43040-012: Road Sector Capacity Development · PDF fileAn Overview of the Road Sector from...

Technical Assistance Consultant’s Report

This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents. (For project preparatory technical assistance: All the views expressed herein may not be incorporated into the proposed project’s design.

Project Number: 43040-012 (TA 7844) March 2015

Mongolia: Road Sector Capacity Development (Financed by the Japan Fund for Poverty Reduction)

Prepared by VicRoads International

Victoria, Australia

For Ministry of Roads and Transportation

Report Name: Final Report 22 September 2014 Version 1 1 Project Name TA-7844. MON. Road Sector Capacity Development Plan

Mongolia

Road Sector Capacity Development Project

Final Report September 2014

Date: 22 September 2014

Version Control: V1.


Mongolia

Road Sector Capacity Development Project

Submitted by

VicRoads

60 Denmark Street

Kew, 3101, Victoria, Australia

T: +613 9854 2288

F: +613 9854 2170

W: www.vicroads.vic.gov.au

E: [email protected]

In association with: Monconsult


ABBREVIATIONS & ACRONYMS

Abbreviation Meaning

ADB Asian Development Bank

DBM Development Bank of Mongolia

DG Director General

DoR Department of Roads Mongolia

Drop Box The Gmail Drop Box created for file sharing between the ADB and the VicRoads Project Team

DVD Ref DVD Reference from the DVD produced by the CDTA as part of the December Close-off documentation signed by UBDOR and the MRT

IRF International Road Federation

MRA Mongolia Roads Association

MNT MNT conversion rate in 2014 terms: MNT 1770 equals US$1

MRT Ministry of Roads and Transport

MUST Mongolian University of Science and Technology

MED Ministry of Economic Development

MoF Ministry of Finance

REA Road Engineers Association

Roadmap The Roadmap for the Road Sector in Mongolia

RPICD Road Policy Implementation and Coordination Department (Part of the MRT)

RRDP Regional Road Development Project (ADB)

RSRC Road Supervision and Research Center attached to the MRT

SPC State Property Committee

This TA Road Sector Capacity Development Project (TA-7844 Mongolia)

TTC Technical and Technological College of Mongolia

UB DoR Ulaanbaatar City Department of Roads

UB City The City of Ulaanbaatar

VR VicRoads

WRRP Western Regional Roads Project (ADB)


Table of Contents

Contents

1. Introduction............................................................................................................ 6

Period of Report: ................................................................................................... 6

Contents: ............................................................................................................... 6

Report DVD ........................................................................................................... 6

2. Executive Summary ............................................................................................... 9

Scope and Objectives of the CDTA ....................................................................... 9

An Overall View of the CDTA ................................................................................ 9

The CDTA Scorecard .......................................................................................... 10

Project Close-off Arrangements ........................................................................... 15

3. An Overview of the Road Sector from 2012 to 2014 ............................................ 17

The National Road Network ................................................................................. 17

UB City Road Network ......................................................................................... 22

4. Implementation of the CDTA – Analysis and Assessment of Impacts .................. 24

Overall Assessment ...................................................................................................... 24

Task 1: Institutional Strengthening: MRT, UBDOR and Road Law ....................... 25

Task 2: Road Fund and Road Fund Board Establishment ................................... 32

Task 3: Procurement and Project Management .................................................. 34

Task 4: Outsourced Supervision .......................................................................... 37

Task 5: Periodic Road Maintenance .................................................................... 39

Task 6: UB Road Maintenance ............................................................................ 49

Task 7: Road Network Planning .......................................................................... 52

Task 8: HR Strategy and Training ........................................................................ 52

Task 9: Road Research and Technology Transfer ............................................... 60

Task 10 Communications .................................................................................... 62

5. Road Map Update from 2012 to 2014 .................................................................. 63

6. Potential Future Targets for the Road Sector in Mongolia.................................... 65

Appendices: .................................................................................................................. 67

Appendix 1: Original Detailed Tasks and Outputs ......................................................... 68


Appendix 2: Project Close-off Memorandum for the MRT ............................................ 72

Appendix 3: Project Close-off Memorandum for the UBDOR ........................................ 75

Appendix 4: MRT and FIDIC Contract - Mongolian Translation ..................................... 77

Appendix 5: Road Condition Inspections – Darkhan and Choyr ................................... 78

Appendix 6: Road Map Progress ................................................................................. 91


1. Introduction

Period of Report:

1.1 This Report covers the entire period of the Road Sector Capacity Development Project (TA-7844 Mongolia) and is the Draft Final Report as required under the Project Terms of Reference.

1.2 The Report period is from 6 February 2012 until 14 September 2014.

Contents:

1.3 The Contents of the Report includes the following:

• Executive Summary (Part 2 of this Report);

• An overview of the road sector in Mongolia from the commencement of this TA until its completion in June 2014 (Part 3 of this Report);

• The implementation of the CDTA including an implementation analysis and an assessment of its impacts (Part 4 of this Report);

• The Road Map Progress from February 2012 to June 2014 (Part 5 of this Report)

• Potential future targets for the road sector in Mongolia, with road maintenance being the major target (Part 6 of this Report).

1.4 The Report also undertakes a critical analysis of the impacts of the CDTA into high medium and low impact and the reasons for that assessment

1.5 The Report also discusses project contract variation number 7 (the final project variation) which targeted: road maintenance standards and strategies, executive information systems and development of a masters in road management.

Report DVD

1.6 The major reports of this CDAT are contained in a DVD as indicated in the Draft Final Report. The Report and their location in DVD are contained in the following reference table.

Task Number and DVD

Reference Reference Document

Task 1 Institutional Strengthening

1.1 Discussion Paper Road Law

1.2 Discussion Paper-DOR Organizational Structure

1.3 DOR Organization Structure Explanation

1.4 Road law final draft

1.5 UBDoR Organization Structure Brief Paper

1.6 UBDOR Organization Action memo

Task 2 Road Fund and Road Maintenance Fund (RMF)

2.1 Discussion Paper on Road Fund and Road Board

2.2 RMF Decision Paper


Task Number and DVD


2.3 RMF Handbook

Task 3 Procurement and Project Management

3.1 Comment on FIDIC Conditions of Contract to MRT

3.2 Competitive Bidding Process - Works

3.3 Contractor Registration System

3.4 FIDIC License Agreement signed by MRT

3.5 Price Escalations - Draft Proposal

3.6 Procurement of Consultant Services

3.7 Video Presentation on Program Management System (PMS)

3.8 List of Companies included in the Contractors and Consultants Registration System

Task 4 Outsourced Supervision

4.1 Construction supervision manual

4.2 Consultant Registration System

4.3 Consultant Services Operational Manual

Task 5 Road Maintenance

5.1 Diagnostic Report on State Road Companies

5.2 MRT Road Maintenance Strategy

5.3 Periodic Road Maintenance Program 2014

5.4 Periodic Road Maintenance Program

5.5 SBD Draft Works Contracts up to USD 1m

5.6 dTiMs Mongolian Front-end

Task 6 UB Road Maintenance

6.1 Maintenance in UBDoR Discussion Paper

6.2 Summary of UB Road Conditions Survey

6.3 UBDoR Maintenance Manual Draft September 2013

Task 8 HRD and Training

Task 8.1 FIDIC Conditions of Contract Administration Training

8.1.1 Attendance sheet of FIDIC

8.1.2 CM program

8.1.3 Module 1 Practical Use of FIDIC Contracts

8.1.4 Module 2 - 2 - day ECV FIDIC Course - claims- 2012

8.1.5 MRTs list of Participants for FIDIC Training

8.1.6 Training Program as of Sep 20

Task 8.2 International Road Federation DVDs on Road Management

8.2.1 13 Series

Task 8.3 Road Management and Maintenance and Cold Climate Engineering training by OGRA

8.3.1 Course Intro Road Asset Management

8.3.2 Course Superpave and Asphalts

8.3.3 Course Cold Weather Concrete

8.3.4 Course Construction Practices

8.3.5 Course Pavement Design

8.3.6 Course Winter Road


Task Number and DVD


8.3.7 Time scheduling OGRA

Task 8.4 Training needs Assessment for MRT

8.4.1 TNA June 2012

8.4.2 TNA Questionnaire

8.4.3 TNA September 2012

Task 8.5 Position Paper on Education and Training Options

Task 8.6 MRT and UBDOR Capacity Development Matrix 2014 to 2017

Task 8.7 Engineering Education Provision in Mongolia

Task 9 Road Research

9.1 Standards Gap Analysis - first report

9.2 Road Research Center Structure: Discussion Document


2. Executive Summary

Scope and Objectives of the CDTA

2.1 “The overall objective of the capacity development technical assistance (CDTA) is to increase the capacity and performance of Mongolia’s road sector by initiating the implementation of the Roadmap over a period of two years. The consultant is expected to give an equal priority to on the- job training and policy advice/production of directly usable outputs. The international consultants will particularly task to train their counterpart staff in the DOR and UB DOR and their counterpart local consultant in their fields of competence through on-the-job training. To facilitate change, the consultant will also organize stakeholder retreats and facilitate policy-makers’ meetings as needed.”1

2.2 There were 10 Outputs expected from this TA (the 10 Outputs are described in Appendix 1). Those Outputs were designed to be delivered in two phases: Phase 1 where the project focused on identifying and developing the policy and strategic approach to the road sector reforms and Phase 2 where the project focused on assistance in implementing the agreed road sector reforms.

2.3 The delivery of the Outputs presumed the appointment of the High Level Steering Committee to make decisions on the policy and strategy papers and then monitor implementation with the guidance of the CDTA Team.

An Overall View of the CDTA

The Initial Project Environment

2.4 The CDTA commenced on 6 February 2012 in a setting where an election was to be held in June of that year and some uncertainty within the bureaucracy on some issues that were key aspects of the implementation of the Road Sector Road Map signed by the then government and the ADB.

2.5 The uncertainties largely related to the institutional structure of the DoR, the draft Road Law that was under consideration and the potential to establish a road maintenance board and fund for the national road network. These were major policy initiatives to be implemented within the framework of the CDTA.

2.6 The Project Team commenced to implement the CDTA in accordance with the Approach and Methodology that had been agreed. In that context, the uncertainties referred to in the previous paragraph were somewhat compounded by the lack of the High Level Steering Committee that was to act as the decision making body for the policy and strategy proposals presented to it by the DoR in conjunction with the Project Team. In other words, there was no policy decision body to work to for the CDTA.

2.7 The absence of High Level Steering Committee saw the approach and methodology, become less relevant as the way forward. After the elections in July 2012 and subsequent restructuring of government departments, it was clear that a new approach was needed.

A Successful Change in the Project Direction and Implementation Approach

1 Detailed Terms of Reference. Paragraph B5: Objectives of the Technical Assistance


2.8 Lessons learned from this situation showed that the CDTA approach may not have suited the Mongolian position and ethos and so in September 2012, the Project Team recommended and the ADB agreed to a different approach to the CDTA. Indeed, the events have indicated strongly that the Government prefers to have documents prepared that are ready for decision and not documents that involve detailed problem analysis and detailed reports.

2.9 It was therefore decided to adopt a more direct approach and make recommendations and deliver decision documents to the (newly formed) MRT and UBDoR. The Agenda within the CDTA was still relevant and responsive, but a shorter gestation period and a more action oriented approach was required where the CDTA delivered policy and strategy documents and activities for adoption. Indeed, with the UBDoR there was a particular focus on its organizational structure, its maintenance program and its road network management systems and a high level of success was achieved with that focus.

2.10 More than 300 meetings were held over the life of the project and around 45 recorded field visits were undertaken as key component of engaging the client Departments and understanding the environment in which the project team was working. This translated directly into more practical advice being given to both clients and the development of management tools that were specifically designed for the Mongolian situation. For example, the development of Mongolian front end to the dTiMs pavement management system for the MRT was a direct result of practical talking with the MRT as the client department.

2.11 In the end, there was substantial success in achieving results in the important areas of the CDTA. The success demonstrates a commitment by both the UBDOR and the MRT to introducing and sustaining good practices in managing their respective road networks. While some aspects of the original ToRs were not achieved, especially in actually establishing a road maintenance program for the national road network, there is now a move for the 2015 budget year for a structured and comprehensive road maintenance program for the national road network.

The CDTA Scorecard

2.12 A scorecard has been developed to report the progress under the CDTA. The detailed scorecard for the CDTA is contained in Part 5 of this Report. The following table shows what was achieved and what was not achieved against each of the original 10 Outputs designed in the CDTA:

Original 10 Outputs Scorecard

Task Scorecard

Task 1: Institutional Strengthening

DOR ORGANIZATIONAL STRUCTURE

Achieved: Revised organizational structure delivered in May 2012 and agreed by DoR.

Impact: Restructure not implemented.

Change in Government in 2012 established a completely different Ministry-based structure.

(Documents contained in DVD Ref 1.2, 1.3 and 1.4)

ROAD LAW

Achieved: Agreement to draft a new Road Law (and not revise the existing road law). An agreed MRT (Road Policy and


Task Scorecard

Regulation Division) Draft Law prepared.

Impact: The Draft Law remains un-presented to the Parliament and may be presented in the Spring Session 2014.

(Document contained in DVD Ref 1.1 and 1.4)

REORGANIZATION OF THE UBDOR

Achieved: Substantial input and a revised modern structure was recommended to the UBDOR in November 2012.

Impact: Some aspects of the recommendations were accepted.

(Documents contained in DVD Ref 1.5 and 1.6)

Task 2: Road Fund and Road Fund Board Establishment

POLICY STRUCTURE FOR THE ROAD MAINTENANCE BOARD

Achieved: Completed and documented. Agreed-in-Principle by MRT.

Impact: The new Road Law which will establish the Road Maintenance Board remains to be finally agreed.

(Document contained in DVD Ref 2.1 and 2.2)

ESTABLISH A ROAD MAINTENANCE FUND

Achieved: All technical work has been completed based on the World Bank Road Maintenance Fund model.

Impact: It is not yet Agreed-in-Principle, pending final agreement for the new Road Law.

(Document contained in DVD Ref 2.3)

ROAD MAINTENANCE BOARD OPERATING ARRANGEMENTS

Achieved: Completed and documented at ‘Principles’ Level.

Impact: Not yet agreed pending final approval of the new Road Law


Task 3: Procurement and Project Management

MANUALS AND CONSULTANT/CONTRACTOR REGISTRATION

Achieved:

• Construction Supervision, Consultancy Services and Procurement;

• Registration System for Consultants and Contractors

• Training in project and contract management and implementation planning and sequencing.

Impact:

• All manuals and documents translated into Mongolian.

• MRT is adopting these documents through Ministerial Regulation.

(Document contained in DVD Ref 3.3 and 3.6 and 4.1 to 4.3)

CONTRACT MANAGEMENT SYSTEM

Achieved: Contract Management Systems were completed and installed at both MRT and UBDOR.

Impact: Data entry has been completed for 2013 in both systems


Task Scorecard

and they are operational


FIDIC BASED CONSTRUCTION CONTRACT

Achieved: Internationalization of the MRT construction documents and standards has been a focus for the CDTA. FIDIC endorsed the translation of the Standard Construction Contract in Mongolian in April 2014.

Impact: MRT adopted the FIDIC Contracts (State Secretary has signed the endorsement). International standard contract now possible


Task 4: Outsourced Supervision

OUTSOURCED SUPERVISION

Achieved: Two manuals were produced and are in the process of regulatory adoption by the MRT:

• Consulting Services Operation Manual

• Construction Supervision Manual

(Documents contained in DVD Ref 4.1 to 4.3)

FAST-TRACK TRANSPARENT PROCUREMENT

Achieved: Two other concepts were produced specifically to encourage the MRT and UBDOR to use transparent fast track competitive bidding processes:

• Procurement – Fast Track Competitive Bidding Processes for Works

• Procurement - Fast Track Selection and Employment of Consultants

Impact: Neither were adopted by the MRT or UBDOR

(Documents contained in DVD Ref 3.2)

Task 5: Periodic Road Maintenance

PERIODIC ROAD MAINTENANCE PROGRAM

Achieved: A periodic road maintenance program was developed for the 2013 and the 2014 budget periods. The process for developing the program was established and assessment methods were established.

Impact: A periodic road maintenance program was not approved for either year by the Ministry of Economic Development. Road deterioration now very problematic and significant budget implications

Discussions are being held between the MRT and the ADB on establishing a loan facility (in local currency) for a comprehensive road maintenance program.


dTiMS PAVEMENT MANAGEMENT SYSTEM

Achieved: dTiMs has been reactivated in the MRT and a Mongolian language “front end” for data entry has been developed, tested and provided to the MRT in January 2014.


Task Scorecard

Manuals for operation have also been provided

Impact: Data from recent road conditions surveys has been entered by the MRT. System operational. Key data available


STATE ROAD MAINTENANCE COMPANIES SURVEY

Achieved: Review of financial and technical capacity State Road Maintenance Companies. The major outcomes were: too many companies exist leading to a lack of financial stability and an inability to recapitalize and low standard equipment to undertake their work.

Impact: Recommendations made by the CDTA to consolidate the Companies to 6 and focus their business on routine maintenance with periodic maintenance to be contracted to the private sector.

Note: the CDTA specifically advised not to create any more State Road Maintenance Companies, but rather focus on consolidation and allowing performance based contracts to be undertaken by the private sector, given the general low performance of those companies


Task 6: UB Road Maintenance

PAVEMENT MANAGEMENT

Achieved: Four products have been delivered for UBDOR:

• The SMEC Pavement Management System with training in its operation;

• Data entry with SMEC direct assistance in undertaking the data entry.

• Road condition survey or 22 kms of ‘ring road’ in Ulaanbaatar

• Urban Road Maintenance Manual, including standards of service and maintenance specifications

Impact: All are now operational. SMEC continues to support UBDOR in establishing the pavement management system

(Documents contained in DVD Ref 6.1 to 6.3)

Task 7: Road Network Planning

No work commenced and was agreed to be removed from the project ToRs in September 2012. The task was closed off in December 2012

Task 8: HR Strategy and Training

IRF ROAD MANAGEMENT DVD SERIES

Achieved: The International Road Federation Road Management DVD series (2000 minutes) dubbed into Mongolian (transcripts in Mongolian and English). Series launched in MUST in January 2014.

Impact: MUST is offering the course as on-line learning from 2014 to cater for UB and regional delivery.

(DVD list contained in DVD Ref 8.2.1)

WEBINAR BASED TRAINING

Achieved: The first web based training in road engineering was conducted by OGRA from both UB and Ontario (real time using


Task Scorecard

the MUST E-Open learning facility).

Impact: The training facilitated 50 participants. Continuing relationship between OGRA and MRT

(Documents contained in DVD Ref 8.3.1 to 8.3.7)

SPECIALIST TRAINING

Achieved: Specialist training in: Periodic Road Maintenance; Contract Management Training; Training for Trainers; Training in Canada (OGRA); Procurement and Consultant Procurement Training Course; Project Supervision Training Course; Degree course for Road and Bridge Certified Engineers; Quantity Surveyor Training; Road and Bridge Estimators


TRAINING IN FIDIC

Achieved: A comprehensive training program in FIDIC Contracts was completed in November 2013


HR DEVELOPMENT STRATEGY

Achieved: The HR strategy has been completed with a strategy and costed implementation plan. HRD Strategy is based on a capacity development matrix and plan covering 2014-2017. The plan is drawn from an analysis of the core functions of MRT and UBDOR.

Impact: First structured and costed HR strategy for the civil service in Mongolia


Task 9: Road Research and Technology Transfer

MONGOLIA ROAD STANDARDS

Achieved: Specific advice has been given to the RSRC as follows:

• The gaps in the road standards required for Mongolia;

• The way forward to fill those gaps and specifically adopting AASHTO as the “library” for finding and adopting road standards for Mongolia.

Impact: Mongolia is now adopting international standards for the road sector, which matches the adoption of standard FIDIC conditions of contract by the MRT.

Private sector based Research Centre concept from the CDTA was not adopted.


Task 10: Communications Web site and brochures produced.

This Task was closed off in December 2012.

Contract Variation 7 Scorecard

Task Scorecard

Develop a Post Graduate CURRICULUM POSTGRADUATE TRAINING


Program for Road Management

Achievements: Curriculum developed and delivery approach established. A Masters degree qualification enabling numerous entry and exit points was seen as the most appropriate course and qualification for MRT and UBDoR.

Impact: MRT has agreed in principle to send a fact-finding team to RMIT University in 2014. Opens up substantial education options and pathways.


TWINNING (COOPERATIVE) ARRANGEMENTS

Achievements: CDTA facilitated dialogue with the Guangdong Provincial Government.

Impact: dialogue commenced. MRT has proposed a high-level delegation visit to PR China sometime over 2104.

Road Maintenance Service Levels and Benchmarking

PERIODIC AND ROUTINE ROAD MAINTENANCE BENCHMARK SURVEY

Achievements: Benchmarking study completed at mid June 2014 and presented to MRT.

Benchmarks established were: VicRoads, Denmark, Finland and Ontario Canada.

Impact: A core document to make decisions for changing maintenance practices

SERVICE LEVELS AND MEASURES FOR ROAD MAINTENANCE

Achievements: Report and document for maintenance strategy and service levels. The service levels cover both routine and periodic road maintenance

Impact: Increased the knowledge base of MRT. High Impact will be achieved if implemented

PERFORMANCE-BASED ROAD MAINTENANCE PROCUREMENT DOCUMENTS

Achievements: Performance-based Road Maintenance Contract. Agreed in principle by MRT.

Impact: For high impact the contract must be applied to State Road Maintenance Companies

Executive Management Systems

INTERFACE/CONSOLIDATE DATABASES/INFORMATION SYSTEMS WITHIN MRT AND UBDOR

Achievements: For MRT and UBDOR: A fully functional road management data base that has a Mongolian language front end and a set of defined reports for management and Contract Management system and Consultants registration system all interlinked.

Capacity to identify through GIS the road program progress.

Impact: UBDOR interlinked system fully operational. MRT yet to interlink systems

Project Close-off Arrangements

2.13 Delivery of Tasks: The CDTA and both the MRT and UBDOR have signed project close-off documents for the end of November 2013. The purpose of the close-off documents was to:

• Identify the activities that are recognized as completed.


• Identify the ‘products’ that have been delivered by the CDTA under the project – including manuals, policy documents and training;

• Provide the ‘products’ in both hard and soft versions (the soft version was completed with a fully indexed DVD with electronic copies).

2.14 The Project Close-off Memorandum provides a clean and agreed version of the CDTA outputs according to ToRs as amended by the project memoranda issued by the ADB after review missions have been conducted.

2.15 The Project Close-off Memoranda or the MRT and UBDOR are attached in Appendices 2 and 3.

2.16 CDTA Office Equipment: the office equipment that has been purchased by the CDTA has been transferred to the MRT – at the end of December 2013 and in June 2014.


3. An Overview of the Road Sector from 2012 to 2014

3.1 This Part of the Report documents the changes that have occurred in the period of the CDTA from February 2012 to June 2014. It measures the significant changes that have taken place during the CDTA project period and sets out the current major facts for the road sector at June 2014.

3.2 The key challenge of the road sector is to accommodate needs for the soaring number of vehicles in the country particularly in Ulaanbaatar. The total number of vehicles has doubled between 2005 and 2010 from 154,576 registered vehicles to 303,744.The fleet further increased in 2011, 2012 and 2013 with 462,608, 554,557 and 618,744 vehicles respectively contributing to annual growth of 20-50%.

The National Road Network

The Total Road Network

3.3 Following to the general election held in June 2012, the new Government established a Road Action Plan for the period between 2012 and 2016. The key objectives of the current Government are:

• to connect Ulaanbaatar with all aimags (provincial) centers at the end of 2016;

• to construct expressway (990 kilometers) between the North and South border; and

• to construct 212 kilometers of the new road including 7 flyovers and reconstruct 350 kilometers of roads in Ulaanbaatar.

3.4 Table 1 sets out the total road network for Mongolia and then the breakdown into National, Local and Mining and then again into paved and non-paved.

Table 1: Mongolian Road Network (in kilometers)

Type of Roads 2010 2011 2012 2013

Total Road Network

National 12,722 12,722 12,722 12,722

Local 36,528 35,975 35,975 35,938

Mining 553 553 590

Total 49,250 49,250 49,250 49,250

Paved Road

National 2,600 2,948 2,964 4,441

Local 545 563 566 702

Mining 553 553 590

Total 3,145 4,064 4,083 5,732

Source: MRT: Paved road is increased by 1,650 kilometers in 2013 mainly attributable to completion of the major road projects connecting the aimag centers and the national road network contributes 90% of the total increase in paved roads.

The total road network has not increased from 2010.


Table 2: Paved Road facts:

Road Type 2010 % of Network 2013 % of Network

Paved national road 2,600 5.28% 4,441 9.02%

Paved local road 545 1.10% 702 1.42%

Total 3,145 6.39% 5,143 10.44 %

Figure 1 shows the road network plan from 2012 to 2016


Figure 1: Road Network Development Target (2012-2016)

Road Network by 2016 - 8501.62km paved road


Road Network Budget (budget funded, DBM funded, Multi-lateral and Bilateral Funding):

3.5 The total expenditure for road construction and reconstruction has tripled between 2009 and 2012 and further tripled in just over a year with a record high investment of MNT940 billion (US$531 million) in 2013 with the completion of 1,650 kilometers of paved roads from projects that date back to 2010.

3.6 As of May, 2014 the total portfolio of the sector is about MNT 1.5 billion for ongoing road construction projects covering 3,321 kilometers with 74 projects. Out of 74 projects 49 contracts are being executed by national companies and 25 by foreign companies.

3.7 The funding arrangements are set out in the table 3:

Table 3: Funding Arrangements

Budget Source Amount MNT

Billion

Amount US$

million

% of total Budge

t

State Budget 293.10 165.50 31.20%

DBM Budget 362.30 204.60 38.50%

International Finance Budget (ADB, Kuwait etc)

285.10 161.10 30.30%

Total 940.50 531.20 100%

3.8 The following graph shows the expenditure:

Figure 2: Road Sector Expenditure (2009-2013) in Billion MNT

Road Maintenance Budget and Implementation:


3.9 The capital expenditure on road maintenance has been increased from MNT 9.2 billion (US$5 million) in 2009 to MNT 22 billion (US$12.4 million) in 2013.

3.10 Figure 2 above shows the comparison quite starkly – where there is a substantial ‘kick-up’ of capital expenditure in increasing the paved road network there has been no corresponding maintenance investment. The share of road maintenance as a total investment in the sector has sharply declined from 11% to 2.3% in the same period.

3.11 The impact of this is demonstrated in the snapshot of the road to Darkhan which now largely needs rehabilitation/reconstruction because little maintenance has been undertaken on that section of road. A similar position now exists for the UB to Choyr road.

Indicative Deterioration of the Road Network:

3.12 The road network despite the additional kilometers added to it as a paved network is in a deterioration position. The following graph indicates (at December 2012) the age of the paved network:

Age Length Percent of Network 1 to 4 years 634,5 25% 5 to 13 years 1139,32 44% Periodic Road Maintenance Target More than 13 years 755,95 29% Reconstruction target More than 25 years 46,71 2%

The Structure of the Road Sector:

3.13 The key road sector agencies and entities include:

• The Government (Ministry of Roads and Transport and the RSRC). Department of Policy Implementation and Coordination for Road consists of two major divisions of Road Construction with 14 staff and Road Maintenance with 10 staff;

• The Road Supervision and Research Center (RSRC) is established in 2013. The center has 196 positions consisting of 58 permanent and 138 contracted staff

• 7 sector related NGO’s;

• 23 road maintenance companies: state owned (19) and private (4);


• 365 road construction and 23 road design and engineering companies. (Out of 365 road construction companies, 81 contractors are active in the sector and carry out about 90% of the contracted works).

3.14 At the end of 2012, 8,342 people are employed in the road sector consisting of 6,755 skilled and seasonal workers and 1,587 engineers and technicians

UB City Road Network

3.15 The total number of vehicles registered in Ulaanbaatar by 2014 is 385,090 which accounts for 62.2% of the national fleet.

3.16 The key challenge for the city is to address needs for increasing number of vehicles by expanding the road network and maintaining the existing roads.

Network Expansion and Budget:

3.17 The following table shows the investment in the road network of UB since 2010. The capital investment has increased 280% in that period and the length of roads constructed has increased 10 fold in that period. The budget sources are set out in Table 4.

Table 4: Current Investment and Road Construction in Ulaanbaatar

Profile 2010 2011 2012 2013

Constructed/Reconstructed roads in kms

14 41.7 114 145.5

Investment in billion MNT 79.1 70.1 224.4 221.2

Investment in USD$ million 44.70 39.60 126.80 125.00

Source: UBDOR, 2013 Annual Report

Table 5: Budget Sources for Road Investment

Budget Source Amount MNT

Billion

Amount US$

million

% of Total Budge

t

City Budget 112.5 63.60 51%

Development Bank of Mongolia 79.1 44.70 36%

National budget 16.1 9.10 7%

City Road Fund 13.5 7.60 6%

Total 221.2 125.00 100%

Road Maintenance Budget and road Maintenance Implementation:

3.18 At the time of this Report there were no definitive figures for road maintenance budgets within the UBDOR. The recent initiation of a UB City Facilities and Utilities


management company has not clarified the budget for road maintenance nor the implementation plans for road maintenance.


4. Implementation of the CDTA – Analysis and Assessment of Impacts

Overall Assessment

4.1 Overall, the progress in the road sector has seen a range of successes. The development and implementation of road system management tools for both the MRT and UBDOR has been very successful. The use of innovative approaches to delivering technical capacity development and training has been successful and very successful with the introduction of cost effective real time web-based training from OGRA in Canada to both the MRT and UBDOR.

4.2 The CDTA has been able to produce a number of “products” for both MRT and UBDOR to use in the management of their respective road networks.

4.3 The work program with UBDOR has been successfully completed. UBDOR now has tools to manage its road network with a Contract Management System and a Pavement Management System. Both are operational with data entered based on 2013 conditions. Previous years will be entered progressively. A Road Condition Survey was also completed for the major road around UB City – 22 kms and UB DoR now has the approach and methodology to undertake a full condition survey in 2014.

4.4 Part of the MRT program was focused on the delivery of similar management tools – a Contract Management System and an upgrade of the dTiMs pavement management system with a Mongolian language interface. The IRF DVD training materials were also completed and dubbed into the Mongolian language. Successful training was completed for FIDIC Contracts and the HR development strategy, fully detailed and costed, has been delivered to MRT.

4.5 The areas that have not progressed as successfully have been problem areas for the entire project. Those areas are:

• Periodic Road Maintenance: For two years, proposals for periodic road maintenance have been rejected at the Ministry of Economic Development. The reasons for the rejection of the budget bid seem to be based in the view that periodic road maintenance is an option and therefore an increase in budget that in the current fiscal climate is not affordable. However, in the same period routine maintenance through the State Owned Road Maintenance Companies has almost doubled from MNT 11 Billion (US$6.2 million) in 2012 to MNT22 Billion (US$12.4 million) in 2014.

Recent News: Discussions have been held between the ADB and the MRT on creating a loan facility in MNT to dedicate to road maintenance.

This is a significant move forward.

This discussion seems to have come about from the realization that the expansion of the network through multi and bi-lateral loans and the Aimag to UB roads program will produce a significantly increased requirement for road maintenance.

Recent road condition inspections (not surveys) by the CDTA Team indicates that the major corridors of UB to Darkhan and UB to Choyr are becoming dysfunctional and have moved quickly from requiring periodic maintenance to requiring rehabilitation at increasing levels and indeed moving to reconstruction.


• Road Law: Success was achieved in establishing the need for a new Road Law and not simply amending the current road law. The new Draft Road Law contained many new policy initiatives (in line with general international practice) including the road maintenance board and fund and sections related to planning and implementing the road network.

However the draft did not proceed and is pending for the 2014 Spring Session of Parliament. (Note: An alternative draft prepared by the Strategic Policy Division has omitted or changed key aspects of the Road Maintenance Board and the Road Maintenance Fund Manager - aspects of the draft for the Fund Manager increase the corruption risk significantly).

• The Road Maintenance Board has been removed from the Draft Road Law and is proposed for implementation through Regulation. The former Road Board was established by Regulation and it became ignored and its functions redundant. Including the Board within the Road Law itself is considered important for successful implementation and it is also normal international practice to undertake the establishment of a Board in this fashion.

• The Restructuring of the DOR was not achieved. While the CDTA work was completed and accepted by the DOR at the time, it was not agreed at the higher level of government. The new Government resulting from the elections in June 2012 introduced a Ministry-based organization structure which made the recommendations of the CDTA redundant.

4.6 The following tables set out an assessment of the CDTA by task and sub-task. The tables show the activities undertaken by the CDTA and the relevant outputs. Importantly, the fourth column endeavors to assess the impact of the activities and the outputs on the capacity of both MRT and the UBDOR and in that sense whether the objectives of the CDTA have been met.

Task 1: Institutional Strengthening: MRT, UBDOR and Road Law

Organizational Arrangements – MRT and UBDOR

4.7 The MRT: The structure of this task changed with the change in government that occurred in mid-2012. The main change in the institutional arrangements was the introduction of a Ministry-based administration in place of the Department of Roads.

4.8 In short, this move does not follow the growing practice of focused and at least partly separated road administrations2. The move to a Ministry-based organization also removed the opportunity to regionalize three important functions in roads administration:

• Control of overloaded vehicles;

• Management and supervision of small works;

• Road maintenance supervision and performance.

2 The CDTA Discussion Paper for the Institutional arrangements for the former DOR identified

benchmark countries and organizational arrangements for roads administration and the characteristics of those benchmarks. Partly separated road administrations were the norm in those benchmark countries.


4.9 The opportunity to create a more modern administrative structure that was focused on road operations with policy and administrative support has been missed for the medium term, but the opportunity still remains to develop that approach in the context of a considered review of the success of the current MRT.

4.10 However, the CDTA has focused on what it has been able to achieve. For the MRT, it has focused on developing an executive management system that will provide the MRT with the capacity to develop network management plans including road maintenance, manage its construction contracts and contractors.

4.11 The UBDOR: The UBDOR and the CDTA established a good working relationship with for the restructuring work program. A similar approach to the MRT was undertaken and the focus was on establishing relatively modern approach to administration based on benchmark organizations.

4.12 There was some reluctance to go along that path and so a number of recommendations were not adopted by UBDOR. However, the opportunity and the field remains fertile for the gradual introduction of modern organizational structures. Indeed, as is indicated later in this Report, the UBDOR has been proactive in adopting and using the executive management systems developed with it by the CDTA and it has been innovative and transparent in the road works program it established for 2014.

4.13 That attitude is fertile ground for considering the introduction of Corporate Management Group/Committee focused on innovation within its administration. Some mentoring could be provided for this Group/Committee in its initial stages.

4.14 The progressive attitude of the UBDOR is also fertile ground for additional training and knowledge assistance (to be defined by UBDOR) in road management.

The Road Law

4.15 There was mixed success in this task. The agreement to develop a new Road Law (and not amend the current law) was a significant success. It resulted from the early Discussion Paper by the CDTA that recommended that a Road Law was needed to underpin the roads administration for the next ten years. New concepts were needed and legislative support was also needed for major policy initiatives such as the Road Maintenance Board and the Road Maintenance Fund. A benchmark comparison was conducted with South Africa, Australia, New Zealand and Indonesia. Sample laws from Bhutan and the National Highways Law of India were also provided.

4.16 From that Discussion Paper, a Working Group was established between the MRT and the CDTA and joined by UBDOR and the MRA. A final draft was agreed and then further discussions were required between the MRT, UBDOR and the MRA on policy initiatives. They were all agreed at a negotiation meeting facilitated by the CDTA in March 2013. The final result was an agreed document between the key parties and a set of policies that represent good road law against the assessment criteria set out in the original Discussion Paper:

• Modern Policy facilitation – the policy expression for the road network and its management is included in the law.

• Modern Institutional structures facilitation – net yet in place with the Ministry-based roads administration, but the Draft Law provides for the option of introducing a road operations focused organization


• Key Policy Issues established and clearly stated - eg road planning, road construction and management standards, road maintenance arrangements, road classification system.

• Clear Allocation of Roles and Responsibilities between road sector stakeholders at the national level, provincial level and soum level.

4.17 However, the draft Road Law has not progressed from that point and there is no certainty that it will progress in the Spring Session of 2014.

4.18 The Strategic Policy Division of the MRT also developed its version of a Road law – without the benefit of discussion and negotiation or benchmark materials. That document has clouded the issue. But also, and importantly, it has set out policy positions that contradict a number of the policy positions established in the Draft law developed with the Road Regulation and Policy Implementation Division. The assessment of that draft is contained in the Table 1.


Table 1: Institutional strengthening for MRT and UBDOR and the Road Law

Sub-task Activities Outputs Impact Assessment

The Restructuring of the Department of Roads

Several discussions with the then Director of DOR

Preparation of Discussion Paper with principles for the revised organization

Preparation of a decision paper for the revised organization

Discussions with the MoED on structuring an efficient Roads Organization

This item was formally closed off in December 2012.

A draft organizational structure with detailed administrative arrangements was produced.

Recommendations for regionalized functions and a structure for the regional administration was developed and recommended to the DoR.

DoR agreed to the revised structure and the regional arrangements

No impact.

The new organizational structure was not approved by the new Government in 2012

The new Government developed and implemented a new organizational arrangement for the civil service. The recommendations from the CDTA did not fit that arrangement.

The restructuring of UBDOR

Discussions with the newly appointed Chairman of the UBDOR

Three options presented for discussion on a revised organization option

Key roles and responsibilities identified

Key level position descriptions prepared in draft form

This item was closed off in June 2013.

There was significant input from the CDTA on this issue.

A draft organizational structure with detailed administrative arrangements was produced.

Recommendations for district engineering offices were developed and recommended to the UBDoR.

An Innovation Corporate Management Group was also suggested.

The structure suggested by the CDTA was partly agreed by UBDOR

Medium Impact.

District Offices were not established and the Innovation Group was not adopted.

The issue faced by UBDOR was that it did not have complete control over the way it was to be structured

Assistance in implementing the new Road Law

Discussion Paper by CDTA on the current Road Law and the potential for a new Road Law

Facilitation for the preparation of the new Road Law

Facilitation of negotiations

This item was closed-off in November 2013.

The MRT agreed with the CDTA recommendation to prepare a new and modern Road Law.

The draft Road Law has been prepared through a consultative process facilitated by the CDTA.

Medium Impact

The Draft Road Law has not been presented to Parliament, but is scheduled for the 2014 Spring Session



between key stakeholders (MRT, UBDOR and MRA) on key policy issues agreements

The CDTA also facilitated final agreements between the MRT, the UBDOR and the MRA on a number of policy matters including agreements on the structure of the Road Maintenance Board and the Road Maintenance Fund Manager

Note additional discussion below in the text box.

‘New’ Draft Road Law – MRT Strategic Policy Division

A ‘new’ draft of the Road Law has been prepared by the Strategic Policy Division of the MRT – that is – an alternative to the draft Road Law negotiated between the Road Policy Implementation Regulation Department and the CDTA in April 2013. This Draft is not agreed by the Road Policy and Regulation Division and it has not been discussed and agreed with key stakeholders. Major problems with this draft include:

• The Road Maintenance Board provisions have largely been eliminated. The law establishes a Board but that is all. This is not good practice and is a throw-back to the former Road Board that languished as a result of a lack of statutory backing. Establishing a Board and its operation and constitution in Parliamentary Law is common international practice and should be recognized in Mongolia as good practice. This will ensure the role and the existence of the Board

• The Road Maintenance Fund Manager has been eliminated. There are provisions for the Road Maintenance Funds to be lodged into bank accounts, but this is seriously flawed practice without a proper contractual role being given to the fund manager to implement the designated road maintenance program established by the Road Maintenance Board. The Fund Manager role was pivotal in ensuring the correct implementation of the Road Maintenance Board Program with the funds allocated to it.

• Licensing of Road Construction and Road Supervision Companies. There are very detailed provisions about licensing of these companies. The provisions in the draft law reinstate an out of date process for managing the road industry and indeed reinforce a significant barrier to entry to the sector. There is no policy thought in this approach.


Contract Variation 7: Executive Management System for MRT and UBDOR

4.19 The Executive Management systems have been completed for both MRT and UBDOR. The following table sets out the achievements and impacts.

4.20 It should be noted that the CDTA has established the Executive Management systems but has provided assistance for both MRT and UBDOR to undertake the data entry work and system management. This approach has been specifically taken so that both organizations understand how the systems work and the data entry processes for them to be constantly updated.

4.21 The full suite of activities were completed by mid-April 2014. A DVD presentation (attached to this report) has been produced to explain the systems and how the systems work and interact.


Table 1A: Contract Variation 7 Implementation - Institutional


Upgrade the road information system

A database on the state road network (dTIMS and PMS)

A fully functional road management data base that has a Mongolian language front end and a set of defined reports for management.

Data entered from 2012 and 2013 surveys

Capacity to link with the Contractor and Consultants Registration system and the Project Progress program within the CMS to identify through GIS the road program progress, including the construction and supervision consultants per project.

Significant Impact:

System revitalized and now a capacity to manage the system internally within the RSRC.


Contractor and Consultants Registration System

All now fully functional and data entered by RSRC under supervision. Staff trained in data entry and system management.

Significantly increased capacity for integrated management

Significant Impact:

Registration system ready to replace the current licensing system.


Progress of project and program implementation (CMS)



Significant Impact:

An executive management tool that has standard reporting functions


Information from contractors and consulting firms (standard reporting procedures)



Medium Impact:

Program knowledge about the road sector companies

UBDOR Road Information system (GIS Based)

Information about road conditions; and road user assessments (City Traffic Control System etc.)

SMEC Pavement management system linked with the Contractor and Consultants Registration system and the Project Progress program within the CMS to identify through GIS the road program progress, including the construction and supervision consultants per project.

Significant Impact:

Information easily available to management and now available to the public via the UBDOR website.


Task 2: Road Fund and Road Fund Board Establishment

4.22 The establishment of a Road Maintenance Board and a Road Maintenance Fund remains connected with the development and approval of the new Road Law. There was detailed and robust discussion with the MRT and the UBDOR on this issue throughout 2012 until mid-2013.

4.23 The concept put forward by the CDTA for the Road Maintenance Board and a Road Maintenance Fund with a Fund Manager (separate from the Board itself) was agreed by the parties in negotiation meeting in March 2013. The results of that negotiation were incorporated into the draft Road Law.

4.24 The process of reaching the policy position was iterative and participative. It demonstrated an active interest in the issue and the final policy position was readily agreed by the key stakeholders.

4.25 The Board and the Fund are positioned to be established. The Fund Manager (a licensed bank) would need to be appointed under competitive tender.

4.26 If the proposal noted earlier in the Report to establish a loan in MNT from the ADB for road maintenance, the Fund and the Fund Manager should be in place as the logical governance arrangement to deploy the funds in accordance with a clearly articulated road maintenance policy framework, strategy and standards. Much of this framework has been established by the CDTA.


Table 2: Road Fund and Road Fund Board


Establish a Road Maintenance Fund

Discussion Paper on Road Funds and road Maintenance Funds including an international benchmark comparison

Development of a potential fund management arrangements

This item was closed off in November 2013

Documentation for the establishment of the Road Maintenance Fund has been prepared. The documentation includes:

• A Discussion Paper with international benchmarks and a recommended approach.

• A Policy Paper with specific recommendations for establishing the Road Maintenance Fund and its management

• An initial assessment of the funds required for road maintenance (using the World Bank Model) has been established

The concept of a Road Maintenance Fund (with a Bank as the Fund Manager) has been agreed by the MRT and the UBDoR. It is incorporated into the Draft New Road Law

Medium Impact.

There is agreement to the policy position put forward by the CDTA

The implementation of the Road Maintenance Fund has not occurred because of the delay in the presentation of the new Road Law to the Parliament.

Establish a Road Maintenance Board

Discussion Paper on Road Boards and Road Maintenance Boards including an international benchmark discussion


Documentation for the establishment of the Road Maintenance Board has been prepared. The documentation includes:

• A Discussion Paper with international benchmarks and a recommended approach.

• A Policy Paper with specific recommendations for establishing the Road Maintenance Board and its decision-making role

• Draft operational guidelines for the Board

Medium Impact.

There is agreement to the policy position put forward by the CDTA

The implementation of the Road Maintenance Board has not occurred because of the delay in the presentation of the new Road Law to the Parliament.


Task 3: Procurement and Project Management

4.27 The focus of this task was to develop tools for the MRT to adopt and manage its construction and maintenance functions with internationally based contracts and an IT-based executive management system that provided information to management about:

• Contracts in place, the contractor, the percentage completed, the duration of the contract the cost of the contract and other key data that was not available to management in a coordinated way.

• Contractors and consulting engineering companies undertaking work for the MRT. (Eventually this system will replace the licensing approach adopted by the MRT under the current Road Law

4.28 The adoption of FIDIC conditions of contract as a standard for construction contracts has been part of the process of internationalizing the contract forms of the MRT for its construction arrangements.

4.29 The final product and the FIDIC conditions translated into Mongolian have been agreed by the International Federation of Consulting Engineers (FIDIC) and a contract between the MRT and FIDIC to use the document was been signed in May 2014 (Appendix 4).


Table 3: Procurement and Project Management


A Contract Management System (CMS)

Design and establish the CMS

(SQL based);

Consult UBDOR and MRT on the final CMS;

Test the data base to ensure its

proper functioning;

Provide User manuals for both clients;

Undertake training in the data

entry process and use of the CMS reporting functions;

Enter data into the CMS so the system is fully loaded with data from 2013

Contract Management System – including contracts for 2013 loaded onto the system.

Manual for Operating the Contract Management System - Mongolian (Draft Manual – Mongolian and English)

Ministerial Decree prepared by MRT for adoption of the Contract Management System

Significant Impact:

Core aspect of innovation in management. Introduces a complete new system and replaces an excel–based ‘ad hoc’ system

Adopted by MRT and UBDOR

A Consultants Registration System (CRS)

Design and establish the CRS

(SQL based);

Consult MRT on the final CRS;


proper functioning;

Provide User manuals for both

clients;

Undertake training in the data

entry process.

Consultants Registration System for on-line registration

Manual for Operating the Consultants Registration System (Draft Manual – Mongolian and English)

Ministerial Decree prepared by MRT for adoption of the Consultant Registration system

Significant Impact:

Core aspect of innovation in management. Replaces the manual licensing system

Adopted by MRT



Contractors Registration System (CRS)

Design and establish the CRS (SQL based);

Consult MRT on the final CRS;


proper functioning;

Provide User manuals for both

clients;

Undertake training in the data entry process.

Contractors Registration System for on-line registration

Manual for Operating the Contractors Registration System (Draft Manual – Mongolian and English)

Ministerial Decree prepared by MRT adoption of the Contractor Registration system

Significant Impact:

Core aspect of innovation in management. Replaces the manual licensing system

Adopted by MRT

Adoption of FIDIC Conditions of Contract

Assistance to MRT in the translation of the English version of the FIDIC to Mongolian.

Provide advice on the structure of the FIDIC conditions for Mongolia and the potential for minor amendments

FIDIC Conditions of Contract – embedding into MRT Works Contracts

Draft Contract – Mongolian and English

State Secretary has signed the adoption of the FIDIC contract and the agreement with FIDIC

Ministerial Decree prepared by MRT for adoption of the Mongolian version of the FIDIC Contract

Significant Impact: adoption of international standard contracts now formalized and in Mongolian language.

Internationalization of Contracts and standards (by adopting AAHSTO) now completed

Road Construction/Maintenance Cost survey

No activities Not carried out. A review of the State Road Maintenance Companies financial structure and capacity was implemented through the Mongolian Roads Association under Task 5

No Impact.


Task 4: Outsourced Supervision

4.30 The task on outsourced supervision was essentially to establish the means to achieve the arrangements for the MRT to step back from direct supervision and implement private sector based road construction supervision.

4.31 Two manuals have been produced by the CDTA in conjunction with the MRT. One for construction supervision and one for consulting engineering services

4.32 As an addition to assist the MRT in managing construction supervision costs, the CDTA undertook a small benchmarking exercise on the following issues:

• the construction supervision fee as a percentage of construction costs

• what generally makes up those costs.

4.33 The benchmark countries were: Australia (VicRoads) New Zealand, South Africa and Indonesia


Table 4: Outsourced Supervision


Establish a manual for consulting services provision

Commenced joint work with DOR in mid-2012.

CDTA developed the manual through late 2012 and early 2013.

Orientation session with MRT did not proceed


Consulting Services Operation Manual (Draft Manual – Mongolian and English)

Ministerial Decree prepared by MRT for adoption of the Manuals as operational procedure for Consulting Services

Significant Impact:

Consulting services guidance was absent for contracts underway in 2012 and 2013.

Roles and responsibilities of consulting services and the MRT and the constructor will be clarified and incorporated into the appointment contracts

Establishing Manual for Construction Supervision

Commenced joint work with DOR in mid-2012.

CDTA developed the manual through late 2012 and early 2013.

Orientation session with MRT did not proceed


Construction Supervision Manual (Draft Manual – Mongolian and English)

Ministerial Decree prepared by MRT for adoption of the Manuals as operational procedure for Construction Supervision

Significant Impact:

Construction Supervision guidance was absent for contracts underway in 2012 and 2013.

Roles and responsibilities of construction supervisors and the MRT and the constructor will be clarified and incorporated into the appointment contracts

Construction Supervision Costs

Discussions with MRT on their budget/costing issues and questions from MED

Agreed to undertake a short benchmark study on costs

Short Report to MRT on construction supervision costs and the make-up of a construction supervision team

Medium Impact

Direct impact on budget certainty for budget funded projects and DBM funded projects


Task 5: Periodic Road Maintenance

4.34 Periodic Road Maintenance Task. The periodic Road Maintenance task had mixed results. There has been no success in achieving a periodic road maintenance program. Two programs were devised and presented. The program devised and presented in September 2012 for the 2013 financial year (which included fiscal benefits and a positive NPV for the entire program (NPV includes EIRR)) was rejected by the Ministry for Economic Development. The program developed in August and September 2013 for 2014 and settled with the Road Policy and Supervision Division of the MRT was also not approved by the Ministry of Economic Development.

4.35 While the reasons for the non-approval are said to be budgetary- no budget funds – the budget for Routine Maintenance delivered through the State Road Maintenance Companies increased from MNT19 billion (US$10.5 million) to MNT 22 billion (US$12.4 million) (from a baseline of MNT11 (US$6.2 million) Billion in 2012). This is not a compromise position but rather increasing the budget for a system and approach that has not delivered adequate road maintenance for some considerable time.

4.36 On the positive side there are a number of achievements:


• Recent meetings between the State Secretary and the ADB Mission on 25 to 27 November indicate a commitment to road maintenance (that needs to be converted into budgetary commitment for 2015);

• Corridor management has been adopted by MRT as the way to manage the major road network.

• A system documented approach for establishing a periodic road maintenance program;

• A heightened awareness of road maintenance and periodic road maintenance;

• A revised dTiMs Pavement Management system with a Mongolian front end for data entry thus making it a user friendly system;

• An understanding of the periodic road maintenance techniques that are available for implementation;

• A new normative has been approved that provides for Periodic Road Maintenance of the national road network – developed by the MRT with technical assistance from the CDTA.

Structuring Road Maintenance Delivery

4.37 The CDTA undertook a review of State Road Maintenance Companies financial and capacity situation through a consulting contract with the Mongolian Road Association. The review revealed a number of significant issues, but the critical key facts and findings were:

There is a strong commitment to maintenance improvement and asset preservation and so there is basic agreement with the strategy identified by the CDTA to deliver routine and periodic road maintenance.

Key Fact 19 State Road Maintenance Companies are in existence. 4 private sector companies

Other Businesses are not profitable. Many make a loss (graph 2)

Unable to recapitalize: Low cash flow and Low profit. (graph 1)

Key Fact

Key Fact

Their market size is restricted. Can only grow through other business Key Fact

Average allocation of paved road is 130 kms and 450 of unpaved road

Key Fact


Graph 1: Profitability and Capacity to Recapitalize

Graph 2: Low profitability of “Other Businesses”

4.38 The MRT had proposed 6 new companies and recently has identified Choyr as a base for another State Road Maintenance Company to specifically manage parts of the Choyr road.

4.39 Establishing additional companies into this environment is difficult to justify. Establishing a specific State Road Maintenance Company for Choyr to manage the Choyr to UB road is problematic. The capacity – technical and mechanical – is not present and while the Choyr road does need special attention to preserve the asset, establishing yet another State Road Maintenance Company is not the way to treat the problem. Applying international standard work practices is the key to asset preservation success.


4.40 The potential solution developed by the CDTA and advised to the MRT and the ADB comprises the following attributes:

4.41 Key to the institutional structure of road maintenance will be to implement something similar to the CDTA recommendations immediately above. Continuing to develop State Road Maintenance Companies using the current approach is perpetuating a practice that does not achieve the needed results for preserving the road network.

4.42 This concept was discussed at a briefing with the State Secretary and senior officers of the MRT including Mr Batsuri, in December 2013. There has been no discussions with the State Road Maintenance Companies. The State Secretary acknowledged there was a significant issue to address for road maintenance arrangements needed to be addressed and that State Road Maintenance Companies required a significant restructuring along the lines of the diagram above, with the private sector playing a greater role in road maintenance.

Special Report on Road Maintenance – May 2014

4.43 As part of the final review of the road maintenance arrangements that the CDTA has been advocating during the project, a series of road inspections were undertaken to understand the general condition of the existing major corridors and what level of deterioration had occurred from 2012 to 2014.

4.44 In summary, the inspections revealed serious problems had developed on both the UB to Darkhan Corridor and the Choyr to UB corridor. For the Darkhan to Erdenet and the Darkhan to Sukhbaatar corridors, they are in good to very good condition.

4.45 The following tables indicate the road condition encountered during the inspections (a full technical report is provided in Appendix 5).

Darkhan/Sukhbaatar/Erdenet

Road Section Report Issues Actions

UB to Darkhan – Summary: The UB to Darkhan road is largely dysfunctional. 65% of it needs major and

Strategy required for

As a consequence, all periodic road maintenance should be contracted out to the private sector on the basis of competitive bids.

Combine 19 into 6 companies (av. 740 km sealed allocation)

Specialization and growth in expertise. Higher standards of maintenance

Develop skills and equipment in routine road maintenance

Better and more transparent financial management

Focus on crack sealing, small potholes and shoulder maintenance

Performance based contracts and bidding for work

Position the Companies for Privatization (but not privatize)

Higher cash flows. Lower overheads, commercially viable

Less State Road Maintenance Companies

Action Principle Impact



220 kms expensive repairs. Very poor standards of road maintenance.

• 65% of the road section requires reconstruction/rehabilitation and high risk periodic road maintenance (near rehabilitation

• 35% requires normal periodic road maintenance

• Rapid deterioration of the road section in 18 months. Much was savable with periodic road maintenance 18 months ago.

• Costs to restore the 65% of the road will be double that of normal periodic road maintenance.

• No evidence of routine maintenance by the State Road Maintenance Companies in 2014.

• The road is dangerous with large potholes on the blind side of hills

restoration of the road

Emergency reconstruction works must proceed in 2014

All maintenance to be contracted out to the private sector on performance contracts

Darkhan to Sukhbaatar – 130 kms

Summary: the Darkhan to Sukhbaatar road is in very good condition. Requires normal periodic road maintenance program for 2015 and 2016 to maintain it and prevent rapid deterioration to reconstruction.

• 90% of the road section is very good condition.

• No section requires rehabilitation or reconstruction at this stage

• Evidence of constant routine maintenance

• Due for periodic maintenance in the next 12 to 18 months

• Chip seal used as treatments for large sections of this road (proves it is a viable treatment for periodic road maintenance in Mongolia)

Full road condition survey.

Plan for periodic road maintenance in 2015 and 2016 and allocate budget

Darkhan to Erdenet – 180 kms

Summary: the Darkhan to Erdenet Road is in good condition. Evidence of a good routine maintenance program. Periodic road maintenance will be required 2014/2015. Minor length for reconstruction in 2015.

• 75% of the road section is in good condition

• About 5% requires rehabilitation/reconstruction

• About 10% requires periodic maintenance now – 2014/2015

• Evidence of good routine maintenance practice

Allocate periodic road maintenance budget for 2014/2015

Undertake reconstruction of 5% 2015


Choyr/Baganuur


UB to Choyr – 225 kms

Summary: Considered in 2012 to be the ‘best’ road in Mongolia. In 2012, around 40 kms were recommended for periodic maintenance with some rehabilitation. That has now moved to 66 kms as a minimum.

Rapid deterioration has occurred in up to 55 kms and the treatment may move from maintenance to rehabilitation/reconstruction.

Approximately 40% needs periodic maintenance or rehabilitation/reconstruction.

Approx. 60% can be maintained through routine maintenance now, but the known rapid deterioration will see more periodic maintenance needed in the next 12 to 18 months

Heavy vehicles may not be controlled/managed to prevent road damage. Around 10 overloaded trucks identified in the road trip

Route and Photographs: Attachment A

Strategy required for restoration of the road


UB to Baganuur – 130 kms

Summary:

This section had been identified in 2012 as one of the recommended periodic maintenance sites.

The periodic maintenance program was not funded and it appeared that no preparatory patching or crack sealing had been undertaken.

Also there appeared to be no routine maintenance undertaken either with the result that the condition of this section of road has deteriorated considerably and its suitability for the asphalt overlay will now need careful consideration

Route and Photographs: Attachment B




Table 5: Periodic Road Maintenance


The Periodic Road Maintenance Program

For the 2013 Periodic Road Maintenance Program:

• Development of the program jointly with MRT.

• Training in program approach and methodology

• Joint preparation of approval documentation

• Post Program Review and training

For the 2014 Periodic Road Maintenance Program

• Development of assessment tools

• Separate development of the program and negotiation of the final recommended program

• Joint preparation of the approval documentation


A periodic Road Maintenance Program for 2013 with documentation for:

• The process and timing of developing a periodic road maintenance program;

• A physical inspection process for determining the final program.

• A calculation method for determining the cost of a period road maintenance program

• A calculation method for developing three measures of expected benefit: NPV, Benefit/Cost ratio and EIRR

For the 2014 program, a simplified assessment and cost calculation method. A specific strategy for saving the Choyr to UB national highway which was incurring significant damage and deterioration over the 2012/2013 period.

A Periodic Road Maintenance Program was not approved by the GoM

Two levels of Impact;

High Impact: for the transfer of knowledge and program development processes. MRT has tools, methodology and processes to conduct periodic program development (see also dTiMs redevelopment)

Low Impact for the actual delivery of a periodic Road Maintenance Program. A periodic road maintenance program was not approved by the GoM

Note the potential for an ADB MNT loan facility for road maintenance for 2015 will increase the impact of the work on periodic road maintenance significantly

Private Sector participation to deliver periodic road maintenance

Discussions and agreement with both the DoR and the MRT that 50% of the periodic road maintenance program would be tendered out to the private sector


Agreement that the private sector would be able to participate in delivering 50%of the agreed periodic road maintenance program.

The periodic road maintenance program was not agreed by

Low Impact:

while agreement was reached, the proposal was not able to be tested because no periodic road maintenance program was agreed by government



government

dTiMs Road Management System

Review of dTims system and data entered into the system.

A review of the skills for managing DTiMs

Alternative systems were examined including HDM4 and potential other systems to replace dTiMs

Discussion held with MRT on developing a ‘front end’ on the system to deliver:

• Mongolian language inputs and report

• Standard management reporting functions

This item was closed off in March 2014

There were some significant outputs from this task. The major output was a re-commitment by the MRT to establish a road system data base with current and accurate data.

The Mongolian language front end was discussed and tested with the MRT. The project proceeded from that point and was tested several times with the client. Training in the use of the data base was undertaken and test report run.

The final product was delivered in February 2014.

An important capacity building issue was to provide the MRT with the skills to undertake the data entry for the revised system, as opposed to delivering the data base fully loaded.

All data entry from 2012 and 2013 was completed in May 2014

High Impact:

After a considerable downtime in the use of dTiMs as a road system management tool, it is now loaded with 2012 and 2013 data.

A key executive management tool in now in place and capable of being used effectively

State Road Maintenance Companies

Review of the State Road Maintenance Companies.

The focus was on financial structure, capacity to undertake the assigned tasks, recapitalization capacity, profitability and cash flow.


The Report was undertaken by the Mongolian Roads Association. The CDTA considered it to be the most appropriate and had strong ability to access information.

Key outcomes were:

• Allocation of road lengths(average 130kms) was not sufficient to operate a viable company

• The companies are cash strapped and unable to recapitalize (They are not capable of undertaking periodic road maintenance work)

• There should be a focus on routine maintenance and equipment to deliver that.

Medium Impact:

The impact is considered medium at the moment because no activity to reform the State Road Maintenance Companies has commenced.

Solutions for restructuring and creating specialized and no more than 6 companies for routine maintenance will have a high service delivery and quality impact.


Contract Variation 7- New Tasks in Road Maintenance


Benchmark survey on the costs of periodic and routine road maintenance per work practice and kilometer in Mongolia

Benchmarking exercise undertaken inside VicRoads Australia.

Presentation to study tour by Director of Roads of MRT and State Secretary

Benchmarking study completed at mid June 2014 and presented to MRT.


Medium Impact:

MRT understands the need to establish a cost base for road maintenance and apply that to the contracts for routine and periodic road maintenance (if finally approved

Benchmark international practices applicable for Mongolia

Benchmarking exercise undertaken inside VicRoads Australia.

Presentation to study tour by Director of Roads of MRT and State Secretary

Benchmarking study completed at mid June 2014 and presented to MRT.


The base document for the analysis was the PIARC Report on Road maintenance Methods and Strategies

3

Medium Impact:

Reference points for MRT on maintenance practices and budgeting arrangements. A core document to make decisions for changing maintenance practices

Propose Service Levels and measures for road maintenance

Strategy and Service level interventions established.

Key meeting with Division Head of Road Maintenance

Report and document for maintenance strategy and service levels. The service levels cover both routine and periodic road maintenance

MRT to implement the strategy and service levels

Medium Impact:

Increased the knowledge base of MRT and its capacity to introduce better road maintenance practices.

High Impact will be achieved if implemented

Draft performance based road maintenance

Draft performance-based Contract prepared. Both

Performance-based Road Maintenance Contract. Medium Impact:

3 World Road Association (PIARC) Maintenance Methods and Strategies 2013 (http://www.piarc.org/en/order-library/19446-en-

Maintenance%20methods%20and%20strategies.htm)



procurement documents and contracts

international example and VicRoads contract base used at the source

Agreed in principle by MRT For high impact the contract must be applied to State Road Maintenance Companies


Task 6: UB Road Maintenance

4.46 Through 2013 and 2014, significant work was undertaken with UBDOR on road maintenance activities.

SMEC Pavement Management System

4.47 The SMEC pavement management system was installed and data entry is now underway. The CDTA has been monitoring the data entry and question and answer sessions have been held with SMEC as their support role will continue for 12 months form installation.

4.48 A number of video sessions have been held between UBDOR and SMEC to deal with the questions and issues that arise in UBDOR in establishing and working the system. These support sessions are proposed to continue and be held least every month until the12 month support arrangement expires. The CDTA proposes to continue interpretation services until, September 2014 to assist these technical sessions.

UBDOR Road Maintenance Strategy and Manual

4.49 A Road Maintenance Manual containing a strategy and standards was forwarded to UBDOR in August 2013. There were several attempts by the CDTA to arrange a review session but that has not yet occurred.

4.50 A final session for the review Manual to achieve close-off was held in May 2014.

Road Condition Survey

4.51 A road condition survey was conducted in October 2013 paid for by the CDTA – it covered 22 kms of road. The Road condition survey was discussed in detail with UBDOR and conducted to demonstrate two significant points:

• The methodology for the conduct of the survey and the subsequent data to be entered into the SMEC Pavement Management System;

• That a road condition survey is not just to be undertaken on a road that requires significant maintenance, but as a general tool to monitor the road network itself and gather data for the pavement management system that has been adopted by UBDOR.

4.52 The Survey road is shown in the map below. This route was selected as it is partly under construction, partly repaired and is an important component of the UB road network.

4.53 The Road Condition Survey Report was delivered to UBDOR 22 October 2013 and it has been entered into the Pavement Management System.



Table 6: UB Road Maintenance


Pavement Management System

Detailed discussions with UBDOR on the pavement management system needed.

Coordinated procurement of the system in 2013

Joint decision on system purchase – SMEC system

Continued technical assistance since June 2013

The SMEC pavement management system delivered and installed by June 2013.

In Mongolia training for 8 days by SMEC specialist, including system set up

Continued technical support by SMEC on a monthly basis from June 2013 until September 2014

Data input under a coaching arrangement facilitated by CDTA

Not all data input completed. Will be a 3 year program to complete.

High Impact:

A move from an Excel-based ad hoc road management system. Greater capacity to determine road management decisions.

Capacity to develop a full inventory of the road system and its needs

Road Maintenance Strategy and Manual

Discussions with UBDOR on needs and content of the Manual.

CDTA developed drafts of the Manual and discussed with UBDOR allocated team.

Final Draft submitted to UBDOR in August 2013.

Manual service level interventions to be finally decided by UBDOR.

Medium Impact:

Documented Service Levels and standards for routine maintenance.

Understanding of service levels vs ‘activity based’ maintenance

Road Condition Survey Several discussions with UBDOR Chairman on the site for the condition survey

Joint decision on the “UB Ring Road” as the highest impact survey.

Small management team between CDTA and UBDOR managed the project

A road condition survey completed for 22 kms of UB Road

Survey results entered into the SMEC pavement management system

Process for survey documented and a report provided to UBDOR

Condition survey can be replicated by UBDOR staff

High Impact:

Two impacts from this exercise:

• Process knowledge by UBDOR

• Data for entry into the SMEC pavement management system


Task 7: Road Network Planning

4.54 This task was closed-off in December 2012. The MRT and ADB agreed that no work was required under this task.

Task 8: HR Strategy and Training

The CDTA Training Program

4.55 The CDTA training program was structured based on discussions with the MRT and the training needs analysis conducted by the CDTA in 2012. The program through 2012 and 2013 included the following:

Periodic Road Maintenance; Contract Management Training; Training for Trainers; Training in Canada (OGRA); Procurement and Consultant Procurement Training Course; Project Supervision Training Course; Degree course for Road and Bridge Certified Engineers; Quantity Surveyor Training; Road and Bridge Estimators.

4.56 A relationship with OGRA was specifically sought by the CDTA after discussions with the MRT. OGRA is a specialist provider if high level training to Canadian roads organizations and with specific experience and course material in cold climate road management. Training with OGRA has established two outputs:

• A potential expert provider relationship between MRT and OGRA

• The first web-based live training session for specialist engineering subjects

The HRD Strategy

4.57 The HRD Strategy was completed on 15 December 2013 (DVD Reference 8.6) and presented to the MRT. The strategy assumes that officers from the MRT, UBDOR and Road Supervision and Research Center will benefit from a single plan, one that enables numerous entry and exit points for civil engineers and senior managers across a broad training menu covering many topics central to public sector management and civil engineering.

4.58 Therefore, HRD Strategy is based on a capacity development matrix and plan covering 2014-2017. The plan is drawn from an analysis of the core functions of MRT and UBDOR. This analysis examined the formal education and qualifications of MRT and UBDOR staff, the level/category for each job and trade discipline (i.e., Grade and Classification), job descriptions for those occupations requiring university graduates at the recruitment point, and the time staff had spent working on the road sector including periods of employment with both private and public sector employers. This analysis enabled an assessment of the actual training and qualification level of staff against the desired level. The HRD Strategy provides a framework for bridging training and qualification gaps.

4.59 Through 2013 MRT in particular became actively involved in planning the strategy. At this point, the MRT officers took on the responsibility of preparing a financial plan for the four year training cycle outlined in the capacity development plan. The fully costed training plan is quite reasonable in terms of an overall investment and MRT has already progressed to a fully costed education and training plan for 2014-2105 which was submitted for approval for funding on 30 April 2014. A central platform of the plan is the introduction of intensive English language training for MRT civil engineers to enable officers to better access international courses and qualifications in road/civil engineering and road management.


4.60 This work was subsequently followed by a MRT request for the CDTA to prepare a full qualifications and training framework for eleven MRT Departments and Divisions as a contribution to the whole of government approach to civil service reform. This was assembled and handed to the Head of the Department for Strategic Policy and Planning in December 2013. It has since been included in the work of the Prime Minister’s Office on priority public sector reforms including a more uniform approach to educational planning.

4.61 UBDOR’s contribution to the implementation of the capacity development plan/HRD Strategy is severely restricted as the Department does not have a training budget. The staff involved are certainly motivated and keen to have access to a wider range of professional training. Unlike the MRT, the organizational structure of the UBDoR has been stable so there is in-house clarity on where training and knowledge gaps exist.

4.62 This will need to be addressed as the volume of international activity in engineering education is set to escalate. Proposed new activity will be in:

• A significant investment in engineering education through the Government of Germany and its development cooperation agency GIZ. This includes the development of a new university in Nalaikh with a Faculty/School organizational structure specializing in engineering disciplines. From September 2014, the German-Mongolian Institute for Resources and Technology (www.gmit.edu.mn) will introduce undergraduate training (Bachelor of Science) in three engineering disciplines: Mineral Resources Engineering; Mechanical Engineering and Environmental Engineering. It is aiming to have at least 120 fulltime residential students and another 40 places for short-term training. Instructional programs will be delivered in English through visiting Professors from leading German universities;

• The Government of Japan has entered an agreement with the Government of Mongolia for training up to 1,000 new engineers from 2014 to 2023. This will include the upgrading of qualifications of existing Mongolian engineers. The education and training program will be pitched at some 600 Upper Secondary School students as a stream of feeder students for university entry, new undergraduate programs and qualifications at the School of Civil Engineering within the Mongolian University of Science and Technology (MUST) and additional undergraduate and postgraduate training within Japan. This program will take effect from September 2104 and also include activity with the Institute of Engineering and Technology (IET), the main private TVET institution providing vocational and technical training in road construction. IET’s business plan includes expansion to a higher education institution offering a Bachelor degree in a range of disciplines including road construction and maintenance;

• The Government of Australia has expanded its scholarship program enabling Mongolians to undertake a Master degree in Australia. The program will provide 42 scholarships annually and of the four key areas of training, public sector management and engineering are targeted as priorities. The Government of Australia is also preparing the design for a new program, Australia Mongolia Extractives Program (AMEP), which will have a strong focus on capacity development across the mining operations sector with Mineral Resources Engineering as one focus of a possible suite of engineering disciplines and professions. The AMEP will be implemented in 2015;

• Joint investment at a new university in Dalanzadgad. The former Millennium Challenge Corporation activity in TVET is being continued through the


development of new training facilities at Dalanzadgad. This is being funded by Oyu Tolgoi, the principle player in private sector-led education and training in Mongolia, GIZ and the Government of Australia. The current TVET institution will be steadily upgraded to full university status where again the emphasis will be on training in engineering trades and professions; and finally

• The proposed new postgraduate course in road engineering and road management being prepared within the current CDTA. This will involve a new exercise in transnational education with a Master of Engineering (Management) from RMIT University, Melbourne being delivered in Mongolia in 2015 or 2016. As engineering education enables a seamless transition from Certificate 1 to Ph.D. the proposed Skills for Employment project slated for 2014 by the ADB offers an opportunity to plan MRT and UBDoR training drawing on both TVET and higher education programs within a single and unified education and qualifications framework.

4.63 The Mongolian university system is currently undergoing reform to ensure that Mongolian universities, courses and qualifications are consistent with UNESCO specifications for higher education. The reform process will see all State-owned universities undertake a rationalization exercise to: (i) reduce the number of Faculties/Schools; (ii) streamline the number and range of undergraduate and postgraduate programs in accordance with international norms; (iii) and as a result of this, increase class sizes to achieve efficiencies in the delivery of instructional programs; and (iv) where possible reduce the number of Branch Schools (i.e., smaller campuses often having a TVET focus).

4.64 Owing to developments with the GMIT, Dalanzadgad and the investment in engineering education by Japan (through JICA) it is very likely that a number of existing Mongolian qualifications in engineering will be replaced by international courses and qualifications. Certainly at the MUST, the proposed new undergraduate degree in the School of Civil Engineering will supersede the MUST equivalent as the new degree will run for four years not three (i.e., two years at MUST and two years at a Japanese university). Similarly, the new Bachelor degrees at the GMIT will be pitched at international standards to ensure they achieve global recognition (their marketing advises: Study in Mongolia and become an engineer recognized all around the world).

4.65 This process of internationalizing engineering education has been in place for several years through Oyu Tolgoi and Wagner Asia LLC offering training in engineering trades and mining operation trades based on an international course and qualification. As engineering education is one of a few disciplines that enables an uninterrupted progression from Certificate I (Grade 9 equivalent) to Ph.D. there are strong prospects for engineering education to become fully international within the short to medium-term within a well-defined national qualifications and training framework specifically for engineering trades and professions.

4.66 This observation comes about as a result of an exercise in curriculum mapping undertaken by the CDTA team in 2014. The Bachelor of Science in Civil Engineering from MUST was compared to a standard degree in civil engineering from Australia. The degree at MUST is one year less in duration than its Australian equivalent. Furthermore, the number of relevant subjects (Units of Study) in the MUST degree are significantly lower than the Australian degree. This means that the total amount of instructional time in the MUST degree is well below the Australian, and therefore international, benchmark.


4.67 Also, the Australian degree in civil engineering has a significant practical component requiring undergraduates to undertake industry-based or onsite training. This stream is absent from the MUST degree. Once future students and employers become aware of this discrepancy, they will seek entry to degrees and graduates that are internationally benchmarked.


Table 8: HRD Strategy and Training


Functional analysis of the MRT, UBDoR and RSRC. Prepare a Capacity Development Plan

Analysis of core functions in each MRT Department and Division having a roads sector range of functions. Analysis of the core functions of UBDoR and RSRC.

Four year capacity development plan and matrix (2014-2017) defining all priority professional education and training by Band (capabilities) and Domain (training options).

Medium Impact:

Strong MRT engagement with the CDTA enabled a fully costed training plan for 2014-2015 that has already been operationalized.

The RSRC could not be analyzed owing to vagaries about the core functions of the Center and the operational role it has with the core work of the MRT.

UBDoR does not have a budget for annual training so cannot generate an annualized training plan.

Qualifications and training framework for MRT.

The analysis of core functions of MRT required an examination of all MRT jobs from General Roads Worker to Departmental Head. All position descriptions were collected and appraised by Grade, Level or Classification.

The development of a comprehensive qualifications and training framework that identified existing or actual qualifications and training and the required (desired) level of training and qualification sets.

High Impact:

The is the first evidenced based qualifications and training framework developed in Mongolia

The qualifications and training framework has been drawn upon by another project team to figure out a relevant national qualifications and training framework for assisting the whole of government approach



to civil service reform. .

Assessment of nationwide current and proposed provisions for engineering education.

The CDTA examined all current provisions for engineering education for engineering trades and engineering professions.

.

Quality and relevance assessment of engineering trades education at numerous TVET institutions (public and private) and civil engineering courses and qualifications at MUST

Full appraisal of the range of new qualifications for engineering trades being introduced nationally by private sector firms concerned with mining, mine operations and the mining supply chain.

Full appraisal of the range of new professional qualifications in engineering disciplines funded by the governments of Australia and Germany. This assessment found that the Bachelor of Science in Civil Engineering at MUST has become outdated.

The undergraduate degree has evolved from a former Soviet course and qualification and has not been upgraded to meet the requirements of the market place.

The degree is too short in duration and lacks many core subjects common to most Bachelor degrees in Civil Engineering. MUST is not providing postgraduate training in road construction and maintenance.

High Impact:

The assessment has enabled the MRT and UBDoR to consider a new suite of high quality training in engineering including eLearning provisions and the introduction of new postgraduate training in a variety of engineering disciplines.

MRT intends to fast track formal training of MRT staff in intensive English for technical purposes.

Robust dialogue with various Embassies regarding their own plans to widen Mongolian access to engineering education.

Cooperation with the German-Mongolia Institute for Resources and Technology (GMIT).

Discussions with GMIT as its Nalaikh campus as the most appropriate venue for high quality instructional programs in engineering education.

The CDTA inspected the Nalaikh campus of the proposed School of Engineering. Ongoing discussions are being held about the GMIT providing a foundation year for engineering education.

High Impact:

The cooperation provides MRT and UBDoR with a high quality and relevant education environment.

The proposition of a Foundation Year in engineering education will provide a solid platform for the proposed RMIT Master in Engineering (Management)



Training Program for MRT and UBDOR

Set up and deliver series of training programs for MRT and UBDOR

Periodic Road Maintenance; Contract Management Training; Training for Trainers; Training in Canada (OGRA); Procurement and Consultant Procurement Training Course; Project Supervision Training Course; Degree course for Road and Bridge Certified Engineers; Quantity Surveyor Training; Road and Bridge Estimators.

Training with OGRA has established two outputs:

• A potential expert provider relationship between MRT and OGRA

• The first web-based live training session for specialist engineering subjects

Medium Impact:

The training program requires a better structure. The impact will increase when the post graduate structure is introduced and a learning pathway is developed

Contract Variation 7: Development of a Postgraduate Program for Road Management


Introduction of a new postgraduate qualification for MRT, UBDoR and private sector employees.

The CDTA conducted a survey of postgraduate engineering education provisions in Australia, Canada, Germany and New Zealand

The survey involved an examination of courses and qualifications in civil engineering in major universities. A Masters degree qualification enabling numerous entry and exit points was seen as the most appropriate course and qualification for MRT and UBDoR officers who have limited time for training outside of work hours.

A Master of Engineering (Management) from RMIT University is closest to meeting the MRT priority for postgraduate training in road management.

This degree is based on a pathway consisting of a Graduate Certificate (5 months duration), Graduate Diploma (12 months

Medium Impact:

Ongoing work will be required to assist RMIT University to enter a twinning arrangement with MUST and this will involve activity with Mongolia’s National Council for Higher Education Accreditation.

MRT has agreed in principle to send a fact-finding team to RMIT University in 2014.



duration) and Master (18 to 20 months duration).

Twinning agreement between MRT and the Guangdong Provincial Government Department of Construction.

At the request of MRT, the CDTA opened up discussion with the World Bank Office of the Guangdong Provincial Government.

The CDTA made possible an avenue for future discussions between MRT and the World Bank Office which is responsible for road and expressway construction through Guangdong Province.

The CDTA prepared a formal letter of introduction for use by MRT when it commences dialogue with the Guangdong Provincial Government.

Low Impact:

This initiative remains at the discretion of the MRT. MRT has proposed a high-level delegation visit to PR China sometime over 2104.

MRT has also entered a relationship with the Government of Belarus so it remains unclear which country MRT will continue with a formal arrangement.


Task 9: Road Research and Technology Transfer

4.68 The prime activity under this task was to establish a Road Research Institute with research program developed for 2013/2014 and secured funding. A Discussion Paper was developed after discussions with the then DOR and a concept developed for the establishment of a Research Centre with a substantial private sector component and structure.

4.69 With the change in government and the structure of the DOR to a Ministry, that concept did proceed and that agenda item was closed off in December 2012.

4.70 Two tasks were substituted for completion during 2013:

• Review of the road standards applicable to Mongolia and develop a consistent and international approach to those standards;

• Identify the gaps in the standards that apply to Mongolia and recommend standards to adopt.

4.71 This task was closed-off at the in June 2013 as completed.


Table 9: Road Research and Technology Transfer


Establish a Road Research Centre with an initial program and projects.

Discussion Paper prepared developing a Road Research Centre based in a private sector model with government and private funding

Discussions with MRT on the concept

Concept discussed with MRT. At the change of Government in mid-2012 and the MRT was established a Road Supervision and Research Centre was established to undertake the task.

There was no consultation with the CDTA on the establishment of the organization.

The MRT requested the task be closed-off.


No Impact.

The activity was closed off after the change of government and the Road Supervision and Research Centre was established

Review Road Standards and identify gaps and establish a path to adopt international standards

Discussions with the Deputy Director of the RSRC.

Initial assessment RSRC of the standards it requires for managing road standards

Discussions and assessment by CDTA of the standards and adoption of internationally recognized standards

Specific advice has been given to the RSRC as follows:

• The gaps in the road standards required for Mongolia;

• The way forward to fill those gaps and specifically adopting AASHTO as the “library” for finding and adopting road standards for Mongolia.

Medium Impact.

Mongolia is now adopting international standards for the road sector, which matches the adoption of standard FIDIC conditions of contract by the MRT.


Task 10 Communications

4.72 This task was closed-off in December 2012


5. Road Map Update from 2012 to 2014

5.1 In summary there has been good progress in in some of the more important areas of road administration. There has been mixed or little success in others. The overall summary assesses the improvement and issues per Road Map topic. The following tables take a snapshot of the major issues that have progressed in the Road Map and the challenges that are still faced to continue achievement.

5.2 The full update of the Road Map is set out in Appendix 6.

Road Map Item 1: Strengthen the Road Sector Industrial Capacity

Progress Challenges

Outsourced road construction supervision and design has been achieved

Increase the quality of the supervision standards

A capacity and training program for 2014 to 2017 has been costed with an implementation plan

Monitoring implementation and effectiveness

Japan funded training to produce 1000 trained engineers in Japan

Be inclusive of the University system in Mongolia to enhance deliver capability

Flexible and internationalized engineering bachelor and post graduate courses in engineering designed

Establishing and maintaining international education partners.

Road Map Item 2: Provide a High Quality Road Network

Progress Challenges

Road Asset management systems in MRT have been re-fuctionalized (in Mongolian) and new systems have been provided to UDOR. Standard management reports have been developed

Continuing systems management assistance until both organizations are totally familiar with the data management and reporting arrangements

The Road Maintenance Fund and Board have been agreed as policy and included in the draft new Road Law

Presenting the new Road Law to the Parliament

State Road Maintenance Companies have been found by CDTA study to be too many for the road network and be commercially viable. They have little capacity for recapitalization.

The Companies have not managed their roles on two major corridors: Darkhan and Choyr.

Restructuring and positioning the State Road maintenance Companies for privatization is critical.

Consolidate to no more than 6 and allow higher level of private sector participation in all maintenance.

UB City has created one major maintenance company for all engineering functions

Proper transparent work orders for road maintenance by UBDOR to the maintenance company


Road Map Item 3: Increase Return on Investment in the Road Sector

Progress Challenges

A road sector master plan is being prepared by the MRT.

Note: lack of maintenance is reducing ROI for the sector as rehabilitation/reconstruction is occurring earlier than needed at a far higher cost

The master plan must include a specific maintenance strategy for translation into legal obligation.

MED has issued 14 ‘concessions’ for Aimag to UB Roads. Tenders issued in Mongolian Only

Complete 1600 kms of construction by 2016, at a quality level.

Contracts for Road Construction have been internationalized and adopted FIDIC terms and Conditions. Mongolian translation completed. Signed off by State Secretary

Actual implementation

Road Supervision and Research Centre has been established and is fully funded by Government

Interaction between the MRT and the RSRC needs attention to achieve research and road management systems success.

Road Map Item 4: Strengthening Road Sector Institutional Capacity

Progress Challenges

MRT was established in 2012 by the new Government in preference to an ‘arms-length’ DOR.

A review is needed to determine effectiveness of the institutional structure

Regionalization of roads sector has not occurred. Some functions re monitoring of road maintenance have been passed to Aimags. But effectiveness is questionable.

Regionalization is recognized as necessary. Review is required of MRT operational mode to include regional functions

Output based management has had no effective work carried out

Create an understanding of the concept with quality management approaches

Executive management systems have been implemented in MRT and UBDOR, including connected pavement management systems, contract management systems and GIS applications.

UBDOR has commenced an effective website on all road projects using that system

MRT to adopt and fully use the system that is available to it. Similar to UBDOR.

Continued support to UBDOR on executive management systems and innovation.


6. Potential Future Targets for the Road Sector in Mongolia

6.1 The discussion in this Part is short and to the point. It looks at additional/future targets identifies the potential work stream on an ‘in principle’ basis.

6.2 For periodic road maintenance and road maintenance generally, there has been mixed success. A periodic road maintenance program was not instituted but the impact of that Ministry of Economic Development decision not to agree to that program for 2013 and 2014 is clearly evident. The rapid deterioration of two major corridor roads has been the direct result. But on the other hand there is now a commitment within the MRT to adopt better maintenance regimes to preserve the road asset and prevent asset impairment.

6.3 Road management systems and management information systems have been installed and are now operational to varying degrees. Further assistance to help deliver consistency in using the executive management systems is required and sought by both MRT and UBDOR.

6.4 There is continuing and strong interest in higher level education and short targeted courses in road management skills, especially in the more practical aspect of road management.

6.5 These three themes provide fertile ground for the concentration of the next Technical Assistance Project:

A relatively small part of a further TA. Both MRT and UBDOR do need consistent support for another 12 moths to 2 years on the Executive Management systems that have been delivered under the CDTA.

The MRT in particular need to understand the value of the systems as the Road Network Owner and the need to manage them directly and not ‘move’ them to the RSRC to undertake.

Technical assistance in report generation, data manipulation and more skilled system operators are required so minimize the risk of the systems falling into disuse.

Executive Management

Finalizing the Policy Approval for Road Maintenance: Achieving Government and MRT agreement and approval for the key elements of the road maintenance arrangements including the Road Maintenance Board and the Fund and Fund Manager.

Developing the Specific Road Maintenance Program for 2015 and 2016: Similar to 2013 and 2014 periodic road maintenance programs, the TA should focus on developing a periodic road maintenance program budget for 2015 and 2016 with private sector delivery and performance based contracts.

Road Maintenance Program Supervision: Once the road maintenance program is developed (both routine and periodic), the supervision of the delivery is critical – critical in terms of understanding set up time and actual practices in deliver

State Road Maintenance Companies Restructure: for the 2015 road season, undertake and assist in delivering a restructure of the State Road Maintenance Companies into larger and more commercially viable business units.

Road

Maintenance


Introduction of a new postgraduate program in road construction and road management: There is general agreement that civil engineers employed by MRT and UBDoR require additional training in key disciplines such as road asset management, managing the road environment and engineering management. There are numerous courses leading to a Graduate Certificate, Graduate Diploma and Master. Whilst Mongolia’s higher education system is being reformed there will be a need to introduce a suite of new courses and qualifications including a Master in Engineering. Between the closure of the CDTA and the introduction of a new TA in support of road maintenance it will be necessary to have ongoing activity in the installation of a new Master of Engineering (Management) from RMIT University to become effective by mid-2015. This will necessitate a RMIT and MUST institutional partnership. Given the proposed development cooperation involving road maintenance, MRT and UBDoR civil engineers will require short-term training in a number of topics including contract management, pavement wearing surfaces, pavement evaluation and rehabilitation, road maintenance and highway engineering. It is proposed that a Foundation Study program be organized with the GMIT.

Higher

Education


Appendices:


Appendix 1: Original Detailed Tasks and Outputs

Output ToR Phase 1

1. Strengthen Road Agencies’ Organization and Human Resources

• Recommending a target organizational structure for the DOR; the recommendations should include preparing a proposal for developing regional offices.

• Recommending the distribution of responsibilities between the DOR and the MRTCUD and MOF. • Recommending ways to streamline the DOR’s main business processes • Recommending a plan to gradually strengthen DOR’s management and information systems • Defining corporate performance indicators for the DOR • Recommending mechanisms to mitigate governance risks and increase transparency in road sector

management and procurement, • Determining future human resources (HR) needs • Preparing a performance agreement and/or other performance monitoring and reporting mechanisms

between the DOR and MRTCUD

• assessment of UB DOR’s institutional development challenges leading to Institutional relationships with the DOR, the MRTCUD, and the municipality; Short and medium-term human resources needs, including training requirements; and Organization structure, particularly in relation with the proposal to set up an urban road maintenance company.

2. Restructure the Road Fund and Re-establish the Road Board

Assist the MRTCUD and the DOR restructure the Road Fund with the two following objectives: (i) the Road Fund should have sufficient earmarked resources to cover road routine and periodic maintenance; and (ii) a Road Board composed of a majority of user representatives should control use of Road Fund proceeds to finance maintenance, but not take a managing role

3. Increase DOR’s Project Management and Procurement Capacity

• Recommend methods to improve civil works management methods and provide on -the-job training and support for portfolio management

• Advising on implementation and portfolio management strategies and processes, including DOR construction unit staffing needs, procurement strategies, implementation planning and sequencing.

• On-the-job training and support to procurement and project management • Regularly evaluating the capacity of procurement and contract management staff and the quality

of processes • Preparing the concept and terms of reference for a project and contract management and


Output ToR Phase 1

monitoring system for road projects under MRTCUD.

4. Set-up an Outsourced Road Supervision System

Help the DOR outsource and manage road works supervision and foster the use of better quality assurance systems by contractors • Proposing a strategy and organization in the DOR to manage outsourced supervision • Recommending a road supervision procedure, documented in an operational and field manual • Prepare standard terms of reference and budgets of road supervision consultants • On-the-job training to DOR staff • Reviewing issues with current contractor registration and performance management system • Recommending quality assurance mechanisms to be introduced in Mongolia • Preparing a quality assurance leaflet for road construction companies, and preparing associated

training

5. Implement a Road Periodic Maintenance Program

See suggested amendments to the ToRs and Methodology for this Output. Refer to Section 7 of this Report

6. Define a Road Maintenance strategy and standards for UB City

Help UB DOR prepare a road asset management plan and standards, improve maintenance practices and advise on the setting up of an urban road maintenance company

• Assessing the current quantity of assets managed by UB DOR • Assessing the current condition of the assets – this should mainly be done using the existing

databases of UB DOR • Estimating user needs and expectations • Recommend improvements to the technical bases used for planning maintenance • Assessing the operational efficiency of current road maintenance practices • Developing a set of options of levels of service and life-cycle plans by asset group • Forecasting maintenance needs and service plans based on the proposed options • Proposing a contracting framework, particularly considering the possibility to set up a maintenance

company in UB

7. Strengthen DOR’s Project Planning and Evaluation Capacity

Help MRTCUD and the DOR improve project planning and evaluation capacity, and particularly help update the road master plan. Investment cycle:

• Recommending the steps involved in a road project investment cycle and the documentation and


Output ToR Phase 1

degree of studies associated with it • recommend thresholds when the full procedures are mandated • defining methodologies for project approval at the (proposed) feasibility study stage, particularly

related to economic appraisal • recommending a procedure and methodology for project post-evaluation • preparing a road construction planning manual for DOR and MRTCUD • providing on-the-job training on project appraisal and post evaluation, through the analysis of at least

4 projects • draft related amendments to laws and regulations as needed to ensure a high degree of enforceability

to the proposed investment cycle • Road Master Plan Update - assist the DOR in the preparation a long-term road master plan for

approval, including assessing recent and new planned developments, including mining roads and tourism road

• assessing budget availability • forecasting traffic • assessing standard costs • recommending split between maintenance, rehabilitation and investment spending • identifying projects that could be financed by the private sector, • helping prioritize corridors based on economic, social and strategic considerations

8. Set up Regular Training and Re-training Programs

• Preparing a capacity and training needs assessment for the DOR, UB DOR, MRTCUD, local aimag administrations and state-owned companies

• Reviewing current trainings and re-training programs offered to road engineers and managers • Proposing priorities for scaling-up and improving such road engineer programs; outlining and costing

a set of training and re-training road engineer programs to be regularly delivered • Preparing a training program prepared and delivered under the CDTA covering both government staff

and non-government engineers • Proposing an institutional structure for implementing the trainings; the consultant will seek to involve

road sector professional associations and academic entities • Preparing or supervising the preparation of complete sets of translated training materials and

delivering or supervising the delivery of the training modules

• Identifying opportunities for and assist training institutions in obtaining funding for trainings, curricula


Output ToR Phase 1

improvements or research from other donor programs

9. Develop Local Capacity for Road Sector Technology Transfer

The main objective of this task is to establish independent Road Research Institute to increase Mongolia’s capacity to transfer and adapt foreign technologies in the road sector.

• Assessing current priorities, current local capacity and gaps in Mongolia’s road sector technology development

• Recommending an institutional structure and business model for the Road Research Institute, • Preparing a proposal for the creation of the Road Research Institute • Consulting with DOR, UB DOR, UB University, design institutes and other stakeholders on medium-

term applied research needs • Preparing a medium-term road sector technology transfer and research plan.

10. Monitor Roadmap Implementation and Communicate with the Public

• Preparing a reporting structure for the Roadmap

• Preparing and delivering a public outreach campaign to win public support and keep informing about progresses made

• Assisting in the preparation of the documentation submitted to the Implementation Committee and Higher-Level Steering Committee meetings


Appendix 2: Project Close-off Memorandum for the MRT




Appendix 3: Project Close-off Memorandum for the UBDOR



Appendix 4: MRT and FIDIC Contract - Mongolian Translation


Appendix 5: Road Condition Inspections – Darkhan and Choyr

SUMMARY REPORT TRIP TO:-

Darkhan, Sukhbaatar, Erdenet

Date: Saturday/Sunday, 3/4th May 2014

Asian Development Road Sector Capacity Development Team: Present in Mongolia for 2.5 years

VicRoads: An Australian State Government Road Authority responsible for 30,000 kms of national and state highways

The inspections covered three main sections of road:-

1. Ulaan Baatar – Darkhan

2. Darkhan – Sukhbaatar (and the Russian border)

3. Darkhan – Erdenet

The main purpose of this trip was to gain a current understanding of the condition of the roads, especially the condition of the sections on the road to Darkhan that had previously been recommended for Periodic Maintenance treatments by the Project team.

Key Summary Points


UB to Darkhan – 220 kms

Summary: The UB to Darkhan road is largely dysfunctional. 65% of it needs major and expensive repairs. Very poor standards of road maintenance.

• 65% of the road section requires reconstruction/rehabilitation and high risk periodic road maintenance (near rehabilitation

• 35% requires normal periodic road maintenance

• Rapid deterioration of the road section in 18 months. Much was savable with periodic road maintenance 18 months ago.

• Costs to restore the 65% of the road will be double that of normal periodic road maintenance.

• No evidence of routine maintenance by the State Road Maintenance Companies in 2014.

• The road is dangerous with large potholes on the blind side of hills.


Emergency reconstruction works must proceed in 2014




Darkhan to Sukhbaatar – 130 kms

Summary: the Darkhan to Sukhbaatar road is in very good condition. Requires normal periodic road maintenance program for 2015 and 2016 to maintain it and prevent rapid deterioration to reconstruction.

• 90% of the road section is very good condition.

• No section requires rehabilitation or reconstruction at this stage

• Evidence of constant routine maintenance

• Due for periodic maintenance in the next 12 to 18 months

• Chip seal used as treatments for large sections of this road (proves it is a viable treatment for periodic road maintenance in Mongolia)




Darkhan to Erdenet – 180 kms

Summary: the Darkhan to Erdenet Road is in good condition. Evidence of a good routine maintenance program. Periodic road maintenance will be required 2014/2015. Minor length for reconstruction in 2015.

• 75% of the road section is in good condition

• About 5% requires rehabilitation/reconstruction

• About 10% requires periodic maintenance now – 2014/2015

• Evidence of good routine maintenance practices

Route and Photographs: Appendix C

Allocate periodic road maintenance budget for 2014/2015

Undertake reconstruction of 5% 2015


APPENDIX A: UB TO DARKHAN

Map of Route:

Key Photos

Failed Asphalt Patch not repaired


Significant failure of the road. Evidence of no maintenance

Traffic has made an alternative road because the current road in not passable


No evidence of maintenance by the State Road Maintenance Companies


APPENDIX B: DARKHAN TO SUKHBAATAR

Map of Route:

Key Photos

Road has good structure and evidence of constant road maintenance

Chip Seal treatment for the large sections of the road have been undertaken.


APPENDIX C: DARKHAN TO ERDENET

Map of Route:

Key Photos

Evidence of constant routine maintenance. State Road Maintenance gang out on Sunday 4 may undertaking shoulder work and crack sealing work


Concrete road with patches. Road section requires substantial repair/reconstruction (about 5% of the road length to Erdenet)

SUMMARY REPORT TRIP TO:-

Choyr, Baganuur

Date: Saturday, 17 May 2014

Asian Development Road Sector Capacity Development Team: Present in Mongolia for 2.5 years

VicRoads: An Australian State Government Road Authority responsible for 30,000 kms of national and state highways

The inspections covered three main sections of road:-

1. Ulaan Baatar – Choyr

2. Ulaan Baatar – Baganuur

3. The main purpose of this trip was to gain a current understanding of the condition of the roads, especially the condition of the sections on both roads that had previously been recommended for Periodic Maintenance treatments by the Project team.

Neither road is in as bad a condition as the Darkhan Road at this stage.

Key Summary Points


UB to Choyr – 225 kms

Summary: Considered in 2012 to be the ‘best’ road in Mongolia. In 2012, around 40 kms were recommended for periodic maintenance with some rehabilitation. That has now moved to 66 kms as a minimum.

Rapid deterioration has occurred in up to 55 kms and the treatment may move from maintenance to rehabilitation/reconstruction.





Approximately 40% needs periodic maintenance or rehabilitation/reconstruction.

Approx. 60% can be maintained through routine maintenance now, but the known rapid deterioration will see more periodic maintenance needed in the next 12 to 18 months

Heavy vehicles may not be controlled/managed to prevent road damage. Around 10 overloaded trucks identified in the road trip


UB to Baganuur – 130 kms

Summary:

This section had been identified in 2012 as one of the recommended periodic maintenance sites.

The periodic maintenance program was not funded and it appeared that no preparatory patching or crack sealing had been undertaken.

Also there appeared to be no routine maintenance undertaken either with the result that the condition of this section of road has deteriorated considerably and its suitability for the asphalt overlay will now need careful consideration





APPENDIX A: UB TO Choyr

Map of Route:

Key Photos

Incomplete patching: significant impact in rapid deterioration.

Patching mainly on north bound side. Indicates loaded trucks and significant overloading


Incomplete patching and lack of patching and maintenance: significant impact in rapid deterioration.

Choyr road. Section in very poor condition. Note vehicle choosing to drive on shoulder rather than intended traffic lane

Standard level of overloading and no evidence of enforcement.


APPENDIX B: UB to Baganuur

Map of Route:

Key Photos

Section of road within a proposed periodic maintenance overlay that has had no maintenance and has deteriorated rapidly


Another section of road within a proposed periodic maintenance overlay that has had no maintenance and has deteriorated rapidly


Appendix 6: Road Map Progress

Update on Implementation of the Mid-Term Road Sector Capacity Building Program

No Activity Implementation Update

OBJECTIVE 1: Strengthen road sector industrial capability and develop skilled Human Resources

1.1 Strengthening road sector industrial capability

1.1.1 Step up the capacity of the national road construction industry and create national road construction companies with the ability to carry out international competitive bidding.

MRT and ADB have undertaken contractor’s capacity assessment in the first quarter of 2014 to compare the sector capacity for the last three years.

1.1.2 Upgrade registration and qualification criteria for national companies. Build a national road construction contractors’ association that could ensure road construction standards.

MRT is drafting procedure for registration, qualification and classification system for contractors. With assistance from the CDTA, contractors and consultants registration system application is being developed.

1.1.3 Identify a tax policy approach to supporting the national road construction companies. Set up a proper legal environment to exempt companies from customs tariffs and value-added taxes on imported equipment with advanced technology.

MRT is drafting a legal document on the exemption of road construction projects from fees and taxes for the use of local mineral deposits.

1.1.4 Create various opportunities for national road construction companies to develop their businesses by taking out loans with minimum interest rates. Support the merger of national contracting companies, to increase their financial, equipment and human resources capacity.

At the moment, road contractors have access to commercial credits and leasing for capital investments and recurrent costs.

1.1.5 Enable national consulting firms to supervise road design and construction in order to gain experience and bring their performance in these areas to international levels.

Starting from 2012, construction supervision roles have gradually been shifted to private sector companies. The new guidelines for the quality certification of road and structure design works have been developed for mobilization of



independent experts.

1.2 Strengthening the sector’s human resources capacity

1.2.1 Demand for study and training will be identified, planned, and implemented. Identify the number of engineers and professional workers needed in the road sector, and develop and implement training programs for engineers and professional workers with different professional backgrounds. Furthermore, identify a number of trainees for upgraded professional qualifications and retraining.

The CDTA has prepared a fully costed capacity building and training plan for 2014-2017 covering both MRT and UB Department of Roads. The first 12 months of training covering 2014-2015 has been drafted as a plan by MRT and is currently being reviewed by MRT senior management.

Ongoing activity is being conducted within the Office of the Prime Minister concerning the current skills shortage of engineers and general road workers. As road construction activity has expanded the sector continues to experience a shortage of fully trained and qualified civil engineers and general roads workers trained in road construction and maintenance. The demand for work ready engineers continues to be unmet.

The number of new TVET graduates in road construction is small as are graduates from the School of Civil Engineering and Architecture (MUST). Most civil engineers at MRT and UBDoR are MUST graduates. As the Bachelor of Science in Civil Engineering is not a quality curriculum program it needs to be understood that all engineers require re-training and a professional upgrading of their existing qualification/s. This also implies that graduates although trained are not qualified according to international norms in engineering education.

This situation extends to engineers employed in the private sector. Opportunities to provide up-to-date and quality engineering education are limited as the most relevant professional training is in English. Current plans for a rapid escalation in provisions for engineering education involve the delivery of courses and conducting assessment in English.

The Government of Japan has plans to train or re-train 1,000 new engineers with most training conducted in Japan and in Japanese. 600 secondary school students will be trained in Japanese with a view to them continuing on to a new engineering degree with two years conducted at MUST and the final two years



at a university in Japan.

A situation is developing that existing engineering education in Mongolia will be steadily superseded by undergraduate and postgraduate courses and qualifications from overseas universities and delivered in English or Japanese. Within Mongolia most up-to-date training in engineering will be conducted in English including courses imported from Germany.

1.2.2 Upgrade the curriculum and study programs of university, colleges, and professional training faculty to meet the demand for professionals to implement middle- and long term programs in the road sector. The target is no fewer than 80 trained engineers and 350 trained professional workers every year.

The university sector is currently being taken through a process of national reform. Using UNSECO classifications as a benchmark, the major universities are being re-structured. This involves (i) reducing the number of Faculties and Schools, (ii) reducing the number of courses and qualifications, (iii) eliminating course repetition across numerous schools, (iv) de-commissioning redundant courses and staff, and (v) putting in place new accreditation and certification regulations and statutes. The re-structuring is expected to be completed by September 2014. This will be followed by a second phase of higher education reform involving the quality improvement of teaching, strengthening the qualifications and research capacity of academics and upgrading/updating curriculum programs.

Taking account of 1.2.1, all current Faculty in the School of Civil Engineering and Institute of Engineering and Technology will require intensive training in English for academic purposes followed by new professional training in a Master of Engineering or similar postgraduate course and qualification.

Since the preparation of the Mid-Term Road Sector Capacity Building Program significant progress in modernizing provisions for education and training have been put in place by private sector firms. This has involved a large investment in those trades central to mining, mine operations and the mining supply chain. This has included engineering trades and numerous automotive and transportation trades. New provisions for upgrading engineering education is gathering momentum by means of ongoing or new investments in the sector including Rio Tinto, GIZ, JICA and DFAT (Australia). The German-Mongolian Institute for Resources and Technology is now in place and will commence



academic programs in September 2014 in three engineering degrees. Total student enrolment as full-time students will be 120 and this will ensure that the target of 80 newly trained engineers per annum is met.

1.2.3 Prepare skilled teachers and trainers and upgrade the curriculum for retraining and postgraduate training. Increase the number of trained professionals to about 150 engineers and technical workers every year.

MRT in cooperation with the Mongolian Road Association (MRA) is implementing re-training and qualification program for road engineers, technicians and operators. 435 persons in 2011, 608 persons in 2012 and 358 persons were involved in various qualification training sessions.

As advised under 1.2.2 new curriculum programs in engineering trades have been introduced. New undergraduate training in engineering will commence in 2014 and includes:

• B.Sc. in Mineral Resources Engineering

• B.Sc. in Mechanical Engineering

• B.Sc. in Environmental Engineering

These courses represent upgraded curriculum and qualifications. The CDTA is proposing a the introduction of a range of postgraduate training for MRT, UBDoR and the private sector drawn from the following qualifications:

• Associate Degree in Engineering Technology: 12 months

• Diploma in Engineering Technology (Highways): 12 months

• Diploma in Road Management and Engineering: 8 months

• Graduate Certificate in Engineering (Management): 5 months

• Graduate Certificate in Road Engineering and Construction: 5 months

• Graduate Diploma in Engineering (Management): 12 months

• Graduate Diploma in Road Engineering and Construction: 12 months



• Graduate Diploma in Engineering (Highways): 12 months

• Master in Road Management and Engineering: 12 months

• Master of Engineering Management: 12 months

• Master of Engineering (Management): 12 months

1.2.4 Strengthen the study and training environment and its resources by providing textbooks, equipment, and on-the-job training

The CDTA delivered the translated and dubbed DVD training materials developed by the International Road Federations (IRF). The Mongolian University of Science and Technology is hosting online and web based training under the contract with the CDTA. Strong progress has been made in introducing new engineering education instructional programs including structured webinars, online learning (eLearning) provisions and the use of self-paced study. There are more opportunities by means of eLearning and video conferencing through the E-Open School (MUST), the National Learning Resource Center (Mongolian-Korean College) and various Regional Training Centers that have been funded for eLearning by MCC. This includes Erdenet VTPC, the Govisumber Polytechnic in Mining and Darkhan VTPC.

The CDTA provided some twelve separate professional education and training

programs. They included:

• Periodic Road Maintenance, September 2012 (20 participants)

• A study tour to the Ontario Good Roads Association (OGRA), Ontario, Canada, December 2012 (2 participants)

• Training-of-trainers in adult teaching and learning, December 2012 (20 participants)

• Road Construction Contract Management, December 2012 (39 participants)



• Construction Contract Management for Senior Management and Senior Engineers, January 2013 (17 participants)

• Procurement Management, February 2013 (25 participants)

• Specialized Engineering for Road Construction, March-April 2013 (30 participants)

• Supervision Engineers in Road Construction, April 2013 (30 participants)

• Elementary Training of Quantity Surveyors, May 2013 (30 participants)

• Cold Climate Road Engineering and Construction, OGRA, May 2013 (42 participants)

• Pavement Management System Training, June 2013 (6 participants)

• Federation of Consulting Engineers4: Conditions of Contracts, October

2013 (20 participants)

Translation, dubbing and review of training DVDs prepared by the International Roads Federation for dissemination through the E-Open School at the MUST.

OBJECTIVE 2: Provide a high-quality road network

2.1 Upgrade road maintenance management

2.1.1 Develop and implement a road maintenance plan for government roads and capital city roads. Obtain sources of

The key component for this task is to functionalize the existing road assets management system or dTIMS at MRT. The CDTA has developed the front end

4 Known as FIDIC.



funding for overall road maintenance and its facilities. Research current road conditions, which is required to develop and implement a plan of periodic maintenance and reconstruction. Get accustomed to periodic maintenance or reconstruction of capital city paved roads every year in accordance with the plan.

application in Mongolian to assist MRT to make use of the system. The system deployment at the Road Research and Supervision Center (RRSC) in addition to operation of the newly purchased road conditions survey equipment will serve a basis for road maintenance program for 2015. Despite, periodic maintenance programs for 2013 and 2014 were developed by the CDTA, no budgets were provided in the subsequent years.

2.1.2 Introduce contracts that base financing on road condition and establish cost norms for road maintenance work. Introduce international practice so that financing is predicated on road condition and quality, rather than on just a background of completed work, and on the basis of established normative cost per kilometer of routine maintenance work.

The work is initiated in 2012 with the creation of a Working Group for revising the basic tariffs for road maintenance to reflect market conditions. Performance based contracts have been made with 4 private road maintenance companies in 2010 for four years.

2.1.3 Perform road maintenance work using road asset management systems. Identify required investment for road maintenance and plan it in keeping with the road asset management database established by the DOR, taking into consideration road length, specific location features, and current road condition, with assistance from ADB consultants.

The Pavement Management System (PMS) is installed and functionalized in UBDOR for the purpose of developing a city wide road maintenance program and capacity within DOR for evaluating the capital city road maintenance needs. The pilot Road Conditions Survey (RCS) is carried out in Ulaanbaatar to be formed as replicable and expandable model for data entry.

2.1.4 Upgrade and develop a legal environment and procedures for the Road Fund and its disbursement. At present, the Road Fund’s legal environment and disbursement procedures are unclear and not optimal. Funding from Road Fund should be exclusively dedicated to routine and periodic maintenance, planned on the basis of the road asset management system. The road maintenance budget will be no less than MNT40 billion per year by 2016.

The CDTA has prepared a discussion note for the Road Fund and further incorporated into the draft new law. Road maintenance budget for 2014 is 22.4 billion with increase above 19 billion in 2013.

2.1.5 Establish a new road maintenance company for every 100–200 km of roads, in keeping with the increasing volume of paved

Two new road maintenance (Bayanchandman and Nalaikh) companies have been created to maintain the completed North and South road corridor. MRT will further create 2 two road maintenance units in the Western Road Corridor



road construction. by 2016.

The CDTA has advised that this action is not appropriate and that greater consolidation of State Road Maintenance Companies is needed and not the creation of new ones.

2.1.6 Clarify the duties and obligations of the road maintenance companies, and improve companies’ management structure and contract administration.

The CTDA has undertaken assessment on the current performance of the road maintenance companies. Starting from 2014, operational supervision of the road maintenance companies has been delegated to the local governors’ offices to improve performance control.

The CDTA advice has been to bring these companies within the MRT function and much higher level supervision. The recommendation has also been to reduce the number from 19 to 6 because the current structure is highly inefficient

2.1.7 Upgrade the current management structure and methodology for routine maintenance of Ulaanbaatar roads. An organization specifically in charge of road maintenance should take over the related duties currently assumed by the current comprehensive city road maintenance contractor.

The UB City is in the process of creating a consolidated public service company with component of the road maintenance service. UBDOR will still act as client and supervisory body for road maintenance in the city. The CDTA has provided road maintenance manual for UBDOR.

2.2 Ensure competitive participation of the public and private sectors in the implementation of road maintenance work

2.2.1 Develop a favorable legal environment and conduct research on public–private participation in routine and periodic maintenance of roads and facilities.

Private sector companies will maintain road sections in Dundgobi, Umnigobi, Bayanulgii, Gobisumber and Zamiin Uud on performance based contracts in accordance with the Government Resolution dated on January 11, 2014.

2.2.2 Provide an opportunity for the private sector to execute some routine road maintenance on the basis of good accountability. Evaluate the performance of the private sector during execution of routine maintenance.

No formal decision. Only 4 of the 23 road maintenance companies are private sector. There has been no expansion of that arrangement.

The CDTA has made strong recommendations to:



• Consolidate the State Road Maintenance Companies into no more than 6;

• Create significant opportunities for the private sector to undertake road maintenance on major corridor roads govern the failure of the maintenance regime on the Darkhan and Choyr roads.

2.2.3 Ensure competitive participation of the public and private sectors in implementation of periodic road maintenance. In selecting a road maintenance company for periodic maintenance, priority should be given to human resources qualifications, appropriate machinery and equipment, work experience, and capability.

In periodic road maintenance plan for 2014, it is proposed that 50% of the total works will be tendered out to private sector companies.

Periodic road maintenance was not agreed by the MED and so no budget provision was made and the private sector is not involved in delivery of maintenance except for the 4 maintenance companies carrying out routine maintenance.

2.3 Assess the current axle loads of road users and develop strategies to prevent overloading on roads

2.3.1 Develop an action plan to prohibit overloaded traffic from running on state paved roads. Set up proper devices to measure load capacity at main points on state paved roads, forcing users to follow proper standards. Address overloading issues incrementally and ultimately stop it.

The CDTA has recommended a specific overloading strategy for the major corridor roads that involves:

• The MRT administering overloading laws

• Trucks that carry loads outside their actual dimensions be included in the definition of overloaded

• Introducing CCTV monitoring cameras as part of the enforcement approach

The recommendations are still with government

2.3.2 Study the possibility of increasing the load capacity of roads. Conduct field experiments in two locations traveled by heavily loaded vehicles within 2012. Install devices to measure load capacity, observe pavement deterioration, and recommend

The construction of complex control and service (weigh and inspection) stations is under way at the existing toll gates of Ulaanbaatar in 5 locations to control overloading. Furthermore, MRT plans to mobilize inspectors equipped with portable weighing scales at 15 strategic road segments.



measures to improve pavement design.

OBJECTIVE 3: Increase return on investment for the road sector

3.1 Plan investment in road construction based on prioritization of socioeconomic significance and return on investment

3.1.1 Update the Road Master Plan to be consistent with the policy of regional development, mining, and tourism. A master plan on road network development in harmony with state policy on regional development, mining, and tourism is needed.

The key objective of road sector is to connect Ulaanbaatar with all provincial centers by paved roads as declared in Action Plan for 2012-2016 of the Government. The current investment projects include 3,321 kilometers of paved roads and 2,984 meters of bridges financed by the national budget, the Development Bank of Mongolia and international donor agencies.

3.1.2 Elaborate midterm and yearly investment plans within the context of state development policy and strategy. Eliminate decreasing returns on investment and disruption of plans due to unexpected projects and activities not reflected in the approved policy and strategy but reflected in midterm and yearly plans.

A draft road master plan for 2008-2020 was prepared in 2007 with technical assistance from the World Bank. Update of the Road Master Plan is underway.

3.2 Encourage private investment in the road sector

3.2.1 Formulate a favorable legal environment and proper procedures to encourage private investment in the road sector.

3.2.2 Improve the regulations on contracting procedures for concessions and evaluate and track contract achievements. Develop standard contracts for concession and craft regulations for bidding. Develop qualification criteria for contract evaluation, to be followed by the road sector in accordance with the Concession Law in Mongolia.

The implementation of the Concession Law is handled by Ministry of Economic Development and 14 packages of ‘Concessions’ for build and transfer contracts have been issued in 2014. for 14 Aimag to UB roads.



3.2.3 Develop, endorse, and improve state policy documents about road sector–related transportation of mining products. A comprehensive government policy and coordination is needed for the biggest projects and programs in the mining sector and for the transportation of these mining products, given the initiation of road construction by private companies.

MRT is developing plan for coordination of mining roads. The key concept of the plan is to define the main arterial alignment for roads between strategic mining locations, entry ports and transport hubs. The plan will serve as basis for review of the technical feasibility for concessional roads.

3.3 Improve contract administration and procurement procedures

3.3.1 Improve documents related to procurement procedures. Study the bidding documents of countries with internationally recognized bidding experience and customize these to Mongolian conditions. Upgrade and follow regulations for bidding.

The CDTA has developed documents on the procurement process for works and consulting services or fast track competitive bidding. These documents need to be elaborated as operation procedure by MRT.

3.3.2 Reflect more specific feature of the road sector and increase the involvement of professional organizations. Make the procurement procedures more efficient and simple.

3.3.3 Develop and follow rules and regulations for supervisory consultants in road construction and design.

Construction supervision manual is developed by the CDTA team for review and approval by MRT.

3.3.4 Study and introduce international best practices for quality assurance in road construction contracts.

3.3.5 Develop and implement consulting service agreements for road construction on the basis of International Federation of Consulting Engineers standard contracts and consistent with Mongolian conditions.

MRT has signed License Agreement with FIDIC to publish and distribute a translation of the following contract documents:

• Client/Consultant Model Service Agreement, 4th Edition, (2006 White Book)

• Conditions of Contract for Plant and Design-Build, 1st Edition, 1999

• Conditions of Contract for EPC/Turnkey Projects, 1st Edition, 1999



• MDB Harmonized FIDIC General Conditions of Contracts, 2010

3.3.6 Study and implement proper cost estimation procedures for road design, construction, and maintenance, and their enhancement. Apply real market costs in calculating estimates for road design and construction.

Report and recommendations on price escalation clause for FIDIC Contracts is provided by the CDTA.

3.3.7 Apply equal fees for consulting services in road construction and maintenance by increasing consulting service fees independently of contractors’ fees. Increase the supervision fee for road construction consulting services to not less than 4% of total construction cost. Such fees should be projected separately and spent independently from contractor fees.

An indicative budget for construction supervision is increased up to 5% out of the total contract cost. The supervision cost is established at 4-5% out of the total construction budget by the Government Resolution No.124 dated on March 30, 2013 approving the list and budget for road construction projects funded by bond proceeds.

3.4 Strengthen sector capacity for scientific research and laboratory testing

3.4.1 Establish a road research institute and provide related human resources, equipment, tools, and laboratory space. Present scientific research and survey of new techniques, technology, materials, and sophisticated design is outdated due to lack of a special independent research institute.

Research roles have been delegated to the newly established Road Inspection and Research Center. MRT encourages the participation of private sector and NGO in promoting new technologies in forms of EXPO, trade shows, demos etc.

3.4.2 Study and introduce advanced international technology, experience, and management of design, construction, and maintenance of roads and facilities.

MRT is establishing the twinning arrangements with the neighboring countries, Korea, Canada and Australia for training and re-training.

OBJECTIVE 4: Strengthening road sector institutional capacity

4.1 Update, clarify, and strengthen the objectives, obligations, and legal environment of the state agency responsible for the road sector and provide skilled human resources for the implementation of their public responsibility.



4.1.1 Update and clarify the duties, responsibilities of government organizations connected with roads, supported by technical assistance from consultants to strengthen capacity.

The MRT was established under the new Government in September 2012 with a mandate established by the government. That Ministry has been bedding in since that time and o review of functions has been undertaken.

4.1.2 Elaborate and implement an organizational structure for the road sector to ensure a stable management structure, right of independent decision making, transparency, and accountability.

The CDTA did develop a new organizational arrangement for the former DoR which was not adopted by the new Government. A review of the institutional approaches may be appropriate in 2015 after a period of operation of the Ministry structure

4.1.3 Clarify the duties and obligations of the state agency connected with road. The duties and

Responsibilities will include preparing the investment plan for the road network, organizing procurement, ensuring contract administration, ensuring road condition quality, and housing the road asset management system.

Many of these aspects have been addressed as single items through the CDTA – for example, the implementation of the road asset management system. Procurement has now been transferred to the General Procurement Agency.

Road investment planning has yet to be tackled given the sources of funds now are from Budget, Development bank of Mongolia, potential Concessions from the MED and international donors.

4.1.4 Study the possibility of establishing a regional implementation unit to supervise proper road conditions and road maintenance. Change and upgrade the existing structure of road maintenance activity for international and state road networks

Regional implementation was recommended in the DOR structure proposed by the CDTA. The regional plan was not agreed under the new Ministry structure.

Regionalization needs to be investigated into the 2015 year as part of the institutional review recommended above in 4.1.2

4.1.5 Identify the human resources necessary to implement the enhanced duties and obligations of the state road organization and develop a plan for retraining and specialization of personnel. Develop and implement a training plan for personnel to strengthen the road sector until 2012, and encourage its personnel to undergo further graduate and postgraduate studies and other certified training.

The CDTA carried out a full and comprehensive skills and position assessment for MRT. A costed training and development strategy and implementation plan has been developed for 2014-2017.



4.2 Upgrade output-based management

4.2.1 Upgrade the output-based management system in the state road organization and clarify performance and evaluation criteria.

The Ministry approach to road sector management put this work on hold for the CDTA project period.

4.2.2 Evaluate the performance of the state road organization on the basis of the following:

• creation of the midterm investment plan and its achievement; • creation of the annual investment plan and its achievement (by activity and through contractor); • road condition; and • contractual management.

The evaluation should be conducted in 2015 after 2 budget cycles of the new Ministry have been undertaken

4.2.3 Craft regulation for evaluating performance No progress.

4.3 Expand the involvement of NGOs in the sector related activities

4.3.1 Support and strengthen the capacity of public nongovernment organizations.

4.3.2 Study and identify the involvement of public nongovernment organizations in sector activities, supported by technical assistance consultants.

MOU signed between MRT and the Mongolian Road Association (MRA) in November, 2012 on the areas for cooperation. Training is the key responsibility of MRA.

4.3.3 Some government assignments and tasks will be transferred to public nongovernment organizations. Expand the cooperation between public organizations and professional nongovernment organizations and formulate a favorable legal environment for

The initial review of applications for road construction licenses now is responsibility of the MRA as regulated by MRT.



cooperation on any road sector activity.

4.4 Reorganize the Road Board and intensify its activity

4.4.1 Upgrade the legal environment of the Road Board and reorganize its management structure. Reorganize the composition of the Road Board with representatives of public, private, and civil society in 2012. Rights and duties will be regulated in accordance with the Road Act.

This task is pending for approval of the new Road Law.

4.4.2 The Road Board will support and collaborate with state road organizations. Its main activities are to give recommendations for projection of the investment plan and to collaborate with government organizations to reflect Road Board strategy on road construction supervision and maintenance, marketing the road sector’s achievements to the public, and including road users’ interests in road sector policies.

Same as above

4.5 Upgrade the road sector information system

4.5.1 Formulate proper capacity building to upgrade the road information system. Identify the necessary software, hardware, equipment, tools, human resources, and funding

4.5.2 The following information will be included in the road information system:

• a database on the state road network; • midterm and long-term plans to develop the road network; • information about procurement status; • progress of project and program implementation; • reports from the Department of Roads, Ulaanbaatar DOR,

The contract management system (CMS) for monitoring and assessment of contract performances is now installed at MRT and UBDOR.

Contractors and Consultants Registration System (CCRS) is developed with data over 200 road construction and consultant companies.

GIS based and road network data application is developed to interface with



and the Road Board; • information from contractors and consulting firms; • information about road conditions; and • road user assessments.

CMS, dTIMS and CCRS.

4.6 Support and assist the local administrative units of aimags in developing an aimag level road network plan

4.6.1 Each aimag should identify and endorse a local road network, create a road information database, and elaborate and implement midterm and annual plans to develop the local road network. Support and assist in the creation of an administration and management methodology for local administrative units to follow in developing the local road network

Progress has not been tracked by the CDTA


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