COMPLETION REPORT AID Loan No. 522-L-015 Title

COMPLETION REPORT A.I.D. Loan No. 522-L-015 Title: FeasibilitywStudies Date Signed: February 25, 19 A. Identification 1. A.I.D. staff conducting review: General Engineer FFigueroa Z. 4" 2. Date of Report:' September 17, 1974 B. 1. Background: As contemplated in the Loan Agreement this loan was made to the Government of Honduras (Borrower) to carry out certain feasibility studies of high priority in the economic and social develop ment of Honduras. 2. Scope of the Project: The Superior Council for Eco nomic Planning (CONSUPLAN), the agency of the Borrower responsible for the execution of the project, decided to undertake, under this loan, the feasibility study and preliminary engineering for the Central Highway extending from Tegucigalpa to Yoro and from Sta. Rita through Yoro to Olanchito. The total length of the project was estimated about 368 kms. A U.S. consult ing firm, Transportation Consultants International, Co. (TCICO), was selected by the Government, and approved -2 by A.I.D., to make the study. The contract was sign ed on September 13, 1967. C. Project Execution: In agreement with the Consultant, CONSUPLAN decided that the preliminary engineering part of the study would be undertaken by making use of photogram metry and electrical surveying instruments, rather than by conventional ground survey methods. With this purpose, flights were made at an appropriate altitude to provide photographs atAscale of approximately 1: 10,000 covering a strip approximately 2.3 kilometers in width. All angu lar measurements, both horizontal and vertical, were made with Wild T-2 theodolites. Slope distance measurements were made by using Tellurometers ind DM-20 Electrotapes. The project was divided into 11 sections totalling 360 kms., for purposes of preliminary engineering design. In March, 1971 the first draft of the study was delivered to the Government of Honduras. The estimated cost for construc tion, including pavement, amounted to approximately 97 million Lempiras'(U.S. $43.5). D. Acceptance of The Study by CONSUPLAN: The cost-plus-fixed fee contract for this Central Highway feasibility study and preliminary engineering which was signed September 13, 1967, amounted to U.S. $314,924.08i In response to a re quest from the Consulting firm for additional funds to complete the study, a first amendment to the Contract was signed February 6, 1968, increasing the amount of the Contract to U.S. $357,879.00. By a Second Amendment sign ed November 18, 1968, the Contract amount was increased to U.S. $484,973. This Amendment provided that TCICO would present a Preliminary Report within 80 days of the date of signing the Amendment, which would contain conclusions and recommendations to be discussed by the Technical Group, and that TCICO would present its Final Report within 120 working days after the date of the Amendment. Due to discrepancies between the CONSUPLAN and TCICO aboutl6 quality of the study, a technical group was appointed by USAID/H to analyze the same from the engineering and eco nomic standpoint. In addition to this, CONSUPLAN was con cerned about the extremely high cost for the study that, in their opinion, did not correspond to the professional services rendered by the A/E firm. TCICO presented an "Informe Preliminar" to CONSUPLAN with a transmittal letter dated March 13, 1969. The Council, as mentioned above, refused to accept the "Informe Preli minar" on the grounds that it was not a complete draft of -4 what would be in the final report. A second "Draft of Final Report" was presented to CONSUPLAN with a transmittal letter from TCICO dated May 31, 1969. The argument over the ad equacy of the work continued through 1969 into 1970. In an effort to facilitate a settlement, the USAID had the reports and the Contract documents examined by three A.I.D. experts. The results of their analyses were made available to the Council and to TCICO. On the basis of these reviews, CONSUPLAN prepared a document, dated May 15, 1970, entitled "Minimum Requirements Necessary to Complete the Study for the Central Highway". The Highway Consultant appointed by A.I.D. recommended some modifications to the final report in relation with Design Criteria, Benefit-Cost analysis and Road Maintenance. The economist made some recommendations to study in more datail annual user savings and forecasts of net increases in the value of production. He also recommended study in more detail of the relationship of the Central Highway to other transportation facilities, and a full discussion of -5 the priority of the project within the GOH highway pro gram. The legal advisor's main recommendation was to avoid cost plus-fixed-fee contracts, given the experience with this TCICO contract. After the technical groups appointed by both the Planning Council and A.I.D. made their recommendations, the dispute between TCICO and the Government of Honduras continued. On September 9, 1971 this Mission received a cable from A.I.D./W stating that the recommendations made by L.G. Rosenberg and F.L. McRee had been included and that the revised March 1971 draft report met the minimum terms of TCICO's contractual commitment to the Government of Honduras In order to finally solve the dispute, CONSUPLAN and TCICO decided to submit +t and accept an independent audit of all expenditures made under the study to determine the a mounts eligible for reimbursement under the terms of the contract. This audit was undertaken by USAID Controller's Office personnel. As a result of the auditing report a final agreement was reached between the Planning Council and TCICO on May 17, 1974. By means of this agreement the -6- Planning Council and TCICO accepted the amount of $80,989.90 as allowable costs remaining to be paid under the contract. Of this, $3,000 to cover a Spanish transla tion of the study and $25,000 to compensate for deficien cies, if any, in the final report were withhold. As the technical group appointed by CONSUPLAN determined with TCICO's concurrence that certain deficiencies did exist in the report, the U.S. $25,000 plus $3,000 for Spanish trans lation were not paid. Therefore, the total amount paid to S TCICO for the study was U.S. $439,708.62. The balance of the Feasibility Study Loan 522-L-015, $60,291.38, will be deobligated shortly. E. Use that GOH is Making of the Study 1. Tegucigalpa-Talanga Section: (54Kms.) Final Engineering Design of this section of the Central Highway was made by Howards Humphroys, ane English firm, who completed the study in 1972. A review of this study was made by the Highway Department and accepted by the World Bank. Construction of the project was awarded to Cons tructora Chambco, who started construction in August 1974. It is expected that this Section will be com pleted by February 1973 up to sub-base. -7 2. Progreso-Santa Rita-Morazgn-Yoro: (70.7 kms.) Final Engineering Study of the section Progreso-Santa Rita- Yoro was made by Consultora CINSA, a local consulting firm, and completed in November 1973. The Study was financed by IDB under the Loan 153-Sr-HO. As part of this study, final engineering plans were made for the spur from Santa Rita to La Barca, over the North High way, located about 45 kms. south of San Pedro Sula. Construction of this project is scheduled to start by the end of 1975. According to the feasibility study the Highway Department has decided that the section from Progreso to Santa Rita (24 kms.) and the spur from -Vet to La Barca (14 kms) are to be paved highways. The Section from Santa Rita to Yoro is also being studied by CINSA and fina] Engineering plans will be completed in February, 1975. This will be a first class gravel surface highway according to the Highway Department Officials. The Consultant has indicated that the study made by TCICO was not-utilized as previously anticipated. Some discrepancies in criteria withATCIC0 study were found by CINSA during the execution of their final Engineering study. The alignment proposed by CINSA for this portion of the Central Highway follows about 30% of the alignment proposed by TCICO. The Highway Department officials have -8 indicated that IDB has already authorized $20 million dollars for construction of this project. 3. Yoro-Olanchito: (100 kms.) A feasibility study of this section is being made by Gabinete Tecnico, a local Consulting firm. The study is expected to be completed by the end of December 1974. Depending on the result of this study the Highway Department will determine whether or not to procetd with final engineering design, The new route Follows about 50% of the route recommended by TCICO. 4. Yoro-Yorito- Sulaco-El Porvenir: (66 kms.) Gabinete T~cnico is making the feasibility study from Yoro to Yorito and from Sulaco to El Porvenir. The Section from Yorito to Sulaco follows the same route recommended in Sub-Project No. 4 of the Farm-to-MarketAProgram. Access mA4 The engineering standards are to be upgraded in order to be used as part ojihe Central Highway. The Highway Department does not have at this time definite plans in relation to the 40 Kms. Section from 6l Porvenir to Talanga. F. Summary and Conclusions 1. Resolution of the dispute between TCICO AND THE Govern ment of Honduras took 4 years. This long dispute has resulted in a limited use of the study by other Con sulting firms. The Government did not want to release or make use of the study until the dispute was solved. 2. According to information provided by the Highway De partment Officials and sqme Consulting firms, it is estimated that the feasibility and preliminary engineer ing study of the Central Highway made by TCICO has been of limited use to them (about 40%), Deficiencies in engineering estimates and alignment were found when the TCrCO study was reviewed by CINSA and Gabinete T~cnico.

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