmanagement network comprisingcontractor's self-control system, 10 public supervisioncompanies selected through bidding and municipalquality supervision station (Shanghai Municipal Engineering Quality SupervisionStation) carried out engineeringquality supervision and evaluation.This network couldcontrol the qualityand ensurethe projectimplemented well.

IRR has been operatedfor 6 years sincethe completionat the end of 1994,the socialand economiceffects couldbe summarizedas follows: a. The constructionof IRR introducedan urbanexpressway model, which fits the transportationin downtownarea of Shanghaiwith highpopulation density, tangled traffic and limitedland for road. And it plays a lead role in the futureroad constructionof "$` printingtype like (a Chinese characterused to describethe road net lookinglike a ring combinedwith a cross inside)elevated expresswaysystem in downtownarea. b. Enhancedthe traffic capacity. The traffic capacityof IRR afteroperation is 9,400pcu/h (two-way)of which elevatedroad is 6,100pcu/h and groundroad, 3,300pcu/h respectively. While the traffic capacityof original4-lane inner ring road was only 2,280 pcu/h. Thatmeans the traffic capacityincreased by 3.12 times, or in the other word,the capacityof the current innerring road equals4 originalsapproximately. c. The operationof IRR remittedtransportation inside and outsidethe IRR, especiallythe central area. SCCTPIsirnulated the traffic in 1995and the result showedthat the traffic on IRR elevated road and South-NorthViaduct was 1,254,000vehicle-km and 294,000vehicle-km respectively. The traffic distributionis shownas follows.

Area Traffic (1000 vehicle km) Proportion (%/o) Downtownarea 848.7 54.8 Area outside the city center 203.8 13.2 Pudong 8.1 0.5 Zhongshan road at ground 368.7 23.8 Other 118.7 7.7 Total 1,548.0 100

As shown in the above table,the constructionof elevatedroad enabledreducing the traffic on most roads within IRR and part roads outside IRR. Trafficon the roads further away from viadlucts could be indirectlyreduced because IRR would attractthe trafficon adjacentroads, and the adjacentroad would attractthe trafficon the roads adjacentto them. One by one, trafficof most groundroad couldbe diverted.

d. The operationof IRR expeditedthe land exploitationalong and in the vicinityof IRR. Somne 488,000m2 of buildingswas demolishedas 6,985 affectedhouseholds and 841 unitsremoved

- 23 - duringthe constructionof IRR. Replacedare modem architectures.The adjustmentof Shanghai Industrystructure, the removalof lots factoriescausing serious pollution and the improvementof old residentialarea concentratedwith poor and dangeroushouses in the vicinityof IRR provided opportunitiesfor land displacementand attractedreal estatedevelopment. The fair trade street at North ZhongshanRoad of Putuo District,the outstandingZhujiawan, Panjiawan and Tanziwan tinpotresidential areas, New SouthBund of NanshiDistrict, Shanghai Stadium center of Xuhui Districtare all the typical cases. The former old, shady and tattered face on both sides of IRR is now replacedby new pictureof modem commercialskyscrapers, office buildings, and high grade apartmentbuildings. e. The investmentof the constructionof IRR and the use of loan is undergood control,which could be presentedfrom the followingdata:

the final cost of IRR is about 7.8%more than the estimate,within the nornal limnit; the rations betweenallocated and real used amountof loan is 97.7%.

The cost of IRR makesup 88.95%of the total cost of SMTPand the loan used for IRR accounts for 85.87%of that for SMTP,which means that good use of funds and loan for IRR couldmake the whole SMTPgood status. f. The economicbenefit of Puxisection of IRR is good. Accordingto the specialanalysis three economicindexes are as follows:

* EIRR over 27%, 18%and 20% more than that in SAR of SMTP I and II; NPV more than 0; B/C more than 1.92under various discount rate (DR). g. Environmentalimpact of IRR In accordancewith the requirementsspecified in TechnicalAssistance (TA)-D5 the environmental action plan underSMTP II, comparisonof vehicleemission exhaust, air quality,noise and vibrationbefore and after constructionof IRR was carriedout throughmonitoring. The result showedthat the traffic environmentworsened because the traffic volumeincreased by 4.8 to 8 timnes.However vehicle emission exhaust didn't increasedin an arithmeticprogression due to the increaseof speedand the changeof vehicletype. The densityof N02 and TSP increasedbut not too high for CO. Noise level of 20 - 50%monitoring points in the daytimeexceeded the standard and the highestnoise levelwas 4 - lOdB(A)over the standardrequirement. 80 - 90% monitoring points at night exceededthe standardand highest noiselevel was 17 - 23dB(A)over the standard. Vibrationmonitored at most points didn't exceedthe standardrequirement. Totally 14,654m long noisebarrier was installedat the placeswhere the residentsare concentratedalong IRR route, which reducedthe noiseinterference with the residentsliving in 5th and 6th story even thoughit is not so ideal.

ShanghaiGovernment has made decisionto take the environmenttreatment as the importantpolicy and measurefor constructionduring the furtherdevelopment of Shanghaiso as to contributeto the improvementof transportenvironment.

-24 - 2.2 TrafficManagement and Safety

Underthis component8 sub-projectswere arranged. ShanghaiMunicipal Engineering Administration Department(SMEAD) and ShanghaiTraffic/Patrol Police General Brigade (T/P PGB)(the former ShanghaiPublic Security Bureau, SPSB) are the main executiveagents.

The contentsof this componentinclude a. Constructionof Non-MotorVehicle (NMV) road and bridgesin down town coveringCentral BusinessDistrict (CBD) area insideIRR in Puxi so as to reduce congestionon someroads caused by conflictsbetween MV and NMV and increasethe capacityof the transportnetwork; b. Strengtheningand improvingtraffic management by means of such measuresas signal control, channelization,signs and markingand establishmentof 1.1km two-wayexclusive bus way along the Waitan; c. Provisionof 6 regiontraffic control centers and I road safetycenter.

The scopeof this componentcovers a very large area. In addition,during 1990sShanghai was in the peak periodof city improvement.The central area of the city wasjust like a big constructionsite. Affectedby land saleand lease, demolitionof old buildingsand constructionof new buildingsdue to land replacement, complicatedground and undergroundutilities renovation along urbanroad network,it was very difficu'ltto executethis component. The implementationperiod had to last for about 10 years from 1991to 2000. With the effortof the executiveagents, the followingworks were completed. a. 30.1 km long NMV road and 4 NMV bridges(Xinzha Rd Bridgewill be completedin 2001),I1 km NMV road beneaththe Projectof Light Railway. The total lengthof newly establishedNMV lane is now 41.1 km, of which 25.7 kIn is parallelto IRR, 6.9 km parallel to NanjingRoad, 1.4 km parallel to East Yanan Road, 2.1 km parallelto South-NorthViaduct and 2.7 km parallelto LujiabangRoad. The NMVroute improvedMV/NMV mixed traffic situation,increased the capacityof road networkand accumulatedexperience for furtherNMV road construction. Accordingto the plan of ShanghaiMunicipal Engineering Administration Bureau, additional 25 km NMV road will be builtby year 2005. b. Completeexpansion of urbanroad trafficmanagement facilities. At present, signalwas provided at 2000junctions mainly in the center area of Shanghai,3.2 time as much as 626 in 1991;71,000 pieces of traffic signs, 3 times as that in 1991;7300 km of markings,4.3 times as in 1991ancd 255,000m2 of pedestriancrossing line, 1.8 times as in 1991. Thereare now 52 MV exclusive route, 518 MV singleroute, 2 public transportexclusive route and 48 NMV route in centralarea of Shanghai. The abovementioned traffic facilitiesand the constructionof road during 90s impelledthe death and injuryrate to be reducedby 60% and 43% (in person/10,000vehicles), which presentsthat the trafficmanagement of Shanghaihas steppedup to a new stage. c. 6 new districttraffic controlcenters were set up underthis component. With the original2 centers, now there are 8 controlcenters in total,which could controlroad traffic withinIRR and provided good bases for overallimplementation of road trafficinformation management in Shanghai. Recentlya batch of electronicpolice is used for trafficmanagement, which representsthat the urban transportmanagement has goneinto a modem process.

- 25 - d. One of the sub-projectunder this component,1.1 -km two-wayexclusive busway along the Waitan could not be implementedbecause a left-turnramp of Yanan Rd Viaduct(East Section)Project was arrangedat the same location.

With the completionof three longitudinaland three horizontalbackbone roads and the reconstructionof otherroads, the policy of public transitpriority will be carriedout in new "FiveYear Plan" and 120km long bus-onlyroute will be completedbefore 2005.

2.3 Supportto ShanghaiPublic Transit (STC)

The result of technicalassistance on PublicTransit Reform Studyled to the overall implementationof publictransit sectionreform during 1996 - 1998by ShanghaiGovemment. With the renovationin ticket system,management system and operationsystem carried out and then the loss turnedinto profit, public transitwent to the way of marketsystem. The comparisonbefore and afterrenovation shows that the public transitrunning vehicles increased by 45.5%and the runningroutes and the lengthof routes increasedby 15%and 32%respectively, which obviouslyrepresented the socialand economicbenefits.

Underthe componentof PublicTransit Investment, two depots and one interchangewere completedon time with the efforts of PublicTransit Company, which is beneficialto the operationmanagement of the Company.

2.4 TechnicalAssistance

Technicalassistance includes foreign consultant service and equipmentimportation, which aims to strengthenthe capacityof institutionsconcerning Shanghai urban transportation planning, traffic managementand road maintenanceas well as projectmanagement.

This componenthas 15 sub-projects.7 organizationsresponsible for respectivesub-projects are Shanghai MunicipalEngineering Construction Company, Shanghai Traffic/Patrol Public General Brigade, Shanghai UrbanPlanning, Designing and ResearchInstitute, Shanghai Municipal Engineering Administration Division,Shanghai Comprehensive Transportation Planning and ResearchInstitute, Shanghai Public TransitCompany and ShanghaiAcademy of EnvironmentalSciences. Implementation of this component lasted about 10 years, from 1991 to 2000.

Outcomesfrom this componentare summarizedas follows: a. Provisionof good foundationwork for projectidentification and implementation.The preparation of SMTPreceived grants fromFrench, Australian, USA and Japan governmentsthrough World Bankmanagement. With the assistanceof foreignconsultants and local expertsfrom Shanghai Urban Planning,Designing and ResearchInstitute, Shanghai Comprehensive Transportation Planningand ResearchInstitute, and some otherdesigning institutes in Shanghai,eight studieson Shanghaiurban road and transportationsystem were conductedand frameworkfor SMTPwas identified. It provideda soundbasis for the overallimplementation of SMTP. b. Consultationand trainingprovided by the foreignconsultants enabled the local staff to absorb currentadvanced concept and technicalapproaches in term of transportationplanning, traffic management,project management, public bus companymanagement and road maintenanceand etc. in the world. No doubtthat the localcounterparts and traineeswill play an importantrole in their ow units in the future.

- 26 - c. The importedhardware and softwarehave upgradedthe transportation& traffic management capabilitiesin Shanghai.In someareas, suchas computerizedmanagement, traffic software development,traffic analysisand trafficinformation collection, traffic monitoringand road maintenance,Shanghai is in the leadingposition in China. d. Throughimplementation of SMTP I-C6, ShanghaiTransit Company Support, some intemational advancedconcepts on publicbus companymanagement were leamedby ShanghaiPublic Transit Company. It provideduseful ideas for the overallreform of Public TransitSector started in 1996. The reformput the companyinto a market-baseddevelopment cycle and releasedthe company fromhuge deficitand the dependenceon governmentsubsidy. e. The implementationof SMTPII-D5, EnvironmentalAction Plan, lasted for 4 years. The Plan made an overallassessment on the traffic-relatedenvironment within Inner Ring Road in Shanghai. Outcomesfrom this environmentalaction plan are summarizedas follows. (l) Strengthenedthe conceptof air pollutioncontrol. With the implementationof D5 sub-project,the environmentalauthorities recognized serious vehicle exhaust problem in Shanghai,particularly in downtownarea. Vehicleemission has becomethe major contributorto air pollutionin Shanghai. Enhancingthe vehicleexhaust emission controlhas been put on the priorities. In early 1998,a leadinggroup for vehicle exhaustcontrol was establishedin Shanghaiand carried outmitigation measures of vehicle exhaustemission. (2) Improvedthe technicalcapacity of ShanghaiAcademy of EnvironmentalSciences (SAES). Throughthe implementationof D5 and the cooperationamong intemational and local experts,an environmentalGIS (geographicinformation system) and vehicle exhaustmodel for Shanghaiwere developed. Now SAES can conductsome vehicle pollutionpredictions and basic measuresof prevention. (3) Speed up the vehicle-relatedpollution control in Shanghai. Based on the predicted vehiclepollution trend in Shanghai,Shanghai Municipal Government adopted series measuresto fight againstthe vehicleexhaust emission. Since September1998, purificationinstallations have been requiredfor the using vehicles. In December1998 and November1999, Emission Standard for Light-DutyVehicle and Emission Standardfor UsingVehicle was issued. And from2000, somevehicle emissiontesting centerswere set up and some othermeasures were taken such as greenery,and etc. f. Improvedthe capacityof SCCTPI. With implementationof these projects,SCCTPI upgraded its capacityin the fieldsof concept,measures, methods and researchcapacities of transportation planning. Mostprofessional staff from SCCTPIparticipated overseas training and study tour. And all the techniciansjoined the seminarand lecturespresented by the foreignconsultations in Shanghai. Thesewere very helpfulfor the unit to improveits capacities. Meanwhile,equipment purchased under SMTPassisted SCCTPI to enter upon a new phase. For instance,imported traffic analysisand simulationsoftware provided scientific tools for transportationplanning and decision-making.Traffic information database has been extendedand upgraded. GIS and Oraclehave improvedthe calculationand infornation interpretation,which enabledShanghai to setup a new databasebased on the trafficinvestigation in 1995. And it is also usefulto developand updatethe transportationplanning model. All these areas have upgradedSCCTPI in the field of urban transportationplanning.

- 27 - g. ShanghaiTraffic/Patrol Police General Brigade, the former TrafficManagement Division of ShanghaiPublic Security Bureau, is the authorityresponsible for traffic managementin Shanghai. Its new institutionalstructure actually has been initiatedfrom SMTP,which increasedpolicemen from 4,346 in 1991to 11,023in 1999. SMTP providedthe key persons in the unit an opportunity to leam the advancedtraffic management concept through technical training and study tour. Trafficmanagement in Shanghaihas been improvedand upgraded.

h. Enhancedthe capacityof ShanghaiMunicipal Engineering Administration Division (SMEAD), the unit responsiblefor urbanroad maintenancein Shanghai. With the technicalassistance of SMTPI-C7 (a), Road MaintenanceMonitoring Equipment, and SMTP II-D4,Pavement Management System Development, SMEAD set up a GIS for City InfrastructureManagement and the constructionmanagement system in 1999and 2000 respectively,which provideda soundbasis for municipalengineering computerized management. And the road maintenanceand monitoringequipment improved the road maintenancein Shanghai. The abovementioned results led SMEADto transformfrom traditionalexperienced type to modem scientificand technologictype, whichmade the road comprehensivemanagement to achieve advancelevel in China.

3. GENERALASSESSMENT

3.1 CompletelyFulfillment of ProjectComponents and Objectives

There are totally28 sub-projectsunder SMTPI and II. The compositionof the project coversthe constructionof key points, lines and areas,and hardwareand softwareas well, which is a comprehensive project contributinggreatly to the developmentof Shanghaiurban transportationand socialeconomy.

With ten-yearimplementation, all componentsunder the projecthave completedand put intonormal operationexcept some sub-projectssuch as Xinzha Rd Bridge.

The total investmentof SMTP is USD 648,000,000,of which the fundfinanced by the Bank is 217,000,000accounting for 32.4% and the amount collectedby Shanghaiis 438,000,000making up 67.6%. This is in compliancewith the expectationof SMTP.

The resultof the project achievedthe objectiveand will continuouslymake its socialand economicbenefits yieldwell.

3.2 Good Performanceof both Shanghaiand the Bankduring the Implementationof the Project

SMTPwas implementedduring 90s of the 20th century. At that time Shanghaiwas in face of the commencementof implementationof new urbangeneral planning and the changeof foreignexchange in Chinafrom fixed rate to floatingrate undercontrol. Both Shanghaiand the Bankagreed to make adjustmentand modificationto the Projectso as to enablethe objectivesof SMTPaccording with the new strategyof Shanghaiurban development.

The reason for the successof SMTP is becausethat ShanghaiGovernment made overallarrangement for the organization,staff disposition,implementation, financing, supervision, loan paying of the project and for the macro-planningand policy implementationof the government,which createdfavorable, necessary and feasibleconditions for the completionof SMTP. On the other side, the staff and expertsof the World Bank SupervisionMission visited Shanghai two times per year duringten-year implementation of the

- 28 - project. Theymade site visit to understandsituations and problems. And then they discussedwith local staff,solved problemand gave full play to theirguidance and supervision.The mutual understanding, linkingup and cooperationensured smoothly completion of the project.

3.3 Implementationof the Projectintroduced New Conceptof Urban Transportationof International ModemCities

With ten-yearmutual practice and cooperation,the Bank not only financeda lot of effectivetransport engineeringproject, but also introduceda completeset of intemationalideology of workingprocedure and scientificmanagement. Localofficials and techniciansgained advanced concept of urbantransportation, which enabledthe projectto be carriedout at the intemationallevel and had the continuousdevelopment potentialities.For instance,all contractsunder the projectwere implementedthrough open, fair andjust tendering. The localstaff realizedthat not onlythe constructionof the project couldbenefit from the practiceof suchmarket mechanism but also the reform processof institutionsconceming construction, designand contractorwere promotedby the practice. Theproject startedoverall prosperity of construction marketsystem in Shanghai. Anotherexample is that the introductionof scientificmanagement concept and measuresinitiated a good start for the institutionsof planning,traffic managementand road maintenance tumingfrom traditional experiential to modernscientific type and enabledthe managementcapability of ShanghaiGovernment in this fielda qualitativeleaps.

3.4 Contributionsto Promotionof ShanghaiUrban Transport Development a. The implementationof SMTPwas a perfectstart for realizingthe targetof puttingurban infrastructureconstruction in the first place in the economicdevelopment of Shanghai.In accordancewith the statistics,the investmentof urban transportationin Shanghaiuntil the end of 1999 is about USD 6,570,000,000and the investmentof SMTP is USD 650,000,000(in cunrent exchangerate of USD$l1RMB8.3),making up 9.8% of the abovementioned amount, which presentsSMTP's importantcontribution. b. The constructionof InnerRing Roadunder SMTPpracticed a new experienceof urban expresswaysuitable for Shanghaicentral area traffic,which led to the constructionof the later South-NorthViaduct and YananRd Viaduct. Then the urban viaductsystem shapedas "the ring with the crossinside" like "E" in Chinesewas produced,which plays an importantpart in expandingthe traffic volumeand improvingthe transportconditions in Shanghai. c. During90s, not only "$" shapedviaduct system was fonned, but also a serioustransportation works were completed,such as urbanexpress artery road networkcomposed of three longitudinal and three horizontalbackbone roads, the rail transportnetwork covering No 1, No 2 and Mingzhu Line shapedas "cross"plus "west halfring" with the total lengthof 65 km and large passenger volume, and somebridges crossing Huangpu River. All these representthat the stereotransport networksin Shanghaicenters area has been formedin embryoand needscorrespondingly higher-leveltraffic management.With the completionof traffic managementfacilities and the implementationof technicalassistance under SMTP, both conceptand facilitiesof Shanghaiurban transportmanagement has becomemore modernization.The result of implementationof traffic managementshows that the traffic speedon urbanroad was increasedfrom 10 - 15 km/hin 1991 to 20 km/h in 1997 and 25 - 30 kmn/hin 1999 respectively.The death and injuryrate was decreasedby 60% and 43% in 1999 comparedwith that in 1991respectively.

- 29 - d. With the implementationof technicalassistance under SMTP,the capabilityof relevantinstitutions such as urban transportplanning, traffic management,road maintenanceand environmental research,etc. was strengthened.

3.5 A HelpingHand lent to ShanghaiEconomic Development in the 90s

Just as the whole countryduring 90s,Shanghai experienced reform and opening,and the transitionfrom planningeconomic system to socialmarket economicsystem. GDP of Shanghaicontinuously increased in- two digits and reachedRMB 455,100,000,000at the end of 2000, 5.1 times as that in 1991. And GDP/personof Shanghaiwas USD 4,180, 1.82times as 2,300 in 1995. Shanghaihas gone from well-to-docomfortable level into middledevelopment level. Such achievementis becausethat during90s ShanghaiGovernment did three importantpractical matters: 1) large scale urban infrastructure constructionformed basically general form-work with centralurban functions;2) strategicallyadjustment of industrialstructure formed basically new industrialstructure suitable for further urbandevelopment; 3) large productivitylayout adjustment formed new productionform-work suitable for new productivity form-workfor continuousdevelopment. The abovementioned three form-worksprovide a new and higher startingdevelopment point for Shanghaiin new century,which meansthat the comprehensivecompetitive capacityof Shanghaishould be strengthenedwhen the economicstructure is optimized.

The implementationof SMTPwas includedin the first importantmatter, which directlyhelped Shanghai economicdevelopment during 90s.

Howeverthere is a shortagein the implementationof SMTP. An insufficientprediction of urbanvehicle possessionvolume (the forecastfor vehiclepossession of 2000 at the beginningof 1991 is 400,000,and the actualnumber in 1999reached 706,000) caused insufficient lane arrangementfor Inner Ring Road (4 lanes on viaductand 6 lanes on groundroad). After severalyear operations,a lot of sectionsapproached or exceededthe designtraffic capacity,which caused congestionat the peak hours. Such experienceswere learntby the later projects such as South-NorthViaduct and Yanan Rd Viaduct.

In orderto mitigatethe congestionon InnerRing Road, ShanghaiGovermnent considered the following measures:

a. Speedup the constructionof OuterRing RoadProject and improvethe constructionof road networkbetween iner and OuterRing Road. For instance,to speedup the constructionof auxiliaryring road and upgradethe standard;widen and to open the surroundingroads such as GuanglingRd - LingshiRd - DaduheRd - HongcaoRd so as to increasethe road densityoutside Inner Ring Road and releasethe trafficpressure at the north sectionand west sectionof IRR. b. It is plannedto divertthe NMV on groundroad beneathInner Ring Road and to changeit intoMV exclusiveroad. So that the mixedMV and NMV at the junctionof groundroad couldbe avoided, MV capacityincreased and the traffic volumeon viaductreduced by 4%.

c. The saturationlevel on InnerRing Roadfrom GuangzhongRd to South-NorthViaduct has been over 1.20and the congestionon the up ramp of GuangzhongRd is serious. It is consideredto reconstructand widenShuidian Rd and LiuyingRd. Then by meansof traffic management measures suchas controllingthe trafficvolume on up ramp at the peak hours,the traffic flow of up ramp of GuangzhongRd could go to South-NorthViaduct via GuangzhongRd and LiuyingRd. And the traffic flow of Dabaishucould be led to South-NorthViaduct through Shuidian Rd and Liuying Rd. It is expectedthat if the abovementioned measures could be implementedthe traffic

- 30 - volune on hiner Ring Roadviaduct from GuangzhongRd to South-NorthViaduct couldbe reducedby 12%,which is an obviousmitigation.

d. Adjustand controlthe trafficvolume by strengtheningmonitoring. Becauseof lackof experience, the functionsof originalmonitoring equipment for Iner Ring Roadare not sufficient. With the operationof "''shaped elevatedroad systemin the city center,it is necessaryto establisha traffic monitoringnetwork for whole elevatedroad system,which is underthe stage of programstudy. (b) Cofinanciers: None (c) Otherpartners (NGOs/privatesector): None.

10. Additional Information None.

- 31 - Annex 1. Key Performance Indicators/Log Frame Matrix

Outcome/ Impact Indicators: F tndlcatortmatrtx Projectdin lastPSR' ActuaiLatestEstimato 1. Increasedcapacity: I (a) roadcapacity (in pcu's per hour): IRR Viaduct 2 x 3050 2 x 3050 IRR at grade 2 x 1650

1(b) bus fleet of the ShanghaiTransit 6600 (in 1991) 16900(in 1999 2 Reducedcongestion: travel speedduring 80Km/lhnominal speed 42 to 75 Km/h peak hoursfor the projectinvestment: (a) IRR viaduct 3. improvedefficiency 3 (a) motorizedtraffic volume: average hourly traffic duringpeak period(7AM-7PM) Index= 100 Index= 181to 285 IRR viadud Index= 100 Indext= 118 to 945 IRR at grade 3 (b) improvementto bus operation:ST bus ridershipvolume -63% (1991-96; +8% peryear (1996-98) Fareboxratio 68% (in 1992)

:3(c)Daily trips 31 070 000 28 260 000 3 (d) modalspit: pedestrain 30% 31% NMV 34% 42% publir transit 30% 15% carsand motorcycles 6% 12% Projectedindicators were retrofitted

- 32 - Output Indicators: IndicatoriMatrix Projectedin lastPSR ActualtLatestEstimate SelectedPhysical Output Indicators Inner-RingRoad 29.367km 30.95km Stage l: North-westemSection (Panwanli-HutaiRd) 5.470km 7.40 km Stage II: North-eastemSection (Hutai Rd-YangpuBridge) 10.473krm 10.13km South-westemSection (Nanpu Bridge-Panwangli) 13.429km GroundRd of the ElevatedRoad 29.136km 13.42km Ramps(Number) 35 41 Interchanges ? 4 TimelyImplementation

SMTP I A. MajorArterialRoad 1991-1994 1991-1993;Excludes Contract 2.7; Zhoujiazui& JinshajiangRd Rampsadded later

B. TrafficManagement Component B1 Non-motorvehicle Roads 1991-1996 1991-1998;delayed B2 CBDTraffic Management 1991-1996 1991-1996 B3 NSC Network 1991-1993 1993;1.1 km buswaydropped B4 3rd ControlRoom Newlyadded 1992-1994

C. TechnicalAssistance and Training Cl ZhongshanIRR Supervision and Project 1991-1995 1991-1994;ahead of schedule Management C2Traffic Management 1991-1993 1991-1994 C3 Supportb SCCTPI 1991-1994 1992-1995 C4 Identficationof Investmentpriorities & 1991-1993 1992-1995 C5 PreliminaryFeasibility Study 1991-1993 1992-1995 C6 Supportto STC 1993-1993 1993-1994 C7 EquipmentProcurement (a) RoadMaintenance Monitoring 1992 1994-1996 Equipment (b) ProjectManagement Computer 1992 1992 (c) TransportAnalysis Computer 1992 1992 (d) TrainingSafety Monitoring Equipment 1992 eariy 1993 (e) TrafficData CollectionVehides with Newlyadded 1994-1999 Equipmentand Software (i) TransportationInformation center Newlyadded 1995-1997

SMTPII A. InnerRing Road 1993-1997 1993-1995;open to trafficDec. 1994 B. TrafficManagement and Safety B1 Area TrafficControl 1994-1996 1994-1998 B2 Roadsafety Research Center 1994-1995 1994-1997 B3 TrafficManagement Program Works 1994-1997 1998-2000 B4 6th, 7th and8th ControlRoom Added 1998-2000

C Pubic TransportInvestments Cl CaobaoDepot 1994-1996 1995-2000 C2 RoadSafety Research Center 1994-1997 1997-2000 C3 CaoxiInterchange 1994-1996 1995-1996

- 33 - D. TechnicalAssistance D1 ProjectManagement Support 1994-1995 1994-1995 D2 TrafficManagenent Support 1994-1996 1996-1998 D3 TransportPlanning Support 1994 1997-1998 D4 PavementManagernent Design 1994 1994-1996 D5 EnvironmentalAction Plan Support 1994-1997 1994-1998 D6 TrafficPolice Training Newlyadded 1995-1996 D7 Trairing for PItUStaff Newlyadded 2000 D8 ConsultantService for Implementation Newlyadded 2000 Report End of project

-34 - Annex 2. Project Costs and Financing

ProjectCost by Component(in US$ millionequivalent) Appraisal ActuallLatest Percentageof Estimate Estimate Appraisal ProiectCost By Component US$ million US$ million Major arterialroads 107.10 136.91 127.82 Trafficsafety and management 9.40 10.51 111.81 Technicalassistance 4.20 4.12 98.1

TotalBaseline Cost 120.70 151.54 PhysicalContingencies 11.70 0.00 PriceContingencies 15.80 0.00 TotalProject Costs 148.20 151.54 Total FinancingRequired 148.20 151.54 Changesin the projectcomponents were made at the time of the appraisalof SMTPII. A total of US$ 1.72million has been canceled ProjectCosts by ProcurementArrangements Apraisal Estimate) (US$ million equivalent) ProcurementMethod ExpenditureCategory ICa NCEt Other N.B.F. TotalCost 1. Works 54.10 18.30 5.40 0.00 77.80 (37.40) (12.60) (3.70) (0.00) (53.70) 2. Goods 0.00 1.00 0.90 0.00 1.90 (0.00) (0.70) 0.90 (0.00) (1.60) 3. Services 0.00 0.00 4.60 0.00 4.60 Technicalassistance (0.00) (0.00) (4.60) (0.00) (4.60) 4. Miscellaneous 0.00 56.20 0.00 0.00 56.20 Resettlement (0.00) (0.00) (0.00) (0.00) (0.00) 5. Miscellaneous 0.00 0.00 7.80 0.00 7.80 Taxesand overheads (0.00) (0.00) (0.00) (0.00) (0.00) 6. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) Total 54.10 75.50 18.70 0.00 148.30 (37.40) (13.30) (9.20) (0.00) 59.90)

35 - ProjectCosts by ProcurementArrangements (Actual/Latest Estimate) (US$ million equivalent) Pirocurment Method' Exnur tr 2 N.B.F. Total Cost

1. Works 67.39 11.01 0.00 0.00 78.40 (46.72) (8.33) (0.00) (0.00) (55.05) 2. Goods 0.00 3.36 0.00 0.00 3.36 (0.00 (3.36) (0.00) (0.00) (3.36) 3. Services 0.00 0.00 2.86 0.00 2.86 Technicalassistance (0.00) (0.00) (2.86) (0.00) (2.86) 4. Miscellaneous 0.00 0.00 0.00 45.09 45.09 Resettlement (0.00) (0.00) (0.00) (0.00) (0.00) 5. Miscellaneous 0.00 0.00 0.00 21.23 21.23 Taxes and overheads (0.00) (0.00) (0.00) (0.00) (0.00) 6. Miscellaneous 0.00 0.00 0.00 13.86 13.86 (0.00) (0.00) (0.00) (0.00) (0.00) Total 67.39 14.37 2.86 80.18 164.80 (46.72) (11.69) (2.86) (0.00) 61.27) A total of US$1.72 million has been cancelled " Figures in parenthesisare the amounts to be financedby the BankLoan. All costs includecontingencies.

21 Includes civil works and goods to be procuredthrough national shopping, consulting services, services of contracted staff of the project managementoffice, training, technical assistance services, and incrementaloperating costs relatedto (i) managingthe project, and (ii) re-lendingproject fundsto local governmentunits.

ProjectFinancing by Component(in US$ millionequivalent)

,oniponeifl AppIt*IS;p XhaistEKI*Jnat0 3 A; Late#ststmate0 Prrentage'of0 Appraisal ______00X:Gv00Xi00IDA00 t.;00001000000^CF ; X,:0IA00Gv CoF_ IDA Gpoy CoF. Major arterial works 50.80 81.13 0.00 54.05 92.34 0.00 106.4 113.8 0.0 Trafficmanagement 4.62 7.12 0.00 2.94 11.20 0.00 63.6 157.3 0.0 Technicalassistance and 4.58 0.00 0.00 4.28 0.00 0.00 93.4 0.0 0.0 training Total 60.00 88.25 0.00 61.27 103.54 0.00 102.1 117.3 0.0

- 36 - Annex 3. EconomicCosts and Benefits

ECONOMIC AND FINANCIAL EVALUATIONS

Introductions

1. The projecteconomic analyses were re-evaluated by the Borrowerwith assistancefrom the Bank team. As at appraisal,the economicanalysis focused on the Inner RingRoad, which comprised90% of projectcosts and financing. A singlere-evaluation was undertakencovering both Stagesof the Ring Road. The reevaluationwas undertakenusing the same standardmethodology adopted duringboth appraisals.

2. The benefitsfrom the ring road wereestimated as the savingsin vehicleoperating costs (VOC)and passengertime costs comparedto the situationwithout the project. The majorbenefit streamsinclude savings:

(a) for the trafficoriginally on the IRR (b) for the increasein traffic on the IRR (c) for traffic on the central area road networkwithin the ring road (d) for traffic on other parts of the network,outside the ring road

In the economicevaluation undertaken at appraisal,items (c) and (d) were stated as benefits,but couldnot be calculatedas the traffic modelat the time wasnot able to producerobust enoughestimates of speeds,and flows.

3 . The key assumptionsand inputsmade remainedthe sameas at the appraisals,with these exceptions:

(a) capitalinvestmnent costs wererevised to reflect "as built" costs (b) maintenancecosts werebased on actualmaintenance expenditures during the initialyears of operation (c) the actual constructionperiods were used(3 years insteadof four)

Capital costs were around21% greaterthan the appraisalestimates, while the actualconstruction period was 3 years, insteadof 4 years assumedat appraisal.

HighwayCorridor Traffic

4. Stage I of the elevatedInner Ring Road(funded under SMTPI) was openedto trafficin December 1993 and Stage 2 (fundedunder SMTP II) in December1994. The tablebelow provides a comparisonof the traffic volumesbefore and afterthe elevatedroad construction.

- 37 - Comparison of Traffic Volume Before and After Viaduct Construction

ElevatedRing Road Daily TrafficVolume GroundRoad Daily TrafficVolume before the excludingground road traffic elevatedroad was built (September1, 1996) (January30, 1991) Cross-section Outbound Inbound Total Cross-section Outbound Inbound Total Yangpu Bridge-Hejian Rd 21,000 21,000 4200 Zhoujiazui-Songhuajiang Rd 4255 4083 8338 Hejian-Zhoujiazui Rd 17300 18450 35750 Songhuajiang-Wujiaochang 4118 3937 8055 ______~Rd Zhoujiazui-Songhuajiang Rd 10500 13569 24068 Wujiaochang-Dabaishu Rd 5957 1326119 218 Songhuajiang-Siping Rd 18497 8760 27257 Dabaishu-Guangzhong Rd 8301 1045618 757 Siping-Zhongshanbeiyi Rd 18497 23148 41645 Guangzhong-Xibaoxing Rd 9845 9805 19650 Zhongshanbeiyi- 30232 30539 60771 Xibaoxing-Gonghexin Rd 10930 1064821 578 Guangzhong Rd Gaungzhong-Hetian Rd 45577 44897 90474 Gonghexin-Hutai Rd 11489 1144122 930 Hetian- Gonghexin Rd 40719 44897 85616 Hutai-Wuning Rd 9956 9070 19026 Gonghexin Hutai Rd 46444 43989 90433 Wuning-Wuyi Rd 10626 1026920 895 Hutai-Wuning Rd 40112 34427 80900 Wuyi-Yan'an Rd 10371 9740 20111 Wuning-Wuyi Rd 34639 29450 64089 Yan'an-Honggiao Rd 11318 1067221 990 Wuyi-Yan'an Rd 17829 12516 30345 Honggiao-Wuzhon Rd 9826 9186 19012 Yan'an-Xinhua Rd 17829 12516 30345 Wuzhong-Caoxi Rd 8264 7857 16121 Xinhua-Wuzhong Rd 32421 31140 63561 Caoxi-Tianyuegiao Rd 7418 1004717 465 Wuzhong-Caoxi Rd 40933 30795 78367 Tianyueqiao-Wanping Rd 7927 8916 16843 Caoxi-Tianyuqiao Wanping 36497 30642 67139 Wanping-Dapu Rd 6038 6986 13024 Rd Tianyueqiao-Wanping Rd 29201 24490 60843 Dapu-Luban Rd 3469 4266 7735 Wanping-Ruijin Rd 41491 40105 81596 Luban-Xinzhaozhou Rd 3220 3455 6675 Ruijin-LubanRd 33767 32352 66119 _X____ Luban Guohuo Rd 29149 26613 63756 Guohuo-NanpuBridge 16819 15613 32432 _

Benefits:

5. The differencesin traffic countson the elevatedRing Road(September 1996) and Groundroad (January 1991)indicate strong growth of traffic. Thus, traffic growthexpectation has significantlybeen met. In fact, the traffic growthon the IRRwas even higherthan anticipated.The rapid increasein traffic volumeover the viaductled to traffic saturationthereby limiting the potentialspeed gain. Overall,the constructionof the InnerRing Road systemhas not only attractedtraffic, it has effectivelyimproved the distributionof traffic,reduced a major bottleneck,made possiblehigh speedtravel and reducedtravel time. This increasein traffic capacityreduced congestion in the rest of the network. However,the rapid increase in trafficvolume relativeto the enlargedroad capacityled to a smallerspeed increase than expected.

OverallEconomic Internal Rate of Return(EIRR)

6. A post constructioneconomic appraisal of the elevatedsystem was undertaken.The principal benefitsincluded: savings in vehicleoperating cost, reductionin vehicle-kilometer,passenger time, and savingin traveltime due to reductionin congestion.The EconomicInternal Rate of Return (EIRR) estimatedto be 27.6%taking both Stagestogether. At appraisal,the EIRRestimates for the Inner Ring Road(SAR, STMP I & II) was 18%and for StageII was 15%respectively. Adjustingfor the increasein IRR costs, these EIRRbecome 16.5%and 14%respectively. Theoverall post-construction EIRR estimate at ICR for the Inner Ring Roadsystem (StageI and Stage II combined)at 27.6%compares favorably with the appraisalestimates in SMTP I & II.

-38 - Annex 4. Bank Inputs (a) Missions: Stagc( of ProjectCycle No. of Personsand Specialty Performa ceRating (e.g. 2 Economists,1 FMS, etc.) Implementation Development Month/Year Count Specialty Progress Objective Identification/Preparation January 1988 3 ResettlementSpecialist, Urban Planner, TransportPlanner May 1988 5 TransportEconomist, Economist, Urban Transport Specialist, Environmental/Sanitation Specialist,Transport Planner July, 1998 6 Transport Economis,Economist, ResettlementSpecialist (2), Transport Planner (2), August 1988 1 Economist October 1988 7 Economist,Railway Engineer, Highway Engineer(2), Transport Economist(2), Environmental Specialist January 1989 1 Urban TransportPlanner

Appraisal/Negotiation October 1989 6 Economist (2), Urban Transport Planner, Urban Planner,Municipal Engineer,Civil Engineer, November1989 1 Anthropologist February 1991 3 Transport economist,Transport Urban Planner,Municipal Engineer March 1991 1 TransportSpecialist Supervision 11/16/91 6 TransportSpecialist (2), HS HS Urban Transport Specialist (2), MunicipalEngineer, 03/27/92? 4 Urban Transport Specialist, HS HS Traffic Engineer,Highway Engineer, ProcurementSpecialist 08/15/92 6 Transport Specialist,Urban HS HS Transport Specialist,Traffic Engineer, HighwayEngineer, ProcurementSpecialist, ResettlementSpecialist 11/28/92 6 TransportSpecialist, Urban HS HS TransportSpecialist, Traffic Engineer,Highway Engineer, ProcurementSpecialist, ResettlementSpecialist

- 39 - 03/20/93 6 Transport Specialist,Urban HS HS Transport Specialist,Traffic Engineer, HighwayEngineer, ProcurementSpecialist, ResettlementSpecialist 12/01/93 3 Transport Specialist,Traffic HS HS Engineer,Highway Engineer 07/30/94 3 Transport Specialist,Traffic S S Engineer,Public Transport Specialist 04/08/95 3 Transport Specialist,Traffic HS S Engineer,Civil Engineer 12/29/95 3 Transport Specialist,Traffic HS S Engineer,Transport Economist 10/17/96? 4 Urban Transport Specialist, HS S Environmentalist,Operation Officer,TransportEconomist

07/11/97 2 Urban Transport Specialist, S S OperationOfficer 01/25/97 Urban TransportSpecialist, S S OperationsOfficer , Resettlement Specialist 05/14/98 2 Urban Transport Specialist, S S ProcurementOfficer 01/28/99 4 Urban Transport Specialist(2), Procurementspecialist, Traffic Engineer

ICR 08/21/99 1 Urban Transport Specialist, OperationsOfficer 02/29/00 1 Urban Transport Specialist 07/21/00 1 Transport Specialist

(b) Staff

Stage of ProjectCycle Actual/LatestEstimate No. Staffweeks USS('000) Identification/Preparation 118.5 332.8 Appraisal/Negotiation 110.9 282.6 Supervision 80.4 235.7) ICR 6.3 (March 2001) 23.3 Total

- 40 - Annex 5. Ratingsfor Achievementof Objectives/Outputsof Components (H=High,SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating O Macropolicies O H OSUOM O N * NA O SectorPolicies OH OSUOM ON * NA O Physical * H OSUOM O N O NA F Financial O H *SUOM O N O NA O InstitutionalDevelopment O H * SU O M 0 N 0 NA Z Environmental O H *SUOM O N O NA

Social ElPoverty Reduction O H OSUOM O N * NA EliGender O H OSUOM O N * NA ElOther (Pleasespecify) O H OSUOM O N * NA O Private sector development 0 H O SU O M 0 N * NA 3 Public sector management 0 H O SU O M 0 N 0 NA ElOther (Pleasespecify) O H OSUOM ON * NA

-41 - Annex6. Ratingsof Bank and BorrowerPerformance (HS=HighlySatisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)

6.1 Bank performance Rating

O Lending *HSOS OU OHU O Supervision OHS Os OU OHU O Overall OHS OS O u O HU

6.2 Borrowerperformance Rating

O Preparation *HS OS O U O HU O Governmentimplementation performance O HS O S 0 U 0 HU O Implementationagency performance OHS OS O U O HU a Overall OHS OS O U O HU

- 42 - Annex 7. List of Supporting Documents The WorldBank, ShanghaiMetropolitan Transport Project, Staff Appraisal Report (No. 8465--CHA), August 12, 1991.

The WorldBank, Second ShanghaiMetropolitan Transport Project, StaffAppraisal Report (No. 11985-CHA),September 10, 1993.

ShanghaiAcademy of EnvironmentalSciences, Environmental Reviewing Statement for ShanghaiInner Ring Road Project,November 1998.

ShanghaiCity ComprehensiveTransport Planning Institute, Transportation Development Impacts of ShanghaiCity (ModifiedVersion) TaskNo. 97-31-30,July 1999.

Corey Wong,Analysis of the ZhongShanInner-Ring Road Construction,September 6, 1999.

AndrePuong, Urban TravelPatterns and Traffic Conditionsin Shanghai City, September7, 2000.

TongjiUniversity, School of Economyand Management,Post-Appraisal of Economic and SocialBenejfts for ShanghaiMunicipal Elevated Road System of Inner Ring Road (Abstract version), November,2000.

ShanghaiMunicipal Engineering Construction Company, Shanghai Metropolitan Transport Project, Project ImplementationUnit, Implementation Completion Report (ICR), December2000.

Shanghai,Shanghai Metropolitan Transport Project (SMTPI & II) ImplementationCompletion Revieiw (ICR) WorkshopPapers, April 2001.

The WorldBank, ShanghaiMetropolitan Transport Project (SMTPI & II) ImplementationCompletion Review (ICR) WorkshopPapers, April 2001.

-43 - Annex 8. Beneficiary Survey Results The beneficiariesof the projectwere the residentsof Shanghai- as pedestrians,cyclists, public transport passengersand motorists,transport operators and businessin general. Theprojects were undertakenat a time of rapid changein Shanghai,and in parallelwith other investmentsand transportimprovements being made by SMG withoutsupport from the WorldBank. Under these circumstances,it was felt that a beneficiarysurvey would not haveyielded useful or meaningfulresults for this report. Instead,greater effortwas put into the StakeholderWorkshop, as describedin Annex9.

- 44 - Annex 9. Stakeholder Workshop Results

The Stakeholder Workshop was held from April 25 to 27, 2001. Participants at the workshop included representatives from the following Shanghai Government Agencies: * PlanningConmmission, Construction Commission; * Audit Bureau, EnvironmentBureau, Finance Bureau,Municipal Engineering Administration Bureau, PlanningBureau, Public SecurityBureau, TransportBureau; * City ComprehensiveTransport Planning Institute,Municipal Engineering Design Institute, Municipal EngineeringResearch Institute,Urban ConstructionDesign Institute,Planning Institute; * City InvestmentCo., PublicTransport Holding Co., Viaduct MaintenanceCo., Bashi Taxi Co., Dazhong Taxi Co., JinjiangTaxi Co., QiangshengTaxi Co.; * Academyof EnvironmentalSciences, Customs, Traffic/Patrol Police GeneralBrigade; * HighwayDepartment, Municipal Engineering Administration Department; ShanghaiMetropolitan Transport Projects- Project ImplementationUnit;

Participants also attended from the cities of Guangzhou, Shenzhen, Shijiazhuang, and Wuhan, as well as Liaoning Province, all of which have Bank supported urban transport projects.

The workshop agenda included a site visits, papers on the ICR and topics related to the objectives and scope of the projects, and group discussions, as follows:

April 25 Morning - Site Visit to the Inner Ring Road (IRR), HongkuDistrict Area Traffic Control Room, NMVr Route parallel to IRR, selectedjunction channelizationsand the Caobao Bus Depot. Afternoon - Visit to the ShanghaiUrban PlanningExhibition

April 26 Presentation of Papers, including question and answer sessions.

Session I Opening remarksfrom Shanghaiand the Bank

Session2 Summaryof ICR report by Shanghai

Session3 Summaryof ICR report by the Bank

Session4 ShanghaiUrban TransportDevelopment - past 10 years & future 20 years (Paperby Shanghai)

Session6 Reform of the Public Transport Systemin Shanghai(Paper by Shanghai)

Session5 ShanghaiLooking at the World - Experiencesof urban transport developmentplanning and investmentin other countries (Paperby the Bank.)

Session7 Putting People First (Paperby the Bank)

April 27 Working Group Discussions

For the discussions on the ICR.and the other papers, participants divided into two groups. The first group addressed "macro" issues relating to overall policy, planning and investments. Discussion in this group was led the Assistant Chief Engineer of the Shanghai City Planning Administration Bureau. The seconcl group addressed "micro" issues of traffic management, public transport and urban road design. Discussion

- 45 - in this group was led by the Chief of the Traffic Facilities Department of the Traffic Police Patrol/General Brigade of the Shanghai Public Security Bureau.

Key Conclusions from the "Macro"- Planning,Policy and Investment- WorkingGroup Discussions

1. TransportPlanning and Policy. * Transport plans should not be ends unto themselves, but should support economic development through integrated planning of transport and land use. * The emphasis should be on moving people and goods, not infrastructure development. * Sustainable Development and the environment/quality of life are now important factors. * Greater coordination of different modes is needed, particularly the integration of rail with other modes * Planning should be related to the resources available.

2. Developmentof the TransportNetwork * Better classificationof the fumctionof roads is needed- i.e. functionalroad hierarchyand more provisionfor walkingand NMV. * Better integrationof rail and bus networks,with use of rail + bus for longertrips and walk/bicycle for short trips * Cyclingto be encouragedwith more appropriatefacilities * Issues regardingthe choiceof modes(between car, NMV and walking)have to be dealtwith at the planningstage.

3. FutureChallenges * Pace of Change. This makesplanning particularly difficult, as the experiencewith the Ring Road has shown. Makes goodpredictions more importantand showsthe need for flexibilityand continuous planningor works will be renderedobsolete by increasesin traffic. A good strategicplan is important when tryingto assess individualprojects. * ProjectInvestment Approval Procedures used in Chinaare generallysatisfactory and simpler than WB procedures. These procedures are being further simplified, but more public participation is requiredand this is being introduced. Thereis also a need for betterintegration between SMG and districts. (Transportis 1/3rd of the SMG investmentbudget. This is a non-commercialinvestment by SMG.) * Environment and Sustainable Development. Environmental considerations (costs and benefits) should be given a higher profile in the evaluation of projects - for example whether to put metro underground. There is a need to raise public awareness of environmental issues of environmental issues. Choice of the most appropriate mechanisms to reduce pollution from cars - emission control devices, tax policies, better control of certain types of vehicles, better traffic management, travel demand management.

Key Conclusionsfrom the "Micro"- TrafficManagement, Public Transport and Urban RoadDesign WorkingGroup Discussions

1. Traffic management - change of mindset after WB project: * Idea of separation of MV and NMV now accepted, but due to the differences of view between departments,the pace of implementationhas been slow. * Bicycles will still be an important travel mode for Shanghai residents, but complete separation from motor vehicles will take a long time.

-46 - * Channelizationnow accepted,but congestionat junctionsstill has to be solved

2. Safety- have to put peoplefirst in the preventionof accidentsand in designinga black spot program. Expertsin analysisof trafficaccidents have been engagedto measureaccidents and design solutions.

3. PublicTransport - great deal of reform,facilitated by the project. * Pricingchange has reducedthe financialburden on government. * Organization- monopolyof STChas been broken

4. UrbanRoad Design * Improvementof road standardshas improvedthe qualityof life of residents. * Puttingpeople first is nIowtaken seriouslythrough environmental protection and beautificationof road

5. FutureChallenges

* Improvingthe connectionsbetween elevated road systemand groundlevel roads. In orderto facilitatesmooth traffic flow on the InnerRing Road,there is a need to smooththe flow betweenthe elevatedroad and the groundlevel roads. Currentlythere is congestionat the on/offramps so manualramnp controlis used.

* TrafficManagement at Junctions. Planning,design and managementof traffic at junctions; becauseof the mix of MV/NMVand pedestrians.The aim is to have no congestionbut smooth,fast and safe movementsfor all modes.

* Puttingpublic transport first. People are chantingthis slogan,but don't knowwhat to do to practicethis idea. SMG shoulcdgive clarifythe policyon "PublicTransport for People" so that bus companiescan betterserve passengers and so that traffic managementagencies can introducebus lanesand signalpriorities favoringbuses. There is a need to not only changethe rnindset,but to put it into practice, (to avoid repetitionof the process that led to the withdrawalof the Waitanbusway).

* IBetterInterchanges between modes. How to connectbus and rail lines? Inconvenient interchanges(like on the PearlLine) does not help passengers.

BetterPlanning and Designof Roads: (i) More considerationmust be givento pedestriansand NMV, especiallypedestrian safety. IRR quite safe but only becausethere are no pedestriansor bicycles. But roads in the suburbsare not safe as not enoughconsideration is givento pedestriansand cyclists. (ii) Nationalroad designcode needsto be reviewedso that designscan be basedmore on road function- for examplelane widths. How wide shouldthey be? In the CBD they are actually2.5 m. But the design code requiresa 3.75 m widthfor a 40 kmlhrdesign speed. (iii) Now that the 3 E-W and 3 N-S arterialroutes are built in the CBD within the ring road, there is a need to upgradethe rest of the networkto provide a bettergrid, while takingaccount of historic buildings.

-47 -

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