ASIAN DEVELOPMENT BANK PCR:PAK · ASIAN DEVELOPMENT BANK PCR:PAK 16143 PROJECT COMPLETION REPORT ON...

ASIAN DEVELOPMENT BANK PCR:PAK 16143

PROJECT COMPLETION REPORT

ON THE

RURAL ACCESS ROADS PROJECT (Loan 1401-PAK[SF])

IN

PAKISTAN

October 2003

CURRENCY EQUIVALENTS

(as of 17 July 2003)

Currency Unit – US Dollar (US$)

At Appraisal At Project Completion September 1995 July 2003

PRe1.00 = $0.0318 $0.017 $1.00 = PRs31.40 PRs57.70

ABBREVIATIONS ADB ― Asian Development Bank BME ― benefit monitoring and evaluation BOT ― build operate transfer CWD ― Communications and Works Department ECNEC ― Executive Committee of the National Economic Council EA ― Executing Agency EIRR ― economic internal rate of return FIDIC ― International Federation of Consulting Engineers FMR ― farm-to-market road LCB ― local competitive bidding MLGRD ― Ministry of Local Government and Rural Development MTR midterm review NHA ― National Highway Authority NWFP ― North West Frontier Province PC-I ― Planning Commission Proforma I PEC ― Project Engineering Cell PMC ― project management consultants PIO ― project implementation officer PMU ― Project Management Unit PPTA ― project preparation technical assistance TA ― technical assistance VOC ― vehicle operating costs

NOTES

(i) The fiscal year (FY) of the Federal Government of Pakistan and the provincial governments ends on 30 June. FY before a calendar year denotes the year in which the fiscal year ends. For example, FY2000 ends on 30 June 2000.

(ii) In this report, "$" refers to US dollars.

CONTENTS

Page

BASIC DATA ii

MAP vii

I. PROJECT DESCRIPTION 1

II. EVALUATION OF DESIGN AND IMPLEMENTATION A. Relevance of Design and Formulation 2 B. Project Outputs 3 C. Project Costs 3 D. Disbursements 4 E. Project Schedule 5 F. Implementation Arrangements 5 G. Conditions and Covenants 6 H. Related Technical Assistance 6 I. Consultant Recruitment and Procurement 7 J. Performance of Consultants, Contractors, and Suppliers 8 K. Performance of the Borrower and the Executing Agency 9 L. Performance of ADB 10

III. EVALUATION OF PERFORMANCE A. Relevance 10 B. Efficacy in Achievement of Purpose 10 C. Efficiency in Achievement of Outputs and Purpose 12 D. Preliminary Assessment of Sustainability 13 E. Environmental and Sociocultural Impacts 13 F. Institutional Strengthening and Other Impacts 13

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS A. Overall Assessment 14 B. Lessons Learned 14 C. Recommendations 15

APPENDIXES 1. Project Framework 18 2. Chronology of Events 21 3. Details of Project Roads 22 4. Detailed Project Cost 26 5. Disbursements 27 6. Project Implementation Schedule 28 7. Status of Compliance with Loan and Project Agreement Covenants 29 8. Summary of Civil Works Contract Packages 32 9. Economic Re-evaluation 37 9A. Comparison of Economic Returns 39

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BASIC DATA A. Loan Identification 1. Country 2. Loan Number 3. Project Title 4. Borrower 5. Executing Agency 6. Amount of Loan 7. Project Completion Report Number

Pakistan 1401-PAK(SF) Rural Access Roads Islamic Republic of Pakistan Ministry of Environment, Local Government and Rural Development SDR95,328,000 ($140 million estimated) PCR: PAK 781

B. Loan Data 1. Appraisal – Date Started – Date Completed 2. Loan Negotiations – Date Started – Date Completed 3. Date of Board Approval 4. Date of Loan Agreement 5. Date of Loan Effectiveness – In Loan Agreement – Actual 6. Closing Date – In Loan Agreement – Actual – Number of Extensions 7. Terms of Loan – Interest Rate – Maturity (no. of years) – Grace Period (no. of years)

3 July 1995 13 July 1995 18 September 1995 19 September 1995 9 November 1995 18 January 1996 17 April 1996 28 March 1996 31 December 2000 31 October 2002 2 1 per cent 35 years 10 years

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8. Disbursements a. Dates Initial Disbursement

16 December 1996

Final Disbursement

Not closed

Time Interval

Effective Date

28 March 1996

Original Closing Date

31 December 2000

Time Interval

57 months

b. Amount ($ million) Category

Original

Allocation a

Last Revised

Allocation

Amount

Canceled

Net Amount

Available

Amount

Disbursed

Undisbursed

Balance Civil Works 100.46 114.89 (14.43) 106.26 102.13 4.13 Consulting Services 9.90 15.22 (5.33) 13.86 13.35 0.51 Project Administration 1.50 1.50 0.00 1.37 1.02 0.35 Service Charge 2.50 2.50 0.00 2.25 2.25 0.00 Unallocated 25.59 0.00 25.59 0.00 0.00 0.00 Total 139.94 134.11 5.83 123.74 118.75 4.99 a Based on SDR: US$ rate prevailing at appraisal (1.47). 9. Local Costs (Financed) – Amount ($) 52.43 – Percent of Local Costs 58.82 – Percent of Total Cost 33.49 C. Project Data

1. Project Cost ($ million) Cost Appraisal Estimate Actual

Foreign Exchange Cost 77.20 67.39 Local Currency Cost 100.80 89.13 Total 178.00 156.52

2. Financing Plan ($ million) Cost Appraisal Estimate Actual Implementation Costs Borrower-Financed 38.00 37.76 ADB-Financed 137.50 116.51 Other External Financing – – Total 175.50 154.27 IDC Costs Borrower-Financed ADB-Financed 2.50 2.25 Other External Financing – – Total 178.00 156.52

ADB = Asian Development Bank, IDC = interest during construction.

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3. Cost Breakdown by Project Component ($ million)

Component Appraisal Estimate Actual A. Right-of-Way 0.50 0.00 B. Civil Works Construction 138.00 139.91 C. Consulting Services for 1. Construction Supervision 7.15 13.10 2. Preparation of RARP IIa 2.75 0.24 D. Project Administration 1.00 1.02 E. Contingencies 25.60 – F. Service Charge During Construction 2.50 2.25 Total 178.00 156.52 RARP= Rural Access Roads Project a proposed ensuing project. 4. Project Schedule

Item Appraisal Estimate Actual Date of Contract with Consultants Supervision Consultants October 1995 July 1996 Management Consultants March 1996 December 1996 TA Consultants March 1996 December 1996 Completion of Engineering Designs March 1996 February 1997 Civil Works Contract Date of Award January 1996 March 1997 Completion of Work June 2000 October 2002 TA = technical assistance. 5. Project Performance Report Ratings

Ratings Implementation Period

Development Objectives

Implementation Progress

1 April 1996 to 30 June 1996 S S 1 July 1996 to 31 December 1996 S S 1 January 1997 to 30 June 1997 S S 1 July 1997 to 31 December 1997 S S 1 January 1998 to 30 June 1998 S S 1 July 1998 to 31 December 1998 S S 1 January 1999 to 30 June 1999 S S 1 July 1999 to 31 December 1999 S S 1 January 2000 to 30 June 2000 S S 1 July 2000 to 31 December 2000 S S 1 January 2001 to 30 June 2001 S HS 1 July 2001 to 31 December 2001 S S 1 January 2002 to 30 June 2002 S S 1 July 2002 to 31 December 2002 S S 1 January 2003 to 30 June 2003 S S 1 July 2003 to 31 December 2003 S S S = satisfactory, HS = highly satisfactory.

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D. Data on ADB Missions

Name of Mission

Date

No. of Persons

No. of Person-Days

Specialization of Members a

Fact-Finding 1–18 May 1995 2 36 a, b Appraisal 3–13 Jul 1995 2 22 a, h Review 9–22 Sep 1996 1 13 b Review 17 May – 3 Jun 1997 2 36 b, j, k Review 3–20 Nov 1997 3 54 b, f, j Review 7–17 Feb 1999 2 18 f, j Mid-Term Review 2–30 Aug 1999 3 70 f, i, j Review 27 Mar–13 Apr 2000 2 21 f, l Special Review 28–30 Aug 2000 1 3 f Review 16 Oct – 2 Nov 2000 1 18 f Review 15–17 Aug 2001 3 9 f, g, j Review 27 Aug – 1 Sep 2001 1 6 g Review 31 Oct – 1 Nov 2001 1 2 f Review 14–16 Nov 2001 2 6 f, j Review 8–15 Jul 2002 1 8 j Review 9–26 Sep 2002 2 36 g, j Project Completion Review b 4–15 Jul 2003 3 36 g, j, k a a = project specialist, b = engineer, c = financial analyst, d = counsel, e = economist, f = project implementation

officer, g = senior investment officer, h = programs officer, i = senior environment specialist, j = project analyst, k = staff consultant, i = resident representative.

b The project completion report was prepared by Allan Lee, Senior Investment Specialist.

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I. PROJECT DESCRIPTION

1. The objective of the Rural Access Roads Project, as described in the Report and Recommendation of the President (RRP), was to assist the Government of Pakistan in improving farm-to-market roads (FMRs) in four provinces: Sindh, Punjab, North West Frontier Province (NWFP), and Balochistan. A particular objective was to (i) support agricultural and rural development, including employment generation in rural small-scale industries and trades to reduce poverty; (ii) reduce transport costs to facilitate more efficient movement of goods and passengers; (iii) enhance the mobility of rural communities, including the provision of better access to health, education, and social amenities; and (iv) strengthen domestic capabilities for designing and constructing the country’s rural access road network. Appendix 1 gives the project framework. 2. The Project emerged from preparation work that international and domestic consultants conducted through several previous studies: Loan 1185-PAK, Provincial Highways Project,1 Loan 917-PAK: Second Farm-to-Market Roads Project,2 and TA 1778-PAK: Third Farm-to-Market Roads Project.3 The Project roads were selected by economic priority from 3,700 km of important farm-to-market roads. The provincial governments identified the roads on the basis of their respective road master plans financed from their own funds, with assistance of domestic consulting firms. Appendix 2 gives the Project’s chronology of events. 3. The scope of the work at appraisal comprised:

(i) improvement of about 1,940 km of farm-to-market roads in 39 selected districts (Table 1) of Sindh, Punjab, NWFP, and Balochistan provinces, including 323 km of roads carried over from Loan 917-PAK because of funding constraints; and

(ii) provision of consulting services for: (a) project management activities and construction supervision, and (b) feasibility studies and detailed engineering for a proposed second Rural

Access Roads Project. 4. Substitution of project roads was permitted, subject to approval of the Asian Development Bank (ADB), provided that (i) the introduced road had already been identified as feasible under TA (technical assistance) 1778-PAK or Loan 1185-PAK, and met the requirement of 12% economic internal rate of return (EIRR); and (ii) the substituted road was to be taken up through another capital development program. 5. The executing agencies (EAs) for the Project were the Ministry of Local Government and Rural Development (MLGRD), and the communications and works departments (CWDs) in each province. Thus, five EAs were responsible for project implementation. Within MLGRD, the manager of the project management unit (PMU) for ADB-financed farm-to-market roads took

1 ADB. 1992. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the

Islamic Republic of Pakistan for the Provincial Highways Project. Manila. (approved on 5 November 1992, for $165.4 million).

2 ADB. 1988. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the Islamic Republic of Pakistan for the Second Farm to Market Roads Project. Manila. (approved on 8 November 1988, for $106 million).

3 ADB. 1992. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the Islamic Republic of Pakistan for the Third Farm to Market Roads Project. Manila. (approved on 5 November 1992, for $250,000).

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responsibility for the Project. Similarly the project directors of the four project engineering cells (PECs) at the CWDs continued to be responsible for project implementation.

Table 1: Districts Included in the Rural Access Roads Project

Sindh Province

Punjab Province

North West Frontier Province

Balochistan Province

Badin, Dadu, Nawabshah, Shikarpur, Sukkur, Thatta

Bahauddin, Bahawal Nagar, D.G. Khan, Jhelum, Kasur, Khanewal, Khushab, Layyah, Mandi, Mianwali, Muzaffargarh, Multan, Narowai, Okara, Pakpattan, Rahim Yar Khan, Rajanpur, Rawalpindi, Sahiwal, Vehari

Abbottabad, Bannu, Charsadda, D.I. Khan, Dir, Mardan, Mansehra, Nowshera, Peshawar. Swabi, Swat

Kalat, Khuzdar, Musakhel, Panjgoor

Source: MLGRD – Project Completion Report, 2002

II. EVALUATION OF DESIGN AND IMPLEMENTATION

A. Relevance of Design and Formulation

6. The Project was consistent with ADB’s operational strategy to facilitate traffic movement at reasonable transport costs and to provide all-weather access to villages. Covenants in the loan documents were designed to protect the substantial investments that ADB had already made by requiring a commitment to maintenance of the road network constructed under Loan 7584 and Loan 917 (footnote 2). 7. The project design was relevant and consistent with the Government’s objective of supporting agricultural, industrial, and rural development by improving the road network and, thereby, reducing transport costs to facilitate more efficient movement of goods and passengers. The Government’s Eighth Five-year Development Plan (1993–98) notes that the infrastructure requires adequate maintenance (financed from current revenues) and continued improvement to effectively meet the growing demands of an expanding economy. The design placed less emphasis than was expressed in the Eighth Plan and ADB’s operational strategy on strengthening of the institutional capacity for road maintenance and road safety, and on financial recovery from road transport users. 8. The candidate roads were prescreened by several criteria, including that they had “…no arterial or collector road functions…” This follows from the project origins as a “farm-to-market” project. But some roads, such as the Gwargo-Panjgur road in Balochistan, have a potential arterial function. Others, such as the Kanju-Baghderi road in NWFP, provide an attractive alternative to the national and provincial highways. The Mangochar-Zard road in Balochistan will be a shortcut between national highways N40 and N5 upon completion of the road being constructed from Zard to N40. Increased network connectivity was, in fact, another criterion, so there was a potential conflict among the criteria. Where the roads have provided a connectivity 4 ADB. 1985. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the

Islamic Republic of Pakistan for the Farm to Market Roads Project. Manila, (approved on 26 November 1985, for US$30 million).

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function, concerns have arisen about the adequacy of the design, particularly if the roads attract heavy vehicles. The situation was recognized, and the designs were changed to accommodate heavy vehicles, for the Kanju-Baghderi and Arrore-Pir Buchal Shah roads in Sindh. ADB required that a toll be imposed on quarry trucks using the Arrore-Pir Buchal Shah road. 9. Several substitutions and amendments were made during implementation. These were generally in response to developments after appraisal and thus, increased the Project’s relevance to provincial objectives. One new road (Thandiani-Pattan Khurd in NWFP) varied significantly, both in scale and scope, from the original project concept, with heavy emphasis on connectivity. All variations were reviewed for feasibility by the TA consultants and, thus, technically complied with the loan requirement for selection from roads identified as feasible under the TA. Appendix 3 lists all of the roads, including those included at appraisal and subsequent changes. 10. Project preparatory technical assistance (TA 1778) (footnote 3) was provided for the selection of project roads and for review of the detailed designs of supervising consultants. The TA was also used to assess the feasibility of roads proposed for substitution in early stages of the Project. Many of the proposed roads were, at the time, only unformed tracks with little or no existing traffic, so a scoring system was developed to prioritize roads based on population and land use data for their areas of road influence. Relating this approach to the standard EIRR measure was sometimes difficult, thus increasing the uncertainty of results. This was addressed through sensitivity analysis. The technique was appropriate under the circumstances, and the work was undertaken satisfactorily. B. Project Outputs

11. At appraisal, the Project outputs were: (i) improvement of about 1,940 km of farm-to-market roads in 39 districts of the four

provinces, and (ii) feasibility studies and detailed engineering for the second Rural Access Roads

Project. 12. At project termination, 1,962 km of 137 roads had been improved through 187 civil contract packages and 3 environmental mitigation contracts. A total of 449 km of roads (362 km in Punjab, 42 km in Sindh, and 45 km in NWFP) were, with ADB agreement, substituted early in the Project. The substituted roads were not necessarily the same lengths as the original roads. Overall, the substitution caused a small increase in road length, but the total cost remained within the dollar allocations. 13. Feasibility studies and detailed engineering for an ensuing project were the subject of TA. The first phase of the TA was to (i) screen 3,500 km of roads and prepare feasibility studies for a subsequent loan project, and (ii) prepare a transport study. The second phase was to (i) supervise and coordinate domestic design consultants, and (ii) advise on technical and contractual matters. ADB canceled the second phase because it changed emphasis from “umbrella” projects to separate projects for each province. C. Project Costs

14. The total project cost, including the service charge on the loan during construction, was estimated at appraisal to be $178 million equivalent, comprising a foreign exchange component of $77.2 million (43%) and a local currency component of $100.8 million equivalent (57%). The

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base cost for civil works was estimated on the basis of bid prices for similar works in TA 917-PAK, (footnote 2) and corresponded to PRs2.2 million ($71,000)/km.5 15. The final project cost was $156.52 million (Appendix 4). The overall cost decrease was mainly because of a change in the exchange rate from PRs31.40/$1 at appraisal to PRs57.70/$1 at project completion. In Pakistan rupees, the final construction cost of civil works was PRs7,184 million compared with the initial estimated cost, or Planning Commission Proforma 1 (PC-1) of PRs4,264 million—a 65% cost increase. Most of the cost increase in rupees was between initial project preparation and tender evaluation. Increases in construction costs over tendered amounts were limited. In some cases, costs were reduced by re-engineering the original designs. 16. The final consultancy cost was PRs714 million compared with the original estimate of PRs288 million—a 248% increase. The increase between PC-1 and the tendered prices was only 12%. Most of the cost increase was caused by the delay in completion of construction, as all supervision contracts were extended pro rata. 17. The main reasons for the rupee cost increases were: (i) concept phase and PC-1 preparation:

(a) engineering was sometimes insufficient at the concept stage in survey and route location, hydrology, geotechnical investigation, and drainage structure design;

(b) cost estimates were sometimes unrealistic at time of preparation of the PC-1, and during preparation of engineering estimates at time of tender; and

(c) awareness was insufficient regarding the need for, and cost of, environmental protection, especially in areas of high environmental sensitivity;

(ii) implementation phase and construction management: (a) with a few exceptions, failure of contractors to apply basic principles of

construction management led to a continuing struggle to meet construction schedules, and

(b) delays in construction led to proportionate increases in supervision costs; and

(iii) role of the sponsoring and executing agencies: (a) inexperience of the EAs in following contract conditions of the

International Federation of Consulting Engineers (FIDIC), especially regarding their roles as “the engineers,” caused contractors to fail to enforce compliance; and

(b) the cumbersome procedures of federal and provincial governments delayed disbursement of funds, which caused cash flow problems for the contractors; Some had to slow or halt work.

D. Disbursements

18. Disbursement of ADB funds was delayed by the cumbersome processing procedures of both federal and provincial government, along with the PMUs’ lack of executive powers until late in the Project. Late transmission of liquidation documents to MLGRD and ADB, documenting approved payments by provincial governments to contractors, caused further delays.

5 The final cost of Loan 917-PAK (footnote 2) worked out at PRs2.4 million per kilometer.

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19. Funding disbursements in NWFP and Balochistan were often delayed because of (i) insufficient funds in the provincial governments’ annual development sources, and (ii) the provision in the Loan Agreement that prohibits ADB loan disbursement until counterpart funding is available. 20. ADB justifiably suspended funds to the provinces on two occasions:

(i) in Balochistan, because the provincial government failed to comply with the Loan Agreement covenant that required prior completion and remedial work on the Khanozai–Loralai road, which commenced under Loan 917-PAK (footnote 2); and

(ii) in NWFP, because the provincial government did not stop contractors who continued to build environmentally damaging earthworks, despite ADB’s clear directives.

21. Delays in disbursement, in turn, delayed the Project. Many contractors lacked the funds to continue work while awaiting payment. Appendix 5 summarizes the Project’s disbursement pattern. E. Project Schedule

22. Delays in implementation caused a delay in project completion of more than 2.5 years. The main causes of delays were as follows: (i) The project designs of several roads were changed to improve their levels of service or to meet changed requirements. Some roads were substituted, which meant they had to be reevaluated and resubmitted for approval. (ii) Some contractors performed poorly. Some had inadequate resources, which delayed mobilization. Insufficient financial backing led to cash flow problems. and (iii) Delays in construction were exacerbated by delays in fund disbursement and, sometimes, a lack of working capital. Smaller contractors often had no choice but to stop work until money was available. ADB granted two loan extensions, changing the completion date from June 2000 to October 2002. Appendix 6 gives the implementation schedule. F. Implementation Arrangements

23. MLGRD and the CWDs were the EAs for the Project. The PMU manager in MLGRD and the directors of the four PECs at the CWD level were responsible for project implementation and coordination, and liaison with ADB. MLGRD was responsible for (i) monitoring and coordination of CWD obligations, and liaison with ADB regarding them; (ii) engaging a general consultant to supervise the civil works construction; and (iii) engaging consultants for feasibility studies for an ensuing rural access road project. CWDs were responsible for (i) prequalification of domestic contractors for the civil works, (ii) implementation of these works through contracts, (iii) issuance of variation orders to the local design consultants for supervision of civil works construction, and (iv) engagement of domesticdesign consultants for detailed engineering for the Project. 24. No changes were made to the implementation arrangements agreed upon at appraisal. The inclusion of MLGRD was to provide institutional support and strengthening for the provincial CWD. It also benefited the CWD because it provided a convenient link with ADB—but it added an extra administrative step in the process. The provincial governments felt that MLGRD presence did not contribute significantly to the Project’s overall success. They have learned by undertaking the Project, and now consider themselves in a position to undertake projects on their own. ADB has now adopted a policy of undertaking projects directly with provincial governments.

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25. The performance of the provincial EAs was generally satisfactory, although problems arose in four areas: (i) finalizing of the list of roads, (ii) disbursing of local funds, (iii) acting as “engineers” under FIDIC, and (iv) ensuring that project sites were handed over free of impediments. G. Conditions and Covenants

26. There were 21 loan agreement covenants and 3 project agreement covenants: 17 loan and 2 project agreement covenants were complied with; the remainder were partly complied with. Appendix 7 lists the covenants. The areas of partial compliance are as follows:

(i) Maintenance. Further evidence is needed that funding is adequate and that all covenants are being met. Provincial CWDs claimed that maintenance was appropriate, but this was difficult to verify,

(ii) Road safety. Selective road safety improvements are being carried out on some provincial highways, but commitment to an action plan is lacking.

Both road maintenance and road safety are critical, so it is important that ADB follow up on these areas of incomplete compliance. The form of covenant for maintenance, however, could be reconsidered in future projects (para 28). 27. The funding requirement for maintenance in the covenants related to both this project and to maintenance of roads constructed through previous ADB projects (footnotes 1, 2, and 3). A lack of commitment to ongoing maintenance reduces the long-term sustainability of road sector projects, and must be addressed; thus, a lack of compliance with this covenant is an important issue. But specifying a minimum maintenance commitment in covenants may not be appropriate or efficient. Some roads may require more maintenance and some, less maintenance (at least initially) than the PRs35,000/km specified in the covenants. Limiting this requirement to ADB-built roads ignores the wider problem of inadequate road maintenance. 28. Pressure on government funds is a major reason for the general shortfall in maintenance expenditures. The requirement to find counterpart funding for new projects increases that pressure. Rather than requiring a commitment of government funds for road maintenance, it may be better for ADB to assist the Government to (i) expand its revenue base through road user charges (maintenance-only charges need not be as high as those required for “build-operate-transfer” [BOT] projects); and (ii) reduce CWD salary expenditures through more effective use of contracting, and more appropriate staffing levels. H. Technical Assistance

29. In conjunction with the Project, ADB provided TA 24376 on a grant basis to help the Government screen and carry out feasibility studies on 3,500 km of candidate farm-to-market roads in selected districts in the four provinces, and detailed engineering for improvement of about 2,000 km of high-priority roads. The provincial governments selected the districts by criteria such as high poverty levels and potential for economic development. The CWDs prescreened the candidate roads by criteria defining each road’s tertiary function, minimum

6 ADB. 1995. Technical Assistance to Islamic Republic of Pakistan for the Second Rural Access Roads Project,

Manila. (approved on 9 November 1995, for $250,000). 7 The opportunity was nevertheless taken to improve the alignment where this could be done without additional cost.

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length, and influence area. Roads serving the relatively poor were given priority, provided a minimum economic return on the road investment could be obtained. 30. The consultants also investigated the possibility of including a component in an ensuing loan project for replacing the narrow steel-rimmed wooden wheels on bullock carts, with their heavy point loads, with rubber tires through the use of axles recycled from scrapped cars, jeeps, vans, and pickups. The costing and implementation arrangements for this proposed scheme were also part of the consultants’ investigations. 31. The contract was awarded in mid 1997 for 20 months of international consultancies and 200 months of domestic consultancies. The international consultant was mobilized to initiate phase 1 in July 1997. The consultant’s contract was extended to June 1999 to complete the feasibility studies of selected roads (the delay was caused by the Punjab government’s late submission of project roads). The transport study was completed and the final report submitted in April 1999. ADB canceled phase II of the TA because of a change in ADB strategy. Under the revised strategy, ADB lends directly to provincial governments. As a result, only 18 international consultant-months, and 30 domestic consultant-months, were used. No separate completion report for this TA was prepared. 32. Some roads included under TA 2437 (footnote 6) have been considered for inclusion in subsequent ADB sector projects for road development in each province. Other such roads have been taken up in their own programs. I. Consultant Recruitment and Procurement

1. Consulting Services 33. Consultants were selected and engaged in accordance with ADB’s Guidelines on the Use of Consultants. As envisaged at appraisal, the four provincial government CWDs engaged 12 groups of domestic consultants to carry out the detailed design and supervision of the civil works. Because project completion was delayed, 2,545 person-months of consultant supervision were financed vs 1,500 person-months estimated at appraisal—a 70% increase. MLGRD engaged an association of international and domestic firms as project management consultants (PMCs) to strengthen the federal ministry’s role in the road development program. The PMCs assisted in the project administration, monitoring, and quality assurance. A total of 58 international person-months was required vs 42 months estimated at appraisal, and 176 domestic person-months were required vs 180 person-months at appraisal—again, because of the delay in project completion.

2. Civil Works 34. Because of the nature of the work, the scattered locations of project roads, and the relatively small size of the contracts (the average road contract length was 11 km), local competitive bidding (LCB) procedures were used. One hundred ninety construction packages, including eight separate bridge contracts for a total road length of 1,962 km, were awarded. Three environmental mitigation contracts were subsequently awarded in NWFP. Appendix 8 gives details of contract packages.

3. Selection of Contractors 35. The selection of contractors involved prequalification through established Government procedures. Many companies were awarded one or more contracts that were beyond their

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capabilities. Government bureaucracy and undeserved protection by courts often rendered subsequent efforts to remove defaulting contractors ineffective and laborious. This led to delays and, sometimes, total stoppages. A number of contracts were reassigned, some more than once, during the Project. Failure of the preselection process to ensure that only capable contractors prequalified caused delays and consumed a disproportionate amount of consultant and CWD time.

4. Equipment Procurement and Use 36. Equipment procured under Loan 917-PAK (footnote 2), but not used because of commissioning delays, was made available for the Project. Popular plant items such as graders and compactors were lent out and distributed to contractors on a first-come, first-serve basis with the contractors paying less than market hire charges. Some contractors who fell behind in their programs because they had not mobilized sufficiently blamed the CWD for not making equipment available. ADB’s original intention of strengthening the local contracting industry by transferring equipment to the private sector did not materialize because of overruling government procedures―administrative problems that were not anticipated. Making provisions for contractors to purchase their own equipment would be preferable in the future. 37. The bitumen distributors and chip spreaders procured specifically for mechanical surface treatment had not been commissioned when the Project started, and were not used. PMC took up the issue of commissioning with MLGRD, which subsequently arranged due clearance through the Department of Supplies. A training program was provided as part of the general consultant’s scope of services for introduction of mechanical methods for surface treatment, but contractors were slow to adopt the new approach. Sindh was the only province where it was used at all. Distribution of small-capacity compaction equipment (walk-behind rollers and plate compactors) in the field was also delayed. Acceptance of mechanized surface treatment has increased since project completion; the equipment provided to Punjab and Sindh provinces is now being used effectively. J. Performance of Consultants, Contractors, and Suppliers

38. The performance of the domestic consultants in design and supervision duties was generally considered satisfactory. The high quality of construction leading to durable and, hence, sustainable roads that require minimum maintenance expenditures can be attributed to the diligence of the supervision teams. Weak areas identified were (i) insufficient support from the consultants’ head offices; (ii) inadequate engineering input during design, causing uneconomic designs or the need to re-engineer during construction, or both; and (iii) an apparent lack of motivation to pressure the contractors to complete their construction programs in the earliest realistic time. The delay in construction led to an increase in supervision time and a proportionate cost increase. The total supervision cost increased by 35%—from $9.90 million to $13.35 million. 39. The performance of the domestic contractors was generally satisfactory. Road construction was generally of high quality and in accordance with specifications. The standard of work was considered higher than in previous phases. 40. All but two roads were completed. The remaining two roads are almost complete. All roads are open to traffic and offer substantial benefits, both in reduced transport costs, and in higher social welfare for the inhabitants of their areas of influence.

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41. Areas for improvement regarding the local contracting industry include the following: (i) The prequalification procedure should be more rigorous, to preempt unqualified

companies from bidding for one or more contracts for which they are either not sufficiently resourced or financially capable. Those contractors who have performed well under previous loans should be prequalified for future work. Contractors who haven’t performed well should be restricted to low-value contracts. Marginal performers should be reassessed stringently .

(ii) Simpler contract documents, especially technical specifications, should be introduced. Confusion resulted from the issue of three sets of specification documents: (i) the National Highway Authority (NHA) General Specifications, (ii) the General Specifications, and (iii) the Particular Specifications.

(iii) Contractors should be stricter in the expenditure of project payments, especially mobilization advances and interim payment certificates that often divert money from the Project, causing unnecessary cash flow shortages and subsequent delays.

(iv) Much improvement is needed among contractors in project planning and resource management to avoid a lack of resources on site, and subsequent delays. The concept of target dates needs developing. Dependency on the CWDs for equipment hire should be discouraged in the future.

(v) Civil works contractors working in hilly and environmentally sensitive areas in NWFP did not realize the need to minimize environmental damage. They often dumped spoil material over slopes instead of hauling it to specified spoil areas that the engineers had identified.

42. Most parties felt that the contractor prequalification process was open to influence, which allowed too many weak and inexperienced contractors to prequalify. That resulted in some unrealistic bids. These contracts were often slow because the contractors lacked resources. The original tenderers ultimately had to be replaced in some cases. It was felt that a more objective prequalification process was needed, and that the CWDs should be able to reject unrealistically low bids. K. Performance of the Borrower and the Executing Agency

43. The performance of the Government and the EAs was satisfactory, considering the Project’s complexity. Much coordination was required among federal authorities; the four provincial governments, each of which has considerable autonomy; and the consultants responsible for implementation of 187 civil and 3 environmental contracts across Pakistan. Reporting requirements were generally met satisfactorily. 44. The Project suffered some initial delays in implementation, especially as it related to the substitution of 362 km of roads in Punjab where new designs were required before contracts could be awarded. Some delays were experienced due to cash flow problems within the provinces where funds for the local component of the mobilization advances to contractors were not immediately available. 45. The Punjab CWD (South) and Sindh CWD performed best in implementation. Sindh had completed more than 90% by the original completion date of June 2000, and completed implementation in December 2001. Punjab was 80% complete in June 2000, but was not 100% complete until October 2002. NWFP was 75% complete, and Balochistan 35%, in June 2000. These provinces had essentially completed their works by October 2002.

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46. Disbursement delays, both from the federal and the provincial governments, were a problem for the Project. Unnecessarily cumbersome procedures caused delays. Limited executive powers delegated to the manager of the MLGRD PMU precluded prompt disbursements. Liquidation documents to be supplied by the provincial CWDs were delayed in reaching the federal ministry and ADB. This caused ADB to occasionally suspend disbursements until receiving evidence of approved expenditures. 47. The performance of the PMU was considered satisfactory as the coordinating focal point of this complex project. The PMC’s monitoring and control of the Project through the PMU office was adequate. Additional PMU staff might have shortened the time needed to process invoices of both the contractors and consultants, which would have made payments more timely. L. Performance of ADB

48. The performance of ADB was considered satisfactory. The appointment of a project implementation officer (PIO), based at the Pakistan Resident Mission late in 1999 (6 months after the implementation phase began), was a major benefit to the Project. The PIO undertook regular missions and reviews of project performance, especially in expediting progress and improving fund disbursement, through close and continued coordination with the project agencies, particularly the PMU and the provincial CWDs. 49. During the latter part of the Project, when nonperforming contractors were responsible for most delayed contracts, ADB supported the efforts of the PMU, PMC, and CWDs to make the contractors develop revised short-term construction schedules and resource the works adequately. 50. ADB became particularly involved in environmental assessment and mitigation works in NWFP, and gave much support to the PMU and PMC in the approval process and execution of mitigation. ADB rightly placed considerable emphasis on the impact of displaced material on vegetation and watercourses below the project roads. But perhaps the more general issue of slope stability and thus, long-term road sustainability, should have received more attention.

III. EVALUATION OF PERFORMANCE

A. Relevance

51. The Project is in line with the Government’s strategy for development of the provincial road system that supports agriculture and industry. The strategy involves reducing transport costs and thus facilitating more efficient movement of goods and passengers; supporting rural development by enhancing the mobility of rural communities; improving the Government’s capacity for road maintenance management, including contract maintenance and quality control; and improving road safety. The Project is considered highly relevant. B. Efficacy in Achievement of Purpose

1. Achievement of Outputs and Outcomes 52. The desired output goals of the Project’s main component, improvement and construction of rural access roads, were achieved. A total 1,962 km were improved, compared with the target at appraisal of 1,940 km. The slight increase was caused by substitution of roads early in the Project. Achievement of the project goals (outcomes) was monitored for a sample of

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roads (Table 2). Overall, the monitoring indicated achievement of the expected outcomes. The achievement of increased farm production is more difficult to judge. A project framework was not required at the time the Project was appraised, and farm production was not monitored. This report is, therefore, based on other information available to the Review Mission, including anecdotal evidence of changes in land use due to road construction. The Mission’s assessment is set out in the following paragraphs, (paras. 53-58).

Table 2: Assessment of Outcomes

Traffic Count (vehicles/day)

Passenger Fare (PRs/trip)

Truck Haulage Rate (PRs/Km)

Provincial Road No.

District

Preconst Postconst Preconst Postconst Preconst Postconst Sindh 21101 Sukkur 45 456 0.46 0.50 0.65 0.29 21406-A Nawabshah 38 46 2.00 0.40 70.00 15.00 Punjab (South)

18314 Rahim Yar Khan

80 211 0.54 0.40 n.a. 15.00

16602-A Pakpattan 641 1,250 0.90 0.75 n.a. 9.00 16101 Multan 87 232 1.00 0.65 n.a. 16.50 16201 Vehari 95 311 1.20 0.90 n.a. 16.50 16304 Sahawal 613 1345 1.50 0.70 n.a. 19.00 Punjab (North)

15311 Mandi Bahauddin

28 148 1.54 0.65 1.20 0.78

14410 Okara 28 402 n.a. 0.40 0.28 0.10 11214 Rawalpindi 57 74 2.77 1.55 3.33 1.50 NWFP 2314B Swat 1,964 4,977 0.45 0.50 6.35 5.15 2101 D.I.Khan 29 73 0.45 0.25 n.a. 16.00 Balochistan 42401 Musakhel 54 97 0.40 0.35 0.35 0.21 Const = construction. Source: MLGRD, Traffic Counts n.a. = not available

2. Achievement of Project Benefits 53. The feasibility study was based on the standard proposition that benefits to society can be estimated by calculating the cost savings (including the value of savings in travel time) to existing, diverted, and generated traffic. Thus, an assessment of the vehicle operating costs and time savings is the normal way to calculate the probable economic worth of an investment. This calculation is the basis of the economic internal rate of return (EIRR). The total calculated benefit on a sample of roads used for evaluation was similar to that originally projected. Reduced passenger fares and freight rates observed in project evaluation are evidence that this benefit is being passed on to end users. 54. The degree of traffic generation is an indirect indicator of the level of benefit from a transport improvement project. High traffic generation normally implies significant benefits to users. In this case the average growth was, and continues to be, considerably higher than projected.

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55. Another indirect measure of project benefit is the impact on land prices. Land prices have increased dramatically along many project roads. 56. People interviewed along project roads tended to emphasize the reduced travel time and consequent improved year-round access to social, educational, and medical amenities available in larger cities. Key to this is the increased availability and frequency of public transport services. Access from outside for educational and health professionals was seen as enabling the achievement of higher standards in the communities. More facilities such as deliveries by merchants from nearby towns were being provided in the wake of the new roads. New employment opportunities, both in the road influence area and in nearby towns, were claimed to have been created. Some producers were now able to reach more distant markets, providing alternate outlets for their products.

3. Rural Development 57. The Review Mission was told that construction of the project roads has stimulated substantial rural development in all four provinces. Reported effects include changes in farming to higher-value—and often perishable—cash crops, small-scale retail and commercial activities, new housing developments, and commuter travel to centers of employment. Many examples of new market opportunities were cited. 58. In several cases, the cultivated area was reported to have increased, especially in production of maize, sugarcane, cotton, fruits, and vegetables. Such developments have been accompanied by innovations that provided greater employment in the area, including expanded irrigation, greater use of modern farming techniques, and the development of processing and packaging facilities. Although it is not possible to separate out the impact of the roads from other influences, people interviewed felt that the role of road improvements had been pivotal. The improved road system facilitates passenger transport services, reducing isolation and allowing workers to travel to distant work places.

4. Overall Rating 59. The road improvements seem to have profoundly and positively affected the socioeconomic environment of the population within the road influence areas. Improved accessibility, rather than cost, is considered to be the main benefit. Improved access to health and educational services is particularly valued. Larger cultivated areas and expanding commercial activity in areas that previously suffered from remoteness and poverty give a clear impression of communities with improved livelihoods. The Project is rated efficacious. C. Efficiency in Achievement of Outputs and Purpose

60. The economic viability of the Project is satisfactory. The EIRR for a sample of roads ranged from 12 to 49% at appraisal, and from 5 to 75% on reevaluation at post completion [What does this mean? Express in layman’s language]. The weighted average EIRR remained high despite a 63% cost increase, falling only 5 points, from 34 to 29%. (The evaluation was undertaken using economic costs denominated in rupees.) Traffic has increased by 260% and inflation has driven up the prices of vehicles and cost inputs, and thus the value of operating cost savings. Besides direct economic benefits through savings in vehicle operating costs, the Project has had a significant indirect impact on the prosperity of the areas served. Appendix 9 gives details of the methodology used to calculate the EIRR. The Project is rated as efficient.

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D. Preliminary Assessment of Sustainability

61. Commitment to ongoing maintenance is still a major concern. The provincial governments must commit to improving funding for maintenance and the use of modern maintenance practices. The Project’s covenant for maintenance was only partially complied with, but there is evidence of a greater understanding of the need for ongoing commitment to maintenance. ADB should monitor maintenance, and continue to pressure provincial governments on the issue. The Project’s sustainability is rated as likely. E. Environmental and Sociocultural Impacts

62. The initial environmental impact study rated all roads as having no significant environmental effects. The Loan Agreement required MLGRD and CWD to address environmental problems such as drainage, landslides, and erosion, as well as related damage-prevention activities, during construction. Several roads, including a substitute after appraisal, caused significant environmental impacts. During implementation, the natural environment along many roads was heavily damaged when excavated material was dumped down natural hill slopes. That initiated mitigation works, which have achieved their primary purposes of limiting environmental damage. The experience has also increased awareness of sound environmental practices among the EA and contractors. It is not clear if the underlying problem of slope stability was solved, but the Review Mission was shown older roads where slopes have stabilized and vegetation has returned. It was claimed that this will also occur along the project roads. 63. Better surfaces of new roads require less traction power, which lowers fuel consumption and thus reduces air pollution from combustion gases. This would offset the effect of increased traffic. On the whole, the Project has little significant environmental effect. 64. Only a few roads required new alignment,7 so land acquisition problems for right-of-way and resettlement were minimal. In many cases the required land was given voluntarily. Post-completion interviews with residents indicated high satisfaction with the roads. Cited benefits included improved access for health and education (both for residents to get to facilities and for specialists to visit or work in the areas), better service and lower prices from traders, and better prices for crops. Security has also improved with better access to police. There have been some changes in land use patterns; farmers have taken advantage of new opportunities for cash crops. Land values were said to have increased substantially. Overall, the socioeconomic and cultural impacts have been positive. Distribution analysis was not required at the time the Project was appraised, so that data were not gathered. F. Institutional Strengthening and other Impacts

65. When the Project was conceived, the individual CWDs were considered to lack the capacity to undertake projects of this size alone. A main ADB objective during discussions with the Government was to ensure the establishment of modern maintenance organizations, with adequate funding. MLGRD was seen as having a role in capacity building for the CWDs. 66. The Project provided very little direct help and support for institutional strengthening. But the CWDs gained enough experience during project implementation that ADB subsequently changed its strategy to one of lending directly to provincial governments. The Project’s impact was moderate.

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IV. OVERALL ASSESSMENT AND RECOMMENDATIONS

A. Overall Assessment

67. The Project was implemented basically as conceived, with no major changes caused by consultant or contractor performance. In Punjab and Sindh , the project roads were properly designed and constructed. Contractual variations were minimal, and overall civil construction costs were in line with revised Government estimates. Construction of the project roads in Balochistan and NWFP faced many problems including (i) difficult geotechnical conditions, (ii) delays in release of counterpart funds, (iii) poor contractor performance, and (iv) poor preparation of detailed designs. But the two provinces completed their work programs without costly overruns over the tendered prices. ADB canceled the design phase of the associated TA for an anticipated follow-on project because of a change in strategy: to work directly with provincial governments. 68. There were no problems with ADB regarding approval of procurement documents, including shortlists, prequalification documents, contract documents, awards, and contracts. Nor were there problems with ADB disbursements, although there were some delays by the executing agencies. Performance monitoring and evaluation of engineering aspects of the Project were good and contributed to the high quality of the final work, but collection and presentation of socioeconomic data were less satisfactory. Overall, the Project is rated as successful. B. Lessons Learned

69. Underestimation of the costs at the project preparation stage led to delays, because the PC-1 had to be revised. Pressure on contractors to reduce their rates had consequences throughout the Project because the contractors could not absorb cash flow problems caused by delays in payment. Civil works packages should be costed at realistic market prices, not based on outdated rate schedules. 70. Inadequate prequalification of contractors led to underbidding by some inexperienced contractors and to the award of tenders to contractors who lacked the technical or financial resources necessary for contracts of this size and nature. Contracts held by poor or nonperforming contractors were difficult to reassign, which caused delays and additional costs. Prequalification of civil works contractors should be based on stringent and carefully designed evaluation criteria, and should be subject to an effective due-diligence review by an independent committee. 71. This was the third in a series of ADB farm-to-market road projects (the first two were loans 758-PAK (footnote 4) and 917-PAK (footnote 2)). In each case, project mobilization took longer than anticipated. In each case, the problem was noted in the risks and remedial actions identified for subsequent projects. Actions that might reduce the delays observed include advance action on selection of the supervising consultants, but a more practical suggestion is to allow a more realistic time period for selection of consultants and contractors. Project construction periods should also be made realistic, taking into account difficult site conditions, especially in Balochistan and NWFP . Additional time spent on planning and preparation at an early stage will reduce delays later. In particular, land acquisition and clearance must be completed before contractors are mobilized.

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72. Using MLGRD as a central coordinating agency gave no clear benefit. Having multiple executing agencies increased the administrative burden, created confusion about responsibilities, and contributed to delays. 73. There was also confusion over the role of the consultant as the “engineer’s representative,” and the role of the “engineer” under FIDIC contract conditions. The “engineer” for this project was an executive engineer of the respective province. The general view was that the supervising consultant should be appointed as the “engineer” under FIDIC. 74. Delays in fund disbursement caused by unnecessary government bureaucracy contributed to construction delays because the funding delays caused cash flow problems among small contracting companies. Future projects should address this issue by understanding the real difficulties within the government offices, and initiating capacity building to address these problems. 75. The provincial agencies were generally happy with the support they received from the general consultant (PMU), and felt that he played a major role in maintaining high quality standards. The opportunity for project managers to meet and discuss common problems was appreciated. Providing opportunities for ongoing information interchange among provinces would be beneficial. 76. Compliance with the maintenance covenants relating to previous projects was difficult to verify. Provincial governments claimed that their expenditures were appropriate. Maintenance issues with the project roads should not arise for several years. It is difficult to ensure that adequate attention is given to ongoing maintenance through loan covenants; financial problems faced by some provincial governments will always be an overriding consideration. Two basic approaches could be adopted: engineering or institutional. The engineering solution would be to build stronger, lower-maintenance roads. The institutional solution would be to build a self-funding mechanism into the road sector, in the form of tolls or a dedicated road fund, or both. C. Recommendations

1. Project-Related 77. Future Monitoring. Ongoing monitoring of the road sector’s performance should continue. The following monitoring activities are especially needed: (i) Monitoring of the maintenance programs on ADB-financed roads should continue. (ii) Benefit monitoring and evaluation of the Project roads should continue for the next 3 years. Such monitoring should include objective surveys of traffic and axle loads, and road roughness and surface conditions. (iii) Monitoring should continue of the sustainability of the physical works undertaken for project roads in NWFP, particularly the Thadiani-Pattan road in Abbottabad. 78. Covenants. Covenants for ongoing maintenance should address the source of funds. Future subsector loans should require strategies, as part of the loan package, that ensure adequate funding for maintenance. Covenants not directly related to the Project should not be included. Such covenants cannot be enforced, unless they are prerequisites. Extra care should

16

be taken to ensure adherence to the recently approved ADB-financed Punjab and Sindh road sector projects, Loans 1892/1893-PAK8 and Loan 1928-PAK9. 79. Further Action or Follow-up. Follow-up is required to ensure that (i) road maintenance, particularly for ADB-funded roads, is adequately funded; (ii) tolls and vehicle fees continue to be adjusted in line with the consumer price index; (iii) the road safety covenants are complied with (in the context of Loan 1185-PAK); (iv) the planting and other environmental mitigation measures in NWFP continue to be effective; and (v) the third benefit monitoring survey, due 2 years after project completion in October 2004, is forwarded to ADB. 80. Additional Assistance. The Project was substantially completed at the revised closing date of the loan. The provincial CWDs have adequate resources to complete the two remaining contract packages, both of which are nearing completion, without further ADB assistance. 81. Timing of Audit Report Preparation. All works have been completed and most improved roads have been open to traffic for 1 to 2 years. The project performance audit report is recommended to be prepared in 2004.

2. General 82. Project Appraisal Stage. The following should be considered at appraisal:

(i) Executing agency. The EA should have complete responsibility and accountability for project implementation, including control of the imprest account. If projects are designed on a provincial basis, the respective provincial governments should be the EAs. This will eliminate a layer of bureaucratic approval in the disbursement of loan funds. But care should be taken to ensure that the EA has the capacity, or the necessary support, to carry out these functions.

(ii) Project cost estimation. Estimates of civil works packages should be based on realistic rates and quantities, taking into account field and market conditions.

(iii) Project scheduling. The EA should prepare the estimate of the project implementation period, considering field conditions, early in project formulation. The EA should determine efficient and cost-effective techniques for construction, such as aggregate-based construction and use of mechanical chip spreaders, at project formulation.

83. Project Implementation. The following should be considered:

(i) Prequalification of contractors. Greater care should be taken in the prequalification process to ensure that only well-qualified contractors are short-listed. All required data should be submitted and vetted by an independent committee as early as possible. The ability of contractors to complete the works should be reviewed at the time of bid evaluation.

8 ADB. 2001. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the

Islamic Republic of Pakistan for Road Sector Development Program (Sector). Manila. 9 ADB. 2002. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the

Islamic Republic of Pakistan for Punjab Road Development Sector. Manila.

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(ii) Benefit monitoring and evaluation. Benefit monitoring should be an integral

part of the project performance reporting and management information system.

PROJECT FRAMEWORK1

Design Summary

Performance Indicators/Targets

Monitoring Mechanisms Assumptions and Risks

Goal To help the Government improve farm-to-market roads in Sindh, Punjab, North West Frontier Province, and Balochistan. Particular emphasis will be devoted to: (i) support for agricultural and rural development; (ii) reduce transport costs to facilitate more efficient movement of goods and passengers; (iii) enhance the mobility of rural communities, including better access to health, education, and social amenities; and (iv) strengthen domestic capabilities for designing and constructing Pakistan’s rural access road network.

Generation of employment opportunities in rural small-scale industries and trades to reduce poverty International Roughness Index and travel time on roads. Bus fares and freight rates Travel time to health and educational facilities. Frequency of transport services Functioning road management units in Communication and Works Department. Effective contract management

Annual statistical survey by the Department of Finance Comparison of IRI and travel times before and after Project. [???] Comparison of bus fares and freight rates Before and after studies of travel time and public transport services Review activities of road maintenance units and design cells

Assumes development is infrastructure-led Analysis based on standard assumptions relating transport costs to road conditions Evaluation assumes that trip rates for new roads are based on average travel patterns Main risk involves sustainability of recently established units

Purpose Increase farm production by making the rural road infrastructure network more effective.

Agricultural output in the target districts

Annual statistical survey by the Department of Finance

Assumes development is infrastructure-led

18 Appendix 1

Design Summary



Increase economic welfare by reducing travel costs and time.

National net benefit

Net benefit calculated from savings in time and vehicle operating costs

Depends on traffic and assumptions for vehicle operating costs

Outputs (i) The improvement of about 1,940 km of farm-to-market roads in 39 selected districts of the provinces of Balochistan, North West Frontier Province, Punjab, and Sindh, including 323 km of roads carried over from FMR II because of funding constraints, [Add footnote: FMR = farm-to-market road] (ii) Provision of consulting services for project management activities and construction supervision, and (iii) Feasibility studies and detailed engineering for a proposed second Rural Access Roads Project.

Kilometers of road constructed Cost effectiveness of road construction Client satisfaction. Appropriateness of designs

Monthly reports during implementation Post-completion reviews Review of consulting services

At appraisal, risk of failure due to nonperformance of contractors or consultants, cost overruns, etc. Quality depends on the ability and application of consultants

Inputs Technical assistance for project preparation Consultants Civil works Project administration

ADB $0.25 million Appraisal $7.15 million (Actual $13.10 million) Appraisal $163.60 million (Actual $139.92 million) Appraisal $1.00 million

Disbursements Annual audits and financial statements

Timely availability of counterpart funds A

ppendix 1 19

20 Appendix 1

Design Summary



Project preparation and technical assistance (PPTA) for following projects

(Actual $1.02 million) Appraisal $2.75 million (Actual $0.24 million)

1 The Project at appraisal did not have a project framework. This table is a post-project reconstruction.

Appendix 2 21

CHRONOLOGY OF EVENTS Date Activity 1992 5 November Approval of project preparation technical assistance (PPTA) 1995 30 April Feasibility study completed 18 May Fact-finding completed 28 June Management review meeting 13 July Appraisal completed 7 August Staff review committee 19 September Loan negotiations completed 5 October Board circulation 9 November Loan approved 17 December PC-1 approved by the executive committee of the National

Economic Council (ECNEC) 1996 18 January Loan Agreement signed 17 April Loan due for effectiveness 28 March Loan actually effective 1999 30 August Adverse environmental impacts caused by the construction of roads in

three mountain districts (Abbottabad, Dir, and Mansehra) of North West Frontier Province, identified by the Mid-Term Review Mission.

2000 22 August Award of contracts for mitigation of environmental impacts 16 November Loan closing date extended by 1 year, to 31 December 2001 2002 21 January Loan closing date extended by 10 months, to 31 October 2002 02 November Revised Planning Commission Proforma-1 (PC-1) approved by the

Executive Committee of the National Economic Council (ECNEC) 2003 31 October The loan administration missions are summarized in Basic Data,

Section D.

22 Appendix 3

DETAILS OF PROJECT ROADS

Length (km) Construction As As Cost Road No. Name of Road Appraised Constructed (PRs million) A. Sindh Province

21101 RD40–RD225 Nara Canal 60 50.2 229.70 21102 Sangrar–Rohri Salephat Road 17.0 53.06 21402 Akdoi Minor–Shahzado Dahri 22.6 87.40 21404 Chutto Pitaffi–Chak 3 Sunelo 32 28.6 95.67 21406 Jam Sahib–Chak 3 33 25.9 89.35 21407 Jam Sahib–Mundh Jamrao 31 37.8 124.80 21601 Ali Khan Gaheja–Dakhan 07.7 31.68 21602 Khanpur–Mian Jo Goth 24 23.3 70.01 21603 Darwesh–Salar (Jagzan) 12 07.2 21.63 21604 Garhi Yasin–Jaggan 20 19.0 55.89 21605 Sultankot–Zarkhail 09.0 25.60 21607 Tando Sher Ali–Dringhpur 12.8 40.44 21608 Rahimabad–Syed Ghari 13 21609 Noon–Thanherio 06.4 28.41 22201 Tando Bago–Jundo 47 41.5 170.15 22202 Serani–Kadhan 21 22204 Nindo Wango–Pangrio 14 13.2 51.41 22301 Gulab–Age Dino Gaho 7 05.7 26.60 22303 Gharo Sakro–Matheno Rin 9 25503 Kari Mori–Qamar Sand Babar 26 23.0 124.99 25505 Sita–K.N. Shah 15 12.4 61.77 25508 Jhangara–Nawab Khan Rind 8 4.3 34.17 25511 Jhangara–Bandhri 27 16.6 54.90 Provincial Total 399 384.2 1,477.63 B. Punjab Province 11201 Gursh Kigrab–Takharpari 5 11202 Shahpur–Badia 7 11204 Kahote–Kullayari 19 11205 Bewal–Kallar via Chakri Budhal 10 11209 Rawat–Basali Junction–Sukha 14 11210 Kallar–Mandra 12 11211 Maled Sattian–Azizabad 8 11212 Chuntra–Sihal 14 7.1 22.43 11214 Missa Kaswal–Islampura 16 8.2 50.84 11215 Sarwar Shaheed–Mandra Kuri 7.1 10.83 11216 Bassali–Jabbar Darvesh 9.9 13.74 11217 Dhok Fujran–Parrial 5.2 8.98 11218 Jorrian Morr–Hun 6.4 22.09 11219 Chauntra–Bahal 8.9 22.99 11221 Battli–Javera 5.8 22.87 11222 Shah Khaki–Khadd 9.2 43.78 11401 Pind Swika–Kotal Khund 6 11405 Dhuel Thal–Kahana–Bagga 8 12.0 33.08 12201 Rakar–Bansi and Baiwal 15 15.3 35.42 12204 Mitha Tiwana–Bijar 6 5.7 22.31 12205 Pali Chakwal–Dera Ali Wala 8 7.7 27.68

Appendix 3 23

Length (km) Construction As As Cost Road No. Name of Road Appraised Constructed (PRs million) 12214 Surraki–Nushera 6.4 27.73 12215 Rahdari–Shaahwala 13.0 31.76 12216 Dhamak–Aino 9.3 10.81 12217 Chak 50/DB–Rangpur 10.8 24.79 12401 Chanjri–Nawabwala Link 9.1 18.94 14201 Nandal–Cheema via Rawal 6 4.2 10.11 14203 Gangasinghwala–Hussainwala 14 14204 Khuddian–Chore Kot 9 5.8 13.19 14205 Baquapur–Muchana 12 8.6 19.26 14206 Mohala–Sajra 20 14207 Balandi Hitar–Kasur Khudian Rd 6 12.7 38.54 14209 Chunian Khuddian–Kot Arjan 8 14212 Pernawan–Serhali Kalan 7 11.1 28.50 14213 Thatti Usman–Gohar 8 7.7 24.25 14216 Galla Mandi Khuddian–Saad 10.3 26.79 14217 Theh Kalan–Dhariwal 7.7 19.73 14218 Khurpa Chak–Mir Modh 6.9 26.44 14401 Kasur District Bdry–Jandraka 24 14403 Kaku Road–Pir Ali 10 14404 Zaklera–Chak 1-A 7 14405 Chak 10/1R–Chak 1-A 11 12.8 28.02 14408 Head Gulsher–Bridge Kahan 48 44.2 88.51 14409 Chak 40/4L–42/4L 43/4L Road 5.2 10.88 14410 Pull 28/4L–36/1-4L on Bonga Hayat 13.7 31.27 14411 Sahlowal Razabad–That Kamboh 17.1 51.52 14412 Chak Fazal Shah–Renal Khurd 16.6 43.81 15301 Chillianwala–Chorand 13 15303 Qadirabad–Mela 5 15305 Ajjorwal Shmati–Ajjawal 14 9.2 21.80 15306 Gujra–Chak Shehbaz 12 15308 Mumdana–Waryam 25 21.8 55.15 15310 Chak 44–Nain 18 15.7 47.87 15311 Gojra–Gohar Sharrif 6 5.0 11.63 15312 Qadirabad Rasul–Canal 33 15313 Busal Masroor–Bahara-Chak 14.7 37.87 15314 Bhoa Hassan–Bosal Masroor 20.5 57.55 15315 Chunian–Murad 6.9 20.44 15316 Bhoa Hassan–Rarka 16.4 38.42 15317 Harya–Sehna 5.1 13.18 16101 Multan School–Mattital Road 8 5.9 10.42 16102 Canal Nawabpur–Lakwal 6 6.2 12.56 16103 Bakhshishgarh–Madina Minor 6 6.3 10.32 16105 Kot Abbas–Riazabad 6 7.2 19.11 16107 Sai Chawan–Pul Khadil 6 3.6 7.24 16108 Old Shujabad Road–Maral 10 12.3 26.29 16109 Basti Talaab–Buch 7 4.0 9.34 16110 Nawabpur–Surajmiani 25 14.2 36.04 16201 DM Rd Mile 346–Chak 507 12 18.3 51.70 16203 Burewala–DM Road 11 11.8 24.07 16208 Araypur–Messi Bunyapur 20 5.1 10.90 16212 Sahuka Ludan–Muradali 10 16302 Chak 62/4R–Pull Gandoor 7 9.0 43.11

24 Appendix 3

Length (km) Construction As As Cost Road No. Name of Road Appraised Constructed (PRs million) 16304 Ballewal More–L Chowk 5 8.2 20.20 16310 Chak 50/GD Pull–Chak 71/4R 13 11.8 32.98 16601 Rakh Pakpattan–Pir Ghanihota 15 7.5 16.30 16602 Malikpur–Mari Adda 14 23.6 61.64 16605 Sikandar Chowk–Scalgarh 8 7.7 18.19 16606 Chak 89/D–Nurpur Kamir 10 16608 Gindi–Wara Parran 10 12.9 32.16 16611 Chak 19/SP–Nurpur-Lalpur 20 16612 Rampur–Chak Bedhi 8 16614 Chak 27/SP–Chak 22/SP 11 11.2 30.56 16616 Mohal Wattoan–Pul Gurru Chak 23 14.0 35.58 18201 Chak 62/4R–Chak 41/3R 10 9.5 25.15 18204 Chak 90/5R–Roda Singh 20 23.6 80.46 18207 Jhal Powaranwali–Heranwal 6 9.4 30.01 18209 Chak 105/Fateh–Chak 106/E 9 11.3 31.65 18211 Yatimwala Bangalow–Kalara 5 8.3 22.07 18302 Moripul Nallah–Massani Pul 7 8.4 25.84 18303 Adda Trinda–Sunny Gulmerg 12 13.8 38.46 18304 Ehsanpur–Head Degi 6 6.6 18.44 18306 Goth Tilloo–Walhar 7 3.7 9.02 18307 Basti Mohamad Din–Chak 45/P 7 8.5 29.91 18309

Mari Allahbachaya–Islamgarh 7

18313 Chanjani–Nawankot Double Rd. 10 18314 Shahi Road Farid–Pacca Larn 13 13.4 45.02 18315 Basti Babran–Chak 116/P 11 8.2 20.67 18316 1-L Minor–Chak 121/1L 12.1 33.27 18317 Walhar–Kot Sabzal 11 9.8 26.10 18318 Feroza Town–Chowk Nadir 9 7.7 24.83 18319 Ghoudri–Zahirpur 6 7.4 20.56 30214 Drahma–Mahtam 20 20.0 58.66 30315 Hajipur–Rajpur 22 22.1 53.94 30405 Chak 139/TDA–Ahmad Yar Rid 16.4 37.00 30406 Paharpur Town–Moza Paharpur 12 30410 Paharpur–Sajanabad 9 17401 Chowbara Nawab Kot–Bhallian 10.2 31.47 30516 Kalabagh Shakardara–Mangha 3 30706 Kallanwali–Ganga via Faizpur 18 18.5 53.79 30713 Mahara Khas–Dammar Wala 13 11.7 37.11 30811 Dajal–Tuziani 48 11.7 40.26 30813 Harrand–Mari Road 31.7 216.79 30919 (III-D) Philora–Kanjroor 5 5.0 142.15 30919 (III-E) Philora–Kanjroor 21 17.3 150.92 30919 (III-F) Philora–Kanjroo, Bridge 3.5 74.28 Provincial Total 1044 977.6 3,102.34 C. North West Frontier Province 101016 Kafoordheri–Meermust 9 101042 Umerpayan–Garhi Haji Khan 8 8.2 20.68 101043 Gravity Canal–Anizai 8 203001 Jalal Dakki–Badraga via Pirsado 8 7.0 30.76

Appendix 3 25

Length (km) Construction As As Cost Road No. Name of Road Appraised Constructed (PRs million) 203005 Dheri–Alo and Kattichar–Shero 8 7.4 18.60 203029 Rustam–Pirsai 10 8.4 20.04 203030 Rustam–Baroch 9 7.6 31.26 204003 Turiadi–Aman Kot 12 15.6 20.60 204004 Hamzakot–Parmuli 11 9.3 24.28 204008 Ahad Khan–Managi 7 7.4 16.18 307014 Sunderwal–Shahi 24 22.5 105.65 35202 Marwat Minor–Norrer 6 5.4 22.66 35204 Norrar Howaid–Mazanga 20 12.5 42.67 614010 Landiwah–Kachi Kamer 12 8.8 19.87 614012 Landidak Multani–Sh. Landak 8 7.6 22.02 614019 Shahbazkhel–Lakki Road 8 8.2 20.53 31201 Amankot–Pabbi 7 10.3 31.56 31202 Akora–Wattar, Wali and Kaka 13 5.8 25.41 31303 Shakor Banlaw Road–Dargai 17 31306 Harichand–Ghazan 8 9.0 36.98 31309 Amirabad–Raidwan, Turangzai 10 31310 Tangi Abazai–Z. Ghari 7 31312 Dargai–Umerzai 12 31321 Kuz Spalmai–Bar Spalmai 5.9 30.62 31325 Dargai–Umerai Giggi 7.1 18.28 31326 Garo Shah–Ganji Dag 12.0 34.84 20101 Said Alian–Kachi Katgarh 10 9.6 27.16 20102 Diyal–Paniala 28 28.2 104.58 20107 Yarik–Paharpur–Wanda 11 10.7 28.17 20222 Chanser–Mera Kararian 14 14.3 110.80 20227 Karak–Jalla Biari 8 7.1 35.59 20231 Balakot–Hungroi 17 16.9 117.60 20245 Kathai–Ahal 13 13.3 63.33 20314 Kanju–Baghdheri 34 28.0 117.40 20316 Shahpur–Ajmir 18 34101 Thandiani–Pattan 57.2 260.08 Provincial Total 395 371.3 1,457.20 D. Balochistan

Province

42401 Kingri–Musakhel 56 59.0 332.05 45101 Mangochar–Zard 47 47.4 151.46 45206 Anjira–Zehri 55 57.9 309.25 46301 Panjgoor–Gwargo 30 29.4 161.78 Provincial Total 188 193.7 954.54 Overall Total 2026 1926.8 6991.71

Source: MLGRD, Project Completion Report, November 2002.

26 Appendix 4

DETAILED PROJECT COST ($ million)

Foreign Local Total Item Exchange Currency Cost A. Sindh Province 1. Civil Works 13.11 16.03 29.14 2. Consulting Services 0.00 1.57 1.57 3. Project Administration 0.00 0.29 0.29 Subtotal (A) 13.11 17.89 31.00 B. Punjab Province 1. Civil Works 27.63 33.76 61.39 2. Consulting Services 0.00 5.50 5.50 3. Project Administration 0.00 0.08 0.08 Subtotal (B) 27.63 39.34 66.97 C. North West Frontier Province 1. Civil Works 14.43 17.64 32.07 2. Consulting Services 0.00 2.45 2.45 3. Project Administration 0.00 0.15 0.15 Subtotal (C) 14.43 20.24 34.67 D. Balochistan Province 1. Civil Works 7.78 9.51 17.29 2. Consulting Services 0.00 1.64 1.64 3. Project Administration 0.00 0.16 0.16 Subtotal (D) 7.78 11.31 19.09 E. Federal 1. Consulting Services 2.19 0.00 2.19 2. Project Administration 0.00 0.35 0.35 Subtotal (E) 2.19 0.35 2.54 F. Service Charge 2.25 0.00 2.25 Total 67.39 89.13 156.52

Source: MLGRD, Project Completion Report, November 2002

Appendix 5 27

DISBURSEMENTS (APPRAISED) DISBURSEMENTS (APPRAISED) ($ Million) ($ Million)

Year Year Projected Projected Actual Actual Annual Annual Cumulative Cumulative

Shortfall Shortfall Shortfall Shortfall

1996 1996 15.0015.00 10.0010.00 5.005.00 5.00 5.00 1997 1997 30.0030.00 11.0111.01 18.9918.99 23.99 23.99 1998 1998 35.0035.00 24.4624.46 10.5410.54 34.53 34.53 1999 1999 35.0035.00 32.2132.21 2.792.79 37.32 37.32 2000 2000 25.0025.00 22.5722.57 2.432.43 39.75 39.75 2001 2001 0.000.00 9.569.56 (9.56)(9.56) 30.19 30.19 2002 2002 0.000.00 6.586.58 (6.58)(6.58) 23.61 23.61 2003 2003 0.000.00 2.362.36 (2.36)(2.36) 21.25 21.25

Source: ADB Loan Finance Information System Source: ADB Loan Finance Information System

Appendix 5 27

Appendix 6 28 PROJECT IMPLEMENTATION SCHEDULE

1995 1996 1997 1998 1999 2000 2001 2002

1 2 3 1 2 4 1 3 4 1 2 4 3 1 2 4 1 34 3 2 1 2 3 4 3 1 2 4 3 2 4

A. Design

B. Civil Works Procurement Prequalification

Procurement

C. Civil Works Implementation Mobilization

Construction

D. Supervision Consultant Recruitment

Services

E. t TA Consultan Recruitment

Services

Appraised l Actua

Appendix 7 29

STATUS OF COMPLIANCE WITH LOAN AND PROJECT AGREEMENT COVENANTS

Covenant Reference

in Agreement

Status of

Compliance 1. MLGRD shall be responsible for (i) monitoring and

coordination and liaison with ADB regarding the CWDs; (ii) engaging the international consultants for project management of supervision of the civil works construction; and (iii) engaging the international consultants for part B of the project.

LA, Schedule 6, Para. 1(a)

Complied with

2. The CWDs shall be responsible for (i) prequalification and

implementation of the civil works under part A of the Project, (ii) issuing variation orders to the domestic consultants, and (iii) engaging the domestic consultants for part B of the Project

LA, Schedule 6, Para. 1(b)

Complied with

3. The PMU in MLGRD for FMR II as well as its project manager

and directors of the project engineering cells of the CWDs for FMR II, shall be responsible for project implementation and coordination, and liaison with ADB.

LA, Schedule 6, Para. 1(c)

Complied with

4. With ADB approval, the Borrower and the provinces may

substitute project roads during project implementation with proposed roads identified as feasible under TA 1778-PAK (having EIRRs of 12%).

LA, Schedule 6, Para. 2

Complied with

5. The Borrower shall take necessary actions to acquire, before

civil works for the project roads begins, all land, rights in land, rights-of-way, easements, and leases, as well as other property rights required for provision of project facilities and construction of the project roads.


Complied with

6. The borrower, including representatives of its Ministry of Finance and Economic Affairs, MLGRD, the CWDs and ADB, shall carry out a comprehensive midterm review about 1 July 1998.


Complied with. A midterm review was carried out in August 1999.

7. The Borrower shall ensure the continuing inclusion of the

Project in its core investment program during project implementation.


Complied with

8. MLGRD and the CWDs shall inform ADB annually of their

project-related annual development programs, and provide timely and adequate funding for such programs.


Complied with

9. MLGRD and the CWDs, with assistance from the domestic

consultants, shall carry out benefit monitoring and evaluation (BME) at the commencement and completion of construction.


Complied with

10. The findings and supporting data of the surveys referred to in

subparagraph (a) will be incorporated in the project completion report. The findings of the third survey will be submitted to ADB in a separate report.


Complied with The third survey is to be undertaken 2 years after project completion (in the year 2004)

30 Appendix 7

Covenant

Reference in

Agreement

Status of

Compliance 11. The BME criteria will include (i) demand satisfaction, (ii) road

surface roughness and maintenance cost, (iii) bus fares and truck rates, (iv) employment generation, and (v) recalculation of project EIRR on a sample basis.

LA, Schedule 6, Para. 7(c)

Complied with

12. MLGRD and the CWD shall ensure that problems related to

the environment are addressed appropriately during the construction of project roads and operation and maintenance of project facilities, in accordance with ADB’s environmental guidelines.


Complied with

MLGRD and CWD shall ensure that the contracts include the

planting of trees along the project roads and the seeding of grass on the roadways and cut slopes.


Complied with

14. The provinces, through the CWDs, shall be responsible for

maintenance of the project roads, including the provision of adequate funds for such maintenance.


Partly complied with The PMU is to provide data confirming that provincial CWDs have been providing funds in their annual budgets.

. 15 Commencing in fiscal year 1996–97, the provinces shall

allocate and spend PRs35,000 per km for maintenance of all farm-to-market roads.


Partly complied with The PMU advised that provinces will plan maintenance work using the new Pakistan Road Maintenance Management System. Also, funds were provided on a “need” basis.

16. The provinces, commencing in fiscal year 1998–99,

shall undertake the following: LA, Schedule 6, Para. 11

(a) With reference to the Provincial Highways Project (Loan 1185-PAK(SF), road maintenance plans for provincial and farm-to-market roads will be prepared annually. Appropriate funding based on an action plan, to be agreed upon between ADB and the provinces, will be prepared annually and made available to ADB.


Partly complied with Road management units have been established in all provincial CWDs. Data on conditions of roads and inventory have been gathered, and action plans have also been prepared.

(b) Contract maintenance of provincial and farm-to-market

roads will be implemented in a phased manner, if appropriate. LA, Schedule 6, Para. 11

Complied with

Appendix 7 31

Covenant

Reference in

Agreement

Status of Compliance

(c) Action plans to implement a new classification system of provincial and farm-to-market roads under the provincial highways project shall be prepared and submitted to ADB for comment and discussion with the provinces before their implementation.


Complied with

19. In respect to the inclusion in the Project of about 323 km of

proposed roads in about 10 provincial districts originally within the scope of FMR II, Schedule 1 to the LA for FMR II is amended mutatis mutandis.


Complied with

20. The provinces shall adjust the toll rates on bridges and annual

vehicle license fees at least every 3 years, consistent with cost rates set forth in the consumer price index of the Borrower.


Complied with Tolls for bridges and vehicle license fees have been levied. The PMU is to provide data on the consumer price index.

21. The Borrower and the provinces shall review with ADB an

action plan to be prepared in fiscal year 1997–98 under the road safety component of the provincial highways project, and shall cause implementation of the plan.


Partly complied with Selective road safety improvement work is being carried out on a few provincial highways. This work is also being undertaken through the Sindh Road Sector Development Project (Loan 1892/1893).

22. Each province shall furnish to ADB, through MLGRD, monthly

reports on project execution and on the operation and management of project facilities and roads.

PA, Section 2.08(b)

Complied with

23. Promptly after physical completion of the project, and no later

than 3 months afterward, each province shall prepare and furnish to ADB, through MLGRD, a report on the execution and initial operation of the Project. The report shall include the project cost, the province’s performance of its obligations under the project agreement, and degree of accomplishment of the purposes of the loan.

PA, Section 2.08(c)

Partly complied with. Project completion reports have been submitted, but reports on the initial operation have not been provided.

24. Each province shall (i) maintain separate accounts for its

respective part of the Project; (ii) have such accounts and related financial statements audited annually; and (iii) furnish to ADB, through MLGRD, promptly after preparation but no later than 12 months after the close of the concerned fiscal year, certified copies of such audited accounts and financial statements, and the auditors’ reports.

PA, Section 2.09

Complied with

ADB = Asian Development Bank, CWD = Communications and Works Department, EIRR = economic internal rate of return, FMR = farm-to-market road, LA = Loan Agreement, MLGRD = Ministry of Local Government and Rural Development, PA = project agreement, PMU = project management unit, TA = technical assistance .

32 Appendix 8

SUMMARY OF CIVIL WORKS CONTRACT PACKAGES

Length Date of Date of Contract Road No. (km) ADB Approval Contract Received Contractor by ADB SINDH

1 25503A 12.3 09-Apr-97 1 28-Jun-97 29-Oct-97 Saeed Khan Construction Co. 2 22301 5.7 09-Apr-97 2 30-Jun-97 29-Oct-97 Inder Lal & Co. 3 25505 12.4 09-Apr-97 3 30-Jun-97 29-Oct-97 Al-Shahbaz Construction 4 21102A 8.1 09-Apr-97 4 08-Jul-97 29-Oct-97 Mohammad Ramzan & Co. 5 22204 13.2 09-Apr-97 5 10-Jul-97 29-Oct-97 Sh. Manzoor & Co. 6 21404A 14.2 09-Apr-97 6 17-Jul-97 29-Oct-97 Development Construction Co. 7 21406A 9.5 09-Apr-97 7 30-Jul-97 29-Oct-97 Syed Construction Co. 8 21407A 20.1 09-Apr-97 8 30-Jul-97 29-Oct-97 Kaybee Construction 9 25508 4.0 09-Apr-97 9 30-Jul-97 29-Oct-97 Umer Jan & Co.

10 25511 16.0 09-Apr-97 10 30-Jul-97 29-Oct-97 Umer Jan & Co. 11 21604B 9.0 09-Apr-97 11 09-Aug-97 29-Oct-97 RPS Construction 12 21101C 10.4 06-Aug-97 12 25-Sep-97 29-Oct-97 Umer Jan & Co. 13 21101D 10.8 06-Aug-97 13 25-Sep-97 29-Oct-97 Mohammad Ramzan & Co. 14 21102B 9.0 06-Aug-97 14 25-Sep-97 29-Oct-97 Mohammad Ramzan & Co. 15 21602A 16.6 06-Aug-97 15 25-Sep-97 29-Oct-97 Asif Construction Co. 16 21602B 6.8 06-Aug-97 16 25-Sep-97 29-Oct-97 Moize Enterprises 17 21605 9.0 06-Aug-97 17 25-Sep-97 29-Oct-97 Taj & Brothers 18 22201A 14.7 06-Aug-97 18 25-Sep-97 29-Oct-97 Niaz Mohammad Khan & Bros. 19 22201B 12.9 06-Aug-97 19 25-Sep-97 29-Oct-97 Niaz Mohammad Khan & Bros. 20 22201C 13.9 06-Aug-97 20 25-Sep-97 29-Oct-97 Mian Abdul Jabbar & Co. 21 25503B 11.6 06-Aug-97 21 25-Sep-97 29-Oct-97 Umer Jan & Co. 22 21404B 14.4 06-Aug-97 22 26-Sep-97 19-Nov-97 Kaybee Construction 23 21406B 16.4 06-Aug-97 23 26-Sep-97 19-Nov-97 Syed Construction Co. 24 21407B 17.7 06-Aug-97 24 26-Sep-97 19-Nov-97 Kaybee Construction 25 21601 7.7 22-Apr-98 1 08-May-98 03-Jul-98 Sh. Haji Mohammad 26 21607 12.8 22-Apr-98 2 08-May-98 03-Jul-98 Pir Ali Shah 27 21609 6.4 22-Apr-98 3 20-Jun-98 03-Jul-98 Jams Construction Co. 28 21402B 10.5 22-Apr-98 4 24-Jun-98 03-Jul-98 M.N. International 29 21604A 10.1 22-Apr-98 5 25-Jun-98 03-Jul-98 Pearl Construction 30 21402A 12.2 22-Apr-98 6 18-Dec-98 04-Feb-99 Inder Lal & Co. 31 21101A 14.6 26-May-98 7 01-Jun-98 03-Jul-98 Hayat Khan 32 21603 7.2 26-May-98 8 20-Jun-98 03-Jul-98 Pir Ali Shah 33 21101B 14.5 26-May-98 9 23-Jun-98 03-Jul-98 Pearl Contractors 34 25508A Bridges 18-Nov-98 10 14-Dec-98 28-Dec-98 Ghulam Akbar & Co. 35 25505A Bridges 18-Nov-98 11 16-Dec-98 28-Dec-98 Haji Atta Mohammad 36 25511A Bridges 18-Nov-98 12 16-Dec-98 28-Dec-98 Hayat Khan 37 25503-B Bridges 18-Nov-98 13 13-Feb-99 19-Feb-99 Ram Chand & Co.

Appendix 8 33

Length Date of Date of Contract Road No. (km) ADB Approval Contract Received Contractor by ADB PUNJAB

1 30315 22.3 22-Oct-96 1 28-Dec-96 26-Aug-97 Sh. Safdar & Co. 2 30405 16.4 22-Oct-96 2 23-Jan-97 26-Aug-96 Sh. Safdar Ali & Co. 3 30813-II 13.3 11-Dec-96 3 19-Dec-96 04-Feb-97 Builde & Co. 4 30813-I 17.1 11-Dec-96 4 29-Dec-96 04-Feb-97 Abdul Waheed Khan & Co. 5 30919-IIIF Bridge 20-Mar-97 1 09-Apr-97 23-Jul-97 Pak Trade Affiliation 6 30713 11.7 21-Mar-97 2 10-Apr-97 26-Aug-97 Ureeb Construction Pvt. Ltd. 7 30919-IIIE 17.3 21-Mar-97 3 03-May-97 26-Aug-97 Gilan Construction Co. 8 30214 19.9 21-Mar-97 4 09-Jun-97 19-Nov-97 Khalid Rauf & Co. 9 30706 18.5 21-Mar-97 5 09-Jun-97 19-Nov-97 M. Ashraf & Co.

10 30919-IIID 5.0 21-Mar-97 6 12-Jun-97 26-Aug-97 Sh. Safdar Ali & Co. 11 14212 11.1 28-Aug-97 7 28-Aug-97 04-Feb-98 Zoraiz Engineers 12 16614 11.2 28-Aug-97 8 02-Sep-97 21-Oct-97 Yaseen & Brothers 13 14207 7.6 28-Aug-97 9 15-Sep-97 29-Oct-97 Muhammad Construction 14 14213 13.7 28-Aug-97 10 15-Sep-97 29-Oct-97 Muhammad Construction 15 14408B 14.3 28-Aug-97 11 15-Sep-97 29-Oct-97 Ghulam Habib & Co. 16 14408C 16.2 28-Aug-97 12 15-Sep-97 29-Oct-97 Ghulam Rasool & Co. 17 16102 6.2 28-Aug-97 13 15-Sep-97 29-Oct-97 Hidayatullah 18 16103 6.3 28-Aug-97 14 15-Sep-97 29-Oct-97 Hidayatullah 19 16110-M7 15.9 28-Aug-97 15 15-Sep-97 29-Oct-97 Hidayatullah 20 16110-M8 14.2 28-Aug-97 16 15-Sep-97 29-Oct-97 Azizullah 21 11212 7.1 28-Aug-97 17 19-Sep-97 29-Oct-97 Associated Construction Co. 22 15308B 9.6 28-Aug-97 18 19-Sep-97 29-Oct-97 Associated Const. Engineers 23 15308A 12.2 28-Aug-97 19 15-Oct-97 17-Apr-98 Khalid Rauf & Co. 24 14201 4.2 03-Oct-97 20 27-Oct-97 04-Feb-98 Nizcon Construction Co. 25 14204 5.8 03-Oct-97 21 27-Oct-97 04-Feb-98 Nizcon Construction Co. 26 14205 8.6 03-Oct-97 22 27-Oct-97 13-Apr-98 Azizullah Khan & Co. 27 15310 15.7 03-Nov-97 23 20-Nov-97 17-Apr-98 Khalid Rauf & Co. 28 12201 15.3 11-Nov-97 24 15-Dec-97 17-Apr-98 J.H.C. Pvt Ltd. 29 15311 5.0 11-Nov-97 25 15-Dec-97 17-Apr-98 J.H.C. Pvt Ltd. 30 15305 9.2 11-Nov-97 26 14-Feb-98 17-Apr-98 Zafar Javed & Co. 31 18209-I 11.2 14-Nov-97 27 15-Dec-97 17-Apr-98 Sarwar & Co. 32 11405 12.0 18-Nov-97 28 30-Nov-97 04-Feb-99 Fazal Karim Construction Co. 33 12204 5.7 18-Nov-97 29 20-Dec-97 04-Feb-98 Sheikh Safdar Ali & Co. 34 12205 7.7 18-Nov-97 30 20-Dec-97 04-Feb-98 Sheikh Safdar Ali & Co. 35 16310 11.7 17-Dec-97 31 03-Apr-98 17-Apr-98 Consolidated Construction 36 16105 7.2 09-Jan-98 1 13-Feb-98 17-Apr-98 Tarmac Pak 37 16201 18.3 09-Jan-98 2 13-Feb-98 17-Apr-98 Tarmac Pak 38 18201 9.5 09-Jan-98 3 13-Feb-98 17-Apr-98 Tarmac Pak 39 18207 9.4 09-Jan-98 4 14-Feb-98 17-Apr-98 Rising Sun Construction 40 18211 8.1 09-Jan-98 5 14-Feb-98 17-Apr-98 Ehsan Brothers 41 18306 3.7 09-Jan-98 6 27-Feb-98 17-Apr-98 Sheikh Safdar 42 18317 9.8 09-Jan-98 7 27-Feb-98 17-Apr-98 Sh.Safdar Ali

34 Appendix 8

Length Date of Date of Contract Road No. (km) ADB Approval Contract Received Contractor

by ADB

43 16602A 11.2 09-Jan-98 8 16-Mar-98 17-Apr-98 Abdul Waheed Khan 44 16208 5.1 09-Jan-98 9 21-Mar-98 17-Apr-98 Ahmed Saeed & Co. 45 16602B 12.4 09-Jan-98 10 22-Jun-98 15-Sep-98 Khalid Rauf & Co. 46 18318 7.7 19-Jan-98 11 02-Mar-98 17-Apr-98 Construction Management 47 16605 7.7 19-Jan-98 12 25-Mar-98 17-Apr-98 Yaseen & Brothers 48 16203 11.8 11-Mar-98 13 16-Apr-98 15-Sep-98 Sarwar & Co. 49 16108 12.3 20-Apr-98 14 08-May-98 15-Sep-98 Hidayatullah 50 14405 12.7 20-Apr-98 15 18-May-98 15-Sep-98 Azizullah Khan & Co. 51 16608 12.9 22-Apr-98 16 12-May-98 15-Sep-98 Sarwar & Co. 52 16601 7.5 29-May-98 17 11-Jun-98 15-Sep-98 A. Hameed Butt 53 18204-II 11.6 29-May-98 18 15-Jun-98 15-Sep-98 Sarwar & Co. 54 16101 5.9 29-May-98 19 18-Jun-98 15-Sep-98 Hidayatullah 55 16109 4.0 29-May-98 20 18-Jun-98 15-Sep-98 Hidayatullah 56 18307 9.3 29-May-98 21 24-Jun-98 15-Sep-98 Bashir Ahmed & Co. 57 18204-III 11.6 29-May-98 22 13-Jul-98 15-Sep-98 Yasin Brothers 58 15313 14.7 24-Jun-98 23 15-Jul-98 15-Sep-98 Khalid Rauf & Co. 59 15316 16.4 24-Jun-98 24 15-Jul-98 15-Sep-98 Nazir & Co. 60 15317 5.1 24-Jun-98 25 15-Jul-98 15-Sep-98 Multimed Construction 61 15314 20.5 24-Jun-98 26 03-Aug-98 15-Sep-98 Khalid Rauf & Co. 62 11215 7.1 24-Jun-98 27 25-Aug-98 14-Sep-98 Consolidated Construction Co. 63 16302 9.0 05-Jul-98 28 30-Sep-98 28-Dec-98 Builde & Co. 64 16304 8.2 05-Jul-98 29 30-Sep-98 28-Dec-98 Builde & Co. 65 18302 8.4 05-Jul-98 30 27-Nov-98 28-Dec-98 Sinaco Engineering 66 18314 12.7 05-Jul-98 31 27-Nov-98 28-Dec-98 Rising Sun Construction 67 18303 13.8 07-Jul-98 32 19-Aug-98 15-Sep-98 Sinaco Engineering 68 15315 6.9 07-Jul-98 33 03-Sep-98 28-Dec-98 Khalid Rauf & Co. 69 11218 6.4 07-Jul-98 34 25-Sep-98 28-Dec-98 Gilan Construction 70 12217 10.8 07-Jul-98 35 25-Sep-98 28-Dec-98 Hidayatullah & Co. 71 11221 5.8 07-Jul-98 36 26-Sep-98 28-Dec-98 Tarmac Pak 72 11222 9.2 07-Jul-98 37 26-Sep-98 28-Dec-98 Tarmac Pak 73 11216 9.9 07-Jul-98 38 28-Sep-98 28-Dec-98 Gilan Construction 74 14410A 6.9 07-Jul-98 39 02-Oct-98 28-Dec-98 Kausar Construction Co. 75 14217 7.7 07-Jul-98 40 03-Oct-98 28-Dec-98 Nazir & Co. 76 12401 9.1 07-Jul-98 41 03-Oct-98 28-Dec-98 Nazir & Co. 77 12215 13.0 07-Jul-98 42 05-Oct-98 28-Dec-98 Manzoor Hussain & Co. 78 14216 10.3 07-Jul-98 43 08-Oct-98 28-Dec-98 Quality Const. Services 79 12216 9.3 07-Jul-98 44 12-Oct-98 28-Dec-98 Const. Management Associates 80 16616 14.0 07-Jul-98 45 12-Oct-98 28-Dec-98 Khalid Rauf & Co. 81 18304 6.6 07-Jul-98 46 27-Nov-98 28-Dec-98 Ramzan & Co. 82 18315 8.2 07-Jul-98 47 27-Nov-98 28-Dec-98 Sh. Manzoor Ahmed & Co. 83 18319 7.4 07-Jul-98 48 27-Nov-98 28-Dec-98 Delta Clic JV 84 11217 5.2 19-Aug-98 49 19-Sep-98 28-Dec-98 James Construction Co.

Appendix 8 35


by ADB

85 11219 9.2 19-Aug-98 50 25-Sep-98 28-Dec-98 F.I.S. Associates 86 11214 8.2 19-Aug-98 51 08-Oct-98 28-Dec-98 Gilan Construction 87 12214 6.4 19-Aug-98 52 27-Jan-99 18-Mar-99 Zafar Javed & Co. 88 14412 16.2 16-Oct-98 53 15-Nov-98 28-Dec-98 Raza Zaman & Co. 89 17401 10.2 18-Dec-98 54 27-Jan-99 18-Mar-99 Zafar Javed & Co. 90 18316 11.8 18-Dec-98 55 10-Feb-99 18-Mar-99 Bashir Ahmed & Co. 91 14411 17.1 14-Jan-99 1 15-Nov-98 28-Dec-99 Nazir & Co. 92 14218 6.9 08-Jul-99 2 15-Aug-99 29-Oct-99 Fazal Karim 93 14409 5.2 08-Jul-99 3 15-Aug-99 29-Oct-99 Khalid Rauf & Co. 94 14410B 6.8 08-Jul-99 4 15-Aug-99 29-Oct-99 Khalid Rauf & Co. 95 30919-PII Protect 11-Nov-99 5 26-Nov-99 15-Feb-00 Hidayatullah Khan & Co. 96 30919-PI Protect 11-Nov-99 6 02-Dec-99 15-Feb-00 Pak Trade Affiliation 97 30919-PIII Protect 11-Nov-99 7 06-Dec-99 15-Feb-00 Khalid Rauf & Co.

NORTH-WEST FRONTIER PROVINCE

1 2101 9.6 14-Nov-96 1 29-May-96 27-Feb-97 Ghulam Faqir & Co. 2 2102-A 12.9 14-Nov-96 2 29-May-96 27-Feb-97 Khattak Allied Const. Co. 3 2102-B 13.3 14-Nov-96 3 29-May-96 27-Feb-97 Raees Khan & Brothers 4 2107 10.7 14-Nov-96 4 29-May-96 27-Feb-97 Yasin Shah & Brothers 5 20314B 15.9 14-Nov-96 5 29-May-96 27-Feb-97 Cemcon Pvt Ltd. 6 20314C 12.2 14-Nov-96 6 29-May-96 27-Feb-97 Itehad Construction Co. 7 20227 7.1 14-Nov-96 7 05-Dec-96 27-Feb-97 M. Haroon Khan & Sons 8 20222 14.3 20-Mar-97 1 10-May-97 29-May-97 M. Ikram & Co. 9 20231 16.9 20-Mar-97 2 10-May-97 29-May-97 M. Ikram & Co.

10 614019 8.2 18-Jan-98 1 07-Sep-98 24-Mar-99 Pir Mubarik Ali 11 101042 8.2 19-Jan-98 2 06-Feb-98 13-Apr-98 Yasin Shah & Brothers 12 204008 7.4 19-Jan-98 3 06-Feb-98 13-Apr-98 I.K. Marwat 13 31201 10.3 19-Jan-98 4 07-Feb-98 13-Apr-98 Ghani Khan & Co. 14 31202 5.8 19-Jan-98 5 07-Feb-98 13-Apr-98 Sahibzada Engineers 15 203001 7.0 19-Jan-98 6 09-Feb-98 13-Apr-98 I.K. Marwat 16 203030 7.6 19-Jan-98 7 12-Feb-98 17-Apr-98 Ghulam Habib Construction Co. 17 203029 8.4 19-Jan-98 8 13-Feb-98 17-Apr-98 M. Ishaq & Co. 18 204003 15.6 19-Jan-98 9 13-Feb-98 13-Apr-98 M. Ishaq & Co. 19 204004 9.3 19-Jan-98 10 13-Feb-98 13-Apr-98 M. Ishaq & Co. 20 31306 9.0 19-Jan-98 11 06-Mar-98 13-Apr-98 Nasrullah Jan 21 203005 7.4 19-Jan-98 12 11-Apr-98 17-Apr-98 Wajahat Muhammad & Co. 22 35204-BII 7.5 11-Mar-98 13 03-Apr-98 17-Feb-99 M. Niaz Khan & Co. 23 35202 5.4 11-Mar-98 14 21-Apr-98 15-Sep-98 M. Ishaq & Co. 24 35204-BI 12.5 11-Mar-98 15 21-Apr-98 15-Sep-98 M. Niaz Khan & Co. 25 34101-IA 27.0 22-Jun-98 16 13-Aug-98 15-Sep-98 M. Ikram & Co. 26 34101-IB 13.4 22-Jun-98 17 21-Aug-98 15-Sep-98 Adalat Khan & Co. 27 31321 5.9 25-Jun-98 18 18-Jul-98 15-Sep-98 Nasrullah Jan

36 Appendix 8


by ADB

28 31326 12.0 25-Jun-98 19 21-Jul-98 15-Sep-98 Dir Construction Co. 29 614012 7.6 05-Jul-98 20 06-Apr-99 22-Apr-99 Muhammadkhel Construction 30 307014-I 11.2 28-Jul-98 21 07-Aug-98 15-Sep-98 Amir Muqam & Co. 31 307014-II 11.3 29-Jul-98 22 07-Aug-98 15-Sep-98 Khattak Allied & Co. 32 31325 7.1 24-Aug-98 23 21-Sep-98 04-Feb-99 M. Ishaq & Co. 33 34101-II 16.9 18-Dec-98 24 12-Mar-99 22-Apr-99 Dir Construction Co. 34 EPM 18-Jul-00 1 05-Aug-00 23-Aug-00 Dir Construction Co. 35 EPM 18-Jul-00 2 09-Aug-00 21-Aug-00 M. Ikram & Co. 36 EPM 18-Jul-00 3 10-Aug-00 21-Aug-00 Raja Adalat Khan & Co. 37 20245 13.3 02-Jan-02 1 31-May-01 04-Dec-01 Raja Adalat Khan & Co.

BALOCHISTAN

1 42401-IA 12.0 08-Apr-97 1 30-Sep-97 21-Oct-97 Standard Construction Co. 2 42401-IB 12.0 08-Apr-97 2 30-Sep-97 21-Oct-97 Zarak Construction Co. 3 42401-IIB 11.0 08-Apr-97 3 30-Sep-97 21-Oct-97 Raza Mohammad & Co. 4 42401-III 11.4 08-Apr-97 4 30-Sep-97 21-Oct-97 Sh. Mohabat Khan 5 42401-IIA 12.7 08-Apr-97 5 21-Oct-97 19-Nov-97 Ghulam Abbas & Brothers 6 45206-IA 12.6 04-Aug-97 6 29-Sep-97 21-Oct-97 Haji Noor Mohammad 7 45206-IB 12.0 04-Aug-97 7 29-Sep-97 21-Oct-97 Ahmad Jan Bangulzai 8 45206-IA 12.0 04-Aug-97 8 29-Sep-97 21-Oct-97 Abdali Brothers 9 45206-IIB 11.0 04-Aug-97 9 29-Sep-97 21-Oct-97 Saadat Akhtar Construction Co.

10 45206-III 10.3 04-Aug-97 10 29-Sep-97 21-Oct-97 Abdali Brothers 11 45206-IV Bridges 04-Aug-97 11 29-Sep-97 21-Oct-97 Bridge Construction Co. 12 46301-IB 14.4 20-Apr-98 1 22-Jun-98 03-Jul-98 Agha Construction Co. 13 46301-IA 15.0 20-Apr-98 2 23-Jun-98 03-Jul-98 Faqeer Mohammad & Co. 14 45101-IB 12.0 16-Jun-98 3 23-Jun-98 03-Jul-98 Mohammad Shahi Builders 15 45101-IIA 12.0 16-Jun-98 4 23-Jun-98 03-Jul-98 Taj & Brothers Construction Co. 16 45101-IIB 12.4 16-Jun-98 5 23-Jun-98 03-Jul-98 Mohammad Imran & Co. 17 45101-IA 11.0 31-Mar-99 1 19-Apr-99 07-Jun-99 Abdullah Jan & Co. 18 46301-II Bridges 01-Apr-99 2 19-Apr-99 07-Jun-99 M.B. Shahwani Construction Co. 19 42401-IV Bridges 02-Sep-99 3 18-Nov-99 03-Jul-00 Prime Construction Co.

190 Contract Packages 37 Packages

Appendix 9 37

ECONOMIC REEVALUATION

A. Introduction

1. The methodology used in the economic reevaluation was similar to that used at appraisal. The standard consumer surplus technique normally used for Asian Development Bank (ADB) project appraisal was used to evaluate investments in road improvement. Tangible benefits to road users were measured by incremental life cycle operating costs of vehicle trips “without” and “with” road improvement. Discounted cash flow techniques were used to compare costs and benefits over 20 years of the Project’s economic life, with a 12% discount rate. 2. The analysis was undertaken in local currency adjusted to exclude taxes and transfers. The cost data are based on actual disbursements. These data did not permit the exclusion of price escalation, so the costs are not true “pre-project” prices. Price escalation after tender award was minor. B. Traffic

3. Traffic counts were available for the sample roads before and after construction but, because of delays in implementation, estimates are needed for the date implementation began and the data for practical completion of each road.1 An average growth rate of 5% was assumed when interpolating these data. 4. Traffic growth after completion was assumed to be 5% yearly [???] for the first 10 years, and 4% thereafter. This is the same assumption used for evaluation of the Provincial Highways Project, and is believed to be conservative. 5. For economic reevaluation, vehicles were classified as “trucks and tractor trolleys” and “others” because those were the only traffic data provided. C. Benefits

6. The quantifiable benefits of project road improvement consist of savings in operating costs for passenger and goods vehicles. Vehicle operation costs (VOCs) depend on vehicle characteristics and prices (weight, size, engine power, fuel used), and on road conditions (type of surface, roughness, curvature, etc.). The Highway Development and Management (HDM-4) model developed by the World Bank has built-in equations for estimating vehicle operation costs, depending on vehicle characteristics and road conditions. These are based on comprehensive VOC studies carried out under the auspices of the World Bank from 1975 to 1982 in Kenya, Brazil, and India. The vehicle prices assumed in the reevaluation are based on those of 2003, the year of project completion. Data on road conditions were deduced from the design parameters. 7. Benefits were assumed to start from the year after disbursements were completed. This is probably conservative, because most roads were open to traffic before formal completion.

1 In practice, most roads were open to traffic well before the official handover date.

38 Appendix 9

D. Construction and Maintenance Costs

1. Construction costs 8. Construction costs included actual costs of civil works, costs of construction supervision, the executing agencies’ incremental administrative expenses, and relevant costs of project preparation technical assistance (PPTA). The cost of civil works can be determined for individual road sections, but the costs of supervision and incremental administration are common for all or several roads. Those costs were distributed, proportionately, over individual sections. Construction supervision accounted for 9% of the costs of civil works; incremental administration and PPTA combined were 1%. Because those items total 10%, the civil works cost was increased by 10%. The actual costs included taxes and duties that must be excluded for economic evaluation. Thus, actual costs were multiplied by a factor of 0.85 to arrive at economic costs, or costs excluding taxes, duties, and transfer payments. The actual disbursement schedule was used to provide expenditures by year.

2. Maintenance costs 9. Maintenance costs by the provincial governments have been assumed to be PRs50,000/km in the first year, increasing over time at the average rate of traffic growth. These were reduced by a factor of 0.85 to arrive at economic maintenance costs. E. Evaluation

10. The economic reevaluation was developed by comparing the incremental costs of use over the life cycle of a road “with” and “without” the Project, and the economic internal rate of return (EIRR) as decision criteria. In this case, this was equivalent to comparing “before” and “after.” Table A9.1 shows the resulting EIRRs for individual roads―they range from 5 to 75%. Some of the roads fall below the 12% ADB criterion, but based on these sample roads, the overall EIRR of the Project is 29%. The base traffic for Balochistan could not be counted because it was spread over many local tracks. The base traffic was, therefore, calculated assuming a 5% growth rate—far lower than growth elsewhere, and likely to understate the return of the road. 11. At appraisal, roads were evaluated at an average cost of PRs2.2 million per km. Because of significant increases in the tendered prices, the cost at completion averaged PRs5.5 million per km. But the cost increase was, in most cases, more than offset by increases in traffic carried. Inflation also caused increased VOCs and thus, increased the savings from reducing road roughness. The distance-weighted average EIRR at appraisal of the sample roads was 34%. 12. After completion, the construction costs and generated traffic were known, but there is still uncertainty about the traffic growth rate, the VOCs, and future maintenance. Sensitivity analysis was calculated by (i) decreasing benefits by 15% to represent an overestimation of the VOC savings, (ii), reducing the future growth rate to 3%, and (iii) assuming lower maintenance, resulting in increased roughness and thus, VOC. Sensitivity indicators, which indicate the elasticity of change in EIRR with respect to a change in costs or benefits (that is, the ratio of change in EIRR: change in variable tested) were also computed. In all cases, a 1% change in costs or benefits would result in less than 1% change in average EIRR. Although reducing the assumed VOC savings by 15% would result in more roads falling below the 12% level, the average EIRR of the sample roads only falls to 26%. The overall outcome is concluded to be robust.

TABLE 9A: COMPARISON OF ECONOMIC RETURNS

Province District Road Length

(km)

Cost (PRs

million) Traffic at

Appraisala Traffic on

Completiona IRI

before IRI

after EIRR at

Appraisal EIRR at Completion

Sindh Sukkur RD40–RD225 RHS Nara Canal 60 93.91 45 456 19 6 49% 39%

Sindh Nawabshah Jam Sahib–chak 3 33 64.29 38 46 19 6 37% 5%

Punjab Rawalpindi Missa Kiswal–Islampura 16 35.78 57 74 19 6 14% 9%

Punjab Mandi Bahauddin Gojra Gohr Sharrif 5 9.88 28 148 19 6 17% 13%

Punjab Multan Multan pub school -Mattital Rd 10 14.85 87 232 19 7 25% 27%

Punjab Vehari

Delhi Multan Road –Tech institute Chak 507/EB 12 30.00 95 311 19 7 25% 23%

Punjab Sahiwal Ballewala More–Chak 61/4 5 26.03 613 1,345 19 7 22% 46%

Punjab Pakpattan Malikpur–Mari Add 14 38.04 641 1,250 19 7 12% 75% Punjab Rahim Yar Khan Shahi Rd –Pacca Larn 13 30.79 80 211 19 7 18% 20%

NWFP DI Khan Said Alian –Kachi Katgarh 10 20.07 29 73 19 7 36%

7%

NWFP Swat Kanju–Baghdehdehri 28 65.48 1,964 4,977 10 6 29% 45% Balochistan Musakhel Kingri Musakhel–Drug 56 210.45 54 97 19 6 49% 6% Overall 262 640 3,731 9,220 34% 29%

EIRR = economic internal rate of return, IRI = International Roughness Index, NWFP = North West Frontier Province Source: MLGRD,Traffic Counts a Vehicle per day

Appendix A

9 39

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