UNIVERSITY OF DHAKA

DEPARTMENT OF ACCOUNTING & INFORMATION SYSTEMS

MBA Program

PROJECT PAPER

ON

CONSTRUCTION OF A BRIDGE

SUBMITTED TO

Md. Abdul Hakim

Professor

Accounting & Information Systems

University of Dhaka

SUBMITTED BY

Alokananda Bhowmik

Id. No. : BBA-15061 (MBA 353)

Section: B

Batch: 15th

DATE OF SUBMISSION: 11th September, 2013

PROJECT: SECOND TONGI BRIDGE

Executive Summary

Tongi which marks the northern border of Dhaka has a population of 350,000. It is also

economically important as it features BSCIC industrial area and an EPZ is situated nearby in

Savar. The area also connects Dhaka and areas of greater Mymensingh, Bogra and Sylhet. The

river Turag has surrounded the city and the project is on constructing a bridge on this river.

Over population has made it quite difficult to use the current bridge without any hassle. It is

evident that within some years the Tongi bridge would not be able to accommodate the increased

number of vehicles. So, construction of a new bridge is a need of time. It is assumed that Second

Tongi bridge will be able to handle the increased vehicle and will facilitate efficient

communication in Tongi and its vicinity.

JICA, a major development partner of Bangladesh, will co-finance the bridge. The bridge will

rapport our relation with Japan as well. However, Bangladesh is expected to repay the loan

before the designated time. And calculations show positive differences between the benefit of the

bridge and its cost.

The report contains several chapters. In the introduction, the background, overview of project,

methodologies and the limitations of the studies has been given. Project description part of the

report will cover every pros and cons of the project. Project Analysis chapter contains economic,

financial, social and environmental aspects of the project. A summary of the project also has

been added. Calculations of different projections and results have been given at the end of the

paper in relevant annexure.

TABLE OF CONTENTS

CHAPTERS TOPICS PAGE Project Summary i Logical Framework of the Project iii STB: Project Time Scheduling iv Feasibility Analysis v Chapter 1 Introduction

1.1 Background of the Study 1 1.2 The Second Tongi Bridge Project 2 1.3 Study Content & Methodological

Approach 3

1.4 Limitations 4 Chapter 2 Project Description

2.1 Project Component 5 2.2 Technical Solution Retained &

Other Alternatives 7

2.3 Project Cost & Financial Arrangements

9

2.4 Project Target Areas & Beneficiaries

11

2.5 Participatory Process for Project Design & Implementation

12

2.6 Repayment of Loan 13 Chapter 3 Project Analysis

3.1 Economic Analysis 14 3.2 Financial Analysis 17 3.3 Social & Environmental Analysis 23

Chapter 4 Implementation 4.1 Implementation arrangements 25 4.2 Procurement 26 4.3 Loan Disbursement 26 4.4 Monitoring 27 4.5 Risk Factors 27 4.6 Strengthening 7 Sustaining

Foreign Relationship 27

SWOT Analysis 28 Conclusion 29 ANNEXURE A Calculation of Cost & Benefit ANNEXURE B Loan Repayment Schedule

ACRONYMS

BCR: Benefit Cost Ratio

E: Equipment

ECNEC: Executive Committee of National Economic Council

ERD: Economic Relations Division

FC: Follow-up

GA: Grand Aid

GOB: Government of Bangladesh

IMED: Implementation Monitoring & Evaluation Division

JICA: Japan International Cooperation Agency

MIRR: Modified Internal Rate of Return

PD: Project Director

PMT: Project Management Team

PO: Project Office

R&H: Roads and Highways

SCBA: Social Cost Benefit Analysis

STB: Second Tongi Bridge.

TCP: Technical Cooperation Project

YLP: Yen Loan Project

Project Summary

1. The Second Tongi Bridge is a JICA- Bangladesh project situated on the northern end of Dhaka in Tongi over the river Turag. The project scope includes constructing a four lane bridge with link roads and paths for passers-by. It can be regarded as the complementary for the existing Tongi bridge. Expected outcome includes-

Reducing traffic congestion in the busy city roads of Dhaka, Tongi and in the way to Mymensingh

Transportation of industrial products and raw-materials between industrial belt of Gazipur and Mymensingh with air and sea-port.

Reduced time-based transport and trade- cost. Save bridge user time and vehicle maintenance cost.

2. Need assessment There is one existing bridge over the river Turag which is used for vehicle passing. Another foot – bridge is also there which is used mainly during the Ijtema. The Ijtema bridge is lower and very near to the wetland.

3. Financing structure of the proposed bridge is as follows:

Sources BDT (in million)

% Total Cost Instrument

JICA 900 90 Loan GOB 100 10 (Self Finance) 1,000 100

Details of loan structure: Loan Currency Taka Loan amount (at 2014) 900 million Interest type Not applicable Interest rate spread Not applicable Tenor 10 years Cost of Capital 10 percent

4. Main Milestones Expected:

Concept note approval January, 2014

Project approval by ECNEC February, 2014 Loan signature April,2014

Loan disbursement May, 2014

Bridge Construction May, 2015

Bridge Completion September, 2017

Repayment 2018 to 2027

5. Financial Analysis Calculated value Acceptance Criteria BCR 1.42 greater than 1 MIRR 12.90% greater than cost of capital The project showed positive result in both cases.

Logical Framework

Planned Date of Project Completion: September, 2017

Narrative Summary Objectively Identifiable Indicators (ODI)

Means of Verification (MOV)

Risk / Mitigation Factors

Impact -To Improve in the existing traffic system over the river Turag -To save user time -To save vehicle maintenance cost -To facilitate better trade

-Decreased traffic jam in the Dhaka-Tongi-Mymensingh road -Decrease transport cost for industries -Save in user time and their vehicle maintenance cost.

Risks Political & institutional risk from Intergovernmental difference Mitigation Open dialog between relevant parties and adherence to protocol

Outputs -900 ft long and 40 ft wide bridge over the river Turag on the western side of the current Tongi bridge -50 ft wide link roads of 300 ft length on the both sides of the main bridge

- Audited annual report of the project -IMED R&H & -JICA officials

Risks -Procurement delay - Cost overrun -Delays in compensation payment and community settlement Mitigation -Apply adequate contingencies -Closer monitoring -Effective project management

Inputs Components - Tk. 90 million forwarded by JICA -Tk. 10 million provided by the GOB (total Tk. 100 million)

1.Civil works comprising (i) construction of 900ft long , 40 ft wide bridge (ii)construction of bridge access/link roads 2.Consultancy services including design review, construction supervision, technical and financial audits 3.Technical assistance for capacity building for asset management 4.Procurement of necessary equipment 5. Establishment of project office 6. Complementary cross cutting components such as relocation and compensation of the inhabitants of the bridge site

Key

Activ

ities

STB Project: Project Time Scheduling

Indicative Project Time

Feasibility Analysis

We can study the feasibility analysis by analyzing the “with project’ and “without project”

scenarios.

With Project Scenarios

With the construction of the new bridge, we will have the following outcomes or impact on the

areas around the bridge.

(1) Traffic problem will be solved significantly. As a result lots of time spent on the current

Tongi bridge or around it will be saved. Besides vehicle maintenance cost incurred by

these users can also be saved.

(2) The area of operation of the bridge is an area of high industrialization. Traffic congestion

hampers free flow of trade raw-materials and out-put from the factories to their

destination. The new bridge will help in this regard.

(3) The Dhaka-Mymensingh high way is reconstructed into a new four lane highway. The

bridge will connect Dhaka- Tongi to area of greater Mymensingh. Better communication

towards Bogra, Narsingdhi and Sylhet will be ensured by the bridge.

(4) The foot-bridge, constructed especially for the Ijtema will be replaced by the new bridge.

As a result, one bridge will serve multiple purposes.

(5) The bridge will be wide and long enough to accommodate future increase in cars and in

population.

Without Project

Currently there are (apart from the railways and Diversion roads) two bridges over the river

Turag. One is the Tongi bridge and the other is the Ijtema bridge. Through the Ijtema bridge no

vehicles can run towards Tongi from Dhaka. So the Tongi bridge is the only way people can pass

the river Turag. As a result,

(1) There tends to heavy traffic congestion throughout the day and this will obstruct the free

flow of trade commodities and even non-commercial traffic. This will cause immense

problem for the people.

(2) After some time the existing Tongi bridge will become inoperable due to increase in

population and increase in vehicles.

From the two scenarios discussed above, it is evident that constructing a new bridge is a

necessity of time and it is feasible to construct the Second Tongi Bridge.

The Financial analysis part shows that the bridge is also financially viable which will result a

MIRR of 12.9 % and a BCR of 1.42. The present traffic situation also makes construction of

another bridge feasible.

1.0. Introduction

1.1. Background of the Project

An adequate and efficient transport system is a pre-requisite for initiating and sustaining

development. Efficient communication is the key to the expansion and integration of markets-

sub-national, national and international. To this end the Second Tongi Bridge will be considered

as a milestone. Its importance should be weighed not by its relative size but the immense impact

it will have in its area of existence.

Tongi is a busy township in Gazipur, surrounded by the river Turag. It marks the northern border

of Dhaka and is also a nearby town of Savar. Being the connector of several industrially and

strategically important places, Tongi can be considered as the gate-way of the capital through

which people can connect areas of Mymensingh, Bogra, Narsingdhi and even Sylhet.

Already there is a bridge on the Turag to facilitate communication to areas adjacent to Tongi. A

question may come- what is the use of building a new bridge when there is already one? Heavy

population has made prompt communication through the bridge impossible and is causing people

to lose their valuable time and increase in price of industrial components. It can be assumed that

within less than ten years, the bridge will no more be able to accommodate the increased number

of people and vehicles. So, to pledge smooth communication system between Dhaka-Tongi and

areas beyond, constructing the Second Tongi bridge is inevitable.

To walk in the road of development, Bangladesh has several partners who have paved our way to

being a middle income country. JICA, one of the development partners of Bangladesh, has run

several projects successfully for the well being of the people of Bangladesh. The STB project

will also be a joint-project of JICA and Bangladesh where JICA will be the major financer. The

bridge project will be another flag-mark of our sustainable and long term relation with JICA and

Japan as well.

This project paper is an essential requirement of successful completion of course no. 7102 of

MBA program. To imply our knowledge on project evaluation, management and implementation

–that we learned in the Project Management (7102) course- was the main objective of the

project. But this does not make the concepts and potentiality of the bridge described in the

project paper useless. The bridge is still a necessity for lessening the suffering of people and

saving their time.

Use of projects to accomplish the many and diverse aims of society is not new. This paper is also

such a project where our task will be to identify the scope and objectives of the project, critically

evaluating various aspect of it and the process of its realization or implementation. Future

projection is not an easy task and predicting it would be even harder. So naturally some

assumptions have been made in analyzing various aspects of the project.

1.2. The Second Tongi Bridge Project

The proposed Second Tongi bridge on the river Turag is a joint project of JICA and GOB. This

four lane bridge will be of 900 ft length and 40 ft wide. Link roads of 300 ft length would

connect the bridge with Dhaka and Tongi. It will be constructed on the western side of the

existing Tongi bridge.

Being situated by the side of capital Dhaka and near an EPZ , Tongi is an important place both

economically and as a connector of the industrial suburbs with Dhaka. The place is also

important as it enjoy special tax exemption and tariffs by the government. STB will be logically

a part of life and business activities in Tongi and cities around it.

1.3. Study Contents & Methodological Approach

The main part of the study enunciates details of the proposed STB project. It examines the

expected economic cost and benefits of the project from a societal perspective and provides with

an assessment of benefit and return on invested capital. The potential bridge tolls are examined

within the context of estimates. Social cost and benefits have also been considered based on

distribution of economic benefits. Environmental aspect was not overlooked though that part was

not overly descriptive and informative. However, no Technical Analysis has been shown in the

Analysis chapter of the project but in the Project Description chapter some alternatives for bridge

construction have been mentioned without providing much detail. It is due to the fact that this

project is assumed to be evaluated on the basis of various economic and financial impact of the

bridge only. Estimates were made for financial and economic projections also.

The study has relied on-

The internet for various facts about Tongi and people living there.

Webpage of the Bangladesh Bridge Authority for knowing the present toll-rates

applicable in various bridges.

The Traffic model which is estimated by Selim Raihan and B.H. Khondker and been

approved by a World Bank team for translating the time and vehicle cost saved by the

proposed bridge into monetary term.

BCR to calculate the cost and presumed benefit ratio of the bridge.

Related data and assumptions will be discussed in the relevant part of the project paper.

1.4. Limitations

Projections of economic benefit in some extent were based on estimation. Traffic model was

taken as a mold to establish the report’s own estimation. Number of cars crossing the Dhaka-

Tongi road was based on personal observation which may not be equal in all the months of

the year.

In evaluating public investment project UNIDO and methods like Little-Mirrles are most

used Social Cost Benefit Analysis (SCBA) techniques. But these models hugely depend on

economic data. But as the project mainly focuses on financial pros and cons, it did not overly

follow the mentioned techniques. Instead, it used BCR which also studies benefits coupled

with its relative cost. The only difference with SCBA is that its focus is on financial numbers.

But Traffic model, which is an economic model, was considered while making projections on

expected benefit.

In the analysis part, no technical alternatives were analyzed. In fact, technical part was

considered very briefly in the Project Description chapter. While making the expected benefit

projections, the net increase in trade in the concerned areas was not considered. It’s because

reliable data were not available.

2.0. Project Description

2.1. Project Component

The project falls under JICA’s investment programme on transport infrastructure operations. It is

a stand-alone national project co-financed through JICA’s loan facilities and the Bangladesh

government.

The project’s development objective is to reduce the traffic load among the capital and the other

major industrial hub. It is also expected to facilitate increase trade activities thereby increasing

the national income and improve regional connectivity. All these will contribute to the economy

as a whole.

The project main components comprise the construction of a new four lane bridge, link roads on

the both side of the bridge and path-way on the sides of the bridge for the passers-by. Realizing

such construction undertakings will require additional activities. Other complementary

components include design of the bridge, control and monitoring of the bridge building process

etc. The details of components are summarized in Table 2.1.

Table 2.1.: Description of the Project Components

Component Name BDT

(m)

Component Description

1 Civil works (Bridge,

roads etc.)

756 Construction of (i) 900 ft. long, 40 ft. wide cable stayed 4

lane bridge, including tolling facilities (ii) two link roads of

approximately 50ft. width and 300 ft long

2 Design reviews &

Construction

Supervision services

6.75 Consultancy services for (i) design review & (ii) supervision

of works and project management services. Project

management services include capacity building & skill

transfer in project management. Consultancy Services

for Project Technical

and Financial Audits

3 Technical Assistance

(Capacity Building)

5.5 Management & trade facilitation procedures and asset

management for the establishment.

4 Project Office

Expenditure

1.50 The setting up and running of the project office at Tongi,

Gazipur comprise: (i) leasing of office space, (ii) office

furniture & equipment, (iii) staff allowance, (iv) salaries, (v)

office maintenance, (vi) overheads etc. This is funded 100%

by the GOB.

5 Studies and Preliminary

Design

6 Consultancy service to carry out preliminary designs.

6 Procurement of

operational equipment

139.50 This includes procurement of land and equipment and

installation of operational equipment.

7 Resettlement &

Compensation

22.50 Construction of new housing units, amenities and services.

8 Escalation cost 62.25 Expenses for accommodating inflationary increase in overall

price level.

2.2. Technical Solution Retained and Other Alternatives

4.2.1. Technical solution

The technical design was governed by two key factors-

(i) location of the bridge, and;

(ii) alignment and length of the bridge.

The latter was however the most significant feature hence fundamental to the design exercise.

The solutions investigated were based on ascertaining the most optimized bridge configuration

and within the following parameters and constraints:

(i) uninterrupted trade activities

(ii) the Turag river and its surroundings

(iii) the local communities, and

(iv) whole-life cost.

In addition, performance criteria on functionality, aesthetics, works scheduling and

constructability and financing alternatives were also explored.

Technical options: Three construction types were investigated-

(i) a cable-stayed extra-dosed,

(ii) concrete box structure, and

(iii) steel/concrete composite warren truss.

As an alternative to the road only bridge and to ensure sustainability of the bridge as a

competitive major trade route for heavy and bulk haulage, the bridge functionality was

considered for each bridge type. The concrete box and steel/composite truss options were

rejected on the grounds of relatively high whole-life cost, aesthetic incompatibility with the

environment, constructability and alignment challenges. The concrete box required frequent

support in the river bed and does not readily lend itself for to curved horizontal alignments. The

truss structure has similar limitations, high maintenance cost and constructability challenges.

The cable –stayed extra-dosed concrete bridge was selected as the preferred option based on the

criteria of functionality in terms of strength/weight ratio, site constraints and lower whole life

cost. With its heavy haulage capacity and significance to trade, the added economic benefit by

integrating a rail component is a value-added functionality over the bridge’s 50-year design life,

albeit the plus 15-20% cost implication.

2.2.2. Financial Alternatives

Financing options: A number of financing options were investigated including PPP financing

with varying combination of public and private (equity and or debt) investment from 100%

public to 100% private against varying scenarios of traffic and revenue generation. The study

concluded that an attractive return on investment required an investment of approximately 20%

of capital cost with 100% of revenue as private income, an unattractive option to the

Governments. The financing of capital expenditure with 100% public funds was therefore

recommended for the project. The study however recommended a PPP option to be considered in

the medium to long term for operations and maintenance on the basis that, excluding capital cost,

the financial return could potentially be attractive for private sector participation.

2.3. Project Cost and Financial Arrangements

The total estimated project cost (net of all taxes/duties) including physical/price contingencies, is

US$13.3 million) shared on 90%:10% split between JICA and GOB.

Sources BDT

(in millions)

% Total Cost Instrument

JICA 900 90 Loan

GOB 100 10 (Self Finance)

1,000 100

The project cost component is given in the following table:

Components Cost in million

BDT

%

Civil works 756 75.79

Consultancy Services 6.75 0.68

Capacity building 5.25 0.30

Implementation of the project 139.50 17.14

Project office establishment

and operations

1.50 0.15

Resettlement and

compensation

22.50 5.34

Feasibility and detailed design 6 0.60

Base Cost 937.50

Contingency 62.25 6.24

Total 1,000 100

Figure 2.1: Cost Components of Project

Table 2.2: Project Total Cost by Category of Expenditures

Category Cost in million

BDT

%

Works 618.75 62

Services 125.25 12.5

Goods 105 10.5

Miscellaneous 58.5 5.8

909.75

Contingency 90.25 9.2

Total 1,000 100

756

6.75

139.5

22.5 662.25

Civil

Table 2.3: Total Expenditures schedule by Component

Components 2014/15 2015/16 2016/17 Total

Civil works 0.00 302.25 453.75 756

Consultancy services 4.50 1.50 0.75 6.75

Capacity building 1.50 0.75 0.75 3

Project Office expenditure 1.50 1.50 0.00 1.50

Feasibility study and

preliminary expenses

6 0.00 0.00 6

Procurement and operational

expenses

90 30.75 18.75 139.50

Resettlement and

compensation

23.25 0.00 0.00 22.5

Base cost 125.25 336.75 474 937.75

Contingency 26.25 22 15.75 62.25

Total 151.5 358.75 489.75 1,000

2.4. Project Target Area and Beneficiaries

The project mainly aims at two things. As-

1. Greater connectivity among the capital and other industrial hub situated around the

Dhaka belt &

2. Increasing “road user benefits” by saving on vehicle operation cost (VOC) and saving on

travel time cost (TTC).

Tongi, Gazipur, Bhaluka etc are in vicinity of the project area. These areas have become the

major industrial concentration of the country. The current bridge will become inoperable due to

increased population say within less than ten years. This will add to the sufferings of our

industries and national income as well.

Dhaka, being an over-populated city, tends to be jam-prone. This project will reduce the problem

in great extent in its area of operation. Total traveling cost and time spend in traffic clogged

roads can be translated into monetary amounts and this will amount to a significant amount.

Time is money. And the bridge is expected to save our valuable time and transport operation

cost.

2.5. Participatory Process for Project Design & Implementation

The participatory process for the design and implementation will have cross-border dimensions.

Japan, being one of the major development partners of Bangladesh, will finance the bridge

project. Hence, at design phase, cross-border participation and consultation will be undertaken.

JICA representatives will also be present in the consultation process to observe operations and

will provide their guidance and suggestions as and when applicable. On implementation phase,

the project JICA team and the government agency (Department of Roads & Highway) will

consult extensively on the technical aspects, legal and institutional and implementation

arrangements.

2.6. Repayment of Loan

As the project started to produce positive net benefit after 2018, the GOB will start to make

repayment from the year 2018. JICA provided BDT1000 million. Cost of capital as assumed to

be 10 percent. The loan would be repaid in nine installments where the final repayment would be

made on 2027. Loan repayment schedule is given in the annexure-B.

3.0. Project Analysis

3.1. Economic Analysis

The bridge project will not only connect two in-lands but also create employment for people and

will create more potentiality of trade. Moreover it can be considered as industry-friendly as it

will ensure faster transfer of trade components without creating back-logs. Non-commercial

users of the bridge will also be benefitted by the bridge. All these will add to our economy as a

whole.

The economic aspect of the bridge project can be discussed from two aspects-

a) Transportation Cost (TC) savings by saving in Total Travelling Cost (TTC) &

b) Increased trade activities.

Besides more employment will be generated centering the bridge project which will add value to

the economy and income of the country.

3.1.1 Transportation Cost Savings

The construction of the second Turag bridge will:

Reduce the travel time taken to cross the existing bridge which is always clogged by

heavy traffic due to increased number of vehicles resulting from increased population.

Users of the present bridge incur an excess travel time that can include waiting for buses

or other kind of transport which cannot be moved an inch due to heavy traffic. Long hour

of being stuck in a traffic jam can also be very gruesome and can cause health hazard.

Reduce transport costs incurred by commercial and non-commercial traffic during

crossing the present Tongi bridge. This will flourish trade activities of that area as the

area in the vicinity of the bridge area are heavily engaged in industrial activities.

Non-Commercial Traffic

Traffic Numbers

An estimated 9,000 passengers and other light vehicles use the bridge daily. The bridge traffic

figure is based on actual counts found on the Bangladesh Bridge Authority website. This traffic

volume is projected to increase by 1% per annum until 2050.

The economic analysis of the project assumes that the bridge, if constructed, would facilitate

smooth flow of traffic and will lessen the present traffic-pressure on the existing bridge.

Commercial Traffic

Traffic Numbers

Commercial vehicles include- small bus, large bus, small truck, medium truck and large truck.

According to the Bangladesh Bridge Authority, nearly 2000 commercial traffics cross the bridge

(including both up and down services). Among the vehicles, there are industrial carriers which

may run through the Dhaka-Mymensingh highway and even Narsingdhi, Bogra and Sylhet.

Cost Savings

For the calculation of the road user benefit of the bridge, we will use the “Traffic Model”. The

model was originally developed by S. Raihan and B.H. Khondker and was later revised by the

World Bank on 2002.

Road user benefits are estimated based on the savings on vehicle operation cost (VOC) and

savings in travel time cost (TTC). VOC is used to provide economic value in distance savings

covering various factors such as fuels, tiers and maintenance etc. For economic valuation unit

VOC is derived from the “Road Users Cost Report”. Total VOC is segregated into fuel and non-

fuel components, which are then escalated to future years by the increase in average petroleum

spot price and Consumer Price Index.

A measure of Value of Time is used to convert travel time savings into a monetary value.

Savings in travel time is estimated to be account for 23% of total benefits. These constitute a

major part of the economic benefits of the bridge.

Table: Road User Benefit from the traffic model

Year end June VOC TTC Total

2013 0 0 0

2014 0 0 0

2015 0 0 0

2016 0 0 0

2017 0 0 0

2018 74 87 161

2019 84 97 182

2020 93 106 199

2021 111 124 235

2022 131 145 276

The construction is designed to be completed on 2017. Five year projection of VOC and TTC is

projected after the completion of the project. According to Raihan and Khondker, the bridge will

amount to total of 18,512 million taka till 2050.

The exact number of trade occurred in the Dhaka-Gazipur-Mymensingh route cannot be traced

and no such records were also found anywhere. Still it is evident that with the increased cost and

time savings, the profit figures of the industries will increase. Smoother operation and easy

access to trade facilities will change their position significantly upward.

3.2. Financial Analysis

Financial analysis is an inseparable part of project appraisal. It seeks to ascertain whether the

proposed project will be financially viable in the sense of being able to meet the burden of

servicing debt and whether it will be able to satisfy the return expectations of the investors. But

as the bridge project neither aims to earn any return nor is meant to achieve any target return, the

study will strive to make some projections of possible revenue earned from toll collections and

the savings in user time and vehicle maintenance cost.

In the economic analysis section, the benefits of the project were spelled out. It is to understand

that, the bridge is a public good and hence estimation of profit or any kind of returns will not be

a wise thing to do. Social cost benefit analysis will be the right approach to evaluating the project

or to find out its viability.

However, within the context of the economic findings described in the previous section, the

study will analyze a number of potential financial impacts that may accrue to various stakeholder

groups.

1. Toll collection:

The proposed bridge will be financed by JICA where only 10 percent of the total cost will be

carried by our government. JICA will provide the capita amount as a loan which we will be

needed to pay subsequently. The loan amount will be interest free though a small percentage will

be charged for servicing the dead. Being a public good does not prohibit collecting user charges

from the users who will be benefitted by the bridge. The estimated economic life of the bridge is

assumed to be 50 years. But toll will be collected up to the 33rd year of its life that is up to the

year 2050. Within this period, it has been calculated that the bridge will be able to make the

repayment to JICA and even will result in to some positive cash inflows which will amount to a

very handsome amount at the end of 2050.

Toll collection rate will be determined by the Bangladesh Bridge Authority. Charge would not be

taken from the passers-by. However, both commercial and non-commercial vehicles will fall

under the toll-collection jurisdiction. Naturally, the rate will be different for different types of

vehicles.

The proposed toll rates ruled out by the Bangladesh Bridge Authority are given in the following

table.

The toll rate for one-way crossing of the proposed Second Tongi Bridge (in Tk.):

Motor cycle 40

Car/Light vehicle 400

Motor car/Jeep/Micro-bus 500

Small bus 650

Large bus 900

Small truck 850

Medium truck 1100

Large Truck 1400

2. Savings in user time and vehicle maintenance cost

In the previous section, collection of toll for crossing the bridge was discussed. Collection from

toll is a direct economic benefit of the bridge. But there are some other benefits which will arise

from the construction of the new bridge which are not directly measurable in monetary terms but

nonetheless are very significant.

Long hectic hours in traffic jam are a regular phenomenon of city life. The vicious traffic clog of

the Dhaka-Tongi and Dhaka – Mymensingh road is not unknown to anyone. People travelling

regularly though the mentioned route lose a good portion of their daily life in the traffic clogged

road of Tongi. To some extent, the existing Tongi bridge is responsible for this traffic

congestion. With the increase in population and commercialization, the number of cars in the

cities has also increased many folds. But the width of the bridge has not (this is nearly an

impossible task). Due to this reason, the traffic congestion becomes more concentrated around

the Tongi bridge.

This problem has also added our vehicle maintenance cost. The vehicles are needed more hours

to reach to their destination than they would have needed in on traffic-less roads. Industrial

transportation cost thus goes up which in turn will increase our product cost and subsequently

will increase the price level.

The user time spent on the traffic congestion and additional vehicle maintenance cost can be

saved if the new Tongi bridge is constructed. We can convert the savings in time and

maintenance cost onto monetary terms and can calculate net benefit and total benefit from the

bridge project.

Now, the cost of constructing the proposed bridge can be discussed. Two kinds of costs are

mainly related with the cost.

1. Capital cost

This includes the major cost involved in constructing the bridge. This mainly consists of

civil works, design, consultancy services, preliminary planning, procurement,

compensation, remuneration etc. The details cost component is discussed in the project

description part. The fund provided by JICA will be used to finance this work.

2. Operation cost

Operation cost covers a very insignificant cost of the total project cost. In the project

construction period, this kind of expenses will not incur. Operation cost will start to incur

once the bridge will be opened for the public use.

It mainly includes cost of collection toll, maintenance cost of the paths and lightening the

bridge, maintenance cost of the lamppost and lightening facilities etc. This is assumed to

incur in a uniform rate though it may rise due to inflation.

Results of Benefit –Cost Analysis:

There are various investment appraisal criteria used by investors across the world. Some of them

are discounting methods and some other is non-discounting. This study, tried to analyze the

benefits and costs (BCR) associated with the bridge project.

In BCR, two elements are involved. The numerator is the present value of benefits and the

denominator is the present value of initial investment. Here, the initial investment is the capital

cost of the bridge while benefits include collected tolls and numerical value putted on savings on

time and maintenance cost.

Details analysis of BCR is given in the appendix. The project results into a BCR of 1.42. The

acceptance criterion of BCR is that projects with BCR greater than 1 should be accepted. So, this

bridge is financially viable.

The study has also calculated the MIRR of the bridge project which results into 12.90%. Project

with MIRR greater than its cost of capital are good projects to invest in. The proposed project

has a cost of capital of 10%. So, the project shows positive result regarding MIRR also.

3.3. Social and Environmental Analysis

The project can be categorized as a medium project in terms of capital involved, scope of

activities and resulting output. But the impact is huge. It is going to make crossing the river

Turag easier , will facilitate better connectivity with the suburbs of the capital and most

importantly will save lots of time of the bridge-users.

Like all construction project, this bridge will also have to be undertaken, considering its

surroundings and natural environment. As it will be constructed near wetland and also within

busy city life, the environmental aspect of the bridge cannot be ignored. The bridge will also

result in relocation of people living adjacent to the bridge and involves acquisition of land for

construction purpose. Besides it will create some additional employment regarding the bridge

project. So, it is evident that the project has some social impact also.

However, the bridge poses no major threat to the local communities and natural surroundings.

The environmental and social impact of the project, during and post- implementation may

include-

- soil erosion;

- noise/air/water pollution;

- limited loss of property;

- increased influx of construction workers and vehicle traffic;

- increased pressure on social services,

Mitigation measures of some of the above include construction of temporary and compliant

waste and pollutants (fuel, oils, hazardous substance etc.) storage and disposal facilities. River

contamination will be monitored and attempts will be made to mitigate future possibilities of

erosion by tree-plantation around the river bank. Sensitive ecological areas such as wetlands and

river banks will be avoided.

The project has positive economic attributes. Within the immediate environment, job creation

schemes will flourish and economic activities during construction will inject money into the

local economy for the duration of construction, generating tax revenues for the economy. New

businesses are anticipated in terms of direct service provision associated with the bridge, notably

toll and bridge management, small-scale trade and retail trade. The bridge will link two city

corporations and will facilitate better communication for both commercial and non-commercial

purpose.

Climate Change:

There will be potential impacts on climate change caused by exhaust emissions during

construction and service operations with a net air pollution increase during construction.

Mitigation measures contemplated are controls over the working conditions and efficiency of

construction equipment, with key equipment meeting minimum specification. Recycling &

reusing of waste materials (e.g. composting of biodegradable waste) will be encouraged among

the communities around the bridge.

Employment:

The project will create temporary employment opportunities for local communities. In addition,

the suppliers of goods and services will also economically benefit from the project. An estimated

workforce of 200 skilled and unskilled labors is expected to participate in the construction

activities with at least 80 persons recruited from local communities. It is also anticipated that on-

going bridge maintenance would generate full employment positions although periodic

maintenance of specialized nature may attract workers outside the local area.

Safety:

The inherent risk of construction and operational safety will be managed. While workers’ safety

issues are addressed, the project will also ensure that additional road safety measures are being

adhered to, during construction and operation. During construction, the contractors will provide

adequate awareness on safety through to public and construction works.

Compensation and Relocation:

Constructing the bridge may require the removal of some of the inhabitants or trade activities of

the construction site. There is a provision for compensating those who will be suffered

economically and physically by the bridge project. Some land may have to be acquired by the

government for constructing the bridge and link-roads. Land owners of these lands will also be

compensated by appropriate amount. It is to note that relocation and compensation expense

comprise 5. 34% of the total bridge project cost.

Religious Significance:

Tongi has some religious importance too. The Bishwa Ijtema ground is situated by the Turag

River in Tongi and attracts estimates of between two to four million Muslims annually as well as

representatives from over sixty countries, making it the second biggest Islamic congregation

after the Hajj. During the time of Ijtema, millions of people are gathered around the Turag River,

making it nearly impossible to move any sort of vehicles at the concerned place. Besides, the

devotees also suffer due to the narrow roads and congested Tongi bridge. During the time of

Ijtema, temporary bridges are built for lessening their sufferings. The bridge will certainly be of

great help in this regard.

4.0. Implementation

4.1. Implementation Arrangements

The executing agency will be the Department of Roads & Highway (R & H). Department of

R & H is under the Roads Division which is one of the three parts of the Ministry of

Communication. Road division is headed by a secretary while the department is chaired by a

Chief Engineer. The bridge project will be a project under the department and there will be a

Project Director (PD) to execute the project. A Superintend Engineer or an Additional Chief

Engineer will serve as the PD who has to report to the Chief Engineer about the progress of the

project. A dedicated project office (PO) will be set-up located in the proximity of the project site

in Tongi.

A Project Management Team (PMT) composed of members of the R&H and JICA, having a skill

mix covering all relevant disciplines, will be responsible for administrating the project. Two

main categories of members, permanent and non-permanent members, and discipline-based will

make up the PMT.

Permanent members will cover the following core disciplines:

(i) bridge, road and building engineering,

(ii) measurement engineering,

(iii) architecture,

(iv) environmental and

(v) procurement/contracts management.

Other supporting resources for disciplines such as legal, financial management and monitoring

and evaluation, will be on-demand. To strengthen the institutional capacity and enhance its

management effectiveness, the PMT may get support from outside consultants as part of project

management service. The PMT will be headed by the PD. The activities of the project must be

reported to the JICA officials as they are the chief financer and therefore held a right to be

informed.

4.2. Procurement

All procurement of goods, works and acquisition of services will be financed by the join fund of

JICA and the GOB. Procurement cost or the implementation cost constitutes 17.4% of the total

project cost. Tender procedure will be conducted by the PMT as well. Procuring entity will

follow Public Procurement Act 2006 and Public Procurement Rule 2008 for the procurement of

goods and services. All the legal procedures set out by the GOB will, nonetheless, be followed.

4.3. Loan disbursement

The project has been approved by the planning commission and ECNEC. And the loan will be

channelized through Ministry of ERD. As the STB project is a small project, the loan will be

disbursed by JICA in one installment. The fund will be provided to the Road Division who later

will forward it to the PMT. The loan as is provided by our development partner JICA will be

entirely interest-free. However, adequate systems will be employed to handle the project

transactions regarding the disbursement and repayment as well.

4.4. Monitoring

Project monitoring will cover:

environment,

social,

quality of works,

general management activities of the project

financial discipline and

compliance with various institutional agreements and protocols.

IMED and JICA will monitor adherence to key milestones, quality of deliverables and outputs

through periodic supervisions, mid-term reviews, implementation support and quarterly

reporting. The monitoring will cover pre-construction, construction and post-construction, i.e.

operational periods. Even the PMT will be subject to periodic reviews and updates, to ensure its

effectiveness as a working tool.

4.5. Risk-factors

The risk of the project resulting from political discord is very low. As the bridge is a “need” not a

show-down of any political regime, chances are few that the project will be opposed by any of

the political parties.

4.6. Strengthening and Sustaining Foreign Relationship

The project will be another flag mark of our relationship with Japan, JICA in particular. JICA

has financed several TCP, YLP, GA, E, TP and FC projects in Bangladesh both in private and

public sector. Though the bridge is one of the small projects, still it will mark one more

milestone to our relation with JICA.

SWOT Analysis

Strength Weakness

Will reduce traffic congestion

Will smooth communication for

commercial and non-commercial

vehicles

Reduce time and vehicle maintenance

cost

Better connectivity with the Dhaka-

Mymensingh four lane road

There are two other bridges ( Tongi

bridge and Ijtema bridge)

People may wonder about the necessity

on one more bridge

River erosion

Pollution of river water

Opportunities Threat

Trade will increase

Ijtema will be more easier

Trade around the bridge will also

flourish

Population can further increase

Toll collection may become uncertain

after some time because people may not

want to pay toll

Conclusion

The scope of the project may be small but its impact is huge. Its rationale is strong in terms of its regional economic significance and social benefits it aspires to result into. In the line with the development activities JICA has run in Bangladesh, this project will add another milestone to our relationship. The project aims at completing all the scheduled activities within time without any major variances or major risk. Government officials and JICA officials will overview and supervise the entire project. So it can be expected that the proposed bridge on Turag will improve the communication system of Tongi and will make it less pain-stalking.

ANNEXURE B

Loan Repayment Schedule

Year of Payment Annual Installment

(BDT in millions)

Present Value

(BDT in millions)

2018 90 81.81

2019 90 74.38

2020 80 60.11

2021 90 61.47

2022 100 62.09

2023 100 56.45

2024 100 51.32

2025 100 46.65

2026 100 42.41

2027 50 19.28

Total 900 555.97