Project Administration Manual Project Number: 41220 Loan and/or Grant Number(s): October 2012 Republic of the Philippines: Integrated Natural Resources and Environmental Management Project Contents ABBREVIATIONS I. PROJECT DESCRIPTION 1 II. IMPLEMENTATION PLANS 2 A. Project Readiness Activities 2 B. Overall Project Implementation Plan 7 III. PROJECT MANAGEMENT ARRANGEMENTS 11 A. Project Implementation Organizations – Roles and Responsibilities 11 B. Key Persons Involved in Implementation 15 C. Project Organization Structure 16 IV. COSTS AND FINANCING 19 A. Detailed Cost Estimates by Expenditure Category 21 B. Allocation and Withdrawal of Loan and Grant Proceeds 23 C. Detailed Cost Estimates by Financier 26 D. Detailed Cost Estimates by Outputs/Components 28 E. Detailed Cost Estimates by Year 30 F. Contract and Disbursement S-curve 31 G. Fund Flow Diagram 32 V. FINANCIAL MANAGEMENT 33 A. Financial Management Assessment 33 B. Disbursement 37 C. Accounting 40 D. Auditing 41 VI. PROCUREMENT AND CONSULTING SERVICES 42 A. Assessment of Procurement Capacity 42 B. Advance Contracting 42 C. Procurement of Goods, Works and Consulting Services 43 D. Procurement Plan 44 E. Consultant's Terms of Reference 49 VII. SAFEGUARDS 52 VIII. GENDER AND SOCIAL DIMENSIONS 64 IX. PERFORMANCE MONITORING, EVALUATION, REPORTING AND COMMUNICATION 66 A. Project Design and Monitoring Framework 66 B. Monitoring 69 C. Evaluation 69 D. Reporting 69 E. Stakeholder Communication Strategy 70 X. ANTICORRUPTION POLICY 72 XI. ACCOUNTABILITY MECHANISM 76 XII. RECORD OF PAM CHANGES 76 APPENDIXES 1. Implementation Arrangements 2. Detailed Cost Tables (Per Subcomponent) 3. INREMP Performance Based Grant System: Conceptual Framework 4. Implementation Arrangements and Funds Administration/Flow 5. Eligibility Criteria for Block Grant 6. National Government Accounting System for LGUs 7. Procurement Guidelines 8. Procurement of Goods and Services Checklist 9. Terms of Reference of Key Disciplines 10. Gender Action Plan 11. Suggested Report Formats 12. Suggested Formats for Progress, Status and Completion Reports 13. Sample Form of Auditor’s Opinion 14. Matrix of INREM Communication Plan Project Administration Manual Purpose and Process The project administration manual (PAM) describes the essential administrative and management requirements to implement the project on time, within budget, and in accordance with Government and Asian Development Bank (ADB) policies and procedures. The PAM should include references to all available templates and instructions either through linkages to relevant URLs or directly incorporated in the PAM. The Department of Environment and Natural Resources (DENR) is wholly responsible for the implementation of ADB financed projects, as agreed jointly between the borrower and ADB, and in accordance with Government and ADB’s policies and procedures. ADB staff is responsible to support implementation including compliance by DENR of their obligations and responsibilities for project implementation in accordance with ADB’s policies and procedures. At Loan Negotiations the borrower and ADB shall agree to the PAM and ensure consistency with the Financing and Grant agreements. Such agreement shall be reflected in the minutes of the Loan Negotiations. In the event of any discrepancy or contradiction between the PAM and the Financing and Grant Agreements, the provisions of the Financing and Grant Agreements shall prevail. After ADB Board approval of the project's report and recommendations of the President (RRP) changes in implementation arrangements are subject to agreement and approval pursuant to relevant Government and ADB administrative procedures (including the Project Administration Instructions) and upon such approval they will be subsequently incorporated in the PAM. Abbreviations ADB = Asian Development Bank ADF = Asian Development Fund AFS = audited financial statements CHARMP = Cordillera highlands agricultural resources management project CQS = consultant qualification selection DBM = Department of Budget and Management DENR = Department of Environment and Natural Resources DMF = design and monitoring framework EA = executing agency EARF = environmental assessment and review framework EIA = environmental impact assessment EMP = environmental management plan ESMS = environmental and social management system GACAP = governance and anticorruption action plan GDP = gross domestic product IA = implementing agency ICB = international competitive bidding IEE = initial environmental examination IFAD = International Fund for Agricultural Development INREMP = integrated natural resources and environmental management project IPP = indigenous people plan IPPF = indigenous people planning framework LAR = land acquisition and resettlement LIBOR = London interbank offered rate LGU = local government unit NCB = national competitive bidding NGOs = nongovernment organizations PAI = project administration instructions PAM = project administration manual PIU = project implementation unit QBS = quality based selection QCBS = quality- and cost based selection RRP = report and recommendation of the President to the Board SBD = standard bidding documents SFM = sustainable forest management SGIA = second generation imprest accounts SOE = statement of expenditure SPS = Safeguard Policy Statement SPRSS = summary poverty reduction and social strategy TOR = terms of reference WA = withdrawal application I. PROJECT DESCRIPTION 1. The Integrated Natural Resources and Environmental Management (INREM)1 Project (hereinafter referred to as Project) will address unsustainable watershed management in four priority river basins: (i) the Chico River Basin in the Cordillera Administrative Region, Northern Luzon; (ii) the Wahig–Inabanga River Basin on the island of Bohol; (iii) the Lake Lanao Basin in the Autonomous Region of Muslim Mindanao; and (iv) the Upper Bukidnon River Basin in Bukidnon, Northern Mindanao. With particular focus on indigenous peoples and resource-poor communities, the project will reduce and reverse degradation of watersheds and associated environmental services caused by forest denudation and unsustainable farming practices. It will also provide incentives to local communities, local government units (LGUs), and the Department of Environment and Natural Resources (DENR) for improving natural resource management by generating sufficient and tangible economic benefits. Mechanisms to achieve these project objectives include (i) payments for environmental services (PES) including water regulation, soil conservation, carbon offsets, and biodiversity; (ii) income generation from sustainable use and management and value-added processing of timber and non-timber forest products; (iii) improved natural resource productivity; and (iv) improved climate resilience in project watersheds. 2. Impact and Outcome. The Project impact will be improved condition of watersheds generating livelihood benefits in the four URBs. The project outcome will be increased rural household incomes and LGU revenues in selected watersheds in the four URBs. 3. Outputs. The Project outputs are consolidated based on extensive consultations with stakeholders and beneficiaries. a. Output 1: River basin and watershed management and investment plans established. Indicative development plans (IDPs) will be developed for the four URBs to be adopted by regional development councils and/or provincial legislative councils. IDPs will be based on land capability assessments and participatory land use classification to identify appropriate management zones, and will be drawn up by the regional and provincial offices of the DENR in coordination with national agencies and LGUs.2 Watershed management plans (WMPs) will be prepared for the selected watersheds based on the IDPs. The WMPs will define and prioritize subprojects and establish a work program for implementation by LGU clusters and municipal development councils. The WMPs will take account of existing tenurial arrangements and treat ancestral domains as management subunits.3 A geographical information system (GIS) based database for performance monitoring will be established. b. Output 2: Smallholder and institutional investments in conservation increased and URB productivity enhanced in the forestry, agriculture and rural sectors. Subproject investments will be undertaken within the 23 project watersheds based on outputs from river basin-wide planning (output 1). Interventions for watershed restoration and rehabilitation covering more than 325,590 ha will be implemented by the DENR to include community-based protection, reforestation and/or assisted natural regeneration, production forestry 1 ADB. 2009. Technical Assistance to the Republic of the Philippines for the Integrated Natural Resources and Environmental Management Project. Manila. (TA 7109-PHI). 2 Integrated ecosystem management will be made operational within the priority watershed by assimilating science- based land management regimes with local indigenous knowledge and practices. 3 As defined in the Indigenous Peoples Right Act, 1997. 1 including demonstrations on agroforestry and commercial plantations, and conservation farming. Livelihood improvement investments to be undertaken by municipal LGUs include (i) 645 kilometers of rural access roads and foot trails; (ii) communal irrigation systems servicing 3,040 ha; (iii) 275 units of potable community water facilities; (iv) a provincial trading and processing center supporting farming communities; and (v) seed funds for replication and/or