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ReportNo. 16555-RO

STAFF APPRAISAL REPORT

ROMANIA

SCHOOL REHABILITATION PROJECT

JULY 29, 1997

Europe and Central Asia RegionHuman Development Sector Unit

This document has a restricted distribution and may be used by recipients only in theperformance of their official duties. Its contents may not otherwise be disclosed withoutWorld Bank authorization.

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CURRFNCY Ej)iElUVALENTS(as of June 30. 1997)

Currency Unit = Leu (plural Lei)US$I 7,032 Lei1 Leu US$0.00014

AVERAGE EXCHANGE RATESLeu = US$ I

1299 1996 April, 1997 May. 1997 June.19972,033 3,084 7,095 7,110 7,032

WEIGHTS AND MEASURESmetric system

ABBREVIATION.S AND ACRONYMS

CAS - Country Assistance StrategyCEE - Central and Eastern Europe

CESDF - Council of Europe Social Development FundCPCU - Central Project Coordination UnitDPIU - District Project Implementation UnitECU - European Currency UnitGDP - Gross Domestic Product

IBRD - International Bank for Reconstruction and DevelopmentICB - International Competitive BiddingIDA - International Development AssociationIRR - Internal Rate of Return

MOE - Ministry of EducationGDHRF - MOE General Directorate for Human Resources and FinanceGDTIC - MOE General Directorate for Technical Investments Coordination

OIS - MOE Office of Inforrnation and StatisticsMOF - Ministry of Finance

MPWTP - Ministry of Public Works and Territorial PlanningNCB - National Competitive BiddingNPV - Net Present Value

OECD - Organization for Economic Cooperation and DevelopmentPIP - Project Implementation Plan

SAR - Staff Appraisal ReportSCT - Social Challenges of TransitionSRB - School Rehabilitation BoardSOE - Statement of Expenditures

BORROWER'S FISCAL YEARJanuary I - December 31

Vice President: Johannes F. Linn, ECAVPCountry Director: Kenneth G. Lay, ECCO5

Sector Director (Acting) J. Christopher Lovelace, ECSHDResponsible Staff: This report is based on the findings of an appraisal mission which visited Romania

in March, 1997. The mission comprised Leonardo M. Concepcion (Sr.Implementation Specialist, ECSHD), Mansoora Rashid (Human ResourcesEconomist, ECSHD), and Ana Maria Sandi (Human Resources Projects Officer,ECSHD). Danelle Howell provided copy editing and document processing. ThePeer Reviewers are Jee-Peng Tan (HDDED), Arvil van Adams (AFTHI), CeciliaValdivieso (PSP) and Eduardo Velez (AFTH1). ). Mr. Concepcion will monitorprocurement.

ROMANIA



Table of Contents

I. BACKGROUND AND RATIONALE ......................................................... 1I

A. INTRODUCTION ....... ................. .................................. I

B. THE EDUCATION SECTOR -- AN OVERVIEW ........................................................ 2

C. THE SCHOOL REHABILITATION PROGRAM -- KEY ISSUES ......................................... 4

D. GOVERNMENT STRATEGY AND BANK INVOLVEMENT ............................................... 7

2. THE PROJECT ......................................................... . 11

A. PROJECT OBJECTIVES .......................................................... I

B. PROJECT DESCRIPTION .......................................................... 11

C. PROJECT RATIONALE ......................................................... 17

3. COST, FINANCING AND IMPLEMENTATION ......................................................... 25

A. COST AND FINANCING ......................................................... 25

B. IMPLEMENTATION SCHEDULE ......................................................... 28

C. PROJECT MANAGEMENT ......................................................... 29

D. PROCUREMENT ARRANGEMENTS ......................................................... 31

E. DISBURSEMENTS ......................................................... 35

F. ACCOUNTS AND AUDITS ......................................................... 38

G. SUPERVISION AND MONITORING ......................................................... 38

4. PROJECT BENEFITS AND RISKS ......................................................... 41

A. BENEFITS ......................................................... 41

B. RISKS ......................................................... 41

5. AGREEMENTS AND RECOMMENDATIONS ......................................................... 43

ANNEXES

I Statistical Data on the Romanian Education System

2 Design Standards for Rehabilitating Schools

3A Method for Determining the Scope of Rehabilitation Efforts

3B Determining the Scope of Rehabilitation Efforts: Results

4 Prioritizing Schools For Rehabilitation: Ranking Method and Simulation Results

5 Project Cost Estimates

6 Procurement Plan

7 Monitoring Indicators

8 Bibliography of Documents in the Project File

ROMANIA


Loan and Project Summary

Borrower: Romania

Guarantor: Not Applicable

Implementing Agency: Ministry of Education

Beneficiary: Students, Teachers and Other Occupants of Selected Kindergarten, Primary andSecondary Schools in the 41 Districts of Romania

Poverty: Program of Targeted Interventions

Amount: US$ 70.0 million equivalent

Terms: Payable in twenty (20) years, including five (5) years of grace, at the Bank'sstandard variable interest rate for currency pool loans.

Commitment Fee: 0.75 % on undisbursed credit balances, beginning 60 days after signing, less anywaiver

Onlending Terms: Not Applicable

Financing Plan: See Schedule A.

Staff Appraisal Report: 16555-RO

Map: IBRD No. 28793

Project Identification: RO-PA 44614

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1. BACKGROUND AND RATIONALE

A. INTRODUCTION

1.1 The newly appointed Government of Romania faces a daunting economic and socialchallenge. The gradualist approach to structural reform in the past several years and the laxmonetary and fiscal policies followed in the 1996 election year have precipitated an economiccrisis. The country is running a high current account deficit, high inflation, and faces huge fiscalpressures. The Government has also inherited a large group of poor -- a major social problem --the result of growing unemployment and large declines in real income in the early years of thetransition. The most vulnerable groups of poor reside mainly in rural areas and comprise theunemployed, families with a large number of children, small farmers and particular groups ofpensioners. A common facet of poverty is the poor health and education status of low incomegroups.

1.2 Long term sustained economic growth will require tight monetary and fiscal policies anda stepped up pace of structural reforms. Especially necessary are an acceleration of privatizationin the industrial and agricultural sectors, liquidation of non-viable enterprises, liberalization ofagricultural prices, and imposition of hard budget constraints combined with sound financialsector policies. Equally vital for sustained economic growth and the alleviation of poverty is thedevelopment of a human capital base adapted to the emerging labor market needs of acompetitive market economy. This will require an acceleration of on-going reforms ofRomania's public education system that is likely to remain, for both efficiency and equityreasons, an important provider and financier of pre-university education in the country.

1.3 Since 1990, Romania's Education Reform Program has focused mainly on the criticalissues of improving the quality, coverage, and cost-effectiveness of the pre-university schoolsystem. The necessity of providing safe school infrastructure, essential for a well functioningschool system, has thus far largely been left unattended. The need to provide safe schools isespecially critical in Romania where a century of neglect and four major earthquakes havecreated a stock of severely damaged and unsafe schools that pose a daily physical threat to school

I Romania: Poverty and Social Policy (1997). Report 14642-RO

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occupants. The new Government, like its predecessors, is well aware of the need to rehabilitatethese severely damaged schools and has developed a two-phased school rehabilitation program.The first phase of this strategy focuses on rehabilitating damaged schools in imminent danger ofcollapse up to the national safety and pedagogic standards for pre-university schools establishedby the Ministry of Education (MOE). Over the longer tern, the Government is commnitted toupgrading all remaining damaged schools and constructing new schools, as needed, inaccordance with these norms.

1.4 The proposed School Rehabilitation Project would support the first phase of Governmentschool rehabilitation efforts by rehabilitating some 900 schools that are in imminent danger ofcollapse. The main issues in school rehabilitation are detailed in section C of this chapter. Adiscussion of the Government Rehabilitation Program and its support for the overall EducationReform agenda is contained in Section D. A brief overview of the education sector, provided insection B below, precedes this discussion. Basic statistics on the Romanian education system areshown in Annex l.

B. THE EDUCATION SECTOR -- AN OVERVIEW

1.5 The Socialist Legacy. Under socialism, Romania achieved universal coverage in its pre-university education system, comprising kindergarten (ages 6/7); primary (grades 1 to 4);gymnasium (grades 5 to 8); and secondary school (grades 9 to 12/13). The secondary schoolsystem was (and still remains) more diversified, comprising (a) four-year academic (general)high schools; (b) technical high schools offering four-year day and five-year evening programs;and (c) two- and three-year vocational schools attached to enterprises and vocational programsattached to cooperatives. The system reported low drop-out and repetition rates and no genderbias. Enrollment rates for girls were at par (basic education) or higher (secondary and tertiary)than for boys.

1.6 Despite these achievements, the socialist objectives of the pre-transition Governmentcompromised the quality of education provided by the state. In the socialist era, education wasseen as a means of producing workers to meet the production goals of a command economy.Curriculum and teaching approaches aimed at rote mastery of factual material, rather thandeveloping a student's cognitive and problem solving abilities. National examinations were usedprimarily as a selection mechanism as opposed to a tool for assessing or certifying education andtraining outcomes, monitoring school performance, ensuring accountability to the public, andsupporting educational change. Basic provision of textbooks and materials was outdated, withyear to year shortages, the result of the Government's reliance on an ineffective distributionsystem and a state producer. Decision making in Romania's education system was highlycentralized, rather than reflective of school-based professionalism and flexibility in resourcemanagement.

1.7 Consistent with their social planning objectives, pre-transition governments channeledmost students into vocational and technical education narrowly focused to meet the country's

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industrial needs. The proportion of secondary school students enrolled in technical or vocationalschools in Romania (96 percent) was the highest in the region. The Socialist governments alsorestricted higher education to a privileged few. Students graduating from specialized vocationaland technical schools were channeled directly into the labor force. In 1990, only 6 percent of therelevant age group, only half of the regional average, was enrolled in higher education programs.Students enrolled in university education also faced a restrictive curriculum. The main emphasisof higher education was on engineering, a program that enrolled almost two-thirds of allstudents; academic research, social sciences and humanities were almost entirely neglected.

1.8 The share of resources allocated to education -- about 3 percent of GDP (Gross DomesticProduct) in 1990 -- was the lowest in Central and Eastern Europe (CEE), and much lower thanthe Organization for Economic Cooperation and Development (OECD) average of 6 percent ofGDP. The largest share of the education budget was spent on personnel, not surprising given thesmall teaching loads, and high numbers, of single subject teachers. The proportion of totaleducation expenditures allocated to capital expenditures (5 percent) was amongst the lowest inthe region and well below OECD norms. One major problem ensuing from inadequateinvestment in capital structure and reduced real resources is that the Romanian schoolinfrastructure is antiquated and considerably depreciated. Four severe earthquakes over thecourse of the last century have left many buildings, constructed with outdated earthquakestandards, and built with traditional building materials, in imminent danger of collapse.

1.9 Recent Developments: The Impact of the Transition.. The economic and socialdevelopments over the transition exposed the poor quality and structural weaknesses of thesocialist education system and created a dynamic process in the provision and demand foreducation in Romania. Two early reforms of the education system -- the freedom of schoolchoice and the removal of restrictions on private entry in the education sector -- provided furtherimpetus for this change. As a result, in 1994, in marked contrast to the nearly universal coverageof pre-transition times, gross enrollments declined to 94 percent in basic education, and remainedonly 60 percent in secondary school. The bulk of secondary school leavers were students ofvocational and technical schools with curriculums that became largely irrelevant to emerginglabor market needs. Enrollments in general secondary schools, offering a more balancedcurriculum, actually increased to nearly 20 percent of total secondary school enrollment.Dropouts were largely concentrated among children from poor families, hit hardest by realdeclines in income, and least able to bear the rising direct and indirect costs of schooling.

1.10 Emerging unemployment and poverty among secondary school leavers, and increasingprivate sector wage premiums for college educated workers induced students to pursue highereducation. Enrollments in colleges and universities increased phenomenally, particularly amongthe better off segments of society that were able to afford the fees charged by private collegesand universities. Private sector growth in the education sector surpassed all countries in theregion. In 1995, nearly 85,300 students (almost 25 percent of all tertiary students) attended 36private higher education institutions. Private sector entry into pre-university education has beenmore limited. Although private secondary schools have been established, they enroll only anegligible share (0.1 percent) of secondary school age children.

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1.11 Changing student needs and the rigidities in down-sizing and re-allocating staff to meetemerging student demand, led to an increase in the number of total staff in the pre-universityeducation program. Student-to-teacher ratios declined at all levels of education to well belowOECD norms. Although real education spending declined by only 4 percent, the share ofpersonnel expenditures in the total education budget, already high by regional standardsincreased further -- at the expense of capital and other essential expenditure -- to over three-quarters of the total education budget. In 1994, the overall spending on basic education was pro-poor, but spending on secondary and, particularly, tertiary education was more biased towardshigher income groups. There was also an urban bias to education expenditures. Per capitaspending on education in rural areas was lower than for urban centers.2

C. THE SCHOOL REHABILITATION PROGRAM -- KEY ISSUES

1.12 In 1994, faced with these realities, Romania embarked on a reform of its pre-universityeducation system. The main objective of the Education Reform Program, supported by theWorld Bank financed Education Reform Project 3, is to improve the quality and coverage of thepre-university education system. Reform efforts have mainly focused on updating thecurriculum, and improving the quality of management and staff. The necessity of improving thequality of the school infrastructure, to ensure the safety of students and teachers, and to supportthe pedagogic changes envisaged by the education refonn program, has so far largely been leftunattended. The potential risks of delaying rehabilitation efforts further are enormous. Nearly200,000 students are daily exposed to physical risk in some 900 severely damaged anddilapidated schools. The key issues facing the implementation of the Government's schoolrehabilitation efforts, the focus of the proposed School Rehabilitation Project, are outlinedbelow:

1.13 Aging and Poorly Built School Infrastructure. At the beginning of the 1995/1996academic year, the basic education system in Romanian educational network (private and public)at all levels included 29,536 units: 12,772 kindergartens; 13,817 primary and gymnasia schools,of which 6,180 offer only grades 1-4 ; 2,684 academic secondary and technical schools; 168special schools for handicapped children; and 95 higher education institutions. The entireeducational physical plant included about 121,300 classrooms, 19,300 laboratories, 4,608gymnastic rooms, and 10,590 workshops. The majority, or 82 percent of the schools, are locatedin rural areas, but urban schools account for about 40 percent of all classrooms and laboratoriesand 66 percent of all workshops. Most of the school facilities are dated and outmoded: about 12percent were built in the last century; 27 percent were built between 1901-1945; 43 percentbetween 1946-1970; 16 percent between 1971-1989. Less than one percent were built from 1990to the present. Many facilities used as schools were not designed for educational use and do notmeet generally accepted norms for school facilities: teaching spaces appropriate for the subjects

2 Romania: Poverty and Social Policy (1997). Report 14642- RO

Loan RO-3724-RO for US$50 million.

taught; optimum space utilization and unit areas per student place; basic sanitation and comfort; andsafety (building fire protection/escapes, seismic reinforcement). Nearly 76 percent of all ruralschools have no water or sanitation facilities, some have no electricity at all. Most schools are ill-equipped. Classroom furniture is generally adequate/appropriate for only half of the students inschools with two or more shifts (students in lower grades (1-4) are enrolled in morning shifts whileolder students (grades 5-8) occupy the same classrooms in the afternoon shifts). The MOE hasestablished basic school facilities norms, but their application to school buildings has been limitedby three key factors: (a) the chronic shortage of funds that has only permitted very basic repairs toschool infrastructure; (b) until 1991 and after 1995, the local responsibility for school constructionand repair; and (c) the limited MOE supervision of school rehabilitation efforts (discussed below).

1.14 Insufficient Investments in School Infrastructure. The Govermnent initiated a largeprogram of investment in school infrastructure during the Ceaucescu era, but a shortage of fundshas left the program in disarray. Since 1980, there had been no new significant investments innew infrastructure, and construction of many school buildings started at that time remainincomplete. The school infrastructure investment program was revived in 1990, but even with2,000 new classrooms built since then, the backlog in the demand for new student places has notbeen met. The rehabilitation and upgrading of the aging physical plant has barely scratched theextent of the need. In 1995, the Government increased the school investment budget to 5 billionLei (about US$2.5 million), or 0.2 percent of the pre-university school budget (from 0.1 percentof this budget in previous years). In 1996, the share of investment in the total pre-universityschool budget was maintained at 1995 levels. Over 50 percent of the 1996 capital budget wasused to continue works started in 1995, and nearly 30 percent was devoted to the rehabilitation ofdamaged school buildings; the remainder was spent on replacing furniture and equipment inschools and preparing and planning for new work. Since 1995, the MOE has embarked on therehabilitation of some 600 of the most damaged schools in Romania. Nearly 200 schools havebeen completely upgraded (although not necessarily to meet the pedagogic standards of theEducation Reform Program) and the rehabilitation of another 400 schools is near completion.

1.15 Limited Funds for Maintenance of School Buildings. Annual expenditures for schoolmaintenance are covered by the budgets of local governments. Lump sum amounts are allocatedby the Ministry of Finance (MOF) from the State Budget to cover part of the expendituresfinanced by local governments, including those for school maintenance. In theory, the fundsfrom the State Budget are allocated to districts based on the following algorithm: maintenanceresources to each district equal 1.5 percent of the value of all new school buildings and 5 percentof the value of all older schools. The values of older school buildings are updated by applyingthe price adjustment coefficients determined by MOF. In practice, maintenance funds areallocated on the basis of student enrollment in each school, but the MOF has provided far lessthan the stipulated amount for the maintenance of schools. The inadequacy of the centralGovernment allocations are further compromised at the local level. School maintenance fundsare not always used by localities for the purposes for which they are intended. District and localGovernment have been known to appropriate these funds for other more pressing district or localconcerns. The actual availability of funds for maintaining schools has therefore been largely adhoc, presenting potentially greater problems for poorer districts, less able to lobby for funds, orraise their own resources to maintain school infrastructure. The degree of deterioration of school

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facilities is now so severe that many school buildings qualify for major rehabilitation works. Thecurrent funding levels barely cover the costs of simple, routine maintenance, which is no longeradequate to restore school buildings to minimal safety standards, often cosmetic, and masksserious structural damage.

1.16 High Physical Risk to School Occupants. The age and extensive deterioration of manyschool facilities due to the poor building standards and inadequate maintenance have raisedanxiety about the safety to school occupants should another earthquake of major magnitude hitthe country. The strong tremors that struck Romania in 1977 (7.2 Richter) collapsed 32 majorbuildings in Bucharest alone and damaged numerous schools in the affected areas. Majorearthquakes in 1986, and again in 1990, aggravated an already serious situation and fueled publicconcern about building safety, particularly of schools. In 1995, the MOE undertook facilitysurveys covering around 12,000 schools. The surveys, validated by the Ministry of PublicWorks and Territorial Planning (MPWTP) revealed serious structural damage in some 1,150schools which accommodate around 315,000 students and 22,000 teachers. These schools wereassessed with a damage factor of 0.60 or less, a level of deterioration which could cause thebuildings to collapse without warning. Of the 1 ,150 schools, 170 were declared as totally unsafe.These buildings have been condemned and necessitate complete replacement. The students havebeen transferred to other available facilities or to neighboring schools. About 600 of thesedamaged schools have since been structurally reinforced (about 200 have been completed, therest are currently undergoing repairs). From additional surveys conducted in 1996 by the MOEand MPWTP, 420 other schools have emerged as having an equally serious degree of structuraldamage. Thus, there remain about 900 schools that require immediate attention andrehabilitation. Nearly 80 percent of these buildings are in rural areas and enroll almost 41percent of the 200,000 affected students.

1.17 Overcrowding and Reduced Learning Time. The lack of investment in infrastructure tomeet demographic trends and address poor building standards has created over-crowdedconditions in public schools. Many of the classrooms in the damaged schools, especially in urbanareas,5 are under-sized and accommodate more than the regular number of students. About 16percent of the damaged urban schools (for which data is available) are operating with three ormore shifts. The "class hour" in these schools has been reduced to only 30-35 minutes, muchlower than the regular 45 minutes of instruction in single- and two-shift schools. As a result ofthe closure of part or all of the school, students of many damaged schools have been displacedeither to facilities not intended for classroom use or to adjacent schools. The displacement ofstudents to adjacent schools has in turn exacerbated the classroom situation in the host schooland disturbed the learning environment for all the students. The MOE reports that, in somecases, the damage to school buildings has led to the closure of schools in remote rural areas

4 The degree of seriousness of the damage to a building is based on the ratio of the assessed seismicresistance of the building in its present state to the minimum seismic resistance mandated by the National BuildingCode. A factor of 0.60 or less classifies the building under the emergency category, and requires that the building bestrengthened no later than 5 years. A factor of 0.30 or less requires that the building be strengthened within twoyears of the technical assessment

5 On the average, an urban classroom accommodates 52 students compared to 19 in rural schools.

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forcing students to travel greater distances to attend neighboring schools. Other ruralcommunities faced with this situation, have rented schools in farm houses, while in some villageschildren have been deprived of education altogether.

1.18 Inefficient Allocation of Investment Funds. Scarce capital funds for school constructionand/or repair are allocated inefficiently with little judicious/strategic planning. Allocationcriteria among the Judets and the system of ordering priorities has much room for improvement.Because design norms are not applied consistently, the scope of school construction contractsbecome too broad and open-ended, resulting in vicious cycle of contract price adjustments,completion delays and escalating costs. This inefficiency reduces the amounts potentiallyavailable to repair other schools or to construct new or expanded schools to accommodatestudent needs. The absence of basic information, such as a comprehensive school map, hindersthe capacity of the MOE to save resources by consolidating under-utilized schools in the samecatchment area.

1.19 Weak Management of the School Construction Program. The rehabilitation andconstruction of schools is the responsibility of District Education Inspectorates which award thecontracts through a competitive process. The MOE is appropriately removed from implementation.Its role is to allocate investment funds to the Judets, set the standards by which these funds areused, and monitor the use of the resources. The MOE General Directorate for TechnicalInvestment Coordination (GDTIC) is ill equipped and staffed to perform this task. With its sixexisting staff, GDTIC lacks the capacity and management skills to plan, regulate and oversee alarge new educational infrastructure program in addition to its current workload. The regulatorycapacity of the GDTIC unit is already over-extended because it oversees (i) the construction andfurnishing of school buildings left uncompleted by the Ceaucescu regime; (ii) keeps track of theregular repairs of school buildings, and the construction activities on higher educationinstitutions funded from the MOE capital budget, which are ongoing in all 41 Judets. The lowpay scales and poor working conditions in the public sector make it difficult for the GDTIC toattract skilled professionals to augment its management and/or staff.

D. GOVERNMENT STRATEGY AND BANK INVOLVEMENT

1.20 The Education Reform Strategy. The new Government of Romania is committed toaccelerating the pace of education sector reforms in Romania, and has placed the development.of an adequate human capital base as a cornerstone of its Development 2000 agenda. Theultimate objective of the Government's education sector reform plan is to improve the quality(including the safety) and coverage of its education system to OECD standards, and to ensurethat scarce resources available to the education sector are allocated efficiently to address pressingsectoral needs. Considerable progress has already been made toward achieving this objective.

1.21 Romania moved towards achieving better quality and efficiency in its education system asearly as 1990. Early reforms removed restrictions on school choice and allowed private sectorentry into the education system. In 1993, the Government issued a white paper on education,

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supported by the conclusions of the Bank's first sector review of the Human Resources Sector inRomania, that had at its core: (a) a re-orientation of education to lifelong learning; (b) the updatingof the content of education and approach to teaching based on knowledge of cognitive sciences; (c)the reorganization of both pre- and in-service teacher education to increase teacher's understandingof teaching and learning; (d) a restructuring of technical and vocational education to consolidateand provide a common core of general training in all secondary schools; (e) the abolition of thestate monopoly of textbooks, (f) the decentralization of the coordination and administration of theeducation system to regional Inspectorates and schools; (g) structural change in higher educationthat diversifies the types of post-secondary programs offered, reduces emphasis on earlyspecialization and promotes research; (h) accreditation methods for private and public education;and (i) an increase in the resource base for education to improve teaching conditions and raise thelevel of investment and operating expenditures for buildings and education materials, in line withregional norms.

1.22 In 1994, with World Bank support, Romania embarked on a reform of its pre-universityeducation program that was consistent with the objectives of the reform strategy outlined above.The Education Reform Project focuses on:7 curriculum reform; teacher in-service and pre-servicetraining; the introduction of learning assessment mechanisms; and the de-regulation andincreased competitiveness of the textbook supply process. The increased relevance of thecurriculum to labor market needs, in conjunction with social scholarship programs to the poor,was expected to redress the declining coverage of recent years. An equally important objectiveof the project is to strengthen the managerial and financial efficiency of the system in order thatscarce budgetary resources are allocated cost effectively across competing intra-sectoral needs.

1.23 Romania's education reform strategy was incorporated in the landmark (a) 1995 EducationLaw that reforms the structure, content and requirements of compulsory education, rationalizesschool entrance/leaving examinations, strengthens the management authority of schoolheadmasters, strengthens in-service teacher training programs, allows cost recovery by highereducation institutions, and (b) the Law on Local Administration which devolves authority to thedistricts for revenue generation and management of public services, including education. Inresponse to the resource problems of the education sector, the Government also has raisededucation spending to 4 percent of GDP.

1.24 The policy framework provided by these laws gave impetus to the development of aBank-assisted Reform of Higher Education and Research Project 8, effective since December1996, that supports the improvement of the management capacity of higher education institutionsand the development of undergraduate and postgraduate research programs.9 The coming intoforce of these Laws also facilitated the implementation of the pre-university Education ReformProgram. Progress has been made on several key fronts. The curriculum for basic education has

6 Romania: Human Resources and the Transition to a Market Economy, World Bank, 1992

7 Report No. 1193 1-RO

8 Loan 4096-RO for US$50 million.

Staff Appraisal Report No. 15525-RO, August 26, 1996.

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been revised, the textbook monopoly has been abolished, and the entry of private textbooksuppliers into the public school textbook procurement process well secured. Learningassessment tools are being developed, the remaining curriculum is under revision, the financialand management capacity of the MOE is being strengthened, and the re-organization of teacherpre- and in-service training should soon be underway. The Government has also slowly startedto convert under-utilized technical and vocational schools to a more general education system, aprocess supported by EU/PHARE.

1.25 The School Rehabilitation Strategy. The rehabilitation of pre-university schools to thesafety and pedagogic norms established by the Education Reform Program has been slow. Inresponse to public outcry about the lack of safety in public schools and agitation aboutimpending earthquakes, the Government enacted Decrees HGR 644/1990 and OGR 20/1994mandating that citizens and institutions ensure the safety of their respective physical facilities. In1995, the Government also centralized school rehabilitation efforts, previously the purview oflocal authorities, in the MOE, to ensure compliance with national safety standards and buildingcodes, and outlined its School Infrastructure Program. This program includes: (a) the completionof unfinished construction started during the Ceaucescu regime; (b) an annual investment targetof 400 new classrooms to reduce overcrowding, accommodate demographic shifts, and provideschools in under-served areas; (c) upgrading deteriorated infrastructure; and (d)equipping/furnishing schools.

1.26 The new Government faces a major task in accomplishing these goals, particularly asfunds for school rehabilitation efforts are extremely limited. Its School Infrastructure Program isa two-prong strategy of rehabilitation and new investments in school facilities. SchoolRehabilitation will be implemented in two phases. In the first phase, the Government will focuson upgrading and strengthening the schools that pose the greatest risk to the life of schooloccupants. The second phase will strengthen and repair the remaining schools, and upgrade orexpand existing schools to reduce school crowding. Priorities for new investments in pre-university facilities are the provision of schools in under-served areas. Schools in both facets ofthe School Infrastructure Program will be rehabilitated or constructed in accordance with thesafety and building standards for the pre-university education system established by the MOEand adapted under this project.

1.27 The Government has requested urgent support from the World Bank and the Council ofEurope Social Development Fund (CESDF) to complete the first phase of its schoolrehabilitation efforts. The proposed School Rehabilitation Project responds to this request bysupporting the rehabilitation of 900 of the most seriously damaged schools in Romania to thesafety and pedagogic norms established under the Education Reform Program. The proposedproject has considerable merit as it would: (a) eliminate the physical risk to occupants ofdamaged schools; (b) improve the learning environment in affected schools, with a beneficialimpact on student achievement and learning; (c) improve the education status in rural areas andcontribute to alleviating poverty; (d) reduce fiscal costs by increasing the capacity of theGovernment to plan and execute school building and rehabilitation programs efficiently usingeconomic principles and established building norms; and (e) galvanize and attract donor funds topressing school construction and rehabilitation needs. Finally, by complementing the

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Government's overall Education Reform Program, the project would help improve the qualityand coverage of education in Romania and contribute to the development of a skilled humancapital base essential for sustained economic growth.

2. THE PROJECT

A. PROJECT OBJECTIVES

2.1 The broad objective of the proposed project is to support and sustain the Government'sEducation Reform Program as outlined in the preceding Chapter and described in greater detail inStaff Appraisal Report (SAR) of the Education Reform Project.10 Specifically, the project supportsthe Government's efforts to rehabilitate schools up to the safety standards and pedagogic normsestablished by MOE in accordance with the Education Reform Prograrn. The objectives of theproject are to:

(a) rehabilitate, upgrade and furnish pre-university schools, thereby restoring safetyof school buildings in imminent danger of collapse, and mitigating the educationaldisadvantages to students occupying such schools; and

(b) improve MOE's institutional capacity at the national and district levels to plan,develop and maintain the public educational physical plant.

2.2 The two main components of the project, School Rehabilitation and Institutional CapacityImprovement, are directly linked to these objectives, and will be implemented over a five yearperiod (1998-2002). A detailed description of these components is provided in Section B.Section C provides the economic justification for this project

B. PROJECT DESCRIPTION

2.3 Prpject Content. The two main components of the project are:

Component 1: School Rehabilitation. (US$103.3 million base cost) This componentconsists of the rehabilitation, upgrading, and furnishing of about 900 schools(kindergarten, primary and secondary) in 41 districts. The extent or scope of therehabilitation for each school would be determined in accordance with the school designand planning standards described in Annex 2 and the economic concepts and methods inAnnexes 3A and 3B. The prioritization of schools for rehabilitation would be establishedin accordance with the school mapping models developed for the pilot districts of Tulceaand Vaslui and the agreed economic criteria and methodology described in Annex 4.

10 SARNo. 11931-RO. March 16,1994.

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Component 2: Institutional Capacity Improvement. (US$3.3 million base cost). Thiscomponent consists of strengthening the sectoral capacity of the MOE, at both nationaland Judet levels, to: (i) plan, implement and manage the Government's school investmentand rehabilitation program; and (ii) to manage and maintain the public educationalphysical plant. This component has two elements:

(i) School Facilities Planning and Maintenance. This sub-component consists ofdeveloping/improving the skills of MOE and District Inspectorate staff to use cost-effective methods and national building standards in: (a) the development of neweducational facilities; (b) rehabilitating and upgrading existing physical infrastructure;and, (c) managing the school maintenance program.

(ii) Project Administration. The project would provide the necessary resources to theCentral Project Management Unit (CPCU) and to the District Project Implementing Units(DPIU) to implement the project efficiently.

Detailed Project Description

2.4 School Rehabilitation. This section describes the key elements of the schoolrehabilitation program that include: (a) the selection of project schools; (b) the scope ofrehabilitation efforts; (c) the sequencing of schools for rehabilitation; and (d) the buildingstandards used for rehabilitating schools.

2.5 Pr£J.ect selection. The proposed project will rehabilitate, upgrade and furnish about 900seriously damaged pre-university schools nationwide. The schools were selected on the basis offacility surveys conducted by the MOE and MPWTP in 1995 and 1996, to identify those withseriously damaged buildings which are likely to collapse without warning and cause fatalities.(para 1.16) The structural resistance of these buildings were found during the surveys, to beunder the threshold considered able to resist an earthquake of a given magnitude, as specified inthe latest (1996) edition of the National Building Code of Romania. Nearly 170 of thesedamaged facilities have been condemned and need to be completely replaced with newconstruction. The selected facilities include about 100 kindergarten, 700 primary and 100general secondary schools, which altogether accommodate about 200,000 students. Nearly 80percent of these schools are in rural areas and enroll almost 41 percent of the affected students.

2.6 Project scope. The exact scope of school rehabilitation efforts (upgrading, expansion,consolidation, etc.) would be decided on the basis of a comparison of the net present value(NPV) of several possible rehabilitation possibilities relative to a base case scenario (do nothingnow and replace the school when the building collapses). The chosen option would have thehighest NPV among all considered. The menu of available options include: (a) for an isolatedschool: (i) strengthening, or depending on the technical considerations, completely rebuilding thedamaged school; (ii) expansion of the damaged school to relieve overcrowding; I Iand (b) for

The positive impact of reasonably adequate physical facilities on learning outcomes is well documentedworld-wide, although rarely is investment in physical space the single most effective investment for increasing

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schools with similar schools in the same catchment area: in addition to (i) and (ii) above, aconsideration of: (iii) the closure of the damaged school as a result of consolidation withexpanded (if needed) adjacent schools; or (iv) the consolidation of area schools with therehabilitated and expanded (if needed) damaged school. The NPV calculations provide the netfinancial savings in terms of recurrent and capital cost realized by investing in rehabilitating theschool now relative to later when the school is more damaged or collapsed. A detaileddescription of this method is provided in Annexes 3A and 3B.

2.7 Project sequencing. The project will need to prioritize rehabilitation efforts for tworeasons: (a) the possibility that particular school buildings may collapse over the lifetime of theproject and result in a loss of student/teacher lives; and (b) resources allocated for therehabilitation for all the 900 schools may fall short of actual requirements. School rehabilitationefforts will be prioritized in two stages. In the first stage, all schools will be ranked, in ascendingorder, by the benefit-cost ratio of rehabilitating each school. The benefits of the project are toimprove the quality of education in accordance with the pedagogic and safety norms for pre-university education established by the MOE. For sequencing purposes, the benefit will beapproximated by the major benefit of rehabilitating each school: averting the potential loss of lifeof students. The cost is simply an approximate cost of rehabilitating each school. Assuming thevalue of each student life is identical for all students, schools can be ranked simply by thebenefit-cost ratio, approximated by the total number (expected value) of lives saved per schoolrehabilitation cost, avoiding the issue of assigning a precise value to each life saved. A highersocial value of rural lives, implied by the Government's own ranking method, can also beaccommodated in the method outlined above by assigning a relatively higher multiple (of 10%)in the calculation of project benefit to rural schools. (See Annex 4 and Annex 2 for details ofestimating the benefits and costs of rehabilitating each school, respectively). This phase ofsequencing provides the theoretical basis or benchmark for prioritizing schools for rehabilitation.

2.8 The second stage of sequencing will prioritize schools for rehabilitation within eachdistrict (over time) and across districts (in any given year), taking into account more practicalconcerns. In this second stage, the first step will be the development of attractive biddingpackages of schools for rehabilitation. The composition of schools in each bidding package willtake into account the geographic proximity, new/old, and urban/rural mix of schools. The nextstep will be the prioritization of packages over the project cycle in each district. This will bebased on the benefit-cost ratio of each bidding package of schools to be rehabilitated in eachdistrict according to the sequencing methodology described above. The last step will be the

learning achievement. The parallel Education Reform Project (Loan 3724-RO) currently under implementation,focuses on other learning inputs such as curriculum, textbooks and teacher improvements.

12 Ideally, project sequencing would be undertaken after, or simultaneously with, the decision on projectscope. But for simplicity and because of data unavailability, it is necessary to use a rough approximation of therehabilitation cost of each school to sequence schools before project scope is decided. In addition, project scopedecisions are only based on fiscal savings and do not include benefits of lives saved because: (i) the lives saved byeach option would be the same under all options and would therefore not distort choice among options; (ii) thisavoids the difficulty of valuing lives; and (iii) initial results from pilot districts indicate that investment in schoolsyields an IRR that is at least 47 percent on the basis of fiscal savings alone.

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determination of the number of packages to be bid in each district in each year of the projectaccording to the construction and project administration capacity of the district. Once thebidding packages have been selected for each year for each district, they can also be prioritizedacross districts in any given year, by the benefit cost ratio of the total bidding package of schoolsto be rehabilitated in each district (See Annex 4 for details).

2.9 Building Standards. The project will rehabilitate the damaged buildings in confornitywith the structural requirements of the National Building Code (see para 2.5). Consistent withthe objectives of the Education Reform Program, the intervention in each project school will alsoaddress educational quality considerations. Each school would be upgraded, as necessary, tomeet the minimum standards for pre-university school facilities established by the MOE. Theseschool design norms take into account: student capacity; the number of shifts; and type ofaccommodation (i.e. adequate number and sizes of classrooms, laboratories, teacher andadministrative spaces, etc.). The MOE has also established standards for the provision of basicnecessities, such as sanitation, water, electricity, heating, safety, and environmental protectionwhich have been incorporated in the design norms. In particular, the design norms prohibit theuse of asbestos in school buildings. Implementation procedures, described in detail in the ProjectImplementation Plan (PIP), also provide for the appropriate removal and disposal of asbestosmaterials in rehabilitating the damaged buildings. The scope of work under the project will besubject to the following conditions:

(a) the scope of work will exclude the rehabilitation of student boarding places(dormitories) and vocational workshops;

(b) only essential utilities will be provided (i.e. fire escapes, toilets/sanitation, waterand heating). In those cases where schools operate in more than two shifts,additional classrooms and essential teaching spaces will be provided such that theschool enrollment can be accommodated in two shifts in classroom capacitiesmandated by the Education Law (i.e. 25-30 pupils per classroom);

(c) all schools will be provided with basic furniture (student and teacher desks) inquantities sufficient to seat all students in the classrooms and laboratories (Insome cases, this could mean supplying all the furniture to schools which havenone or no serviceable units. An inventory of furniture in all schools will beconducted during project implementation to determine the appropriatequantities/types to be provided to each facility). However, given that the pre-university curriculum is still under revision (para 1.24), and that the appropriatestandards for teaching equipment remain to be defined and approved for nationalapplication, the project will not finance the procurement of teaching equipment(e.g. laboratory, audio-visual, computers, etc.); and

(d) the project will not finance the rehabilitation of schools in which structural repairshave already been completed/started by the MOE (see para 1. 16).

2.10 The project will finance civil works/building construction, basic school furniture, andprofessional architectural and engineering services to complete detailed technical surveys, school

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mapping, and the preparation of detailed building plans, specifications and bidding documents.The detailed cost breakdown of this component is shown in Annex 5. Table1. Implementationand procurement arrangements are summarized in Chapter 3 and described in detail in the PIP.

2.11 During Negotiations, the Government provided assurances that it would: (a) follow thecriteria and procedures, and the design standards agreed withi the Bank, witli respect to: (i) therehabilitation, upgrading andfurnishing of the schools under the project; and (ii) theprioritization of thte rehabilitation of such schools; and (b) submit to the Bank, for itsapproval, any proposed modifications to said criteria, procedures and standards before suchmodifications are introduced.

2.12 School Facilities Planning and Maintenance. The project would strengthen capacity atthe national and local levels to plan, implement, and manage a cost-effective and sustainableeducational infrastructure development program, and maintain the physical plant. The targetbeneficiaries of this component are: at the national level, the MOE General Directorate forTechnical Investment Coordination and the MOE Office of Information Systems (OIS); and, atthe local level, the District Education Inspectorates. Specifically, the capacities of relevantMOE and Inspectorate staff would be strengthened in the following areas:

(a) School location planning. Staff of the GDTIC and the OIS would be trained inthe preparation and analysis of detailed school maps in order to develop theirproficiency in the use of the methodology developed during the survey ofdamaged schools in the pilot districts (Tulcea and Vaslui) during projectpreparation. This activity would be organized with the assistance of a schoolmapping expert, and would be implemented through in-country workshops inconjunction with the capacity building interventions under the Bank-assistedEducation Reform Project (Loan 3724-RO). Selected staff of the districteducation Inspectorates would also participate in these in-country workshops.

(b) School facilities development and maintenance. The project will also provide theexpertise of a facilities planner/maintenance management expert to assist theMOE to refine its school design standards, train GDTIC staff on the application ofup-to-date construction management techniques, and develop staff capacity tomanage the maintenance of public school facilities more effectively. The projectwill support a program of in-country workshops on school facilities developmentand maintenance for the MOE and relevant personnel of the District EducationInspectorates, which will focus on the allocation and effective use of budgetaryresources for maintenance and management of the physical plant. The projectwill also support the preparation, by the CPCU, of a study to determine moreeffective methods for allocating budgetary funds for maintenance. Anintegral element of this study would be to sensitize/familiarize MOE planners andeconomists with the application of economic principles and methods fordeveloping a cost-effective and sustainable school facilities investment andrehabilitation program. Short-term training abroad in related areas for selectedMOE and regional staff would complement the in-country workshops.

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2.13 During Negotiations, the Government provided assurances that it would: (a) by April30, 2000, submit to the Bank, for its review, a draft study with recommendations on alternativeefficient allocation methods for pre-university school maintenance expenditures; (b)immediately thereafterfinalize the study taking into consideration the Bank's comments on itsdraft; and (c) carry out the recommendations of the study in accordance witlh thleir terms.

2.14 The project would finance: (a) individual consulting services (expatriate/national) in theareas of school mapping (4 staff months), school facilities planning/physical plant maintenance(I staff month); (b) short-term training abroad for selected MOE and regional education staff (8staff months); (c) in-country training of MOE and Inspectorate staff; (d) 2 computers each (withprinter, scanner, modems, geographic information and standard applications software, etc.) forthe GDTIC and the OIS; and (e) related software/training materials. Detailed costs of thiscomponent are shown in Annex 5. Table 2.

2.15 Project Administration. To ensure that the project is implemented efficiently and in atimely manner, the project would support the strengthening of the Central Project CoordinationUnit (CPCU) and the District Project Implementation Units (DPIUs).13 Recognizing the staffingconstraints and lack of construction management expertise in the MOE and in the Inspectorates,the services of Romanian project/construction management firms (providing the expertise ofqualified/experienced engineers, architects, and economists/financial analysts and appropriatesupport staff) would be contracted for the duration of the project, as needed, to benefit the CPCUand the DPIUs, and strengthen the capacity to assess the scope of rehabilitation interventions inaffected schools, monitor, and supervise the implementation of the school rehabilitation program.The services of a Procurement Advisor as well as a qualified independent Auditor would also becontracted to assist the CPCU organize the project's procurement program, and audit theaccounts and annual expenditures of the project, respectively. Staff of the CPCU and GDTICwould participate in short-term training conducted abroad in procurement, accounting andcontract management. In-country workshops would be organized to train DPIU staff in thesesame areas. The project administration arrangements are described in more detail in Chapter 3,Section C.

2.16 The project would finance: (a) consultant services for: (i) strengthening the management,capacity of the CPCU and DPIUs; (ii) procurement management (2 staff months); and (iii)annual audits of project accounts and expenditure; (b) short-term training abroad (6 staffmonths); (c) in-country workshops including related training materials; (d) equipment consistingof (i) for the CPCU: office, communications and computer equipment (with 6 desktopcomputers, cellular phones, fax, modem, peripherals, copier, printer and applications software),

1 3 The Education Reform Project does not include financing of educational infrastructure, its objectives andcontent focusing exclusively on the enhancement of educational quality, efficiency and relevance (i.e. curriculum,teacher, training, assessment, etc.). Consequently, the Education Reform Project PCU is staffed with specialistsappropriately qualified to manage such programs, but they do not have the skills/experience to administer a large-scale investment dedicated primarily to building/rehabilitating schools, such as the School Rehabilitation Project.Thus, a separate coordinating unit dedicated to infrastructure rehabilitation was established to manage the SchoolRehabilitation Project. The inadequacies of the GDTIC are already described in Chapter 1, para 1. 19, for whichreasons it was not designated to administer the project.

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two vehicles for project supervision, and office materials; and (ii) for each DPIU: one computer(with peripherals, printer and standard applications software); and (d) operational costs of theCPCU and the DPIUs. Detailed costs of this component are shown in Annex 5. Table 3.

C. PROJECT RATIONALE

2.17 This section provides the overall economic justification and rationale for the project.

2.18 Linkage to Economic and Sector Work. There is consensus in economic literature thatinvestment in human capital generates a positive economic return to both an individual and to thesociety at large. Recent work has shown that investment in improving the quality of learninginputs such as curriculum, textbooks, and teachers has a powerful impact on improving studentachievement and earning potential.'4 A growing number of studies suggest that investment inschool infrastructure also has a significant impact on student learning, particularly if it is done inconjunction with qualitative improvements in other inputs to the education system. As notedearlier, investment in severely damaged and unsafe school infrastructure, as found in Romania,has a major additional benefit in averting a potential loss of life of school occupants.

2.19 The private return to investment in education in Romania was the focus of a recent studyon Romanian labor markets.'5 The study found that secondary school graduates earn 17 percentmore than primary school leavers, and students completing higher education earn 36 percentmore than secondary school graduates. The private rate of return to investing in education islow, however. An extra year of schooling yields only a 3.0 percent rate of return in Romania.'6

The main reason for the low private rates of return to education in Romania is the limiteddispersion of wages in the country. A recent study on the wage structure in transition economiesfound that Romania has the most compressed wage structure in the CEE region. '7 The limitedwage dispersion in Romania can be attributed in large part to the public sector dominated labor

14 Harbison and Hanushek (1992)

s Skoufias, E. (1995), "The Labor Market and the Poor in Romania". Background Paper for the RomaniaPoverty Assessment.

16 See Psacharopolous, G. (1995). "The Profitability of Investments in Education: Concepts and Methods",Working Paper 63, World Bank, for the method. The rates of return estimate is obtained from regression estimatesof a standard earnings function for age, sex, experience, tenure, occupation, industry of individuals. (Skoufias,1996). The private rate of return to secondary education (relative to primary) is only slightly higher in rural areas.The rate of return to specialized vocation and apprentice streams is actually negative (relative to completing primaryschool). The rates of return to education are evaluated relative to primary education since the number of individualswith no education is minuscule--only 3 percent of the sample population. The social rates of return to education arelower, by definition. The SAR (Report No. 1 5525-RO ) of the Reform of Higher Education and Research Project,finds that the social rate of return to higher education is 7.5 percent.

'' Rutkowski, J. (1996)

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market that does not accord a significant wage premium to more skilled workers. 8 Theincreasing irrelevance of the pre-university education system itself contributes to a low rate ofreturn to education in Romania. Secondary school leavers constitute a large proportion of theunemployed, are very likely to be poor, and are facing enormous difficulties (relative to collegegraduates) in finding a job. A reform of the pre-university education system and private sectorled economic growth, both priorities of the new Government's reform agenda, should jointlycreate an environment that will increase the returns to education in Romania.

2.20 Earlier economic and sector work, based on a thorough comparative analysis of theeducation system in Romania relative to OECD countries, was the first to identify the qualitativeproblems in the education system. The Bank's first piece of sector work on the country,"Romania: Human Resources and the Transition to a Market Economy" and the Staff AppraisalReport (SAR) of the Bank supported Education Reform Project, both pointed to the need forimproving the quality of education provided in Romania and outlined specific measures toachieve this objective. These include investment in: (a) a revised curriculum; (b) adequate andefficient (private) provision of textbooks; (c) in-service and pre-service teacher training; (d)learning assessment tools; and (e) a modern management and financial capacity for allocatingscarce education resources to pressing sectoral needs. The Education Reform Project SAR alsocited "dysfunctional school infrastructure, the result of chronic under-investment in education inthe Ceaucescu era", as a major problem facing the Romanian education system.

2.21 A recent cross-country study on education finance confirms that Romania continues toallocate the smallest share of its budget to education relative to most CEE countries.19 Moreimportantly, the share of capital expenditures in total education spending in Romania continuesto be amongst the lowest in the region. The Government's education strategy proposed in its1993 White Paper on Education also highlights school infrastructure problems, albeit indirectly,by recommending a modern financial and management system in the MOE that would betterallocate scarce resources to provide basic materials and maintain school infrastructure. Morerecently, Government surveys of school facilities have revealed that most schools are very old,poorly built and lacking essential facilities. Nearly 1,500 Romanian schools have severelydamaged buildings that daily pose a serious physical threat to school occupants. Nearly a fifth ofall damaged schools are located in urban areas. These schools are over-crowded, operating morethan 2 shifts and, from results of studies of similar environments in other countries, likely to havean adverse impact on student achievement. The majority of the damaged, evacuated andcollapsed schools are located in rural areas. According to the Romania Poverty Assessment, thepoor standards or complete lack of school facilities in rural areas may be one reason for the lowparticipation rates in basic and secondary education found among the rural poor.

Is The labor market does accord some premium to more skilled workers. (Skoufias, ibid.) The private rate ofreturn to completing lower secondary (relative to primary) is only I percent; completing secondary education yieldsa private return of 3.0 percent (relative to lower secondary), while investment in higher education yields a 9.0percent private rate of return (relative to secondary education).

19 Laporte, B. and Ringold, D., (1997), "Trends in the Education Access and Financing during the Transition inCentral and Eastern Europe. Social Challenges of Transition Series, No.

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2.22 This literature review indicates that the objectives of the project--to rehabilitate severelydamaged school buildings in imminent danger of collapse up to the safety and pedagogic normsestablished by the MOE -- would, in addition to eliminating the physical risk to schooloccupants, improve the quality of the education services in rural schools, and on those groundsalone confer an enormous social and economic benefit to the affected individuals and to thesociety at large.

2.23 Linkage to CAS. The 1997 Country Assistance Strategy (CAS) reflects the conclusionsof the economic and sector work cited above and the major emphasis on education reform placedby the Government's Development 2000 agenda. As such, the CAS places enormous importanceon investment in education as a long term strategy to alleviate poverty and promote economicgrowth. Two on-going education projects: (a) the Education Reform Project that focuses on thereform of basic and secondary education; and (b) the Higher Education Reform Project, supportimprovements in the quality and coverage of the overall education system in Romania. Theseprojects form an essential component of the human resource development goals that featureprominently in the CAS. The proposed School Rehabilitation Project is included in the coreprogram of the CAS in order to meet the pressing need to provide safe schools for the pre-university education system in the context of the overall education sector reform program. Thisneed is reflected in the commitment of the new Government to the school rehabilitation programand the urgency of its request for resources to rehabilitate damnaged schools.

2.24 Public/Private Justification. In the future, much like all developed market economies,education in Romania is likely to be financed and provided by a mix of public and privateinstitutions. Private schooling is critical for serving the diverse educational needs of thepopulation, for reducing public spending on (higher income) students most likely to opt forprivate schools, and, in concert with other mechanisms, for providing competition for theservices of the public school system. But, as in most developed market economies, a modempublic education system is likely to remain the main provider and financier of pre-universityeducation in Romania. The public education program, suitably reformed to address the emergingneeds of a market economy, would address the under provision of education (particularly to thepoor) likely to obtain from a purely private education system because of: (a) financial marketimperfections (inability of individuals to borrow against human capital); and (b) the inability ofprivate providers to capture the externalities (more civil society, greater social responsibility, anda more uniform and highly educated population, higher growth rate) generated by an educatedwork force for the country as a whole.

2.25 Policy Environment. The details of the policy environment were included in Chapter 1and will therefore not be repeated here. It should be re-iterated, however, that the EducationReform Program has received renewed commitment and support from the new Government.As noted earlier, the Government resolve to improve the quality and availability of educationin line with OECD norms, and accelerate the pace of reforms in the education sector, isevident from the goal of improving the quality of the human capital base that it has set itself asa cornerstone of its Development 2000 policy agenda.

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2.26 Analysis of Alternatives. Three alternative project designs were considered: the firstalternative was no Bank support at all; Alternative 2 was to limit investments exclusively tostrengthen the damaged school buildings; and Alternative 3 was to strengthen the buildings andrelieve the congestion in the classrooms by providing additional rooms to accommodate studentsin the third or later shifts, and upgrade the schools to meet the minimum standards necessary toattain the pedagogical and qualitative objectives of the Education Reform Program.

(a) Project Not Financed. Without the project, the Government would continue torepair damaged schools to protect school occupants as mandated by GovernmentLaw OGR 20/1994. The major constraints in investment funds would besurmounted eventually. Over time, a large number of seriously damaged schoolswould be rehabilitated, and the apprehension about the safety of the occupantswould be alleviated. However, in the meantime, cohorts of students wouldcomplete their education in pedagogically inappropriate (crowded, etc.), andunsafe physical environments. In the event of further serious earthquakes,substantially avoidable injury or loss of life would not have been averted. On thefiscal side, without the project, the Government would incur higher recurrent costsover the life of the school and a higher capital cost of rehabilitating a moredamaged school building in the future.

(b) Finance Only Strengthening of Damaged Structures. Under this alternative theproject would only finance the structural strengthening of damaged schools.Schools would not be expanded to reduce over-crowding, nor consolidated withnearby schools. The Government would invest only in the structuralstrengthening of schools with the potential of receiving the following benefits: (i)saving student/teacher lives; (ii) fiscal savings in lower capital and recurrent costsfrom rehabilitating schools now as opposed to later when school buildings aremore damaged; (iii) improved learning and earning capability of students inschools where the strengthening of schools to their former capacity would reduceovercrowding and/or improve access to schools. Room for further improvementsin student learning would remain. Despite structural strengthening, some schools(without expansion) would still remain crowded. In addition, further fiscalsavings from the consolidation of nearby under-utilized schools would not berealized.

(c) Strengthen the Structures, Relieve Student Overcrowding and Upgrade Schoolsto Meet Minimum Quality Standards. The conclusion reached from consideringthe first two alternatives is that capital investments in the educational physicalplant to ensure a safe leaming environment should take place simultaneously withqualitative investments in the learning environment consistent with the EducationReform Program. This alternative would yield a higher NPV than either of thealternatives presented above because it would: (i) consolidate under-utilizedfacilities in the same catchment area and thereby generate fiscal savings; and (ii)expand buildings (if needed) to reduce crowding in schools and thereby improvestudent achievement and earning streams. In addition, by rehabilitating rural

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schools to their full learning potential, the project would improve education statusof individuals in rural areas and assist in alleviating rural poverty. By supportingthe qualitative standards espoused in the Education Reform Program, the projectwould also contribute to the development of a skilled human capital base andpromote economic growth.

2.27 Cost-Benefits/Cost-Effectiveness. The major benefit of the project is to eliminate thephysical risk to students and teachers posed by school buildings in imminent danger ofcollapse.20 A rough approximation of the benefit cost ratio for the project can be obtained byusing data on total enrollments, shifts, gross area, and the number of classes available for eachdamaged school. Using this data, and under particular simplifying assumptions, the schoolrehabilitation cost is estimated at US$109 million. In the most pessimistic case, assuming a 100percent probability of damage in each school, the project would save about 33,000 lives (one lifesaved for US$3,300 invested). In an optimistic case, assuming a 1O percent probability ofdamage for each school, the project would save about 3,300 lives (one life for US$33,000invested). There is considerable controversy in the literature on how a human life should bevalued. However it is possible to define a range for the value of life over which the benefit/costratio of the project would exceed unity. Specifically, the benefit-cost ratio would exceed unity ifthe value of life exceeds US$3,000 in the optimistic case and exceeds US$33,000 in thepessimistic case. Thus, if the present discounted value of lifetime wages for a student inRomania (US$48,000)2 were used as indicative of a value ol life to Romanian society, theproject's benefit-cost ratio would (far) exceed one.

2.28 Fiscal Impact. In addition to saving lives, the project would yield benefits in fiscalsavings22 through (a) reduced recurrent and investment costs as a result of rehabilitating schoolsnow as opposed to later when schools are more depreciated or collapsed, and (b) reducedrecurrent costs from consolidating under-utilized schools as a result of a reduction in the numberof staff and maintenance area. Fiscal savings from the improvement in the learning environment(lower drop out and repetition rates) and improved access to schools in under-served areas(future reduction in social assistance and other poverty related benefits), difficult to quantify as aresult of data limitations, have not been estimated. Thus, fiscal savings estimates provide alower bound on the total fiscal saving generated by the project. Results emerging from theTulcea pilot test show that, in almost all scenarios undertaken to date, the internal rate of return(IRR) from fiscal savings alone is at least 47 percent, well above a reasonable project return of10 percent.(Annex 3B). It should be noted however that savings in recurrent cost deriving fromthe proposed project, may need to be used to maintain or increase the overall Government capitaland recurrent budget for school infrastructure. The Government currently allocates less than the

20 The mathematical derivation of benefit cost ratio of the project is presented in Annex 3.21 Assuming students would earn the average wage in Romania, about $100 per month, and realise a working

life of 40 years.22 The net benefit of the project is the sum over all schools of the present discounted value of the benefits

from rehabilitating each school: (i) savings in recurrent and capital costs (ii) the total number of lives saved; (iii)incremental earning stream from improvements in student achievements and access to schools in each school.

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stipulated 5 percent of value of old, and 1.5 percent of the value of new school buildings towardstheir maintenance.

2.29 DuringNegotiations, tle Governmentprovided assurances that it would take allnecessary measures on its part to ensure: (a) that every fiscal year, starting in 2001, adequatebudgetary resources are allocated to allow adequate maintenance of thle schools rehabilitated,upgraded andfurnished under the project; and (b) thzat such budgetary allocations are utilizedfor their intended purpose.

2.30 Poverty Analysis. The Romania Poverty Assessment finds that households headed byless educated individuals are more likely to be poor (relative to more educated household heads).More worrisome, the Poverty Assessment indicates that, unless addressed, this aspect of povertyis likely to persist in the future. Children of households with less educated parents are less likelyto be enrolled in school. This problems is more severe in rural areas. Rural household headshave completed far fewer years of education, and rural children are less likely to be enrolled inschool. By rehabilitating mainly rural schools and ensuring that all rehabilitated schools haveadequate facilities, this project, in the context of the overall education program, will improve thequality and (in some cases) the coverage of education in the poorest communities in the country.In doing so, it will contribute to raising low education status in rural areas and alleviate one ofthe fundamental causes of poverty in Romania.

2.31 Institutional Capacity and Regulatory Framework. The commitment of the newGovernment to implement the project is unusually high. Project preparation began in early 1996,with a small team (two researchers) that began to gather data on damaged schools in Tulcea andVaslui (the most disadvantaged district) which were selected as pilots. But the MOE's inabilityto allocate resources for project preparation (and hiring technical experts for the purpose)curtailed preparation activities. These activities only picked up momentum in January 1997,after the national elections. The new Minister of Education announced his and the incomingGovernment's full support for the operation. The School Rehabilitation Board (SRB) wasreactivated and its Working Group became fully staffed in February 1997. Since then, theWorking Group accomplished an impressive amount of preparatory work. It has: (a) completed aschool database on about 190 urban and 350 rural schools; (b) prepared detailed standards 23 forschool design, construction and furnishing; (c) prepared and (in pilot district Vaslui) started toapply the economic criteria for prioritizing schools for rehabilitation and determining the scopeof rehabilitation interventions in the affected schools; and (d) drafted the procedures for projectadministration, procurement and implementation, all of which are embodied in a draft ProjectImplementation Plan. These preparatory activities have laid the ground work and built capacityfor the implementation of the school rehabilitation program according to sound economicprinciples and acceptable safety and pedagogic norms, and enabled earlier project appraisal.

2.32 The capacity to implement the rehabilitation of damaged schools is evident from theoutcome of recent MOE efforts. Since 1995, the structural strengthening of about 200 damaged

23 These standards would be applied to the development and rehabilitation of educational infrastructure

nationally

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schools 24 has been completed and repairs are in progress in another 400. The works wereimplemented by the District Education Inspectorates which used local expertise to prepare thetechnical groundwork for rehabilitating the schools. This demonstrates that, provided resourcesare made available, expertise can be recruited when needed to assist the MOE and the DistrictInspectorates in school rehabilitation. The construction sector has sufficient capacity toundertake the volume of work envisioned under the project. About 120,000 construction firms(large and small) were registered with the MPWTP as of February 1997. Only 9,200 of thesefirms (with about 418,000 employees) reported construction activities, indicating that substantialconstruction capacity is untapped and available for the project. The reported turnover in civilworks contracts at the end of June 1996, was about 4,590 billion Lei (about US$665 million).

2.33 The MOE General Directorate for Technical Investment Coordination is a small unitwhich lacks the manpower and the management skills required to plan and oversee a largeeducational infrastructure program. The regulatory capacity of the GDTIC unit is already over-extended (see para 1. 19). The regulatory capacity of the GDTIC will be strengthened under theproject in order that it can implement the Government's school investment program moreeffectively and efficiently. The capacity enhancing measures included in the project aredescribed in paragraphs 2.12-2.15 above.

2.34 Environmental Analysis. This project is in Category C. The project would support thepreparation of environmental guidelines for school construction and maintenance programs. Inparticular, special attention would be given to the proper removal, handling and disposal ofasbestos, if it is found in the schools to be rehabilitated. Furthermore, no asbestos or asbestoscontaining materials would be purchased for use in the rehabilitation program.

24 1 1 0 completed schools were financed by the MOE budget, and 76 schools were rehabilitated with District

funds.

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3. COST, FINANCING AND IMPLEMENTATION

A. COST AND FINANCING

3.1 Proiect Cost. The total project cost is estimated at US$130.0 million equivalent includingcontingencies, taxes and duties, with base costs estimated at about US$106.5 million. Totalcontingencies (US$23.5 million) which represent 22 percent of the base cost include: (a) physicalcontingencies of US$14.7 million; and (b) price contingencies between project appraisal (March1997) and completion at the end of the five year project implementation period, estimated atUS$8.8 million. The total foreign exchange component (direct and indirect costs) of the projectis calculated at US$22.6 million including contingencies, or about 17 percent of total projectcost. Taxes and duties on works and services are estimated at US$23.4 million equivalent. Theproject cost summaries, by component and by type of expenditure, are shown below in Table 3.1and Table 3.2, respectively. The basis for the estimates of project cost, and the detailed costtables are described in more detail in Annex 5 and in the PIP.

Table 3.1 Summary of Project Cost by Component

% % Total(USS Million) Foreign Base

Local Foreign Total Exchange Costs

A. School Rehabilitation 86 5 16.8 103.3 16 97B. Institutional Capacity Improvement

1. School Facilities Planning and Maintenance 0.1 0.2 0.3 75 -2. Project Administration 1.4 1.6 3.0 53 3

Subtotal Institutional Capacity Improvement 1.5 1.8 3.3 55 3otal BASELINE COSTS 87.9 18.6 106.5 17 100

Physical Contingencies 12.2 2.6 14.7 17 14Price Contingencies 7 3 1.4 8.8 16 8

otal PROJECT COSTS 107 4 22.6 130.0 17 122

Note: Detailed amounts may not add up to exact totals due to rounding.Total costs include taxes and duties estimated at US$23.4 million equivalent.

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Table 3.2 Summary Project Expenditure by Component(US$ million)

Institutional CapacityImprovement

SchoolFacilitiesPlanning

School and ProjectRehabilitation Maintenance Administration Total

1. Investment CostsA. Civil Works/Building Rehabilitation 109.0 - - 109.0B. Equipment, Furniture and Materials

1. School Fumiture 5.0 - - 5.02. Office Equipment and Materials - 0.1 0.4 0.5

Subtotal Equipment, Furniture and Materials 5.0 0.1 0.4 5.6C. Consultant Services and Training

1. Architectural & Engineering Services 8.1 - - 8.12. Consultant Services - 0.1 1.7 1.83. Training

Training Abroad - 0.1 0.1 0.1Local Training - 0.0 0.1 0.1

Subtotal Training - 0.1 0.1 0.2Subtotal Consultant Services and Training 8.1 0.2 1.8 10.1

Total Investment Costs 122.1 0.3 2.2 124.6It. Recurrent Costs

A. CPCU and DPIU Operational Costs - - 1.0 1.0B. Building Operation and Maintenance Costs 4.4 - - 4.4

Total Recurrent Costs 4.4 - 1.0 5.4otal PROJECT COSTS 126.4 0.3 3.3 130.0

Taxes 22.8 0.0 0.6 23.4Foreign Exchange 20.7 0.2 1.7 22.6

Note: Detailed amounts may not add up to exact totals due to rounding.

3.2 Einancing. The Project would be financed by a World Bank Loan of US$70.0 millionequivalent, a Loan from the Council of Europe Social Development Fund of US$13.8 millionequivalent, and Government counterpart funds equivalent to US$46.2 million. The proposedBank Loan, which will cover about 66 percent of total project cost net of taxes and duties, willfinance about 83 percent of the estimated direct and indirect foreign exchange cost and 61percent of total local cost excluding taxes. The CESDF Loan would finance about 17 percent ofthe total foreign cost and 13 percent of local cost excluding taxes. The proceeds of the CESDFLoan would co-finance only the building rehabilitation costs. The Government will finance theremaining local costs including all taxes and duties. For risk management considerations, theGovernment opted to select the standard variable rate, currency pool Loan from the Bank. TheGovernment has received a commitment from CESDF to co-finance the project, and is expectedto sign a separate loan agreement with CESDF for the CESDF Loan. A Grant of US$131,000equivalent was made available last July, 1996, by the Japanese Government to the RomanianGovernment to finance project preparation. The financing arrangements under the project aresummarized in Table 3.3 and Table 3.4 below.

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3.3 As an additional condition of effectiveness of the Bank Loan, all conditions to theeffectiveness of the CESDFLoan must befulfilled.

Table 3.3 Summary of Financing Plan

(US$ million)

Council of EuropeSocial Development

Romania The World Bank Fund TotalAmount % Amount % Amount % Amount %

I. Foreign - - 18.8 83.2 3.8 16.8 22.6 17-4II. Local (Excl. Taxes) 22.8 27.1 51.2 61.0 10.0 11.9 84.0 64.6IIl. Taxes 23.4 100.0 - - - - 23.4 18.0

Total Project 46.2 35.5 70.0 53.9 13.8 10.6 130.0 100.0

Total Net of Taxes 22.8 21.3% 70.0 65.7% 13.8 12.9% 106.6 100.0%

Table 3.4 Summary of Financing Plan by Type of Expenditure

(US$ million)

Council of EuropeSocial Development

Romanla The World Bank Fund TotalAmount % Amount % Amount % Amount %

I. Investment CostsA. Civil Worku/Suilding Rehabilitation 37.6 34.5 57 5 52.8 13.8 12.7 109.0 83.8B. Equipment, Furniture and Materials

1. School Fumiture 0.9 18.0 4.1 82.0 - - 5.0 3.92. Office Equipment and Materials 0.1 18.0 0.4 82.0 - - 0.5 0.4

Subtotal Equipment, Furniture and Materials 1.0 18.0 4.6 82.0 - - 56 4.3C. Consultant Services and Training

1. Architectural & Engineering Services 1.8 22.0 6.3 78.0 - - 8.1 6.22. Consultant Services 0.4 22.0 1.4 78.0 - - 1.8 1.43. Training

Training Abroad - - 0.1 100.0 - - 0.1 0.1

Local Training 01 100.0 - - 01 01Subtotal Training 0.2 100.0 - - 02 0.2

Subtotal Consultant Services and Training 2.2 21 5 7.9 78 5 - - 10 1 7.8Tot Investment Costa 40.8 32.7 70.0 56.2 13.8 11.1 124.6 95.9II. Recurrent Costs

A. CPCU and OPIU Operational Costa 1.0 100.0 - - - 1 0 0.8B. Building Operation and Maintenance Costa 4.4 100.0 - 4 4 3.4

Total Recurrent Costs 5.4 100.0 - - 54 41otbl Disbursement 46.2 35.5 70.0 53.9 138 1086 130.0 100 0

Note: Oetailed amounts may not add up to exact totals due to rounding.

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B. IMPLEMENTATION SCHEDULE

3.4 The project would be implemented over a five-year period between 1998-2002, andexpected to be completed by July 31, 2002. The detailed implementation schedule is shown inthe PIP. The MOE has demonstrated its capacity to complete the project within five years, by theprogress it has a achieved during the past two years rehabilitating about 600 out of the 1,500most damaged schools, commissioned with Government funding (paras 1.16 and 2.32). Projectactivities undertaken during the first year of project implementation are expected to focus largelyon low-disbursing but essential activities that will provide a more comprehensive picture of theproject interventions, and facilitate implementation and procurement planning. Thus, nosignificant expenditures or disbursement of project funds are expected during the first year.These essential activities include:

(a) the issuance of a General Procurement Notice in the Development BusinessPublication immediately following Board Approval of the project;

(b) at the start of project implementation (or soon after Loan Effectiveness), a ProjectLaunch Seminar would be organized by the CPCU in collaboration with theBank. Representatives of relevant institutions, including, the District Councils,District Education Inspectorates, DPIUs, project schools, and other agenciesincluding the MOF, Court of Accounts, MPWTP and CESDF would be invited toparticipate for full briefings on the project scope and objectives. The ProjectLaunch Seminar will: (i) provide a forum for clarifying implementation processes,procedures and documentation; (ii) open lines of communication for bettercoordination and more efficient implementation; and (iii) provide an opportunityfor building capacity, particularly in the DPIUs, in the areas of procurement andaccounts management;

(c) completion of school maps covering the catchment area of the damaged schools(in cases where other schools of the same level are found within the catchmentarea of the affected school);

(d) definition of the scope of work (para 2.6) for rehabilitating all project schools,including the preparation of preliminary architectural and rehabilitation plans forabout 15 percent of the project schools. Civil works initiated in the first year willprimarily cover schools in the pilot districts of Tulcea and Vaslui where projectpreparation is advanced and the school mapping exercise has been substantiallycompleted. This will have a demonstration effect and will be used to fine-tuneimplementation processes;

(e) the provision of basic office equipment for the CPCU and DPIUs; and

(f) training of local staff in project implementation procedures.

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C. PROJECT MANAGEMENT

3.5 Overview. In line with the project's capacity building objectives, the implementationarrangements have been designed to employ the existing institutions and institutional units of theMOE and of the Districts. The project would provide the appropriate technical expertise tostrengthen these institutions as needed. The Minister of Education, who will have theresponsibility for the project, has assigned the overall administration of this investment operationto the School Rehabilitation Board (SRB). To ensure continuity between project preparation andimplementation, the Working Group organized to support the SRB in project preparation hasbeen integrated into the SRB's operational unit -- the Central Project Coordination Unit -- whichwill oversee the day-to-day implementation of the School Rehabilitation Project. Technicalspecialists who assisted the Working Group in project preparation have been assimilated into theCPCU, thereby ensuring retention of the in-depth understanding of the project and the lessonslearned during preparation. This would contribute to more effective project managementresponse to any issues that may arise during project implementation. School rehabilitationactivities at the local level will be supervised by small Project Implementation Units establishedin each District Education Inspectorate. Project funds (provided by the Bank, CESDF and theGovernmnent) will be administered by the MOE General Directorate for Human Resources andFinance (GDHRF) in close collaboration with the CPCU. These units and their responsibilitiesare briefly described in the following paragraphs, and discussed in greater detail, in the PIP.

3.6 School Rehabilitation Board. The SRB was established by the Minister of Education inApril, 1996, to exercise general direction over the project, ensure that project objectives remainconsistent with the Education Reform Program and priorities, and ensure that standards whichgovern the quality of educational infrastructure in Romania are met by the project. Chaired bythe Secretary of State for Higher Education 25, the SRB includes representatives of the MPWTP,the MOF, the Directors of the OIS, GDTIC and GRHRF, as well as representatives from twoDistrict Councils. The CPCU serves as the operational arm of the SRB responsible for overallproject coordination and implementation.

3.7 Central Project Coordination Unit. The CPCU was organized by the MOE by virtue ofMinistry of Education Order No. 4114/20.06.1997 to conduct the overall administration of theproject under the general guidance of the SRB. The CPCU is headed by a Project Managerassisted by six key technical specialists (including Architect/Engineer, Economist/FinancialOfficer, Educator and School Mapping Specialist) and an administrative secretary proficient inEnglish, selected on the basis of their qualifications for the respective tasks. One of the technicalspecialists will be designated as the Procurement Officer. The services of other support staff forthe CPCU will be recruited as necessary for efficiency, after consultations with the Bank. Theservices of the specialists to benefit the CPCU would be financed from the project resources.

25 Although the project directly benefits pre-university schools, the Secretary of State for Higher Education

has been appointed to chair the SRB because the MOE Directorate of Construction and Investment, which hasgeneral oversight of the development of all public educational infrastructure, is under his jurisdiction.

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3.8 The SRB would make provisions for the CPCU to fornulate and implement a program totransfer the skills and experience gained during project implementation to regular staff in themainstream of MOE operations, which include those of the GDTIC and the District EducationInspectorates. This skills transfer would be realized through periodic in-country training sessionsfor selected MOE and Judet staff, and would be reinforced by staff involvement in the annual andmid-term reviews of project performance (in which the Bank, CESDF, or other institutions mayparticipate). To ensure efficient operation, the CPCU would be equipped, through the project,with up-to-date office technology (computers, printers, fax, modems, cellular communications,etc.) and two vehicles for site supervision. In addition, selected CPCU and regional educationstaff would be given the opportunity to undertake short-term training abroad in areas that wouldstrengthen project management capacity, as well as familiarize them with Bank procurement andoperational procedures. The specific functions of the CPCU are to:

(a) manage project implementation activities and the use of resources;

(b) control the quality of the rehabilitation works by ensuring that the agreed norms,criteria and procedures (paras 2.5 - 2.9) are consistently applied by theimplementing units at central and Judet levels. Such norms and proceduresinclude: school design standards; criteria and methodologies for defining optionsand scope of school rehabilitation interventions and prioritization of schools. TheCPCU will coordinate with the GDTIC and with MPWTP in matters related tocivil works such that the planning and execution of the rehabilitation works underthe project meet the prescribed norms for structural safety, sanitation, security,and economic efficiency, etc. CPCU will monitor the performance of each DPIUrespective of the supervision of these contracts;

(c) ensure that the appropriate procedures and documentation for procurement,accounting, auditing, reporting and such other guidelines embodied in the LoanAgreement are applied by all implementing units, monitor performance under allprocurement contracts, and ensure the delivery of the contracted goods andservices to the appropriate recipients. The designated Procurement Officer (para3.7) will have responsibility for overseeing procurement activities under theproject. The CPCU will procure equipment for its use and for the DPIUs;

(d) monitor project costs and expenditures, and coordinate with the GRHRF in theexecution of the Bank and CESDF Loans as well as the Government counterpartfunds, and ensure that project funds are appropriately used, accounted for, andaudited. The CPCU will keep separate and accurate up-to-date records of thedisbursement of project funds on contracts for goods, works and services in eachproject school;

(e) take the responsibility for the organization of training programs (in-country andabroad) and the recruitment of specialist services for the capacity buildingcomponent of the project, and monitor the outcome of the training and technicalassistance provided under the project; and

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(f) monitor implementation progress, and liaise with and report to Government andother relevant institutions (including MOF, MPWTP, the Bank and CESDF) onthis progress and project-related developments.

3.9 District Project Implementation Units. School rehabilitation activities at the local levelwill be supervised by small Project Implementation Units established in each District EducationInspectorate. These DPIUs have also been organized by virtue of the Ministerial Order describedabove (para 3.7). Each DPIU is under the general direction of the District School Inspectorate,and the performance of the DPIUs will be closely monitored by the CPCU. The DPIUs willsupervise all facets of project implementation related to the rehabilitation of schools within thedistrict: selection of specialists to prepare detailed surveys, architectural and engineeringdocuments; organization and award of construction tenders; and final acceptance of completedworks contracts. As in the case of the CPCU and the services of technical specialists (includingarchitects/engineers and economist/accountant) would be remunerated out of project resources.

D. PROCUREMENT ARRANGEMENTS

3.10 Procurement under the Project will consist of: (a) contracting of civil works (schoolrehabilitation); (b) the acquisition of school furniture and minor equipment (office, software,vehicles); and (c) engagement of specialist services and training of local staff. Procurement ofworks and goods will be conducted in accordance with the provisions of the August 1996revision of the Bank Guidelines: Procurement Under IBRD Loans and IDA Credits(Procurement Guidelines). Specialist services and training contracts will be procured inaccordance with the January 1997 Bank Guidelines: Selection and Employment of Consultants byWorld Bank Borrowers (Consultant Guidelines). The procurement arrangements aresummarized in Table 3.5. An estimate of the packaging arrangements and timing of procurementcontracts is shown in the Procurement Plan (Annex 6). The packaging of bids, as well ascontract review requirements under the Project are briefly described below. The specific detailsof these procurement processes, including the required documentation, are described in the PIP:

(a) Civil Works. (US$109.0 million including contingencies) School rehabilitationcontracts under the project would have a wide range of characteristics: geographicdispersal, particularly those in rural areas; execution period as a result of thesequencing of school rehabilitation (para 2.7); school capacities (enrollmentsvarying from less than 20 to 2,700 students); type and scope of works(rehabilitation to full replacement of buildings, see para 2.6); and estimated costs.Some affected urban schools may be clustered relatively close to each other, butmost rural schools are in isolated localities, many of which have difficult access.To the extent feasible, all civil works contracts would be grouped into packagesthat would permit wider competition among a broad spectrum of workscontractors, achieve economy of scale, and improve procurement effectiveness byensuring that contracts for schools in remote locations are not shunned by bidders.Works packages estimated to cost US$1.0 million equivalent or more per package

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would be procured through International Competitive Bidding (ICB) adaptingthe Bank's Standard Bidding Documents (SBD) for the Procurement of Works(Smaller Contracts). However, the geographic dispersal of the schools, theprioritization scheme (see para 2.7), and the type of works (rehabilitation) may notmake it feasible nor practical in most cases to group these contracts into packagesattractive enough for ICB. Therefore, contracts of this nature would be procuredusing other than ICB procedures (up to an aggregate value of US$92.5 million)as follows: (i) National Competitive Bidding (7NCB) procedures for contractpackages estimated to cost below US$1.0 million equivalent per package; and (ii)procurement of small works contracts estimated at less than US$70,000equivalent per package may be procured under lump-sum, fixed price contractsawarded on the basis of quotations obtained from at least three qualified domesticcontractors in response to a written invitation. Within the aggregate total for non-ICB works procurement, procedures for the procurement of small works contractsmay be applied up to an aggregate amount of US$5.5 million. Procurementthrough NCB would be in accordance with procedures agreed with the Bank usingthe Bank's Regional SBD for NCB for works. Documentation for small worksprocurement would be standardized and cleared with the Bank prior to issuance ofthe first package. Interested foreign civil works contractors would not beprecluded from submitting tenders invited either through NCB or procedures forsmall works contracts. All works contracts would be co-financed by the CESDFand procured in accordance with the Bank's Procurement Guidelines.

(b) Goods. Bid packages for the procurement of goods are not expected to exceedUS$300,000 equivalent per package (the threshold deemed attractive for ICB).However, any goods packages estimated at more than US$300,000 per packagewould be procured through ICB, and would be subject to the Bank's prior reviewas provided under Section II and Appendix 1, respectively, of the BankProcurement Guidelines. In such cases, domestic manufacturers would be given amargin of preference in bid evaluation as provided for in Section II C of theProcurement Guidelines. For contract packages less than US$300,000, theprocurement of goods would be undertaken as follows:

(i) Furiture. (US$5.0 million including contingencies) School furniture(student desks) is bulky, and the difficulty of delivering these goods todispersed rural schools make it unattractive for international manufacturersto participate in tenders for furniture. Furthermore, Romania has thecapacity to produce the type, quality and quantity of school furniturerequired under the project at competitive prices. Thus, NationalCompetitive Bidding procedures would be applied for the procurement ofschool furniture (aggregate US$5.0 million) in accordance with theprovisions of Section II of the Procurement Guidelines, and adapting theBank's Regional SBD for NCB for goods. Furniture contracts estimatedat less than US$30,000 per package may be procured through NationalShopping (NS) procedures based on quotations obtained from at least

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three suppliers. NS procedures may be used up to an aggregate value ofUS$1.5 million out of the US$5.0 aggregate for NCB. Foreign furnituremanufacturers/suppliers, would not be precluded from submittingproposals for furniture contracts invited through NCB or NS procedures.

(ii) Equipment and Other Goods. (US$500,000 including contingencies)Equipment, materials and supplies contracts estimated at less thatUS$300,000 per package may be procured through InternationalShopping (IS) procedures (aggregate US$300,000) based on at least threeprice quotations obtained from suppliers originating from at least twoeligible source countries. Goods contracts estimated at less thanUS$30,000 per package (aggregate US$100,000) may be procured throughNational Shopping where the desired goods are ordinarily availablelocally from more than one source at competitive prices. Procurementthrough NS would be based on a minimum of three price quotationsobtained from qualified suppliers. Computer software, books, copyrightsand other items which the Bank agrees are of proprietary nature (aggregateUS$100,000), may be procured through Direct Contracting withoutcompetition.

(c) Consultant Services/Training. The procurement of services included in thiscategory would be as follows:

(i) Architectural and engineering (A&E) services. (aggregate US$8.1 million)These services would be procured using the Quality and Cost BasedSelection (QCBS) procedures described in Section II of the BankConsultant Guidelines. The A&E services will be provided in such amanner that the scope of the assignment includes the preparation offeasibility studies and technical designs (architectural, engineering,bidding documents, etc.) for a group of schools.;

(ii) Other specialist services would be procured using three methods: (1)Selection under a Fixed Budget (aggregate US$8.2 million) as describedin Section III para 3.5 of the Bank's Consultant Guidelines for contractingspecialists to the benefit of the CPCU and the DPIUs, and for auditingservices; (2) Single Source selection (aggregate US$200,000) as describedin Section III paras 3.8 - 3.11 of the Bank's Consultant Guidelines fortraining; and (3) Selection of Individual Consultants on the Basis oftheir Qualifications for the assignment (aggregate US$175,000) in hiringspecialist services for school mapping, project management, procurementand maintenance management to support capacity building initiativesunder the project.

(d) Recurrent expenditure items would be financed entirely by the Government andprocured in accordance with Government procedures.

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Table 3.5 Procurement Arrangements

(US$ million)

Procurement MethodInternational NationalCompetitive Competitive Consulting

Bidding Bidding Other Services N.E.F. at TotUI

A. Building Rehabilitation 16.5 87.5 5.0 1 - 109.0(8.7) (46.2) bl (2.6) cl (57.6)

B. School Fumiture - 3.5 1.5 5.0

(2.9) b/ (1.2) d/ (4.1)C. Equipment, Vehicles and Materials - 0.5 - 0.5

(0.4) el (0.4)D. ArchitecturaUEngineering Services - - - 8.1 8.1

(6.3) fl (6.3)E. Consultant Services and Training - - - 2.0 - 2.0

(1.6) gi (1.6)F. CPCU and DPIU Operational Costs - - - 1.0 h/ 1.0

G. Building Operation and Maintenance Costs - - - - 4.4 h/ 4.4

Total 16.5 91.0 7.0 10.1 5.4 130.0(8.7) (49.1) (4.2) (7.9) - (70.0)

Note: Figures in parenthesis are the respective amounts financed by The World Bank.Detailed amounts may not add up to exact totals due to rounding.

a1 Non-Bank Financed.b/ Bids invited nationally in accordance with procedures agreed with the Bank and using the Bank's regional bidding document for NCB.Cs Procedures for procurement of small works for works contracts less than USS70,000.dv National Shopping for furniture contracts less than USS30,000 per contract.e! Includes International Shopping (USS300,000 aggregate); National Shopping (USS 100,000 aggregate); and

Direct Contracting for software/proprietary items (USS 100,000 aggregate).P/ Quality and Cost Based Competition in accordance with the Bank's Consultant Guidelines.gi Includes competitive selection under fixed budget for specialists to benefit CPCU and DPIU, and auditing services (aggegate US$1.65 million);

individual consultants selected on basis of qualifications (aggregate USS170,000); and single source contracting for training (aggregate USS230,000).hi Financed by the Government.

3.11 Prior Review of Procurement Contracts. All contracts financed under the project willfollow the Bank's documentation requirements (paras 3.12(a) and (b)(i)). Prior to the issuance ofany invitations to prequalify for bidding or to bid for contracts, the CPCU will furnish to theBank for its review and approval, the proposed scheduling of the procurement process(Procurement Plan) in accordance with the provisions of Appendix 1, Section 1 of theProcurement Guidelines. The procurement of all goods, works and services would beundertaken in accordance with such Procurement Plan as will have been approved by the Bank.It is estimated that up to 500 contracts would be signed during the implementation of the project(see Annex 6). Prior review by the Bank is expected to cover an estimated value of about US$42million (out of US$125 million) of works, goods and services. All other contracts would besubject to post review by the Bank in line with the provisions described in Appendix 1, Section 2of the Procurement Guidelines, and Appendix 1 Section 2 of the Consultant Guidelines. TheBank's prior review will include the following:

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(a) Civil works: Prior to the issuance of bids, the CPCU will submit to the Bank forreview, the complete bidding documentation (bid invitation, bid proposal forms,bills of quantities, commercial and technical conditions of tender and of contract,building rehabilitation plans, technical specifications, and draft contractagreements) for: (i) all works contract packages procured through ICB; and (ii)the first works contract in each District to be procured through NCB;

(b) Goods: Prior to tenders being invited, the CPCU will submit to the Bank forreview, the complete bidding documentation (bid invitation, bid proposal forms,commercial and technical conditions of tender and of contract, master lists andtechnical specifications, and draft contract agreements) for the first furniturepackage procured through NCB, and the first equipment package procuredthrough IS;

(c) Services: Prior review requirements for the award of consultant services contractswill be in accordance with the provisions of Appendix 1, Section 2 (Prior Review)of the Consultant Guidelines. The Bank will conduct a prior review of: (i) thefirst contract for each district and each contract costing the equivalent ofUS$I00,000 or more for architectural and engineering services; (ii) auditingservices; and (iii) the first three contracts for individual consultants.

E. DISBURSEMENTS

3.12 The disbursement profile of the project does not depart significantly from standarddisbursement profiles for education projects. The MOE has the requisite capacity to execute theproject over a period of five years, and the Loan proceeds are expected to be fully disbursedwithin five and one-half years (eleven semesters) after Board Approval. The Closing Date willbe January 31, 2003. The disbursements estimated for the first two semesters of projectimplementation are not expected to be significant (para 3.4) and are based on initial deposits intothe Special Account (see para 3.15). The estimated semestral disbursements are shown below inTable 3.6.

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Table 3.6 Summary of Disbursements

(US$ million)

FY1998 FY 1999 FY2000 FY2001 FY2002 FY2003Semester 1 2 3 4 5 6 7 8 9 10 11

Disbursement 2.5 2.5 2.9 7.2 7.2 11.4 11.4 8.7 8.7 3.8 3.7

Cumulative 2.5 5.0 7.9 15.1 22.3 :33.7 45.1 53.8 62.5 66.3 70.0

% of Total 4% 7% 11% 22% 32% 48% 64% 77% 89% 95% 100%

3.13 Procedures for disbursement on contracts financed by the Bank are described in the BankDisbursement Handbook. All disbursement of project funds, including the Bank Loan, theCESDF Loan and the Government counterpart will be under the overall supervision of theDirector of the GDHRF and monitored by the CPCU. Disbursement would be made againstStatements of Expenditure (SOE) certified by the Directors of the GDHRF and the CPCU for: (a)disbursements below US$300,000 equivalent for works and goods contracts; and (b)disbursements below US$100,000 for consulting firms and US$50,000 for individualconsultants. This SOE form would also state that all contracts related to these SOEs have beenawarded in accordance with criteria and procedures agreed with the Bank. All documentationsupporting SOEs will be retained by the CPCU for at least one year after receipt by the Bank ofthe audit report for the year in which the last disbursement was made. This documentationwould be made available for review by the auditors and by visiting Bank staff upon request.

3.14 Disbursements from the Bank Loan proceeds for eligible expenditures incurred under theproject will be withdrawn in accordance with the disbursement schedule shown in Table 3.7below. The disbursement percentages in each expenditure category are based on the totalestimated cost of each expenditure category including contingencies, local taxes and duties. TheBank financing under each category does not include local taxes and duties, these are covered bythe Government share of disbursements. In the case of disbursements under Category 1 (CivilWorks), all works expenditures are co-financed by the CESDF Loan. The Bank share ofdisbursements against total works expenditures would be 52 percent, the CESDF Loandisbursement would cover 12.6 percent, and the Government will disburse the balance (35.4percent). The Bank disbursement rate under Category 1 would be adjusted prior to the ClosingDate to appropriately reflect the final costs of civil works expenditures. The Government shareof disbursements includes all taxes and duties applicable to works contracts. The unallocatedamount under Category 4 is higher than what is normally provided (10 percent of the total Loan)in Bank Loan disbursement schedules. This is due to the higher physical contingencies (15percent of estimated base costs) which have been included in the cost estimates because of thenature of the works (building rehabilitation).

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Table 3.7 Disbursement Schedule

Amount of theLoan Allocated(expressed in

Disbursement Category Dollar Equivalent) % of Expenditures to be Financed

(1) Civil Works 50,000,000 69% until December 31, 1999; and47% thereafter

(2) Goods:(a) Furniture 4,000,000 74%(b) Equipment, Vehicles and Materials 400,000 100% of foreign expenditures,

100% of local expenditures (ex-factory)and 82% of local expenditures for otheritems procured locally

(3) Consultant Services and Training:(a) Consultant Services 7,300,000 100% of foreign expenditures and

82% of local expenditures

(b) Training 200,000 100%(4) Unallocated 8,100,000

TOTAL 70,000,000

3.15 Special Accon. To facilitate the timely implementation of the project, the Governmentwill establish, maintain and operate, under terms and conditions acceptable to the Bank, a SpecialAccount denominated in US Dollars, in a commercial bank acceptable to the Bank. The SpecialAccount would be used under the direction of the Director of the GRHRF in coordination withthe CPCU Project Manager, following procedures established by the Bank. The Special Accountwill have an Authorized Allocation of US$5.0 million in order to cover the estimated averagedisbursements for a three-month period for the Bank-financed expenditures during the peak years(years 2-4) of project implementation. At the start of the project, the Special Account depositwill be limited to half the Authorized Allocation (US$2.5 million) and the remaining portion ofthe Authorized Allocation will be disbursed upon Government request when the aggregateamount of withdrawals from the Loan Account plus the total amount of all outstanding SpecialCommitments entered into by the Bank shall be equal to or exceed the equivalent of US$5.0million. Specifically:

(a) applications for replenishment of the Special Account would be submitted on amonthly basis or when one half of the amount deposited had been withdrawn,whichever occurred earlier, and must include reconciled bank statements as wellas other appropriate supporting documents;

(b) all other applications for direct payment, special commitment or reimbursementshould be for amounts not less than 20 percent of the initial deposit of the

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Authorized Allocation to the Special Account or not less than 20 percent of thefull Authorized Allocation once available;

(c) submission of replenishment applications takes precedence over the minimumsize application as stated in (b) above.

F. ACCOUNTS AND AUDITS

3.16 Project Accon. A Project Account in Romania Lei, will also be established by theGovernment under the general direction of the Director of the GRHRF, to finance expendituresto be covered by Government counterpart financing. Appropriate arrangements would also bemade for disbursements on works contracts financed by the CESDF Loan. Disbursements oneligible expenditures would be effected simultaneously from the Special Account and the ProjectAccount in the respective financing ratios derived from Table 3.7 above. In the case ofdisbursements on works expenditures, withdrawals from the Bank and CESDF Loans and theGovernment Account may either be effected simultaneously to cover the total works expenditurepresented for payment, or advanced in full by the Government and reimbursed subsequently bythe Bank and the CESDF into the Government account.

3.17 Accounting and Auditing. The GDHRF and the CPCU will set up project accounts andfinancial records for all project-related expenditures. All these accounts and records would bemaintained in conformity with accepted international accounting practices. The Special Accountand the Project Account, will be audited in accordance with the Bank Guidelines. FinancialReporting and Auditing of Projects Financed by the World Bank (March 1982). The CPCU willprovide the Bank, within six months of the end of each Government fiscal year, with an auditreport of such scope and detail as the Bank may reasonably request, including a separate opinionby the auditor on disbursements against certified SOEs. The separate opinion should mentionwhether the SOEs submitted during the fiscal year, together with the procedures and internalcontrol involved in their preparation, can be relied upon to support the related withdrawalapplications. . The services of the independent auditor are financed under the project.

G. SUPERVISION AND MONITORING

3.18 Progress Repo. The CPCU will prepare semi-annual progress reports (beginning fromthe date of Loan Effectiveness) on each project component, objective and activity. These reportswill describe: (a) current status and issues; (b) deviations, if any, from the implementation planand project targets; and (c) recommendations for actions and forward planning. The Monitoring

- 39 -

Indicators shown in Annex 7 would be used to keep track of project performance, and theachievements with respect to these indicators would be reflected by the CPCU in the semi-annualprogress reports. These Monitoring Indicators would be reviewed periodically by theGovernment and the Bank during Bank supervision missions to ascertain their continuedrelevance as tools for measuring and/or tracking project performance, targets and objectives,and/or whether modifications in the list of indicators are necessary. The format prescribed by theBank for reporting on the progress of school rehabilitation activities and expenditures would alsobe used by the CPCU in reporting to the CESDF.

3.19 Midtern Review and Evaluation. By April 30, 2000, the CPCU will undertake jointlywith the Bank a mid-term review of progress in project implementation to determine whether: (a)the project's intended objectives remain valid; (b) implementation is advancing satisfactorily tojustify its continued implementation; and (c) any adjustments to, or significant restructuring of,the project are necessary to improve its effectiveness

3.20 During Negotiations, thie Government provided assurances that it would: (a) maintainpolicies and procedures adequate to enable it to monitor and evaluate on an ongoing basis, inaccordance withl indicators acceptable to the Bank, the carrying out of the project and theachievement of its objective; (b) prepare, under terms of reference satisfactory to the Bank,andfurnish the Bank, on or about April 30, 2000, a report integrating tlle results of themonitoring activities on the progress achieved in carrying out the project during the periodpreceding the date of the report, and setting out the measures recommended to ensure theefficient carrying out of the project and the achievement of its objectives; and (c) review withthe Bank, by August 31, 2000, the report, and, thereafter, take all measures required to ensurethe efficient completion of the project and the achievement of its objectives, based on thleconclusions and recommendations of the report and the Bank views on thie matter.

3.21 Project Completion and Evaluation. The five-year project implementation is expected tobe completed by July 31, 2002, and the Loan Account closed by January 31, 2003. The CPCUwill be responsible for preparing a Project Implementation Completion Report to be submitted tothe Bank no later than six months after the Loan Closing Date, by July 31, 2003.

3.22 Bank Superyisin. The project will require intensive supervision (30 staff weeks) duringthe first two years of implementation to review the definition of scope of rehabilitation work forproject schools and the application of the methodologies, criteria and standards referred to inparas 2.5 - 2.9). The basis of Bank supervision will be the semi-annual progress reports preparedby the CPCU, the Monitoring Indicators (Annex 7) and the PIP. These will be supplemented byBank review of project expenditures and availability of financial resources, and discussions withtechnical specialists implementing and/or assisting in the implementation of the project, as wellas with senior management of MOE and the Government. To the extent feasible, the Bank willfield joint supervision missions with the CESDF.

- 41 -

4. PROJECT BENEFITS AND RISKS

A. BENEFITS

4.1 The main benefit of the project would be to eliminate the physical risk to almost 200,000students occupying selected damaged schools. The investment would yield fiscal savings by: (a)rehabilitating damaged schools now rather than at some future date when buildings are furtherdamaged or totally collapsed; and, (b) by consolidating under-utilized schools operating in thesame catchment area. Rehabilitated schools would be built to conform with the pedagogic andsafety standards established by the MOE, which are consistent with international norms. Assuch, project benefits include the improvements in learning and earning, difficult to quantify, butin light of growing evidence from other countries likely to obtain from reduced over-crowding inthe damaged schools. By rehabilitating damaged schools, the majority (about 80 percent) ofwhich are in rural areas, the project would help improve educational status in rural areas andalleviate one of the main causes of poverty in Romania. The investment program itself wouldprovide economic benefits to the local construction industry and the immediate surroundingpopulation. Finally, the project would improve the capacity and economic planning of the MOE,and as such develop institutional capacity of the Government to implement such programsefficiently in the future.

B. RISKS

4.2 There are no major risks to the project, but there are three areas where possible difficultiescould arise: (a) in managerial capacity at the Judet level; (b) in the procurement process; and (c) inthe timeliness of the release of Government counterpart resources. First, the scope of work in themore disadvantaged Judets (which also have the highest number of damaged schools), may extendbeyond the implementation capacity in these Judets. Second, the procurement procedures to beused under the project are significantly different from the local processes with which the MOE andthe Judets are familiar. Third, local procedures for funding allocations and disbursements arecumbersome. Works contractors are very dependent of timely fund flows for efficient contractexecution. Delays in the actual release of counterpart funds could cause critical construction delays(or even work stoppage by small building contractors). These areas of difficulty could delay school

- 42 -

rehabilitation, and increase the risk of serious physical injury to school occupants. Implementationdelays would adversely affect schooling in the affected areas, and trigger cost overruns.

4.3 The project includes measures to mitigate these potential difficulties. The strengthening ofthe CPCU and all DPIUs with technical expertise would address the deficiency in management.The establishment of these units in the mainstream of MOE and district operations will build thecapacity to manage future rehabilitation programs. Training of MOE staff in implementationprocedures (procurement, disbursement of Loan and counterpart funds, and monitoring ofcontractor performance) will accelerate decision making processes and assure a timelyimplementation of the project. Project size and implementation time have been carefully linkedwith resource flows and the availability of counterpart fumds.

- 43 -

5. AGREEMENTS AND RECOMMENDATIONS

Agreements Reached at Negotiations

5.4 During Negotiations, the Government provided assurances that it would:

(a) follow the criteria and procedures, and the design standards agreed with the Bank,with respect to: (i) the rehabilitation, upgrading and furnishing of the schoolsunder the project; and (ii) the prioritization of the rehabilitation of such schools(para 2.1 1 (a));

(b) submit to the Bank, for its approval, any proposed modifications to said criteria,procedures and standards before such modifications are introduced (para 2.1 1 (b));

(c) (i) by April 30, 2000, submit to the Bank, for its review, a draft study withrecommendations on alternative efficient allocation methods for pre-universityschool maintenance expenditures; (ii) immediately thereafter finalize said studytaking into consideration the Bank's comments on its draft; and (iii) carry out therecommendations of the study in accordance with their terms (para 2.13);

(d) ensure that every fiscal year, starting in 2001, adequate budgetary resources areallocated to allow adequate maintenance of the schools rehabilitated, upgradedand furnished under the project (para 2.29(a));

(e) ensure that such budgetary allocations are utilized for their intended purpose (para2.29(b));

(f) maintain policies and procedures adequate to enable it to monitor and evaluate onan ongoing basis, in accordance with indicators acceptable to the Bank, thecarrying out of the project and the achievement of its objective (para 3.20(a));

(g) prepate, under terms of reference satisfactory to the Bank, by April 30, 2000, areport integrating the results of the monitoring activities on the progress achievedin carrying out the project during the period preceding the date of the report, andsetting out the measures recommended to ensure the efficient carrying out of theproject and the achievement of its objectives (para 3.20(b)); and

- 44 -

(h) review with the Bank, by August 31, 2000, the report, and thereafter take allmeasures required to ensure the efficient completion of the project and theachievement of its objectives, based on the conclusions and recommendations ofthe report and the Bank views on the matter (para 3.20(c)).

Condition of Effectiveness

5.5 As an additional condition of effectiveness of the Bank Loan, all conditions to theeffectiveness of the CESDF Loan must be fulfilled (para 3.3).

Recommendation

5.6 Subject to the above, the proposed operation would provide a suitable basis for a Loan ofUS$70.0 million equivalent to Romania.

- 45 -

ANNEXES

I Statistical Data on the Romanian Education System

2 Design Standards for Rehabilitating Schools

3A Method for Determining the Scope of Rehabilitation Efforts

3B Determining the Scope of Rehabilitation Efforts: Results

4 Prioritizing Schools For Rehabilitation: Ranking Method and Simulation Results

5 Project Cost Estimates

6 Procurement Plan

7 Monitoring Indicators

8 Bibliography of Documents in the Project File

ANNEX IPage 1 of2

ROMANIA


Statistical Data on the Romanian Education System

Table 1: Student-Teacher Ratios in the Pre-university System1989 1990 1991 1992 1993 1994

Pre-school 26.6 26.7 20.3 20.4 20.6 19.1Basic 21.1 20.4 16.7 16.6 15.7 15.4Secondary -- -- 24.3 19.1 16.5 15.6

Table 2: Total teachers in the Pre-university System1989 1990 1991 1992 1993 1994

Pre-school 31,197 31,293 37,007 36,326 36,447 37,303Basic 141,130 141,732 163,865 159,199 164,165 164,780General Sec. -- 4,586 13,760 16,791 17,301 18,550Vocational Sec. -- 37,993 37,971 38,222 40,860 40,938Technical Sec. 2,156 1,898 4,209 5,319 5,193 6,222

Table 3: Education Spending in the Pre-university System (billion lei)1989 1990 1991 1992 1993 1994 1995 1996

Total Budget -- -- -- 145695.7 437647.9 1187464 1679416.5 2545206.3Total Recurrent -- -- -- 143246.3 420410.8 1141149 1598470.7 2332296.2Pre-school -- -- -- 20855.2 51622.9 133600.9 -- --

Basic -- -- -- 85078.8 223874.6 634348 -- --

Secondary -- -- -- 37312.3 144913.3 373200.2 -- --

Total Capital -- 0 1978.2 2449.4 17237.1 46314.7 157400.0 212910.0

GDP 800.00 857.90 2,203.90 6,029.20 20,051.00 49,795.00 72,560.00 109,515.00GDP deflator 0.87 1.00 2.95 8.85 29.05 69.42 94.23 136.75

Table 4: Education Spending (% of GDP)1989 1990 1991 1992 1993 1994 1995 1996

Total Budget -- -- -- 2.4% 2.2% 2.4% 2.3% 2.3%Total Recurrent -- -- -- 2.4% 2.1% 2.3% 2.2% 2.1%Pre-school -- 0.3% 0.3% 0.3%Basic -- -- -- 1.4% 1.1% 1.3% -- --

Secondary -- -- -- 0.6% 0.7% 0.7% -- --

Total Capital -- 0.0% 0.1% 0.0% 0.1% 0.1% 0.2% 0.2%

ANNEX IPage 2 of 2

Table 5: Education Spending (deflated) (in 1990 lei)1989 1990 1991 1992 1993 1994 1995 1996

TotalBudget -- - -- 16462.79 15065.33 17105.5 17822.5251 18612.11192Total Recurrent -- -- 16186.02 14471.97 16438.33 16963.5013 17055.18226Total Capital -- 0 670.5763 276.7684 593.3597 667.1665 1670.38098 1556.928702

Education Spending (1992=100)Total Budget -- -- -- 1.0 0.9 1.0 1.1 1.1Total Recurrent -- -- -- 1.0 0.9 1.0 1.0 1.1Total Capital -- -- -- 1.0 2.1 2.4 6.0 5.6

AEX 2Page I of 6

ROMANIASCHOOL REHABILITATION PROJECT

Design Standards for Rehabilitating Schools

1. Introduction. The schools to be rehabilitated under the project were identified as the mostseriously damaged in the country, and the most likely to collapse without warning. Many ofthese schools do not comply with Government building regulations concerning structural safety(particularly seismic protection). Most of these schools also do not provide the appropriatephysical environment for learning that are prescribed in the MOE standards for pre-universitybuilding facilities.

2. The design and scope of rehabilitation interventions in these project schools would,therefore, incorporate the minimum standards described in the following paragraphs. Thesenorms are explained in greater detail in the Project Implementation Plan.

Construction Standards:

3. Structural Safty: All buildings to be rehabilitated will be structurally reinforced in orderto comply strictly with the latest provisions of the National Building Code, in particular, thosethat pertain to the seismic resistance of the building structures.

4. Materials and Construction Methods: No asbestos materials will be used in theconstruction or rehabilitation of the schools. In the process of rehabilitation, appropriatemeasures will be introduced in the construction contracts concerning the safe removal anddisposal, by the works contractors, of any asbestos materials found in the buildings to berehabilitated.

Student Capacity:

5. The sizes (student capacity) of all school facilities situated in urban areas as well as in thelarger rural communities will be designed in such a manner that the total school enrollment canbe accommodated into two shifts. As a rule, classrooms in primary and secondary levels, will bedesigned to seat 30-35 students. Kindergarten classrooms should normally accommodate 20-25students. The average dimensions of these classrooms (i.e. square meters of floor area perstudent) will be in accordance with the norms described in detail in the Project ImplementationPlan

6. Schools in isolated/remote rural areas, where students have to commute longer or fartherdistances than normal in order to attend classes, may be designed to accommodate only one shift.

ANNEX2Page 2 of 6

7. In schools with low enrollments or where there are less than 10 pupils enrolled in mostgrade levels, it is uneconomical to provide separate classrooms for each grade level. In suchinstances, the sizes of the classrooms will be designed for multi-grade teaching (i.e. where onlyone teacher attends simultaneously to students of several grade levels within the confines of oneteaching space).

Amenities:

8. Because of resource constraints, the extent of the rehabilitation and upgrading work doneon the project schools will be confined so as to provide only the basic educational enviromnentto support the pedagogical objectives of the Education Reform Program, and provide theminimum acceptable levels of comfort to the school occupants (students and teachers). Theamenities to be provided (if not available) and upgraded in the affected schools are the following:

Academic facilities:

appropriate number of classrooms and general purpose laboratoriesfaculty room and administrative spacelibrary with a small reading areaall classrooms will be furnished in order to provide seating for all students

Utilities/Other Features:

sanitary facilities for students and teachersappropriate waste/sewage disposaldrinking waterheating: central heating units for larger schools

room/space heating units for smaller facilitieselectricity (also in remote rural areas if available)fire protection and emergency escapesaccess facilitated for disabled studentssecurity measures (as appropriate to protect loss of property)

Other Building Rehabilitation Norms Under the Project:

9. Size of Building Rehabilitated. The actual dimensions (gross building areas) of someschools identified for rehabilitation, are exceedingly larger than the space which shouldnormally/reasonably be provided (after applying the MOE standards for unit areas per type ofteaching space) to accommodate the existing school enrollment, with the appropriate number ofshifts having already been taken into account. In such cases, the scope of the rehabilitation workon the affected school should not extend beyond this normal/reasonable building area, and coverthe entire building structure, without justifiable reasons for doing so. The approval of the SchoolRehabilitation Board should be sought if the building area proposed for rehabilitation will exceedthe norm for building size appropriate for the enrollment capacity, before building designs areprepared, and any investment funds are committed for rehabilitating such a school.

ANNEX 2Page 3 of 6

10. Consolidation of School Buildings. There are cases wherein, within the catchment areaof the school identified for rehabilitation, are found other similar schools which will influencethe student intake, and therefore, the size (or continued existence) of the affected school. Insuch situations, the appropriate scope of rehabilitation work should be determined using theeconomic analysis described in Annex 2 of this Staff Appraisal Report. In brief, the possibleschool rehabilitation alternatives are to: (a) close the affected/damaged school and rehabilitate orupgrade the adjacent school(s) such that these can adequately house the students of the damagedschool to be closed; (b) consolidate the affected school with the adjacent school(s) andaccommodate the students of the adjacent school(s) by expanding the affected school's capacity;or (c) limit the rehabilitation of the affected school to a school size that will accommodate onlythe students who have remained in the facility (if some have been displaced by the damage to thefacility), and upgrade the facilities of the adjacent school(s) which absorbed students evacuatedfrom the affected school. In any case, the appropriate rehabilitation options should be clearedwith the School Rehabilitation Board before these are adopted.

11. Exclusions from Project Financing: Because of resource limitations, the following typesof interventions will not be included for financing under the project:

rehabilitation of student boarding areasrehabilitation of indoor sports facilities (e.g. gyms)rehabilitation of school auditoriums for large congregations/cultural activitiesrehabilitation of vocational/industrial workshopsprovision of pedagogical equipment (e.g. laboratory/office equipment)installation/rehabilitation of air-conditioning systemsinstallation of telephone/telecommunication systems

12. For the sequencing exercise, estimates of the rehabilitation costs of the 900 damagedschools and or replacement costs of the facilities if the buildings have been condemned due tomajor structural defects, were prepared in the following manner:

(a) Rehabilitation and Construction Costs:

(i) Rehabilitation costs were based on a unit cost of US$200 per square meterof building area to be repaired. This unit cost was increased by 1O percent(to US$220 per sq. m.) to take into account any interior wall repartitioningor similar interior remodeling that may be required. Thus the totalrehabilitation cost of a damaged school is equal to the gross existing floorarea of the school (aggregate areas of all floor levels), multiplied by theunit rehabilitation cost.

(ii) Costs of new construction (or building extensions to the existing facility)were estimated on the basis of US$400 per square meter of new building

ANNEX2Page 4 of 6

area. As in item 1 above, the total cost of new construction or anextension wing to an existing building is equal to the gross existing floorarea of the building multiplied by the unit cost for new construction.

(b) Floor Areas of School Buildings: In estimating the costs of buildingrehabilitation, the floor areas were considered in the following manner:

(i) using the existing floor area (EFA) as basis of the scope of work;

(ii) using the required floor area (RFA). The RFA results from applying theMOE school design norms to determine the appropriate size of a school ofa given enrollment. The RFA is a function of the number of classrooms(including laboratories) needed to accommodate the total schoolenrollment either in one or 2 shifts. The RFA aggregates the surface areasof all other rooms/spaces associated with the classrooms and laboratories(i.e. corridors, toilets, core faculty and administrative spaces, utility rooms,etc.) necessary for a school to function in accordance with MOE'sminimum pedagogical standards.

(iii) adjusted floor area (AFA). This results from adjusting the EFA of thedamaged school, to approximate the RFA as closely as possible. Theexisting buildings proposed for rehabilitation could either be: too small toadequately accommodate the enrollment; much larger than what isconsidered appropriate for the enrollment, or just adequate for the needs ofthe school when compared with the RFA resulting from the application ofthe MOE school design standards:

13. In the first case (too small), the school building has to be expanded. The rehabilitationcost is, therefore, the sum of the rehabilitation cost (EFA x unit rehabilitation cost) plus the costof the new spaces ((RFA-EFA) x unit cost of new construction).

14. In the second case (larger than needed), the scope of rehabilitation work will be confinedonly to upgrading the space needed to accommodate the enrollment. In practice, this procedureshould be used judiciously, the key element being the preparation of a good architectural plan forrehabilitating the school. The scope of work on the existing building would therefore beconfined to rehabilitate a floor area not to exceed 15 percent of the RFA.

15. In schools where the existing floor area of the damaged building falls within 15 percentabove the RFA, the total EFA may be rehabilitated.

ANNEX2Page 5 of 6

Preparation of Preliminary Cost Estimates for Sequencing Rehabilitation of Schools

16. For purposes of estimating rehabilitation costs of each school for prioritizing/sequencingthe rehabilitation activities, the following aspects should be taken into account:

(a) the application of the unit construction costs for new buildings (or extensions toexisting ones) or for rehabilitating existing facilities as described in Annex 5;

(b) the application of MOE pedagogical and safety standards for planning anddesigning pre-university facilities, consistent with the provisions of Romania'sEducation Reform Program. The relevant standards are described in detail in theProject Implementation Plan, and they pertain to: (i) the basic (minimum set)types and number of teaching facilities (classrooms, laboratories, etc.) and utilities(sanitation, heating, water, etc.) to be provided each school rehabilitated under theproject; (ii) the school level (i.e. kindergarten, primary, secondary) andenrollment. Each type of school has an appropriate set of optimum net and grossaccommodation areas (square meters) for each type of teaching and environmentand related spaces. The building areas are commensurate with the plannedcapacity of the school; (iii) conformity with the minimum structural requirementsprovided in the latest edition of Romania's National Building Code, in particular,structural provisions for seismic reinforcement;

(c) the use of appropriate building technology and readily available constructionmaterials;

(d) all schools capacities would be designed to accommodate the total studentenrollment in two shifts. In small schools which have less than five studentsenrolled in a grade level, classrooms would be designed for multi-grade teaching(i.e. accommodating two or more levels in simultaneous classes under oneteacher);

(e) the scope of work under the project will be subject to the following limitations;

(i) the scope of work will exclude the rehabilitation of student boardingplaces (dormitories) and vocational workshops;

(ii) all schools will be provided with basic furniture (student and teacherdesks) in quantities sufficient to seat all students in the classrooms andlaboratories (In some cases, this could mean supplying all the furniture toschools which have none or no serviceable units. An inventory offurniture in all schools will be conducted during project implementation todetermine the appropriate quantities/types to be provided to each facility).

ANNEX2Page 6 of 6

17. Procedure for estimating rehabilitation costs. The steps to be taken are the following:

(a) Based on the results of the school mapping exercise, determine what is the mostviable option for rehabilitating the damaged school under consideration (SARpara 2.6), i.e., whether: (i) for an isolated school: (1) to strengthen, or dependingon the technical considerations, completely rebuild the damaged school; and (2)expand the damaged school to relieve overcrowding; and (b) for schools withsimilar schools in the same catchment area: in addition to (1) and (2) above, aconsideration of: (3) the closure of the damaged school as a result of consolidationwith expanded (if needed) adjacent schools; or (4) the consolidation of areaschools with the rehabilitated and expanded (if needed) damaged school.

(b) Determine the appropriate student capacity of the school. The planned capacity ofthe school for rehabilitation/upgrading purposes, as a general rule, should be thecurrent total enrollment divided by two (for a maximum 2 shifts). The schoolcapacity may be adjusted to take into account the average class sizes providedunder the Education Reform Program (and the Education Law).

(c) The optimum size (gross building area) and configuration (number of classroomsand related facilities) of the school under consideration would be determinedusing the planned student capacity resulting from the calculation under para 17(b),and applying the prescribed design standards (para 16(b)). This optimum schoolsize will then be compared with the existing building area of the school (prior torehabilitation):

(i) if the existing size (square meters) is less than the optimum size, theschool would be expanded up to the optimum size, in addition to thebuilding rehabilitation needed, applying the units costs (para 16 above) fornew and rehabilitated construction;

(ii) if the existing building size is substantially larger than the optimum size(i.e. more than 20 percent above the optimum), the rehabilitation workshould be limited to a building area no more than 20 percent above theoptimum school size, applying the unit costs for rehabilitating existingstructures. The 20 percent contingency in the building area to berehabilitated is deemed more than sufficient to cover any type of interiorrepartitioning or adjustment needed that will ultimately result in a wellfunctioning rehabilitated educational facility.

ANNEX3APage 1 of 5

ROMANIA


ANNEX 3A: METHOD FOR DETERMINING THE SCOPE OF REHABILITATION EFFORTS

1. In this section, cost benefit analysis will be used to evaluate the scope of the schoolrehabilitation efforts. The analysis will be used to determine whether a particular damaged schoolshould be (i) rehabilitated (ii) rehabilitated and expanded to relieve crowding or (iii) consolidatedwith an adjacent school. The benefits of each option are expressed in terms of the fiscal savingsobtained from undertaking each option relative to the base case scenario of 'do nothing now andrehabilitate the school to its current structure' when it is totally collapsed.

2. One way to evaluate the financial viability of alternate projects is to weigh the presentvalue of the stream of project benefits against project costs over the life of the project.Formally, the net present value (NPV) of a project is given by:

NPV= E T=o (B,-Co)/(l+i)'

3. Where i= interest rate and t:=0..T is the life of the project in years. In general capitalinvestment is assumed to occur in the first year(t=0) and benefits start to accrue in the secondyear onward (t=1 ..T). The internal rate of return, IRR, of a project is given by the interest rate, I,at which the NPV=0. In this formulation, each lei of benefit in the future is discounted to thepresent by the rate of interest. That is, if the rate of interest is 10%, then 1000 lei today (year 0) isworth 1000(1+. 10) lei tomorrow (in year 1). Similarly, 1000 lei benefit received tomorrow (inyear t=l) is worth 1000/(1.10) lei today, (in year in t=0). Projects with the highest IRR or NPVwould be the preferred options.

The costs and benefits used in this section do not reflect true costs but are fictionalnumbers used to illustrate the methodology for using this economic method to determine thescope of rehabilitation efforts. The examples were obtained from discussions with the MOE andfrom visits to damaged schools in the Vaslui County. Initial results from the application of thismethodology to damaged schools in the pilot district of Tulcea is attached in the followingAnnex 2B.

Example 1

4 Suppose there are two primary schools within 1 km distance (easy access) of each other.The damaged primary school (70% damaged) is running 1 shift per day. It has 25 students, 4teachers, 1 principal, 1 clerical staff, and 3 classrooms. The adjacent undamaged school isrunning 1 shift per day and has 1 classroom, 1 teacher, 1 principal, and 11 students. We assumethat the annual wage of each teacher is 3 m. lei and the salary of a principal is 5 m lei. There is

AvNNEX 3APage 2 of 5

room to expand the adjacent school and there is space for constructing a new school on the site ofthe damaged school.

5. The range of options include: (A) do nothing, (B) rehabilitate the damaged school andmaintain two separate schools; (C) expand the adjacent school and close down the damagedschool; and (D) close down both existing schools and build a new, expanded school in place ofthe damaged school.

6. The hypothetical recurrent and capital costs of all options (in m. lei) are summarized inTable I below:

Table 1. Example: Capital and Recurrent Costs of Options A-D

Costs (m. Iei) Option A Option B Option C Option D

Students (no) 25 11 25 11 36 same as CRecurrent Cost

Principal 5 5 5 5 5Teachers 12 3 12 3 6Other Wages 2 0 2 0 lMaint./Repair 5 1 3 1 1

Total By School 24 9 22 9 13Total By Option (33) (31) (13) (13)Capital CostsConst/Civil Works (1000)* 500 400 800*in year t=2 to reconstruct totally collapsed school

5. Suppose capital costs are undertaken in year zero and assume a 25 year lifetime forconstruction. Assume fixed interest rate (10%) and fixed nominal costs over the life of theproject.I The first benefit of options B, C, D over option A is the reduction in recurrent costsover the life of the project. These are 2 m lei for option B, and 20 m lei for options C and Drespectively. The second benefit of options B, C, D over option A is the reduction in capital costsof having to construct a completely new school in the third year (year t=2) when the damagedschool is assumed to collapse completely. The costs of options B, C, D are the incrementalcapital costs of rehabilitating the damaged school, expanding one school, and constructing a newschool respectively. These are 500 m lei, 400 m lei and 800 m lei in the first year (or t=0)respectively.

6. The benefit cost stream for each option can be summarized in Table 2.

We assume private costs (uniforms, transport costs, etc.) remain the same across each option. We alsoconsider the value of saved lives would be the same for options B-D; but would tend to raise the NPV and IRR ofoptions B-D relative to A.

ANNEX3APage 3 of 5

Table 2. Example 1: Cost/Benefit Stream (in million Lei) Options B-D (relative to A).

Year Option B Option C Option DYear 0 -500 -400 -800Year 1 2 20 20Year 2 1002 1020 1020Year3 2 20 20

Year 26: 2 20 20

NPV 345 608 7IRR 42% 65% 20%

7. The NPV is positive for all options relative to the 'do nothing option'. The IRR is higherthan 10% for all options. The most attractive option is option C, to expand the adjacent school inorder to consolidate two under-utilized schools. The least attractive (other than A) is to build acompletely new school.

Example 2.

8. Now consider the case where the distance between two under-utilized schools is 5 km. Inthis consolidating/expanding either school is not feasible. The options would be A, do nothing;B, rehabilitate the damaged school; C , demolish the existing school and rebuild an entirely newschool.

Table 3: Example 2: Capital and Recurrent Costs of Options A-C

Costs (i. lei) Option A Option B Option C

Students (no) 25 25 25Recurrent Costs

Principal 5 5 5Teachers 12 12 12Other Wages 2 2 1Maint./Repair 5 3 1

Total By School 24 22 19Total By Option -24 -22 -19Capital Costs

Const/Civil Wks (1000)* 500 800*in year t-2 to reconstruct totally collapsed school

9. The NPV and IRR of options B and C (relative to A) derived from the cost/benefitstream of each option (see Table 5). Once again the incremental capital costs are 500 and 800 of

ANNEX3APage 4 of 5

options B and C (relative to A). The benefits are a savings in recurrent costs of 2 m and 5 m leirespectively and the saving in capital costs in year 3 (t=2). The IRR and NPV are as follows:

Option B Option C

IRR 42% 14%NPV 345m lei 71 m lei

10. In this case the most attractive option is to rehabilitate the damaged school.

Example 3

l . Now suppose that under option B, rehabilitating the school would have a shorter lifespan than option C (demolishing/rebuilding), and would require an injection of 400 m lei every10 years (in year 1 0 and year 20). The benefit/cost stream for option C is identical to example 2,option C. The benefit cost stream of option B is the same as in example 2, except that every 10years benefits are reduced by 400 m lei. The cost/benefit streams of each option is provided inTable 5. The NPV and IRR of options B and C relative to option A are as follows:

02tion B Option C

IRR 3% 14%NPV 13m lei 71m lei

12. Under these assumptions building a new school is the preferred option.

Example 4

13. Suppose there are two schools with classes 1-8. These are located within (easy access) 1km of each other. One school is completely damaged and evacuated. The adjacent 1-8 classschool is crowded because it is accommodating students from the evacuated school. It is running3 shifts and has 40 students/class, 400 students, 10 teachers, 1 principal, and 2 clerical staff. Thisadjacent school is crowded. Therefore the options are A) do nothing; B) rehabilitate damagedschool and split the enrollment equally between the two schools C) expand adjacent school andabandon damaged school and D) rehabilitate and expand damaged school for all students.2 Therecurrent and capital costs under each option are as follows:

2 We now add teachers to reduce the teacher to student ratio to 33 students/teacher. Thus, we increase thenumber of teachers to 12 (split 6/6 under option B) under options B-D relative to options A. We assume that expansioncosts increase classrooms to reduce students per class to the optimal ratio and reduce shifts per day in all options to 2per day.

ANNEX 3APage S of 5

Table 4: Example 4: Capital and Recurrent Costs of Options A-D

Costs (m. Iei) Option A Option B Option C Option D(1) (2)

Students (no) 400 200 200 400 400Recurrent Costs

Principal 5 5 5 5 5Teachers 30 18 18 36 36Other Wages/Costs 4 4 4 4 4Maint./Repair 5 2 2 1 1

Total By School 44 29 29 13 13Total By Option 44 58 46 46

Capital CostsConst/Civil Wks 0 200 250 300

14. The NPV and IRR of each option (B-D) are lower than option A, the 'do nothing case'.This is because the recurrent costs and investment costs are higher for options B-D relative tooption A. However, the benefits from option B-D are only financial and are an underestimate ofproject benefits because the beneficial impact of crowding on the learning environment is nottaken into account. The benefits of reduced crowding are difficult to quantify. In practice wewould have to either find a quantitative relationship between crowded schools and repetition ordrop out rates from data collected for the economic analysis/school mapping exercise, or assumethat there is such a positive relationship as shown in studies from other countries in order toquantify the benefits from reduced crowding.

15. Assume for now that the benefits from reduced crowding make options B-D moreattractive than A. We also assume that reduced crowding results in equal benefits for options B-D (vs. A). Since all options are considered attractive relative to A, we can base our decision on acomparison of options C and D relative to B. The benefits of options in C and D (relative to B)would be savings in recurrent cost from consolidating damaged schools. (12m lei over the life ofthe project for option C and option D). The year one (t=0) capital costs of option C (relative to B)are 50 m lei while the year I (t=0) capital costs of option D are 100 m lei. The benefit/coststream for these options is provided in Table 5. Under these assumptions, the IRR and NPV ofoptions C and D (relative to B) is as follows:

Option C Option D

IRR 24% 11%NPV 60m lei 9m lei

16. Thus, option C, expanding the adjacent crowded school rather than rehabilitating andexpanding the damaged school would be the preferred rehabilitation option.

ANNEXIBPage 1 of 8

ROMANIA


ANNEX 3B: DETERMINING THE SCOPE OF REHABILITATION EFFORTS: RESULTS

1. The cost-benefit analysis is applied to selected schools in the pilot district of Tulcea. Theexamples described below were completed by the MOE affiliated Institute of Educationeconomists Comelia and Andre Novak, members of the School Rehabilitation Working Group.The pedagogic and facility standards used in this exercise are based on norms established by theMOE in accordance with the recent Education Law. There is one exception. The number ofteachers are still based on the current MOE standards for teaching norms per class. Changes inthis norm to reflect the revision of the secondary school curriculum, should this occur over theproject cycle, will be reflected in future decisions on project scope. One other caveat. The Tulceapilot district did not contain any schools that could potentially be consolidated with otherschools. Therefore, the consolidation exercise presented in section C below is based on ahypothetical situation to illustrate the methods that would be used when and if schoolconsolidation is a feasible option. The assumptions used in this analysis are described in SectionA Table 1-3 below. An assessment of the area of the replaced or rehabilitated school, determinedaccording to the new facilities norms, is described in Annex 2.

A: THE ASSUMPTIONS OF THE ANALYSISTABLE 1: The distribution of space/student and students/class by level of education

Pre-school Primary Lower HigherSecondary Secondary

# of students per class 10-20 10-25 10-30 15-30

Space per student* 2.4-2.7 1.6-1.8 1.6-1.8 1.6-1.8Space per student = # of shiifts * classrooms surfacel# of students

TABLE 2: The distribution of teaching hours per class and level of Education:

Primary cls.l cls.2 cls.3 cls.4

# hours per week 20 21 22 23

# teaching norms per week 1 1 1

Lower Secondary cls. 5 cls.6 cls.7 cls.8


# teaching norms per week 1.39 1.61 1.72 1.78

Higher Secondary cls.9 cls.l0 cls.l 1 cls.12


# teaching norms per week 1.67 1.67 1.67 1.67

ANNEX3BPage 2 of 8

TABLE 3. ASSUMPTIONS OF INVESTMENT AND RECURRENT COSTS

Wages

- teaching staff: 500 000 lei per month 6.0 million lei per year

- auxiliary staff: 300 000 lei per month 3.6 million lei per year

Maintenance Costs:

- good building: 3% of a total new 0.084 million lei per sq.m.

- damaged building: 5% of a total new 0.140 million lei per sq.m.

Investment Costs

- new building: 400 USD per sq.m. 2.80 million lei per sq.m.

- rehabilitation: 220 USD per sq.m. 1.54 million lei per sq.m.

Area of the New SchoolDescribed in Annex 2: Buildings and Facility Standards

TABLE 4. ASSUMPTIONS OF TIMING OF COSTS FOR ALTERNATIVE OPTIONS

Time Isolated Un- Isolated Crowded School (Crowded/Uncrowded)Crowded School School with N Neighboring Units

in the Same Catchment Area

Before Wages Wages Total wages (ALL units)+Maintenance OLD +Total Maintenance OLD

+Maintenance OLD+ Maintenance Remaining Units

Investment Wages Wages Total wagesYear +Investment Cost +Investment/ +Investment (+ Extension) Cost

Extension Cost +Total Maintenance RemainingUnaffected Units

After Wages Wages Total wages+Maintenance NEW +Maintenance NEW +Total Maintenance NEW

+Total Maintenance RemainingUnaffected Units

ANNEX3BPage 3 of 8

SECTION B: SIMULATION RESULTS FROM THE PILOT DISTRICT OF TULCEA

A. AN ISOLATED UN-CROWDED SCHOOL

2. This damaged multi-grade rural primary school (classes 1-4) enrolls 36 students isisolated, a common situation in Tulcea where many villages are separated by the waters of theDanube Delta. The 5 classes and 450 sq. m of the school area is under-utilized. The calculatedshifts, the ratio of number of classrooms to the required number of classes is only .4, far less thanthe two calculated shifts prescribed by the MOE. According to the new pedagogic and facilitiesnorms, a new school should only consist of 2 classrooms of 70 sq. m. each with an additional 40sq. m of other basic facilities, for a total school area of 180 sq. m. If the school is rehabilitated,rather than completely replaced, an additional 20 percent of the 180 sq. m. of the prescribed area,is added to provide a comfortable margin of error given the difficulty of predicting the new,down-sized and re-configured, school area.

3. Three scenarios are considered in rehabilitating this school:

(a) Do nothing now and replace the school with a new facility of 450 sq.m. in 2 years.

(b) Replace the school with a building with 2 classrooms covering 180 sq.m. now.

(c) Rehabilitate the school area for 2 classes (660 sq.m.) now.

4. The parameters of the school and the difference in maintenance and recurrent costsbetween scenario A and B; and A and C, both before and after the rehabilitation, are outlined inTable 5 below (following page). The results of the IRR and NPV calculations show thatrehabilitating the damaged school now (as in Option C) is the preferred option and yields a 127percent Internal Rate of Return (relative to option A).

A.NNEX 3BPage 4 of 8

Table 5: The Benefit-Cost Analysis of Rehabilitating a Un-Crowded Isolated School

Scenarios A B CI#students 36 36 36# classrooms 5 2 2# classes 2 2 2| existing shifts I 1 1# calculated shifts 0.4 1 1# teaching norms 2 2 2f auxiliary staff 0 0 0

surface - sq.m. 450 180 216

INVESTMENT COST 392.0 504.0 332.6

RECURRENT COSTBefore Intervention 75.0 same as A same as A

Teacher wages 12.0

Other wages 0.0

Maintenance 63.0

After Intervention: 49.8 27.1 21.9

Teacher wages 12.0 12.0 12.0

Other wages 0.0 0.0 0.0Maintenance 37.8 9.9

15.1

NPV (Relative to A) 737.0 937.9

IRR (Relative to A) 76% 127%

B. AN ISOLATED CROWDED SCHOOL

5. This isolated rural primary and secondary school has 156 students with 10 classescrowded in only 4 classrooms. The school is operating in two shifts, but in sub-optimal learningconditions. The number of calculated shifts, the ratio of classrooms to classes, is greater than thetwo, thus two classes are being taught in one classroom during the school day. The school willneed to be extended by one classroom so that the number of calculated shifts can be reduced tothe two prescribed in the new pedagogic standards. The current size of the school far exceeds therequirements of a 5 classroom school. The optimal size for a new 5 classroom school isapproximately 550 sq. m, while the estimated area for a rehabilitated school is about 20% more,about 660 sq.m. Three rehabilitation options are considered:

(a) Do nothing now. Replace the school facilities with a building with 5 classroomsand the same sq. m. area after it is collapsed.

(b) Replace the school facilities with a building with 5 classrooms covering 550 sq.m.

(c) Rehabilitate the school area for 5 classrooms (660 sq.m.).

ANNEX3BPage 5 of 8

6. The school parameters and the financial costs of each option are presented in Table 6(following page) The results show that variant (C), strengthening the existing building generatesthe highest IRR (47%) relative to option A, of all options considered.

Table 6: The Benefit-Cost Analysis of Rehabilitating a Damaged Crowded School

Intervention variants A B C

#students 156 156 156# classrooms 4 5 5# classes 10 1 0 10# existing shifts 2# calculated shifts 2.5 2 2# teaching norms 12 1 2 12# auxiliary staff 2 2 2Surface - total sq.m. 700 550 660- existing 700 700

INTERVENTION COST: 1960.0 1540.0 1016.4

RECURRENT COSTSBefore Intervention 177.2 Same as A- staff wages 72.0 Same as A- other wages 7.2- maintenance 98.0

After Intervention 138.0 125.4 134.6

- staff wages 72.0 72.0- It~~~~~~~~~7.0 ~ 7. 2 7.2

- other wages 7.2 46.2 55.4- maintenance 58.8

NPV (Relative to A) 260.4 655.3IRR (Relative to A) 19% 47%

ANNEX3BPage 6 of 8

C. A CONSOLIDATION OF NEIGHBORING SCHOOLS

7. The commune of Casimcea, in the district of Tulcea, has a group of 2 neighboring units(units 10 and I1) within the stipulated distance from the village that are both running in a singleshift. Unit 11 is under-utilized. Four classrooms in the school are not used during the school day.According to the new facilities standards, the 1655 sq. m. area of the building is too large relativeto the recommended building area (840 sq. m) for a new school, comprising the same levels,classes and students as Unit 10. Rehabilitating Unit 10 is also estimated to use only 1008 sq. m.,well below the current area occupied by this school. The neighboring (non-damaged) unit (11) isa multi-grade school with only 9 students. These schools are within an easy commute of eachother and therefore possible to consolidate. The distribution of classes, students, teachers andteaching norms per school in each school are presented in Tables 3 and 4 below. It should benoted that this is a simulation only. Although the information on each school is real, all schoolsin Tulcea are isolated and cannot be consolidated

Table 7 Distribution of classes and students per schools.Kindergarten Primary Gymnasium

C S C S C S

(10)-718762 3 70 5 119 4 99

(I1)-718774 - - 1 9 - -

(12)-718803 1 28 2 25 - -

(13)-718798 1 26 3 41 3 27

Table 8 Distribution of teaching staff per schools.

Kindergarten Primary Gymnasium

TN T TN T TN T

(10)-718762 3 3 6 6 7.5 7

(II)-718774 - - 1 1 - -

(12)-718803 1 1 2 2 - -

(13)-718798 1 1 3 3 5 5

8. The information on school parameters presented in Table 5 indicates the students fromUnit 11 can easily be consolidated into a rehabilitated Unit 10. The 12 classrooms of arehabilitated or completely replaced Unit 11 will accommodate the students of the combinedschools in a single shift. The total number of classes operating in both schools will decrease fromthe current total of 13 to a total of 12 classes in the combined school. The consolidation of bothschools will reduce the number of teaching norms, from the current 15.5 to 14.5. The alternatescenario, of consolidating both schools in unit 11 is also possible, but only by extending Unit 11to a 6 classroom school covering 570 sq. m. The 6 classrooms will be used in two shifts to

ANNEX3BPage 7 of 8

accommodate the 12 consolidated classes. The first 3 kindergarten classes (3 classrooms) and the3 primary school classes (3 classrooms) will be taught in the first shift. The second shift will becomposed of 2 primary classes (2 classrooms) and 4 gymnasium classes (4 classrooms). Threescenarios are considered:

(a) Do not rehabilitate Unit 10 now. Replace the school (1655 sq. m.) after itcollapses.

(b) Rehabilitate Unit 10 now (to 12 classes and 1008 sq.m.) and maintain both units.

(c) Rehabilitate Unit 10 now and consolidate Unit 11 with Unit 10.

(d) Do not Rehabilitate Unit 10. Consolidate Unit 10 into an expanded unit 11 now.

9. The costs of the alternate scenarios describe above are provided in Table 6 below. Theresults show that consolidating all students of Unit 10 into an extended Unit 11 yields highestinternal rate of return (relative to A) of all considered options.

Table 9: The Benefit-Cost Analysis of Rehabilitating/Consolidating a Damaged School

Intervention variantsA

Current unit nurnber (1 0) (I11) (10) (11)

#students 288 9 288 9# classrooms 16 1 12 1# classes 12 1 12 1# existing shifts 1 1 1# calculated shifts 0.8 1 1 1# teaching norms 14.5 1 14.5 1# auxiliary staff 5 0 5 0Surface - sq.m. 1655 100 1008 100

INTERVENTION COST: 4634 - 1552.3

RECURRENT COSTSBefore Intervention 336.7 14.4- staff wages 87.0 6.0 Same as A Same as A- other wages 18.0 0.0- maintenance 231.7 8.4

After Intervention 244.0 14.4 189.6 14.4- staff wages 87.0 6.0 87.0 6.0- other wages 18.0 0.0 18.0 0.0- maintenance 139.0 8.4 84.6 8.4

NPV (Relative to A) 2729.7IRR 92%

ANNEX3fBPage 8 of 8

Table 9 contd. SIMULATION ONLY

Intervention variants C D

Current unit number (10) (i 1) (10) (11)

# students 297 empty empty 297# classrooms 12 6# classes 12 12| existing shifts 1# calculated shifts 0.8 2# teaching norms 14.5 14.5#auxiliary staff 5 5Surface - sq.m. 1008 570- existing 100- added 470

INTERVENTION COST: 1552.3 - 1470.3-K lff_____ E__T_C_0_S_T___ __ -------------- -------------- ----- -- - -- -RECURRENT COSTSBefore Intervention 336.7 14.4- staff wages 87.0 6.0- other wages 18.0 0.0- maintenance 231.7 8.4

After Intervention 189.6 152.9- staff wages 87.0 87.0- other wages 18.0 18.0- maintenance 84.6 47.9

NPV (Relative to A) 2869.0 3266.4IRR 95% 104%

ANNEX 4Page 1 of8

ROMANIA


PRIORITIZING SCHOOLS FOR REHABILITATION:

RANKING METHOD AND SIMULATION RESULTS

1. The objective of the school rehabilitation project is to rehabilitate about 900 severelydamaged pre-university schools which have been found to be in immninent danger of collapse, inorder to safeguard the lives of school occupants. The schools would be rehabilitated in such amanner that these facilities would meet national safety and pedagogic standards establishedconsistent with the Government's Education Reform Program.

2. The prioritization of rehabilitation efforts will be required because (a) particular schoolbuildings may collapse over the lifetime of the project and result in a loss of student/teacherlives; and (b) resources allocated for the rehabilitation for all the 900 schools may fall short ofactual requirements. School rehabilitation efforts will be prioritized in two stages. The first phasewill present the optimal ranking from a theoretical point of view. The second phase will adapt thetheoretical ranking to more practical project implementation concerns. The method ofprioritization is consistent with the major objectives of the project and simple to use.

The First Stage of Prioritization

3. Ranking Method, In the first stage, all schools will be ranked, in ascending order, by thebenefit-cost ratio of rehabilitating each school. The benefits of the project are to improve thequality of education in accordance with the pedagogic and safety norms for pre-universityeducation established by the country. For sequencing purposes, the benefit-cost ratio will beapproximated by the major benefit of the rehabilitating each school the value of lives saved ineach school per total cost of rehabilitating each school. More formally, the benefit ofrehabilitating each school, B, can be expressed as the product of the value of each life saved, k,and the number (expected value) of lives saved by rehabilitating each school. The number oflives saved by rehabilitating each school is not known for certain. It depends on e, the number ofstudents enrolled/shift in each school and the probability associated with two separate events: (i)pl, the probability that the damaged building will collapse and (ii) p2, the probability thatstudents are in school when the school collapses. Thus, the benefit, B, is given by kplp2e, andB/C, the benefit-cost ratio for each school is:

B/C=[kplp2e] /C (1)

ANNEX4Page 2 of 8

4 Estimation of Variables. The estimation of e, the number of students/shift, isstraightforward and readily available from existing data. The probability that students are inschool when the building collapses, p2, can also be approximated as the proportion of a day (24hours) that each school is in session. That is,: p2=[number of shifts/24]* [hours/shift]. The valueof life, k, can be ignored if we assume that k is the same for all individuals, that is, all individualshave the same value of life. In this case, we can simply rank schools according to:

B/C=[plp2eJ/C (2)

As suggested by the Government, we will attach a 10 percent higher value to rural areas,reflective of a higher social value of rehabilitating schools in poor areas, by letting B/C =

[(I1.1 0)p I p2e]/C for rural schools.

5 The risk of collapse. (p 1). The risk of collapse of a particular school can be expressed asthe probability of an earthquake required to collapse a particular school One option would be todetermine, based on the damage to the school, the size of an earthquake needed to fell thebuilding. Then p 1 would be the probability of the occurrence of an earthquake of that level in thearea of the school. Alternately, pl could be estimated as the product of p3, the probability ofdamage given an earthquake (approximated by the damage index for each school) and p4, theprobability of an earthquake in the area (approximated by the seismic index). In the extreme case,where the damage index and seismic index cannot be established for each school, p I could beassumed to be the same for all schools and equal to unity. This is not unreasonable as it cansafely be assumed that the selected schools are the most damaged in the country. In this case,schools would be sequenced according to p2e/C.

6. The actual costs. C, should ideally be based on (i) the existing physical and pedagogiccapacity of the building; (ii) the determination of the scope of rehabilitation according toeconomic cost benefit analysis; and (iii) the pedagogic and safety norms to which the school is tobe rehabilitated. However, these costs will not be known at the time of sequencing. The cost ofrehabilitation for each school is therefore approximated as in Annex 2.

7. Simulations: The exact distribution of schools by school characteristic (rural/urban,number of enrolled, etc.) can only be determined once a value for pl has been established for alldamaged schools. However, in the absence of such a value, the ranking of schools can besimulated by using the data on school type, location, students, shifts, school area, number ofclasses, provided by the MOE. This data can be used to obtain an estimate of rehabilitation costsand benefits for each school for alternate values of pl . The three simulations, attempted:

Sim. (a) The value of life is the same for each student. The risk of collapse, pl, is thesame for all schools and equal to unity.

Sim. (b) A higher value (5%) for rehabilitating rural vs. urban schools [ A higherpriority of 10% has been agreed however].This serves simply to illustrate a higher value

ANNEX4Page 3 of 8

assigned to rural vs. urban schools. The risk of collapse is the same for all schools. Thevalue of pl=l for all schools.

Sim. (c) The value of life is the same for each student. Rural schools are more likely tocollapse than urban schools. The value of p1=1 for rural schools and pl=.5 for urbanschools

8. The ranking results from these simulations are presented in Tables 1-5 below. Thesetables illustrate the rank distribution of schools by rural-urban area (Table 1), by total enrollment(Table 2), and by Judet (Tables 3-5) for each of the simulations outlined above. The columns ineach table correspond to the results for the first 200 schools (column 1), the second 200 schools(column 2), the third 200 schools (column 3), and the final 238 schools (column 4). The divisionof schools into groups of 200 corresponds to the four year project cycle, with 200 schoolscompleted in each year.

9. Simulation Ranking Results. The first result is that a 5% higher value of life in rural areas(Sim (b)) does not make a large difference to school ranking as compared to Sim (a) whichassumes an equal value of life for all students. Second, assuming the same p for each school, theschools rehabilitated in the first two years of the project would cover nearly 70% of the studentsin all schools. The majority of the schools rehabilitated each year will be rural schools. The shareof rural schools in the total number of schools rehabilitated in each year will increase as theproject progresses. In contrast, the majority of urban schools would be rehabilitated in the firsttwo years of the project, with declining number of urban schools being rehabilitated in eachadditional project year. Simulation (c), results in a more even distribution of students coveredover the project cycle. This result obtains because the higher probability of collapse assumed forrural schools pushes these schools, which have a smaller enrollment than urban schools, higherup in the ranking. This factor also serves to increase the proportion of rural schools in the totalschools to be rehabilitated in the first two years of the project.

These results show that the ranking process does not take into account practical concernsof rehabilitating schools. The ranking scheme spaces out the rehabilitation of schools in the sameJudet unevenly across time. This creates diseconomies of scale in school construction,particularly for Judets where only a few schools require rehabilitation. The sequencing algorithmalso does not take into account the construction or project administration capacity of each districtthat may allow a greater/lesser number of schools to be constructed each year. Finally, thesequencing method does not account for the need to construct attractive bidding package ofschools for rehabilitation in each district based on geographical proximity, type of rehabilitation,and rural/urban location.

Second Stage of Prioritization

10. Ranking Method In the second phase of prioritization, schools will be sequenced forrehabilitation within each district (over time) and across districts (in any given year), taking intoaccount more practical concerns. In this phase, the first step will be the development of attractivebidding packages of schools for rehabilitation. The composition of schools in each bidding

ANNEX 4Page 4 of 8

package will take into account the geographic proximity, new/old, and urban/rural mix ofschools. The next step will be the prioritization of packages over the project cycle in eachdistrict. This will be based on the benefit-cost ratio of each bidding package of schools accordingto the sequencing methodology described above. Thus, if there are l...n schools in a particularbidding package, the benefit-cost ratio of the package, consistent with Benefits and Costsexpressed as in equation (1), will be given by:

BplCp= [B(1)+...+B(n)]/[ C(1)+...+C(n)] (3)

The package with the higher Bp/Cp ratio would be accorded a higher priority.

The last step in the second phase of prioritization will be the determination of the numberof packages to be bid in each district in any year of the project according to the construction andproject administration capacity of the district. The rehabilitation of schools can prioritized bydistricts in any given year, by the benefit cost ratio of the total number of bidding packages ineach district. Thus, if there are I...m package in a district in a particular year, the benefit-costratio of the total number of bidding packag in the district in that particular year is given by

Bd/Cd = [Bp(1)+...+Bp(m)]/[ Cp(l)+...+Cp(m)] (4)

In each year, the district with the higher Bd/Cd ratio would be accorded the higherpriority.

ANNEX4Page 5 of 8

Table 1: Rank Distribution of School EnrollmentSimulation 1 2 3 4 Total Total

Enrollment(a) 41% 29% 20% 10% 100% 189942(b) 39% 29% 22% 10% 100% 189942(c) 20% 21% 31% 28% 100% 189942

Table 2: Rank Distribution of Rural SchoolsSimulation 1 2 3 4 Total

(a) 65% 70% 77% 90% 838(b) 69% 69% 77% 88% 838(c) = 98% 88% 61% 61% 838

ANNE-X 4Page 6 of 8

Table 3: Sequencing of Schools by District and Project Year, Simulation (a)District 1 2 3 4 TotalAlba -- 4 1 1 6Arad 4 2 5 2 13Arges 1 2 1 7 11Bacau 9 7 13 8 37Bihor 2 3 2 4 11B istrita-Nasaud 5 -- -- -- 5

Botosani 3 2 1 4 10Braila 1 2 -- -- 3Brasov 7 3 3 4 17Bucharest 22 18 12 7 59Buzau 4 5 6 7 22Calarasi 1 2 5 -- 8Caras-Severin 3 3 -- -- 6Cluj 5 5 -- 2 12Constanta 2 6 7 12 27Covasna 2 1 5 -- 8Dambovita 3 2 6 1 12Dolj 15 14 12 23 64Galati 2 2 6 1 11Giurgiu I -- 3 1 5Gorj 2 3 -- 1 6Harghita 11 5 2 1 19Hunedoara 3 -- 2 1 6lalomita 2 2 2 1 7lasi 4 3 4 2 13Maramures 5 1 2 1 9Mehedinti 2 2 2 3 9Mures 2 -- 2 1 5Neamt 7 2 2 3 14Oft -- 2 3 1 6Prahova 12 16 14 20 62Salaj 2 1 7 4 14Satu-Mare 6 6 -- 2 14Sibiu I -- I -- 2

Suceava 6 4 4 3 17Teleorman 5 10 13 2 30Timnis 12 9 10 13 44Tulcea 2 4 2 1 9Valcea 3 -- 3 8 14Vaslui 18 38 33 81 170Vrancea 3 9 4 5 21Total 200 200 200 238 838

ANNEX4Page 7 of 8

Table 4: Sequencing of Schools by District and Project Year, Simulation (b)District 1 2 3 4 TotalAlba 1 3 1 1 6Arad 4 2 6 1 13Arges 1 2 1 7 11Bacau 10 6 13 8 37Bihor 2 3 2 4 11Bistrita-Nasaud 4 1 -- -- 5Botosani 3 2 1 4 10Braila 1 2 -- -- 3Brasov 8 2 3 4 17Bucharest 20 17 13 9 59Buzau 4 4 7 7 22Calarasi 2 1 5 -- 8Caras-Severin 3 3 -- -- 6Cluj 5 5 -- 2 12Constanta 2 6 8 11 27Covasna 2 1 5 -- 8Dambovita 3 3 5 1 12DoIj 12 17 12 23 64Galati 2 3 4 2 11Giurgiu I -- 3 1 5Gorj 2 3 -- 1 6Harghita I 1 6 1 1 19Hunedoara 3 -- 2 1 6lalomita 2 2 2 1 7Iasi 3 4 4 2 13Maramures 5 1 2 1 9Mehedinti 3 1 2 3 9Mures 2 -- 2 1 5Neamt 6 3 2 3 14Olt -- 2 3 1 6Prahova 12 17 13 20 62Salaj 2 2 6 4 14Satu-Mare 6 6 1 1 14Sibiu 1 -- I -- 2Suceava 6 4 4 3 17Teleorman 5 10 13 2 30Timis 13 8 11 12 44Tulcea 2 4 2 1 9Valcea 3 -- 3 8 14Vaslui 20 36 32 82 170Vrancea 3 8 5 5 21Total 200 200 200 238 838

ANNEX4Page 8 of 8

Table 5: Sequencing of Schools by District and Project Year,.Simulation (c)District 1 2 3 4 TotalAlba 1 3 1 1 6Arad 4 3 5 1 13Arges I 1 1 8 11Bacau 12 8 10 7 37Bihor 2 4 1 4 11Bistrita-Nasaud 4 -- I -- 5Botosani 3 3 1 3 10Braila I I I -- 3Brasov 5 3 4 5 17Bucharest 3 8 25 23 59Buzau 4 6 5 7 22Calarasi 2 4 -- 2 8Caras-Severin 3 3 -- -- 6Cluj 5 2 3 2 12Constanta 3 3 10 11 27Covasna 1 4 3 -- 8Dambovita 2 7 2 1 12Doij 11 10 20 23 64Galati 1 3 4 3 11Giurgiu I 1 3 -- 5Gorj 3 2 -- 1 6IHarghita 10 6 1 2 19Hunedoara 1 2 3 -- 6lalomita 2 3 1 1 7lasi 3 3 4 3 13Maramures 5 3 -- 1 9Mehedinti 2 1 2 4 9Mures 1 3 1 -- 5Neamt 7 2 2 3 14Olt -- 3 1 2 6Prahova 17 16 14 15 62Salaj 3 5 2 4 14Satu-Mare 9 2 2 1 14Sibiu I 1 -- -- 2Suceava 4 3 7 3 17Teleorman 10 12 5 3 30Timis 13 9 10 12 44Tulcea 3 1 2 3 9Valcea 3 2 3 6 14Vaslui 31 38 35 66 170Vrancea 3 6 5 7 21Total 200 200 200 238 838

ANNEX5Page I of 8


PROJECT COST ESTIMATES

1. Total Project Cost. The total cost of the project is estimated at US$130.0 millionequivalent including contingencies, taxes and duties, with base costs estimated at aboutUS$106.5 million. Total contingencies (US$23.5 million) which represent 22 percent ofthe base cost include: (a) physical contingencies of US$14.6 million; and (b) pricecontingencies between project appraisal (March 1997) and completion at the end of thefive year project implementation period, estimated at US$8.9 million. The total foreignexchange component (direct and indirect costs) of the project is calculated at US$21.7million including contingencies, or 17 percent of total project cost. Project costs wereestimated as follows:

(a) Base Costs. All unit and base costs estimates include local taxes and duties inaccordance with the rates described below in para l(d). Project costs have beenestimated in US Dollars due to the difficulty of predicting the exchange rate of theLei over the life of the project. The costs in Lei have been converted to USDollars at the official rate (7,030 Lei/US$ 1.00) prevailing at the time ofnegotiations in June 1997. Base cost estimates were derived as follows: (i)Building Construction costs were based on recent contracts awarded by theMinistry of Education for the rehabilitation of facilities of the same type as theproject schools (see SAR para 2.14): (a) new construction (i.e. extensions or totalreplacement of damaged buildings) is estimated at about US$400 per square meterof building area; and (b) rehabilitation unit costs, because of the advancedeterioration of facilities, are estimated to range from 50 to 60 percent of the unitcost of new buildings (i.e. US$200 to US$250 per square meter); (ii) Specialistservices: (a) eight percent of total building cost as fees for architectural andengineering design services including construction supervision; (b) remunerationof qualified national experts (technical experts/managers) at current market ratesfor specialized services, ranging from US$250 to US$450 per staff-month; and (c)cost of expatriate consultant services at US$20,000 per staff month (includinginternational travel, subsistence and accommodation in Romania); (iii) Training:(a) US$8,000 per staff month for short-term training abroad (including trainingand registration fees, inland travel and round trip air fare to country of study,boarding and subsistence, allowance for training materials and books); and (b)current Government rates for per diems, internal travel and estimates of trainingmaterial/consumable needs for the local training programs; and (iv) Maintenance:1.5 percent of building rehabilitation cost for the costs of annual preventivemaintenance of buildings.

(b) Contingency Allowances.(US$23.5 million aggregate) Project costs include: (i)physical contingencies for unforeseen additions to the project scope (US$14.7million) based on: (a) 15 percent of base costs for civil works and for

Annrex5Page 2 of 8

architectural/engineering services; (b) five percent of base cost for furniture,equipment, expatriate consulting services, and training; (c) 10 percent of base costfor all other expenditure; and (ii) price contingencies (US$8.8 million) based onannual rates of foreign price increases estimated at 2.3 percent from 1998-2002for all categories of expenditure except for national consultants to benefit theCPCU and the whose services would be contracted based on qualifications for theassignment on a fixed budget basis; the national CPCU and DPIU specialists forwhich no price contingency has been provided. Due to the large differentialbetween estimated local and foreign price increases, the overall pricecontingencies for the project were calculated on the basis of foreign priceescalation rates. This approach would be based on the assumption that the Leiexchange rate will reflect the inflation differential between Romania and itsinternational trading partners.

(c) Foreign Exchange Component. (US$22.6 million equivalent) The foreignexchange component of total project cost was estimated as follows: (i) 20 percentof civil works costs; (ii) five percent of the cost of furniture, local training, andarchitectural and engineering services; (iii) 100 percent for external training/studytours; (v) 80 percent of the cost of external consulting services; and (vi) none forlocal consulting services and building maintenance.

(d) Taxes (US$23.4 million equivalent). Local taxes will be applied on all projectexpenditure, including consulting services. Project cost estimates include localtaxes and duties derived from the following tax rates: (i) 18 percent for civilworks, furniture, architectural and engineering fees, services of consulting firms,and operating/maintenance costs; and (ii) 22 percent for the services of individualspecialists. Total taxes on the project are estimated at 18 percent of total projectcost including contingencies.

(e) Recurrent Costs. The annual preventive maintenance of the rehabilitated schools,will impose significant recurrent costs as a result of the project. However, oncethe buildings are rehabilitated, these costs (about 1.5 percent of buildingrehabilitation cost) are expected to be substantially lower than the current annualbudgetary allocations for school maintenance (reportedly five percent of theinvestment cost).

2. Detailed Cost Tables. The following cost tables are shown in the succeedingsections:

Table 1: Civil Works and Building Rehabilitation (2 pages).Table 2: School Facilities Planning and Maintenance (2 pages).Table 3: Project Administration (2 pages).

Annex 5

Page 3 of 8ROMANIA

School Rehabilitation Project

Table 1: CIVIL WORKS AND BUILDING REHABILITATION

TotalTotal Including

Total Bass Cost ContingencIeUnit Quantites (USVOOO) (US$000)

I. Investment CostsA. Rehabilitalon of School Buildings completion %s 100 88,200.0 108,968.0B. Arch & Engineering Professional Services

1. Detailed A&E Design and Planning /b completon %s 100 6,129.9 7,016.12. Constructon SuperWsion/c comnpleton %s 100 882.0 1,042.3

Subtotal Arch S Engineering Professional Services 7,011 .9 8,058.4C. Basic School Furniture /d complellon %s 100 4,400.0 5,042.6

Total lnvestment Costa 99,611.9 122,069.011. Recurrent Costa

A. Maintenance of Rehabilitated Structures /e phasing 4 3,638.3 4.374.7Total Recurrent Costs 3638.3 4,374.7Total 103,250.2 128,443.7

\a Detailed amounts may not add up to exact totals due to rounding.\b Preparation of feasibility studies, rehabilitaton technical plans, specifications and bidding documents.\c On sits day-to-day supervision of rehabilitation contracts.\d Indudes student and teacher desks, bookshelves. lockers and basic laboratory fumiture.Ie Annual regular and preventive maintenance of rehabilitated buildings.

Annex 5Page 4 of 8

ROMANIASchool Rehabilitation Project

Table 1: CIVIL WORKS AND BUILDING REHABILITATION

Brekdown of Totals Incl. Cont rOOO)Local Expzditurec by Flnancer CM)(Excl. Dutis & Romania World Bank CESOF

For. Exch. Tax") Tax*g Total Total Total Total

I. Investment CostsA. Rehabilitatlon of School Bulldings 19,614.2 69,739.5 19,814.2 108,968.0 37,i32.1 57,535.1 13,800.8B. Arch & Engineoring Profsalonal Services

1. Detailed A&E Design and Planning hb 701.6 5,051.8 1,262.9 7,016.1 1,543.5 5,472.82. Constructlon Supenvsion Ic 104.2 750.4 187.8 1,042.3 229.3 813.0

Subtotal Arch & Engineering Professional ServIes 605.8 5.802.0 1,450.5 8,058.4 1,772.8 6285.5C. Bailc School Fumiture Id 252.1 3,882.6 907.7 5,042.6 907.7 4,135.0

Total Investment Costs 20.672.2 79,424.4 21,972.4 122,069.0 40,312.8 87.955.6 13,800.11. Recurrent Costa

A. MaIntenance of Rehabilkated Structures /I - 3,587.2 787.4 4,374.7 4,374.7Total Recurrent Costs 3,587.2 787.4 4,374.7 4,374.7Total 20,672.2 83.011.6 22,759.9 126,443.7 44,687.3 87,955.6 13,800.8

Anne

Page 5 of 8ROMANIA

School RehablltatioR Project

Tsble 2. SCHOOL FACILMES PLANNING AND MAINTENANCE

Tota

TeOl Ute C.5 Use Ca Co_m enUnlt Qua_d_ PW PA"1111) euv

1. Invstennt CostsA. Consultnt Servce lb

1. School Mapping Speclt I 4 20J00 60.0 as.2. Faciltes Plannki tsnance Monagwmentf 8aputk smnonihs 1 20.000 20.0 21.7

Subtotal Consultant Services 100.0 1000JS. Staff Training

1. Shot-twm Trainng Abroad /d S" mins a 8,000 64.0 72.72. In-country Workshops Is kxSumn 5 S.000 21.0 29A

Subtotal Staff Training 6.0 102.2C. Taining MaterIals and Softwae

1. TraningMMaeiasdl lumnp a 2.000 10 11.22. Mscellareous Appcaions SollwaeGeogra_lVc Mas rnosu S0.0 063

Subtotal Training Mlatlal and Software 100.0 109,5Total 2S9 320.2

\a DOsted anounts may not add up to etac totle due to rounding.lb Individual conaulnts.hc Finalization of sool design nonmn, staiads and ommulallon of soel matn , po .%d Facilitis plannig, bulng mainaac and Mbudget man_man Costs Inkude _stelf callmse. sccmmiad11,0 an a.*alawo.

round ip air ares, alowane for bWtninhg mn _let51a1bOOs.\s Organizational cost for worshops on facilities planning nom, u g r _men r m Costa include wr den t in

internal travel costs for taining prticipant.V Prepartion and publkcton of documention and handuts for In-counliy wakshope.\g Processing of school maps nd digiftzng

Ann" S

Page 6 of 8ROMANIA


Table 2. SCHOOL FACILITIES PLANNING AND MAINTENANCE

Breakdown of Totals nc. Cont('000) Expenditures

Local by Financiers (°°°)For. (Excl. Dutes & Romania World Bank

Exch. Taxes) Taxes Total Total Total

1. Investment CostaA. Consutant ServIck lb

1. School Mapping Specalist 65.1 2.6 19.1 86.8 19.1 87.72. FacIllles Plainngi?Aaintenance Management Expert Ic 16.3 0.7 4.6 21.7 4.8 16.9

Subtobl Consutant Services 81.4 3.3 23.9 108.5 23.9 84.6B. Staff Traning

1. Short-twrm Tnning Abroad d 72.7 - - 72.7 - 72.72. In-country Workshcps I 29.4 29.4 - 29.4

Subtotal Staff Training 72.7 29.4 102.2 - 102.2C. TraIning Matbels and Software

5.6 3.6 2.0 11.2 2.0 9.278.6 2.0 17.7 98.3 17.7 0.6

Subtotal TraIning Materials and Software 84.2 5.6 19.7 109 5 19.7 89.8Total 238.4 38.2 43.6 320.2 43.6 276.6

Annex 5

Page 7 of 8ROMANIA


Table 3: PROJECT ADfMINSTRATION

TotalTotal Including

Total Unit cost Base Coat ContingencIeUnit Quantities (USS) (US$S000) 4USSO000)

I. Investment CostsA. CPCU and DPIU Staffing and Specialists lb

1. Central Project Coordination UnitProject Manager staff months 60 450 27.0 28.4Technical Specialists lc staff months 330 380 125.4 131.7Support Staff /d staff months 120 250 30.0 31.5

Subtotal Central Project Coordination Unit 182.4 191.52. District Project Implementing Units

District Project Coordinator le staff month 1,970 250 492.5 517.1Technical Specialists tf staff month 2.950 250 737.5 774.4

Subtotal District Project ImplemenUng UnIts 1,230.0 1,291.5Subtotal CPCU and DPIU Staffing and Specialists 1,412.4 1,483.0B. Financial Auditor annual cost 5 30,000 150.0 168.5C. Project Management Specialist /g staff month 1 20,000 20.0 21.50. Procurement Adviser staff month 2 20.000 40.0 42.9E. Equipment and Materials

1. CPCU Equipment and MaterialsOffice Equipment/Fumiture ih lumpsum 40.0 42.9Miscellaneous Applications SoftwareReference Materials lumpsum 12.0 12.9Vehide for Project Supervision unit 2 12,500 25.0 28.8Materials and Office Supplies A annual cost 5 10,000 50.0 56.2

Subtotal CPCU Equipment and Materlaba 127.0 138.82. DPIU Equipment end Materials

Office Equipment and Materialsfj package 41 5,000 205.0 219.93. Equipment for Other MOE Units /k lump sum 30.0 32.24. Training MaterisIsIl lumpsum 14.0 15.4

Subtotal Equipment and Materials 376.0 406.2F. Staff Training

Short-term Training Abroad for CPCU/MOE Staff /m staff months 6 8,000 48.0 54.4In-country Workshops /n staff months 60.0 68.7

Subtotal Staff Training 108.0 123.1Total Investment Costs 2,106.4 2,245.2II. Recurrent Costa

A. Operational Costs of CPCU annual cost 5 24.000 120.0 141.2B. Operational costs of DPIU annual cost 205 3,600 738.0 868.4

Total Recurrent Costs 858.0 1,009.6Total 2,964.4 3,254.7

'a Detailed amounts may not add up to exact totals due to rounding.lb 6 specialists in the areas of architecture/engineering, finance/economics, education and school mappingkc Includes translation, secretarial (bilingual) services, records keeping.\d Coordinators for 41 Districts C 48 months contract (average) per individualIe 2 Architects/Engineers in 41 Districts C 36 month contracts (average) each personIf Adviser on implementation programming and contract management.kg Includes: 6 desktop PCs, 2 laptop PCs, 2 printers. 1 photocopier, fax/modem, cellular phones, office fumitureUh Includes printing, communicaton, office supplies and materials\U Consists of I computer, printer, modem and standard applications softwarei For MOEDEF, MOEOCI and MOEOIS Units assisdng the project.Uk For Project Launch Seminar and project implementaton workshops.\U Training in procurement, accounting and contract administratonIm Project Launch Workshop in Year I and subsequent workshops on evaluation of project scope, recordstaccounts keeping and project supervisionIn Project Launch Workshop in Year 1 and subsequent workshops on evaluaton of project scope, records/accounts keeping and project supervision

Annex 5

Page 8 of 8ROMANIA


Table 3: PROJECT ADMISTRATION

Breakdown of Totals Incl. Cont. ('000)Local Expenditures by Financiers ('000)(Excl. Duties & Romania World Bank

For. Exch. Taxes) Taxes Total Total Total

I. Investment CostsA. CPCU and DPIU Staffing and Specisilsts lb

1. Central Project Coordination UnitProject Manager 21.3 0.9 6.2 28.4 6.2 22.1Technical Specialists /c 98.8 4.0 29.0 131.7 29.0 102.7Support Staff /d 23.6 0.9 6.9 31.5 6.9 24.6

Subtotal Central Project Coordination Unit 143.6 5.7 42.1 191.5 42.1 149.42. District Project Implementing Units

DistrictProjectCoordinator / 387.8 15.5 113.8 517.1 113.8 403.4Technical Specialists /f 580.8 23.2 170.4 774.4 170.4 604.0

Subtotal District Project Implementing Units 968.6 38.7 284.1 1,291.5 284.1 1,007.4Subtotal CPCU and DPIU Staffing and Specialists 1,112.3 44.5 3283 1,483.0 326.3 1,156.8S. Financial Auditor 126.4 5.1 37.1 168.5 37.1 131.4C. Project Management Specialist 1g 16.1 0.6 4.7 21.5 4.7 16.70. Procurement Adviser 32.2 1.3 9.4 42.9 9.4 33.5E. Equipment and Materials

1. CPCU Equipment and MaterialsOffice Equipment/Fumiture Ih 34.3 0.9 7.7 42.9 7.7 35.2Miscellaneous Appliations SoftwareReference Materials 10.3 0.3 2.3 12.9 2.3 10.6Vehide for Project Supervision 21.5 0.5 4.8 26.6 4.8 22.0MaterialsandOfficeSuppliesA 44.9 1.1 101 56.2 10.1 46.1

Subtotal CPCU Equipment and Materials 111.0 2.8 25.0 138.8 25.0 113.82. DPIU Equipment and Materials

Office Equipment and Materials tf 175.9 4.4 39.6 219.9 39.6 180.33. Equipment for Other MOE Units /k 25.7 0.6 5.8 32.2 5.8 26.44. Training Materials 11 7.7 4.9 2.8 15.4 2.8 12.6

Subtotal Equipment and Materials 320.4 12.7 73.1 406.2 73.1 333.1F. Staff Training

Short-term Training Abroad for CPCU/MOE Staff /m 54.4 - - 54.4 - 54.4

In-country WVorkshops /n - 68.7 - 68.7 - 68.7Subtotal Staff Training 54.4 68.7 - 123.1 - 123.1

Total Investment Costs 1,661.6 132.9 450.6 2,245.2 450.6 1,794.6II. Recurrent Costa

A. Operational Costs of CPCU - 115.8 25.4 141.2 141.2 -

B. Operational costs of DPIU - 712.1 156.3 868.4 868.4Total Recurrent Costs - 827.9 181.7 1,009.6 1,009.6

1,661.6 960.8 632.3 3,254.7 1,460.2 1,794.6

ANINEX 6

ROMANIA


Procurement Plan(Amounts in US$'000)

Number Total Method Schedule of Procurement ActMUssProcurement Package of Cost ot Iesmiso of Audet ou

Packages Us$00o Procurement Documonn Propoula CutC 3tSi

1 School RehabilitationPackages > US$1.0 million 8 $16,500 ICB Aug-99 Oct-99 Jan-99 Feb-00Packages < US$1.0 min >US$70,000 120 $92,500 NCB Nov-98 Feb-99 Mar-99 Apr-99

of which packages < US$70,000 80 ($5,000) SWC Nov-98 Feb-99 Mar-99 Apr-99

2 Furniture and EquipmentStudent Desks/Chairs > US$30,000 50 $5,000 NCB Apr-98 Jun-98 Aug-98 Sep-98

of which packages < US$30,000 60 ($1,500) NS Apr-98 Jun-98 Aug-98 Sep-98Office Equipment/Computers 2 $240 IS Sep-97 Oct-97 Nov-97 Nov-97Vehicles 1 $25 NS Sep-97 Oct-97 Nov-97 Nov-97Proprietary materials/Software various $120 Direct Sep-97 Oct-97 Nov-97 Nov-97Miscellaneous Materials/Supplies various $150 IS/NS Sep-97 Oct-97 Nov-97 Nov-97

3 Consultant ServicesFirmsArchitectural and Engineering Services 150 $8,060 QCBS Oct-97 Nov-97 Dec-97 Jan-98Auditor 1 $170 CSFB Oct-98 Nov-98 Dec-98 Dec-98Specialists to benefit CPCU and DPIU 25 $1,480 CSFB Oct-97 Nov-97 Dec-97 Jan-98Individual ConsultantsSchool Mapping Specialist 1 $87 CS Sep-97 Oct-97 Nov-97 Dec-97Design Standards/Maintenance 1 $22 CS Sep-97 Oct-97 Nov-97 Dec-97Project Management Specialist 1 $22 CS Sep-97 Oct-97 Nov-97 Dec-97Procurement Adviser 1 $44 CS Sep-97 Oct-97 Nov-97 Dec-97

4 Staff TrainingTraining Abroad various $130 SS Nov-97In-country Training various $100 SS Apr-98

5 Operational Costs

Building Maintenance annual $4,400 NBF Dec-98CPCU/DPIU Operating Costs annual $1,000 NBF Oct-97

Total Project Cost $130,050

Note: Detailed amounts may not add up to exact totals due to rounding.

LegendCS Competitive Selection based on individual consultant's qualifications in accordance with the Bank's Consultant Guidelines.

QCBS Quality and Cost Based Selection in accordance with the Bank's Consultant Guidelines.ICB International Competitive Bidding for works contract packages above US$1.0 million, and goods packages above US$300,000.

IS International Shopping for goods contract packages below US$300,000.NS National Shopping for goods contract packages below US$30,000.

NCB National Competitive Bidding for works contract packages below US$1.0 million, and goods packages below U$300,000.NBF Non-Bank Financed procurement

DC Direct Contracting for proprietary items (computer software, books, journals, copyrghts)SS Single Source selection.

SWC Procurement of Small Works Contracts (less than US$70,000) based on offers from at least 3 qualified works contractors.CSFB Competitive Selection of consultant firms under Fixed Budget in accordance with the Bank's Consultant Guidelines.

ANNEX 7Page I of 4

ROMANIA


ANNEX 7: MONITORING INDICATORS

Description of Indicator Project start Project Closed1997 1998 1999 2001 2002 2003

I DATA TO BE COMPLETED FOR EACH SCHOOL REHABILITATEDInsert appropriate data in the year in which the action was started or completed

NAME OF SCHOOL:Location (Judet/village): rural/urbanLevel of Education (e.g. Kindergarten)Grade Levels Served (e.g. grades V-tv)

A IMPLEMENTATION PROGRESS

School Mapping/survey (not applicable/start date/compietion date) =Scope of work detined (date of SRB/Bank approval)Rehabilitation plans prepared (start date/completed)Works contracts (date bid received/contract awarded)Rehabilitation works (start date/completion date)Furniture contract (bid received/contract awarded) _

Furniture delivery (date completed)School fully operational (date)

B BASIC INFORNtATION - (before rehabilitation/at completion)

Total enrollment (all shifts) ___

total boys'total girlsNumber of teachers (including director) ____X___

Number of other regular school personnel =__School capacity (no. of students) _Number of school shifts per dayLength of class period (actual minutes per shift) _Gross building area (square meters)Net building area (square meters)Number/total capacity of regular classroomsNumber/total capacity of standard laboratoriesNumber of units (single) of classroom furnitureUtilities (water, heating, electricity, sanitation) _ _

Type of rehabilitation undertaken in AFFECTED/DAMAGED schoolBuilding reinforcement only (yes/no)Rehabilitation and expansion (yes/no)Rehabilitation and space reduction (yes/no)Total replacement of buildingsConsolidation with adjacent schools in same catchment areaNumber of adjacent schools affected

ANNEX7Page 2 of 4


Description of Indicator Project start Project Closed'1997 1998 1999 2001 2002 2003

BASIC DATA TO BE COMPLETED for EACH AD.IACENT SCHOOL(Prepare also complete data sheet (see Section I) for each adjacent school to be rehabilitated)

School No. I (name/location)Level of Education _Grade Levels serveddistance to damaged school _

total enrollment (before/after consolidation)number of students taken in from damaged school _number of teachers taken in from damaged schooltotal student capacity per shift (before/after consolidation)number of school shifts (before/after consolodation)number of regular classrooms (before/after consolidation)gross building area (before/after consolidation) ___

School No. 2 (name/location)Level of EducationGradle Levels serveddistance to damaged schooltotal enrollment (before/after consolidation) _

number of students taken in from damaged school ____

number of teachers taken in from damaged schooltotal student capacity per shift (before/after consolidation)number of school shifts (before/after consolodation)number of regular classrooms (before/after consolidation)gross building area (beforelaftler consolidation)

C COST INFORMATION (in USS equivalent)

Average exchange rate (Lei/US5)Total cost of architectural/engineering servicesInitial Estimate of building rehabilitation costRehabilitation cost at contract approval and signatureFinal rehabilitation cost (at completion of works)Cost of furniture delivered to school

Amount of maintenance budlget allocated/released to school per yearBy the Ministry of Education _ _

allocated at start of year =_=actual amount released/received by school

By the District Governmentallocated at start of yearactual amount released/received by school _

ANNEX7Page 3 of4


Description of Indicator Project start Project Closed1997 1998 1999 2001 2002 2003

11 DATA TO BE COMPLETED FOR THE PROJECT AS A WHOLE:Insert appropriate information in the year column in which the activity was started or completed

A. PHYSICAL FACILITIES

School Mapping completed (number of zones) (cumulative) _Total numnber of schools covered by school mapping during the period

Total enrollment in schools mapped ___Total schools where scope of rehabilitation work has been derined (cumulative)

Rehabilitation of School BuildingsPreliminary rehabilitation designs completed and approved _ _

Number of rehabilitation projects invited for bids during the period __ _ _

Number of rehabilitation contracts awarded during the periodContracts awarded through International Competitive Bidding _ _ _

Number of contracts (cumulative)Value of contracts (cumulative)

Contracts awarded through National Competitive Bidding _ _ ___

Number of contracts (cumulative)Value of contracts (cumulative)

Contracts awarded through National Shopping (3 quotations)Number of contracts (cumulative)Value of contracts (cumulative) ___ _

Total value of works awarded (in USS equivalent) during the period _ _Cumulative value of contracts awarded as of year end _ _ __

Number of works started during the period = = _=

Total nunber of school completed during the year _ _Total number of works/schools completed as of year end (cumulative) ____X___ _______

Total number of students accommodated in completed schools (cumulative)Total number of teachers in completed schools (cumulative) ___ ___

Total value of works completed/paid during the yearTotal value of works comlileted as of end of period (cumulative)

School FurnitureNumber of furniture bid packages prepared for bidding _ _

Total quantity of furniture (units) included in packages bid _Number of schools to receive fumiture in the packages

Kindergarten _ _

PrimarySecondary = _ -

Number of furniture packages invited for bids during the period ___through National Competitive Biddingthrough National Shopping

Value of furniture packages awarded during the periodthrough National Competitive Biddingthrough National Shopping

Equipping of CPCU _Date of CPCU equipment bid/delivery date _Value of total equipment for CPCU _ _ _

Equipping of DPIUsNumber of DPIUs equipped (cumulative)Date of DPIU equipment bids/delivery date _Value of DPIU equipment delivered (cumulative) _

ANNEX 7Page 4 of4


Description of Indicator Project start - Project Closed

1997 1998 1999 2001 2002 2003

Start of contract/completion of contract (final_report_submission)_________

Professional fee_(in_US$) ________ _

Work Progress (cumulative percentage perperiod)_

Procurement AdviserStart of contract/completionofcontract(inalreport submission) _

Professional fee_(in USS) ________ ___(tJ s_

Consultant_Planning/Maintenance Specialist _

Start of contract/completion of contract (final report submission)Professional fee (in USS)Work Progress (cumulative percentage per period)

Consultant AudvitorStart of contract/completion of contract (final report submission) _

Professional fee (in USS) = = =Work Progress (cumulative_percentage per period) _ =

Submission of audit reports_to MOF/Bank _

Consultant ArchitecturaUEngineering (A&E) firmsNumber of A&E contrcts awarded (cumulative) _ _

Value of A&E contracts awarded (cumulative) _ _____ _

Value ofcontract payments at end of period (cumulative)_

Maintenance Budget Allocation Study X D _____ =_Preparation of TOR (start date/Bank approval)Hiringof consultant_ Preparation of Study (start/completion of draft report) ___MOE review of Study recommendations _

Bank reviewv of Study Recommendations __ _ _ _

Finalization of Study and recommendationsGovernment approval of recommendationsImplementation of new Maintenance Budget Allocation system ____

External Training _

Identification of courses and places for study visit _ ____ __

Study (List each area of Study/total cost) _ ___Selection of candidates _ _

MOE/Bank approval of study tour/candidates _

Training period _ ___

submission of trainees report

In-Country Training/WorkshopsPreparation of training planPreparation of trainors (start/completion/number of trainors trained) __ _ _

Workshop (List each workshop, Specify area of training/total cost) _Selection of participants/number of trainees ___ ___MOE/Bank approval of programTraining period _

Follow through/evaluation of outcome _ _ _ _ _

ANNEX8


Bibliography of Documents in the Project File

Project Implementation Plan, June 1997Additional Information Requested by the Aide-Memoire from April 17th 1997, Ministry of

Education, 1997School Mapping Evaluation Methodology, (Parts I and II), Ministry of Education Councilfor

School Rehabilitation, Bucharest, April 1997List of Schools to be Rehabilitated, Romania 1997Project of Rehabilitation .of School Buildings, Romania 1997Education Law, Parliament of RomaniaEvaluation Criteria for School Rehabilitation, Concerning the Educational Supply Quality,

Cornelia Novak, Institute of Educational Sciences, 1996Assessment of the Educational Quality of the School Projected for Rehabilitation, Cornelia

Novak, Institute of Educational Sciences, May 1996Romania: School Rehabilitation Progress Report (School Mapping), Mircea Enache,

February 12, 1997Romanian Human Development Report 1996, Bucharest, April 1996Law Concerning Quality in Building, Parliament of Romania, January 18, 1995Building Design Standartization and Codes Specific to the Ministry of Education, 1997Procurement and Contracting Procedures for the Design and Execution of the Works and

Design Practices, 1997Technical Regulations in Buildings, 1997Romania: School Rehabilitation Project School Mapping Activities and Findings, Draft

Report, Mircea Enache, January 1997Copies of the Sample School Building Reports, October 26, 1995Information About Schools Included in Proposals for Rehabilitation, Questionnaire Type

A: School Mapping, May 20, 1996Education in Underpriviledged Areas - Maps, March 1996Consultancy Report on the Romania School Rehabilitation Project (Seismic Risk

Reducation and the Prioritization of School Buildings for Rehabilitation), Horea Sandi,May 1997

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