Document of The World Bank FOR OFFICIAL USE ONLY Report No: 21413 IMPLEMENTATION COMPLETION REPORT (IF-N0320) ON A CREDIT IN THE AMOUNTOF SDRs28.21 MILLION (US$ 39 MILLION EQUIVALENT) TO BOSNIAANDHERZEGOVINA FOR A SECONDEMERGENCY TRANSPORT RECONSTRUCTION PROJECT DECEMBER 14, 2000 Infrastructure Sector Unit Europeand Central Asia Region This document has a restricted distribution andmay be used by recipients only in the performance of their officialduties. Its contentsmay not otherwise be disclosed without World Bank authorization. Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
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Document ofThe World Bank
FOR OFFICIAL USE ONLY
Report No: 21413
IMPLEMENTATION COMPLETION REPORT(IF-N0320)
ON A
CREDIT
IN THE AMOUNT OF SDRs 28.21 MILLION (US$ 39 MILLION EQUIVALENT)
TO
BOSNIA AND HERZEGOVINA
FOR A SECOND EMERGENCY TRANSPORT RECONSTRUCTION PROJECT
DECEMBER 14, 2000
Infrastructure Sector UnitEurope and Central Asia Region
This document has a restricted distribution and may be used by recipients only in the performance of theirofficial duties. Its contents may not otherwise be disclosed without World Bank authorization.
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CURRENCY EQUIVALENTS
(Exchange Rate Effective 12/13/2000)
Currency Unit = Konvertible Mark (KM)KM2.22 = US$ I
US$ 0.45 = KMI
FISCAL YEARJanuary 1 December 31
ABBREVIATIONS AND ACRONYMS
EBRD European Bank for Reconstruction and DevelopmentEC European CommissionERR Economic Rate of ReturnETRP Emergency Transport Reconstruction ProjectICAO International Civil Aviation OrganizationICB International Competitive BiddingIFOR Implementation ForceIMG International Management GroupITF Interim Trust FundNCB National Competitive BiddingOHR Office of the High RepresentativePID Project Implementation DirectoratePMAU Procurement Monitoring Audit UnitRS Republika SrpskaSETRP Second Emergency Transport Reconstruction ProjectSFOR Stabilization ForceSNCB Simplified National Competitive Bidding
Vice President: Johannes F. Linn, ECAVPCountry Manager/Director: Christiaan J. Poortman, ECCO4
Sector Director: Ricardo A. Halperin, ECSINSector Manager: Eva Molnar, ECSIN
Task Team Leader/Task Manager: Aymeric-Albin Meyer, ECS1N
FOR OFFICIAL USE ONLY
Bosnia and HerzegovinaSecond Emergency Transport Reconstruction Project
Implementation Completion Report
CONTENTS
Page No.1. Project Data 1
2. Principal Performance Ratings 1
3. Assessment of Development Objective and Design, and of Quality at Entry I
4. Achievement of Objective and Outputs 6
5. Major Factors Affecting Implementation and Outcome 11
Annex 5. Ratings for Achievement of Objectives/Outputs of Components 24
Annex 6. Ratings of Bank and Borrower Performance 25
Annex 7. List of Supporting Documents 26
Annex 8. Borrowers Contribution 27
Map: IBRD 28612R
This document has a restricted distribution and may be used by recipients only in theperformance of their official duties. Its contents may not be otherwise disclosed withoutWorld Bank authorization.
Borrower/lImplementing Agency: GOVERNMENT OF BOSNIA AND HERZEGOVINA/Federation and RepublikaSrpska Ministries of Transport and Communications
Other Partners:
STAFF Current At AppraisalVice President: Johannes F. Linn Johannes F. LinnCountry, Manager: Christiaan J. Poortman Christiaan J. PoortmanSector Manager: Ricardo A. Halperin Ricardo A. HalperinTeam Leader at ICR: Aymeric-Albin Meyer Enn Peter VasurICR Prima?y Author: Aymeric-Albin Meyer; Enn Peter
3. Assessment of Development Objective and Design, and of Quality at Entry
3.1 Original Objective:
IntroductionThe 1995 Reconstruction Prograrn for Bosnia and Herzegovina was presented to the international donor
community in December 1995: This program defined in 13 sectors the reconstruction and developmentstrategy to be followed as well as the priority investments to be funded, mostly by the internationalcommunity. The program included a Five Year Transport Reconstruction Program totaling US$698million, the emergency component of which, the First Year Program, totaled US$305 million. The FirstYear Program was foreseen to be implemented through the Emergency Transport Reconstruction Project(ETRP) and the Second Emergency Transport Reconstruction Project (the Project). The ETRP waslaunched in early 1996 in a total amount of US$149 million of which the Bank's financing (from the TrustFund for Bosnia and Herzegovina) amounted to US$35 million. The Project, amounting to US$184 millionand to which the Bank contributed US$39 million, was conceived as a continuation of the activitiesinitiated under the ETRP. The objective was the rehabilitation/reconstruction of the primary transportnetwork countrywide.
The Project comprised two distinct and quite separate parts, viz. an adjustment component for RepublikaSrpska (amounting to US$9 million) and a transport component to support reconstruction activities in thetransport sector in both Entities (amounting to US$173 million). The Bank provided a US$39 million credittoward the costs of the Project, funding in full the adjustment component and contributing US$30 million tosupport Project activities in the road sub-sector. In addition, the Bank administered US$12.5 million onbehalf of the Governments of Italy (US$2.1 million) and Japan (US$ 10.4 million) to provide additionalsupport to the road sub-sector. The objective of the adjustment component was to support RepublikaSrpska's fiscal and trade reforms, while the objective of the transport component was the rehabilitation ofthe primary transport network countrywide, and the reconstruction of the remaining key links with the restof Europe. This followed the completion of the implementation of the preceding project, the EmergencyTransport Reconstruction Project, which had included only the Federation (see paragraph 3.1 .ii below).
The part of the transport component not funded through Bank-administered funds was intended to befunded through parallel financing. At the time of Board presentation, the main identified financing sourceswere EC, IDA and the Entities, however a financing gap of US$89.5 million remained. As in the ETRP, itwas foreseen that this financing gap would be gradually closed over the life of the project. This part had amodular structure with independent subprojects for which interested donors could assume financing at anytime and with different and independent implementation schedules. The Project design, the deternination ofpriorities to be followed, and the identification of the activities to be included in the Project were carried outby the Bank in cooperation with the State and Entity authorities and with other organizations and donors,including especially the International Management Group (IMG, see below). All donors and organizationswhich did not channel their funding through the Bank provided parallel financing and administrativecapacity to implement specific activities under the Project. As such, during implementation the Bank's rolewas limited to implementing the Bank funded and administered adjustment and road components and tomonitoring, in an overview manner, the progress of the non Bank-financed components, in order to avoidoverlaps among the activities funded by the different donors and optimize the use of available resources.
i) Adjustment ComponentThe adjustment component was conceived to support Republika Srpska's fiscal and trade reforms bycreating the conditions for efficient budget formulation and execution and for the effective implementationof trade facilitation measures. The adjustment component was prepared following the approval by theRepublika Srpska Parliament of a 1997 budget satisfactory to the Bank, and the passing of new trade andcustoms policy laws, which allowed for a common trade and customs regime throughout Bosnia andHerzegovina. The proceeds of the component were to fund acute budgetary needs, particularly socialexpenditures. By supporting initial budgetary and trade facilitation reforms, this component would helpmaintaining fiscal stability; create conditions conducive to implementation of deeper fiscal reforms; andimprove policy harmonization and coordination between the State and its two constituent Entities, the
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Federation of Bosnia and Herzegovina and Republika Srpska. This component constituted the firstadjustment assistance to Republika Srpska and was perceived as the first in a series of adjustmentoperations designed to support Bosnia and Herzegovina's structural reforms. The adjustment componentwas fully financed by IDA for an amount of US$9 million equivalent.
This adjustment component has been unusual in two ways: (i) it was included in an transport operation; and(ii) it supported budgetary and trade facilitation reforrns while helping to solve urgent fiscal needs inRepublika Srpska. With the benefit of hindsight, we should acknowledge that this one shot operation withfunds disbursed in one payment immediately upon effectiveness had no significant impact on theimplementation of the Project or on the sustainable improvement of customs operations or tradingconditions.
ii) Transport ComponentThe objective of the transport component was to remove critical infrastructure bottlenecks; resumeoperation of major transport networks; and ensure sustainable development of the transport sector andrelated institutions. The specific objective of the Bank-administered part of the Project was to assist theBorrower in further rehabilitating the main road network while supporting the progressive re-establishmentof adequate road maintenance activities in both Entities.
It had been recognized from the outset that the ETRP had to be followed by another project in order to meetBosnia and Herzegovina's reconstruction needs. In the sense that the Project was a continuation of anongoing effort, it posed few problems which had not been encountered earlier and for which solutions andarrangements had been developed. Implementation arrangements, the nature and level of coordinationneeded between the different donors, as well as the functioning of the Project Implementation Directorates(PIDs), their internal organization, their relationship to the relevant ministries, were such issues for whichsolutions had already been found. Two important new developments were, however, included in the Project.One was the inclusion of Republika Srpska and the other was a focus on the establishment/strengthening ofan adequate road management capacity, under the Bank-administered part of the Project. The RepublikaSrpska inclusion, which had been foreseen but had not materialized under the ETRP, was adequate. Supporting the creation of adequate Entity road management capacities was seen as a basic prerequisite forfuture sustainable development in the road sector. Although most reasonable, it was however a riskyrequirement to introduce into the project since there was an absence of basic political understanding,especially in the Federation. The new focus on institution building also turned out to be difficult, given theemergency nature of the project. It also turned out to be difficult to reconcile the objectives of institutionbuilding and reconstruction in an emergency reconstruction project. To support institution building,attention was focused during project preparation and appraisal on reaching agreements with the Federationon the passing of necessary laws and on the subsequent creation of a functioning Federation RoadAdministration. Discussion with both Entities also focussed on the minimum annual budgetary allocationsfor road maintenance. This approach was based on the widespread perception at that time that theinternational community had the capacity to quickly influence and shape policies and decisions. Experiencesince then has shown that more time than expected is necessary in order to reach agreements between thetwo Entities and within the Federation. For example, in the transport sector, while there is a general senseof progress having been made on all fronts, there are still today three railway companies operating a 1,000km network while traffic agreements have yet to be reached between the companies and traffic still has toresume on a significant scale. Also the law on roads in the Federation presented to Parliament in March1998 has yet to be approved.
The size of the project's financing gap, US$89.5 million or about 50 % of total project cost (excluding theadjustment component) was a potential problem. Given the modular structure of the project, and hence the
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independent nature of the components, as well as the positive experience from the implementation of theETRP, the existence of such a gap at the time of appraisal and approval was considered realistic andacceptable.
Within the context of the transport component it is worthwhile to recognize that although the reconstructionoverall has been very successful, it is only now that the country is starting to emerge from this emergencyphase. Up till now all efforts have been focused on emergency reconstruction. Hence, relatively littleattention has been given to describing indirect effects of what has been implemented, providing statisticalsummaries, etc. Such activities are now starting through follow-up projects which will have a differentfocus than the previous ones and through initiatives such as the JICA financed Study on the TransportMaster Plan in Bosnia and Herzegovina of which the Final Report is expected in February, 2001. Atpresent many interesting questions pertaining to the transport sector, such as hard numbers on thedevelopment of the local construction industry, employment generated by transport reconstruction, variousunit costs, etc. are not available and only qualitative statements can be given.
3.2 Revised Objective:
The objectives remained unchanged.
3.3 Original Conmponents:
The Second Emergency Transport Reconstruction Project (SETRP) included the following components:i) Adjustment Component. US$ 9 million to Republika Srpska to support key macroeconomic policyreforms. The proceeds supported the approved 1997 budget in line with agreed budget priorities thatincluded essential social expenditures and debt servicing obligations. The component provided needed fiscalresources that helped alleviate the acute financing shortfall of 1997.ii) Investment Component. The investment component, US$ 175 million, included the subcomponentswhich were the most serious transport constraints not covered by the then ongoing ETRP as follows:-State of Bosnia and Herzegovina. Items of an intemational nature, including the rehabilitation of theSava/Una river bridges (12% of total cost) and of the Sarajevo Airport (4%);-Federation of Bosnia and Herzegovina. Rehabilitation of roads and bridges (16%), rehabilitation ofMostar Airport (3%), support to the railway (16%) and to the urban transport (2%) sectors, and provisionof technical assistance (3%); and-Republika Srpska. Road and bridge rehabilitation (22%), supply of construction/maintenance equipment(6%), support to the railway (6%), and to the urban transport (6%) sectors, supply of navigation equipmentfor Banja Luka Airport (1%), and provision of technical assistance (3%).
The Bank-administered funds (US$51.5 million) were intended for: (i) funding of the adjustmentcomponent; (ii) rehabilitation of roads, reconstruction of bridges and related mine clearing and technicalassistance, within the Federation and Republika Srpska; (iii) supply of maintenance equipment toRepublika Srpska; and (iv)support to the establishment, within the Federation, and the strengthening,within Republika Srpska, of the road administrations. In addition to the Bank administered funding, therewas funding by a number of other financing agencies as detailed in Annex 2.
Implementation/Supervision
The pattems established during the implementation of the ETRP were largely continued. From among themain donors, only the Bank continued using the PID in the Federation while a new one was established inRepublika Srpska, both PIDs within the corresponding Entity Ministry of Transport and Communications.The U.S. and the European Commission (EC) used mainly their own agencies and some funding was also
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implemented through the International Management Group (IMG). The IMG is an entity, funded bycertain members of the EC (in particular, the Government of Italy), which: (i) organizes the preparation ofdamage assessment reports in the infrastructure sectors to be presented to the donor community; (ii)coordinates donors activities in the reconstruction of the infrastructure sectors, especially through theorganization of regular Task Force Meetings (see below); (iii) implements reconstruction activities onbehalf of certain donors; and (iv) supports institutional capacity building. Overall implementation progressunder the Project was supervised primarily by IMG and the Bank.
Coordination
Coordination took place at two levels.
During project preparation. the lists of priority interventions were drawn up and agreed upon with the localand foreign stakeholders active in the reconstruction of the transport sector in Bosnia and Herzegovina.Once the scope of activities to be included under the Project was clearly defined, consultations were heldwithin the donor community to raise funding to cover the costs of the Project, while avoiding overlaps.Based on the conclusions reached at these consultations, each donor could then pursue its activities withlittle coordination with the other donors. Overall coordination was ensured mainly by IMG and the Bank.
During project implementation, coordination activities were kept to the minimum, which was possiblethanks to: (i) the design of the Project which was composed of sub-projects which were fundedindependently; and (ii) the limited size of the community involved in the reconstruction of the transportsector in Bosnia and Herzegovina, community in which informal contacts and coordination played animportant part. Coordination included preparation of updates on implementation progress, discussions onissues encountered by the various actors, and fund-raising activities. The basic coordination was ensuredby the IMG through: (a) the maintenance and update of a database of implementation progress, status ofdonors' commitments and unfunded activities; and (b) the organization of regular Transport Task Forcemeetings, which periodically invited all local representatives of entities active in the reconstruction of thetransport sector to share information and discuss issues encountered. On a general level there was a needfor regular updates on implementation progress and remaining activities to be financed. This was providedby the donor conferehces co-chaired by the EC and the Bank and supported by documents provided forthese occasions.
3.4 Revised Components:
Apart from some modification in the distribution of financing of some items (see paragraph 4.1 and Annex2) caused by availability of alternative financing and the positive cost developments which allowed morecontracts than foreseen to be executed, all the basic assumptions and priorities remained.
3.5 Qialitn at Entry:The project's objectives were fully compatible with the overall reconstruction program and with governmentpriorities as discussed and agreed with the governments and formalized at donors' meetings. Theassumptions and arrangements for implementation for the investment component were fully in line with theexisting and unfolding situation and capacities. This has been bome out by the smooth implementation ofthe Project's physical components. The implementation arrangements were in place (the PIDs functioning)and the bidding documents for the first season's bids were ready by credit approval. Although there wasalready a draft law on roads as well as an assessment of the schedule of the legislative process, for the roadadministration development in the Federation, there was, quite naturally for a process requiring
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parliamentary debate and approval, no agreed schedule and commitment for the approval of the law.Overall, quality at entry is rated satisfactory.
4. Achievement of Objective and Outputs
4.1 Otutcome/achievement of objective:Note: When commenting on the outcomes/achievements it is necessary to make a distinction between theparts of the Project supported by the various donors and the Bank-administered part of the Project. Asexplained above, each donor organized the implementation and supervision for the partfor which itprovidedfinancing. Bank supervision missions followed general implementation progress under theProject, and in particular the Bank-administered part.
Overall, the Project has successfully met most of its objectives and achieved the results expected. Underthe adjustment component, the objective of supporting both initial budgetary and trade reforms andproviding fiscal resources that help alleviate the acute needs has been fully met. Under the transportcomponent, the financing gap can be considered as closed (see below), critical infrastructure bottleneckshave been removed and operation of major transport networks resumed. The emergency reconstructionphase in the Transport Sector has been completed. However, more remains to be done to ensure asustainable development of parts of the transport sector. In the civil aviation, public transportation, and inthe road subsectors in Republika Srpska, necessary institutions and agreements are now in place to ensuresustainable operations (see paragraph 4.2.b). Unfortunately, this is not the case in the railway sector and inthe road sector in the Federation (see paragraph 4.2 b for the Railways and paragraph 4.5 for theFederation Road Administration).
The Bank-administered part of the Project (amounting to over US$42 million) was implemented basicallyover 30 months, which adhered to the schedule established originally. The one area where one would havehoped for more to be achieved is the creation/strengthening of the Road Administration and provision forroad maintenance funding in the Federation of Bosnia and Herzegovina.
At the same time, it is recognized in hindsight that, given the persistence of the political divergence withinthe Federation to date, this would have probably required joint efforts on the side of the Bank and theintemational community, efforts which were beyond any individual sector. Finally, it must be noted thatcounterpart financing to the civil works contracts has not been provided by the Entity Governments on atimely basis. Taking into account the emergency nature of the Project and its primary focus onreconstruction, the Project's outcome is rated as satisfactory.
Closing the Financing GapContrary to the Bank-administered part, as of today, there is about US$30 million worth of activitiesoriginally foreseen under the whole Project, for which funding has not been provided. About two-third ofthis financing gap relates to the railway component of the Project. This component aimed at improvingtechnical and safety conditions as well as maintenance capacity on the network. Thanks to the activitiesundertaken under the ETRP and by IFOR/SFOR, operations were already possible, by the end of projectpreparation, on most of the network, although on minimum technical and safety standards. However, ithad been recommended by the Bank to the donor community not to provide funding under this componentunless a workable agreement could be reached between the 3 railway companies to allow trains to runacross the network on a reasonable and commercial basis. Such an agreement has so far failed to bereached, and present levels of traffic remain very low. These two factors have certainly contributed to thelack of interest that the donor community could have had in supporting further rehabilitation activities inthe railway sector.
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On the other hand, about US$30 million worth of activities not foreseen originally to be undertaken underthe Project have received funding. These activities include rehabilitation of additional intemational bridgesbetween Croatia and Bosnia and Herzegovina, as well as further rehabilitation of the road network. Whilethese activities fit perfectly within the scope of the Project, they had not been initially included, as: (i) itwas estimated, during project preparation, that not more than US$90 million could be raised from the donorcommunity, which already meant to present a project for approval with a 50% financing gap; and (ii) acertain balance had to be maintained between the different components to be included under the Project.Finally, there also remains a fmnancing gap of about US$5 million each under the civil aviation and urbantransport components. However, overall Project objectives have been achieved under the civil aviation andurban transport components (see paragraph below). As such, the financing gap under the Project may beconsidered closed.
4.2 Outputs b} components:Adjustment Component
The totality of the funds for the adjustment component were disbursed upon effectiveness. The adjustmentcomponent provided much needed support to the 1997 budget in Republika Srpska, which was approved inline with Bank recommendations. As the component was prepared on the basis of activities which had beencompleted by Republika Srpska before Board approval, achievement under this component is consideredhighly satisfactory.
Transport Componenta. Activities under Bank-administered Funds.
For both road and bridge rehabilitation, progress was very satisfactory throughout project implementation.About 190 km of road sections and six bridges have been rehabilitated in the Federation. In RepublikaSrpska, about 160 km of road sections and three bridges have been rehabilitated. Thanks to decreasedconstruction costs (see paragraph 5.4) and additional funding provided through Trust Funds, about 100 kmof road sections in addition to what was originally planned under the project have been rehabilitated, and 9bridges instead of the 5 foreseen. Under Trust Fund financing, four bridges are still being rehabilitated withcompletion foreseen by the end of December, 2000. Finally, 15 tipper trucks have been delivered toRepublika Srpska.
b. Activities funded by other donors.
1. Road and Bridge Rehabilitation.This component has been funded in full and, in addition to the Bank-administered part, about 600 km ofroad sections and 7 bridges have been rehabilitated. Construction and maintenance equipment has beenprovided to Republika Srpska as foreseen. Tunnel and land slides rehabilitation have been included underroad rehabilitation contracts or undertaken by SFOR and/or Entity Governments. Only one majorrehabilitation contract remains to be carried out (the Capljina bridge, with funding now available).Achievement under this component is thus rated highly satisfactory.
2. International Bridges between Croatia and Bosnia and Herzegovina.Within the scope of the Project, the Gradiska, Dubica and Brod bridges have been rehabilitated, whichbrings to 5 (out of a total of 10 bridges damaged during the hostilities) the number of international bridgesrebuilt permanently between the two countries, taking into account the Brcko rail bridge and theOrasje-Zupanja road bridge which were rehabilitated under the ETRP. With respect to the rehabilitation of
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the 3 other bridges included in the Project, rehabilitation has started on the Samac bridge, while funding forthe rehabilitation of the 2 remaining bridges has been committed. Achievement under this component israted satisfactory.
3. Railways.As mentioned earlier, only about 50% of the activities foreseen under this component have receivedfunding. Activities funded have focused on further track and bridge rehabilitation and restoration ofmaintenance activities. There has been very little support to re-electrification of lines, which, in a contextof low traffic and little availability of electric locomotives, can be understood. There has also been littlesupport for the rehabilitation of signaling and telecommunication systems. While low traffic can behandled with little signaling and telecommunication devices, more attention should have been given to thiscomponent. In addition, progress has been very slow in agreeing on arrangements which would ensureoperations across the country on a reasonable technical and economic basis. A fundamental reason for thisis the still largely unresolved question of the relationship between the different railway companies. Thereare de facto three railway companies, two in the Federation and one in RS, which all are in seriouslossmaking positions with subsidies in 1999 estimated to be more than US$15 million, and a deficit of overUS$40 million. The situation is deemed unsatisfactory and efforts have been undertaken to improve theorganizations and their cooperation. In February 1998, a Memorandum of Understanding was concludedconcerning the organization of railways and regulation of inter-Entity traffic under the auspices of theOffice of the High Representative (OHR). OHR has also taken the lead in establishing the Joint RailwayPublic Corporation which is to handle a number of questions of common operational interest, and examineways and means to improve and enhance inter-Entity and international railway traffic. Despite theconsiderable efforts that have been invested into these initiatives, the practical results on the ground up tillnow have been quite limited. Achievement under this component is rated unsatisfactory.
4. Civil Aviation.As a result of the implementation of both the ETRP and the Project, as well as the IFOR/SFOR activitiesto ensure the operationality of strategic transport services and networks, the 3 main airports in Bosnia andHerzegovina are now serviceable to a civilian standard. Under the Project, financing has been provided forthe rehabilitation of the Mostar control tower, further rehabilitation of the Sarajevo airport passengerterminal, and supply of navigational equipment and lighting to the Banja Luka airport. The organizationalstructure is established and working. The main organization is the Bosnia and Herzegovina Department ofCivil Aviation in addition to which each Entity has its own Civil Aviation Department. The civil aviationsituation is also characterized by the strong military (SFOR) influence, but overall ICAO rules andprocedures apply. The air space and air traffic control services are regulated in compliance with therelevant international rules and agreements (ICAO, Eurocontrol, SFOR). The ownership of the airports iscomplex and not quite settled, but generally the airports are either Entity or canton/district owned. Thisunsettled ownership does not have much negative consequences for the management and operations in theshort run but in a longer perspective this question will need a resolution. Aviation safety is not reported tobe an issue. The objective of resuming operation of major transport systems has been achieved, and assuch, achievement under this component is rated satisfactory.
5. Urban Transport.About 120 buses and mini-buses, as well as tools for workshops have been delivered. These buses are usedmainly in the Sarajevo area, but also in other cities across the country. The basic needs of the major urbantransport companies seem fulfilled. Achievement under this component is rated satisfactory. Thesecompanies are mainly owned by the municipalities. Certainly future organizational rationalizations andconsolidations will be necessary, but overall it is considered that the present institutional and managerialarrangements provide a reasonable basis for present operations, taking into account the general economic
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and political situation in Bosnia and Herzegovina.
6. Mine Clearing.US$ 1.1 million was originally foreseen under the Project for mine clearing at the construction sites.However, as it turned out, lack of access to the construction sites due to mines was not a major problemthat had to be confronted within the Project, and as such, funding was not required for this component. Thereasons were that various other initiatives, including local initiatives, SFOR interventions as well as theBank's Emergency Landmine Clearing Project were available to handle this problem. Under theBank-administered part of the Project, the landmine question at the sites was competently handled by thePIDs at the planning and design stage to eliminate landmines or verify their absence. Thus, no contractswere delayed by mines, nor were there any accidents caused by mines in the project.
7. Institution BuildingThis component has been providing financing to the PIDs, first under the Bank-administered part of theProject and then under the Capacity Building Program implemented and monitored by IMG. The CapacityBuilding Program is a continuation of IMG's successful efforts to support institution building, projectimplementation and provide informational and operational support to the donor community in the transportsector. Little assistance was provided to the Entity Road Directorates as it appeared that: (i) in theFederation, no agreement could be found on an organizational structure and specific duties of a RoadAdministration; and (ii) in Republika Srpska, allocations from the Government were adequate to allow aproper functioning of the Road Administration. In addition, a Transport Master Plan is being completed.Achievement under this component is rated satisfactory, taking into account the fact that the difficultiesencountered in the Federation with respect to the creation of a Road Administration reflect a generalizeddivergence of opinion between Bosniacs and Croats, which could not be resolved under a transportoperation.
8. Technical Assistance.All activities foreseen under this component have been supported. These consisted mainly of: (i) support toimplementation and coordination under the Project, provided by the IMG; and (ii) financing of feasibilitystudies, design and construction supervision under the Project. The provision of this technical assistancehas been essential in ensuring a smooth implementation of the Project. Achievement under this componentis rated as highly satisfactory.
c. Outputs under the First Year Transport Reconstruction Program.
Note: As explained in para 3.1. ii above, the First Year Transport Reconstruction Program denotes thefirst phase of the Five Year Transport reconstruction Program. The name is somewhat misleading sincethere was no intention of a one year implementation period, but it was foreseen that two projects, theEmergency Transport Reconstruction and a follow-up project, the Second Emergency Transport Project,would be needed to be prepared within thefirst year following the end of the hostilities. The First YearTransport Reconstruction Program can thus be taken to describe the sum of the activities under these twoprojects.
Thanks to the combined activities of the donor community with funding under the ETRP and the Project,most of the emergency needs defined in 1995 as the First Year Transport Reconstruction Program havebeen met: (i) a significant part of the main and regional road networks can be considered rehabilitatedtoday, as 100% of the needs identified in 1995 have been met, with 60 bridges located on the main andregional road networks repaired and/or rehabilitated, and road maintenance carried out on 1,600 km of themain network and 750 km of the regional network; (ii) the Sarajevo, Mostar and Banja Luka airports
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operate to civilian standards; (iii) trains can run on most of the network, although at minimum safety andtechnical standards; and (iv) public transportation has resumed country-wide, the tram system in Sarajevois in operation, and 300 buses and mini-buses procured, meeting about 70% of the needs identified in 1995.Also, the rebuilding of the local contracting and consulting industry has developed strongly as evidenced bythe degree of competition, the ability to submit correct bids on studies and works, and to execute works in atimely fashion in a technically competent way.
4.3 Net Present Value/Econonmic rate of return:The ERR for each of the sections in the road rehabilitation subcomponent was calculated at more than 30%at appraisal, for those road sections funded under the Bank Credit. This was based on an assumed trafficgrowth of about 3-4% annually and vehicle operating costs developed from the Albania-adapted HDM IIImodel. It was most reasonable and justifiable to use the Albania adapted parameters since conditions inmany respects were deemed to be similar, particularly for the vehicle operating costs, and also since Bosniaand Herzegovina specific information in this area was missing. However, for future economic analyses,these assumptions should be checked to verify the degree of concurrence with actual numbers which arenow starting to become available. Within the ongoing Bosnia and Herzegovina Transport Master Planstudy, a limited traffic count has been carried out during the summer of 2000. Not all the road sectionsevaluated at appraisal were included in the count, but those which were (10 out of 15) showed significantincreases of up to 95%, in comparison with the traffic forecasts used for the ERR calculations used atappraisal. The general impression of a very strong increase in traffic during the last few years is thussubstantiated. The actual rehabilitation costs were lower than those assumed ( see paragraph 5.4 below).Using the new values for these two factors while keeping all other assumptions unchanged (including trafficon sections where no counts were carried out), increases the ERRs considerably, from an average of 42.6 to57.0% (see Annex 3). The main determinant of this increase is the traffic which accounts for, on average,about 80% of the increase.
4.4 Financial rate of return:n. a.
4.5 Institutional developnment impact:
Re-establishment of adequate Road Management CapacityOne objective of the Bank-administered part of the Project was to support a progressive re-establishment ofadequate road maintenance activities countrywide. This has been interpreted and agreed to mean thedevelopment of the road administrations in the two Entities. According to the Dayton agreements, eachEntity is to be responsible for its road network. This development has shown very mixed results. In theFederation, progress has been limited. The basic legal framework, especially the Law on Roads which is aprerequisite to formally establish the road administration with its structures and duties, has not yet beenpassed by the Parliament of the Federation of Bosnia and Herzegovina. The discussions about such a lawhave been ongoing for several years but without any concrete results yet. Such a seemingly technical lawentails consequences for questions such as centralization vs decentralization, the role of the cantons, theallocation of tax revenues, and the like. As such, this will require agreements about fundamental politicalquestions in the Federation. In the meantime a road administration has been formally put in place but it hasbeen able to perform only minimal duties, such as proposing allocations for budgetary discussions andprocessing contracts for maintenance activities on a largely non-competitive basis and without a clearsetting of priorities. As the Road Administration does not have an agreed stature and resources, such basicfunctions as an agreed upon funding mechanism, traffic counts, road condition databases, maintenance andconstruction planning, are also lacking.
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In contrast, the situation in Republika Srpska, as far as the road administration is concerned, has developedmuch better. Without the political constraints which exist in the Federation, development of the roadmanagement capacity has been much more of a technical and administrative nature. The roadadministration is functioning in a normal fashion and although there are improvements to be made anddevelopments to pursue, it is now a question of improving and developing what exists. There is a fundingmechanism in place similar to that of a road fund which allocates resources based on fuel taxes, vehicleregistration and transit fees, as well as fees on land adjacent to roads. The PID, which administers theproject and handles the road administration's contacts with donors, has in a real sense ceased to existindependently and is now an integral part of the road administration. Thus, overall the institutionaldevelopment as concems the road administration in Republika Srpska can be described as highlysatisfactory.
Timely payment of counterpartfundsThe Credit Agreement foresaw that 10% of the civil works contracts be paid by the Entities. The Entitygovernments have been slow to allocate money for these payments which in effect has meant that thecontractors have been forced to extend a corresponding amount of credit to the governments. The situationdid improve, however, during implementation so that at the end the counterpart payments due correspondedmore or less to the performance guarantee due to the contractors one year after completion of the works.Republika Srpska has performed better than the Federation in the question of counterpart payments .
Availability of adequate resources for Road MaintenanceIt was agreed between the Bank and the Entities, that the Entities would each allocate US$ 15 millionannually for road maintenance. As the estimated requirements for a reasonable development were severaltimes higher, this amount was seen as a minimum and as an indication of the governments' commitment.The necessary allocation was estimated at about US$25 million. From about US$ 10 million in each Entityin 1998, the trends in allocations have diverged markedly in both Entities. In the Federation there has beena marked decrease with the 2000 actual allocation estimated to no more than US$6 million, in RepublikaSrpska the annual allocation has been increasing and is anticipated to reach US$20 million in 2000.
5. Major Factors Affecting Implementation and Outcome
5.1 Factors outside the control ofgovernment or implementing agency:Note: this part does not deal with the adjustment component of the Project as this was a one timetransfer with conditions for disbursement met prior to Project approval.
One issue which has caused implementation delays under the transport component of the Project has beenthe sometimes irnportant time lags between committed and disbursed amounts from donors. While a certainlag is inherent in the way the donor community works, when the time from when funding is secured tillwhen works are underway or completed stretches into several years, implementation and outcome areaffected. As an illustration, the table below shows the implementation performance of the main donors inthe road and bridge sub-sector. The data is taken from the IMG database as of September 2000. As can beseen, the Bank has been, over the 1996-2000 period, the main actor in the roads and bridges sub-sector,and among one of the most efficient.
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Implementation Performance in the Road and Bridge Sub-Sectors
Committed (US$ million) Contracts under way or completedEuropean Union 48.2 45%United States 20.3 100%Japan (World Bank- 10.0 100%administered Trust Fund)EBRD 19.5 51%World Bank 60.4 100%TOTAL 158.4 77%
This table reflects a number of factors, many of which are outside govermment control. The intemalprocedures and time taken from a decision in principle to the start of implementation, the arrangements forimplementation, the discussions and interaction with authorities from Bosnia and Herzegovina, allcontribute to the disparity in implementation progress. Another factor which has constantly affectedimplementation has been the continued, although decreasing, reliance on NATO troups providingtemporary bridges for bypasses during bridge reconstruction. Although this cooperation has been generallyworking very well, there have been instances where SFOR has had to change its priorities so that thetemporary structures could not be made available as foreseen, thereby forcing arescheduling/rearrangement of the works.
5.2 Factors generally subject to government control:As mentioned earlier (see paragraphs 4.2 b and 4.5), institutional development with respect to the road andrailway sector management and financing, as well as timely payment of local counterpart funds are issueswhich clearly have been subject to govemment control.
5.3 Factors generally stibject to implementing agency control:Under the Bank-administered part of the Project, the PIDs have continued to perform very well and this hasbeen a major factor for fast and efficient implementation. The PIDs have built on the experiences from theETRP and improved its organization and procedures. The continuity in both the project staff and a largepart of the staff in the implementing agencies has enabled the PID to develop a considerable source ofknowledge of bidding procedures, contract administration and implementation.
5.4 Costs and financing:The comments below deal only with the Bank-administered part of the Project, as very little information isavailable regarding the actual costs of the activities carried out by the other cofmanciers due to thedecentralized implementation structure of the Project. As the Project and the ETRP were to some extentcarried out in parallel, the comments pertaining to costs are very similar. Actual costs turned out to be wellbelow original estimates. This applies especially for road reconstruction where, under theBank-administered part of the Project, actual contract values were about 15% lower than estimates. Thisdifference has several explanations. The main one is that competition works, it does reduce costs, especiallyin a situation where the number of contracts on which to bid was limited, compared to an increasingnumber of contractors able to meet the bidding documents qualification criteria. Another is that the costestimates have not followed the decrease in prices caused by competition, although a lag in this respect isnatural. Lower than expected contract prices did not introduce any major problems since, given the extentof the maintenance backlog and the nature of road rehabilitation, additional works can be carried out if
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more funds are available. In certain cases, while bid prices remained lower than cost estimates, the finalcost of bridge rehabilitation has been higher than the initial contract price, as it appeared duringrehabilitation that some works, not foreseen initially, had to be undertaken. The main reason for theseincreases is the nature of bridge rehabilitation works itself, compounded by the fact that, in some cases,bidders were relying on estimated bill of quantities prepared before the bridge site was declared clear ofmines, which impeded engineers to access certain parts of the sites.
6. Sustainability
6.1 Rationalefor sustainability rating:Sustainability of the adjustment component is rated as likely, as this component has assisted RepublikaSrpska to improve its budgetary planning and execution practices and to engage in reforms aimed atimplementation of uniform customs policies in Bosnia and Herzegovina. These initial efforts strengthenedthe institutional capacity for carrying forward more complicated reform programs, under the Bank'ssubsequent public finance adjustment operations; under the EC-funded CAFAO program, in the field ofcustoms reforms; and under the Bank's Trade and Transport Facilitation Program in South-East Europe(TTFSE), in the field of trade and transport facilitation.
The Project as conceived and presented was an emergency operation. As such it was primarily concernedwith the physical reconstruction of the damages caused by the war. As the reconstruction of the directdamages has been largely completed or is underway by now, the concept of sustainability for this aspect isnot fully relevant. However, as this was the second emergency project in the transport sector, it was amplyrecognized that it was central to the future of the transport sector that functioning institutions be developed.
In the road sector, the creation of road administrations, capable of ensuring that the necessary tasks be setup, as well as appropriate levels and mechanisms for funding road maintenance was important. Asdescribed above, the development has been quite different in the two Entities. It is reasonable to assumethat in Republika Srpska the conditions, including government commitment, policy environment, andfmancing arrangements as well as managerial and technical effectiveness and competencies, are such thatthe sustainability can be rated as highly likely. In contrast, in the Federation, the basic political agreementsand legal framework have not yet been arrived at. Sustainability therefore, interpreted as the probability asa rapid achievement of a proper institutional setting, must be rated as unlikely. Taking into account thetwo Entities, and the fact that preparation of a new Road Project focusing on institution building hasstarted (see paragraph 6.2), the sustainability rating has been given as the average of the two above ratings,i.e. as likely. Implicit in this overall rating is an assumption that, even if not in the immediate future, thesituation, especially in the Federation, will improve with respect to legislation and funding, as both thepassing of the Law on Roads in the Federation, and adequate budgetary allocations in both Entities havebeen made conditions for the appraisal of the new road project being prepared (see paragraph 6.2 below).
In the railway sector, taking into account the poor progress achieved so far, and the fact that reaching anagreement on railway operation and management across the country would only begin to address the issuesfaced by the railway sector (e.g. very low traffic levels, overstaffing, inefficiency of operations),sustainability must be rated, at this stage, as unlikely.
In the civil aviation and urban transport sectors, institutions are in place and functioning. Although more isneeded to improve efficiency of operations and administrations, sustainability is rated as highly likely inthese two sectors.
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6.2 Transition arrangenment to regular operations:As the emergency reconstruction in the transport sector has been completed and as it is now five years afterthe end of the war, more long term and conventional development issues will dominate. Althoughinstitutional development has been recognized as vital since immediately after the war and components tothis effect have been included in both of the emergency transport reconstruction projects, the results havebeen mixed and incomplete for reasons which are varied and discussed in other parts of the ICR. The issueof institution building remains central if sustainable development is to take place and if the considerableefforts and investments made during reconstruction are to be safeguarded. It is also clear that the timehorizon foreseen in the Project for institution building in the road sector was too short and did not have thenecessary prerequisites under the prevailing circumstances. A follow up transport project has thereforebeen included in the Bank's lending program to continue and build upon what was started and achievedduring the project. The new project is planned to focus on institution building and development in the roadsector. The main issues at this stage are the needs to:
* create a functioning road administration in the Federation;* strengthen the Entities road administrations;* provide adequate budget allocations to road maintenance;* increase efficiency of road maintenance contracting;* create an adequate project evaluation capacity; and* coordinate necessary activities at the state level.
In addition, to enhance the benefits to road transportation resulting from the implementation of the project,the Bank prepared a Trade and Transport Facilitation Project in Southeastern Europe (TFFSE) of whichBosnia and Herzegovina is part. The TFFSE aims basically at increasing the efficiency of customsadministrations throughout Southeastern Europe, so as to decrease especially freight transit time in thisregion, an issue which has become critical since the break up of the Former Yugoslav Republic.
7. Bank and Borrower Performance
Bank7.1 Lending:The identification of the Project was based on the agreed upon 1995 Reconstruction Program (seeparagraph 3.1 .ii). In defining the components, the Project took into account the actual developments butmaintained its general thrust and definition and was thus consistent with Bank as well as internationalcommunity strategy and priorities. Preparation took place in close cooperation with the relevant authoritiesin Bosnia and Herzegovina and with other international organizations, particularly OHR, EC, EBRD, andIMG. This close cooperation was much facilitated by the fact that good relations had already beenestablished through the ongoing ETRP and that the task manager was based in Sarajevo with close andpractically daily contact with all partners.
Appraisal took place in January 1997, following a preparation mission in October of 1996. There were afew issues of a technical nature but the discussions dealt mainly with institutional development, such asfinancing levels and mechanisms for road maintenance and, of course, the set up/development of the roadadministrations. One issue which proved particularly sensitive was the distribution of the credit fundsbetween the Entities. After this issue had been resolved, negotiations started in April 1997. After two daysof negotiations it appeared however that the Federation could not accept the distribution and thenegotiations were adjourned. Bank staff and management showed great ingenuity in finding a solution tothis problem. It was eventually agreed to allocate an additional US$5 million to the Federation-part of theBank Credit foreseen for the Emergency Natural Gas Project which was still under preparation at that time.
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In addition, as mentioned earlier, just before finalization of the Credit documents, an adjustment componentof US$9 million for Republika Srpska was added to the Credit. The Board approved the credit in Augustand it became effective in September of 1997. The central role played by the Bank in the preparation of theProject, the close cooperation with the authorities and the donor community, the definition of the project ina program form to assist other donors, the speed and consistency of developing the project and the ability toconstructively resolve difficult issues would argue for a satisfactory rating of the Bank during the projectlending and appraisal phases.
7.2 Supervision:The supervision routines which had been started with the ETRP were further elaborated during projectimplementation. The PIDs became gradually more and more familiar with the type of information neededby the Bank and the Bank missions became more familiar with the situations and particularities in Bosniaand Herzegovina. What helped very much was the continuity of staff on both sides. Two supervisionmissions a year were fielded regularly. The reporting from the implementing agencies was consistent and,when necessary, problems were reported in the supervision reports which were read and acted upon bymanagement. Overall, there was good cooperation between the authorities, the Bank and other donors.
In 1999, the project's supervision was evaluated by the Bank Quality Assurance Group and was found tobe highly satisfactory. The project team was recognized by the Bank's managing directors for itssupervision efforts. Based on these evaluations and opinions, the Bank's supervision is rated highlysatisfactory. This can also be justified in a comparison with the achievements in the sector as a whole asillustrated by the table in paragraph 5. 1. Even if such comparisons are inherently difficult as the conditionsand project components are not identical for all donors, the comparison nevertheless shows that the Bankhas been fast and efficient in comparison with other major donors.
7.3 Overall Bank performance:Considering the above, overall Bank performance can be rated as satisfactory.
Borrower7.4 Preparation:Note: the following sections evaluate the overall performance of the Borrower only in relation to theBank-administered part of the Project. With respect to the project components financed by other donors,it has been generally observed that, while the Borrower has been involved in the identification of specificactivities, their involvement in donors'project preparation and implementation has been limited. One ofthe reasons has been the fact that most donor-funded activities were also donor implemented.
The Borrower participated in a very constructive and cooperative manner in project preparation. The onenegative aspect was the delay which was caused by a change in position regarding the distribution of thefunds between the Entities and which led to a delay in project effectiveness. Overall, the Borrowers'performance is rated satisfactory.
7.5 Government implenmentation performance:The Borrower was represented through the Ministry of Foreign Trade and Economic Relations. TheMinistry was involved in general project and policy issues. Although many of the problems that arose werenot within the competency of the Bosnia and Herzegovina Govemment but rather of the EntityGovernments, the involvement of the Ministry proved most valuable in raising the questions and findingways to pursue them. The Entity Governments were represented by the respective ministries of transportand communications. They were the main interlocutors regarding issues such as institutional developmentand financial resources. A number of questions dealing with proposals for modifications and changes to
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contracts, ideas for new components, etc. were discussed and resolved efficiently on that level. That someof the central issues have not found a satisfactory solution is not a reflection on the willingness andcapabilities of these ministries, but rather a recognition of the deeply political nature of these issues whichcan be resolved only through discussions at the highest political levels. The implementation performance isjudged satisfactory.
7.6 Implementinig Agency:The implementation agencies were the PIDs, one in each Entity reporting to the respective Ministry ofTransport and Communications. In Republika Srpska the PID became quickly an integral part of the RoadAdministration whereas in the Federation it was a separate organization. Both PIDs have performed veryefficiently and the most obvious proof of this is that the project was completed on time and within budget.The foreign technical assistance which was available at the beginning of the project in both PIDs was aftersome time considered no longer necessary and both operated from then on with only local staff. In additionto the activities funded under the Bank-administered part of the Project, the PIDs have also administeredworks funded under an EBRD loan (as part of the ETRP). The frequent contract audits conducted by thePMAU (Project Monitoring and Audit Unit set up by the Bank in collaboration with the authorities ofBosnia and Herzegovina) has verified the proper and correct functioning of the PIDs. Their performance isevaluated as highly satisfactory.
7.7 Overall Borrower per]brmnance:Overall borrower performance for the Bank component of the project is judged as satisfactory.
8. Lessons Learned
* Continuity of Involvement. For the Borrower as well as the Bank, the staff involved was practically thesame since the start of the Bank's activities in Bosnia and Herzegovina. Such continuity often greatlyfacilitates operations and it is of particular importance in a situation such as in Bosnia and Herzegovinawith its unconventional government structures and particular problems.
* Project Implementation Directorates. In an emergency situation where speedy implementation is crucialand where established institutions do not exist or where their performance is uncertain, it makes sense tocreate special organizations for project implementation which can focus all their attention on the task athand without being diverted by other considerations. From this perspective the PIDs have proven mostuseful and appropriate. However, they should be seen as transitory arrangements only, and be integratedinto more established administrative structures as soon as feasible. This has already taken place inRepublika Srpska and a logical step in the Federation would be to integrate the PID, with its knowledgeand competence, into a developing road administration.
* Simplicity of Project Design. An emergency project implies an abnormal situation with a strongrequirement to focus on what is agreed to be the central objective of the project, namely rehabilitation ofphysical infrastructure. Although it is reasonable to state that all involved recognized the importance ofdeveloping the appropriate institutions, the main priority nevertheless was the physical reconstruction of thetransport links. The institutional part was therefore not given enough attention and priority in the politicaldiscussion and process. It is therefore legitimate to question if in an operation which is classified as anemergency reconstruction project it is feasible to focus efficiently on institutional development, whichnormally requires an environment where emergency reconstruction is no longer the main priority. Moregenerally it is also questionable to assume decisions and actions during a project, emergency or not, whichrequire parliamentary discussion and decisions. The speed and circumstances of such discussion anddecisions has proven impossible to predict. This is not putting in question the sincerity of the intentions and
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objectives of those involved, but rather a recognition of the inherent characteristics of such processes.
Time Needed for Reforms. Closely linked to the previous lesson is the question of time needed forinstitutional reform and, more fundamentally, the question of where the push for reform has to originate inorder to be successful. Even in an extreme, post-conflict situation such as in Bosnia and Herzegovina,where the international community has much more leverage than in most other countries, the prospects forreforms have proven slim in the absence of local consensus and interest. The situation with respect to theunsatisfactory progress in establishing the Federation Road Administration is but one example of this in thetransport sector. Another more revealing example is that of the railways where the international communitytook the lead and used its powers but where progress has been very slow and mainly of a purely cosmetictype. This lack of progress happened despite the decision of the donors to withhold funding unless therewas progress in organizational and operating agreements. In both of these cases there are compellingobjective reasons to proceed rapidly with reforms, but unless these reasons have been weighed in thepolitical process against the perceived disadvantages for the different ethnic groups, progress is not likely tobe forthcoming. It is also important to note that it is not a question of lack of understanding or informationon the part of the local opinion and decisionnakers. Thus the progress is not likely to be speeded up byinitiatives such as seminars, reports, consultants, and the like.
* Project Concept and Definition. Following the experience from the ETRP, the Project was conceived anddefined not only in terms of those components that the Bank was going to finance, supervise and generallyhave a responsibility for, but as a much broader concept. This broader concept was in fact a program forthe reconstruction of the whole transport sector. As such it was also foreseen that various parts of thisprogram would be implemented by different donors in a very decentralized way. The coordination that wasforeseen, and implemented, was one of exchange of general information rather than any kind of centralizedmanagement and control. The reason for such an approach was that it provided a structure foridentification and discussion of priorities between the governments and the donors in the particular situationthat existed. As such it has been a useful tool. The drawback of such a project concept is that it introducesquite some ambiguity and confusion about what the project actually is. Since the responsibility for thedifferent components is so decentralized, it becomes after some time impossible for Bank missions to followin great detail what is happening in the discussions with different donors about various components.However, it seems that the advantages of providing such a program framework in some emergencycircumstances do outweigh the disadvantages and possible confusions about what the Bank project actuallyis. It is however an approach that should be used very sparingly and in specific situations only. Even then itmight be asked if the program could not be better presented through a sector work type report to thegovernments and the donor community. In the recent Kosovo Urgent Road Project, this issue has beenhandled by clearly defining the project as comprising only the Bank financed components while theprogram, of which the project is a part, is described separately as the context and background for theproject without being made part of the project definition. This latter approach may be preferable as itenables project preparation and supervision work to be more focused.
9. Partner Comments
(a) Borrowt'erlimplementing agencv:The comments of the Borrower/Implementing Agency are in Annex 8 and summarized below.Project components corresponded well to actual needs with respect to transport reconstruction as well as foreconomic recovery and unification of Bosnia and Herzegovina. The priorities of the items included areconsidered to have been obvious and noncontroversial in light of the damages incurred during the war. Theworkings of the two PIDs is deemed to have been important for the project to start on time and move forwardquickly. Local consultants and contractors provided competent, adequate and timely services. The increasing
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competition in the construction industry led to lower than expected prices, which in turn allowed a higherthan foreseen quantity of reconstruction to be carried out. The slow availability of counterpart funds from theEntity government budgets to pay for the 10% of the civil works contracts is noted. On the institutionaldevelopment side, the failure to establish an efficient Federation Road Administration is lamented, a failurewhich is deemed to result in the loss of the experience gained during project preparation and implementation.
IndhatodlMtx ProJected In kat PSR AcbaNLatw*EstmatSupport Republika Srpska fiscal and trade Achieved Achievedreforms, by creating the conditions forefficient budget formulation and execution,and for effective implementation of theapproved trade and customs policy reforms
Remove critical bottlenecks on the main road Achieved Achievednetwork and support the progressivere-establishment of adequate roadmaintenance activiies countrywide
Note: The indicators mentioned in the table above are really the overall objectives of the Project, as nooutcome/impact indicators were defined during project preparation. As described in the main text of the ICR,these objectives can be considered achieved.
Output Indicators:ffld_1ao*tWx P*td In lastP$R P4st*no
Rehabilitation of about 157 km of road About 205 km of road sections rehabilitated About 205 km of road sections rehabilitatedsections on the main road networkRehabilitation of 5 bridges 7 bridges rehabilitated 7 bridges rehabilitated
Supply of 16 tipper trucks to Republika 15 tipper trucks delivered 15 tipper trucks deliveredSrpskaGradual increase of Entities road 2000 estimated budget in Republika Srpska: 2000 estimated budget in Republika Srpska:maintenance budgets to at least US$15 US$20 million US$20 millionmillion 2000 estimated budget in the Federation: 2000 estimated budget in the Federation:
US$6 million US$6 million
Law on Roads passed in the Federation Not Achieved Not Achieved
End of projectNote: this annex refers only to the Bank-funded part of the Project.
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Annex 2. Project Costs and Financing
Proect Cost b Com onent (in US$ million e uivalent)
A. Adjustment Component 9.00 9.00 100
B. Transport ComponentCIVIL WORKSRoad Rehabilitation 22.30 22.40 100Bridge Rehabilitation 3.70 3.80 100Mine Clearing 0.10 0.00 0GOODSSupply of Trucks 1.20 1.30 108SERVICES 1/ 2.40 0.60 29INCREMENTAL OPERATING COSTS 0.30 0.40 133
Total Baseline Cost 39.00 37.50
Total Project Costs 39.00 37.50Total Financing Required 39.00 37.50
1/: The difference between the appraisal and actual costs stems mainly from the fact that trust fund moneybecame available to fund the costs of services under the Project.
Project Costs by Procurement Arrangements (Apraisal Estimate) (US$ million equivalent)
Total 13.10 12.20 6.10 147.70 179.10(11.90) (11.00) (5.60) (0.00) (28.50)
Figures in parenthesis are the amounts to be financed by the IDA Credit. All costs include contingencies.
Includes civil works and goods to be procured through national shopping, consulting services, services of contractedstaff of the project management office, training, technical assistance services, and incremental operating costs related to(i) managing the project, and (ii) re-lending project funds to local government units.
Project Financing by Component (in USS million equialent). . M , -- -- . >"ni~~~~~~~~abegp of Apprabnd
1/: The difference between the amou;nt of technical assistance foreseen to be funded by cofinanciers and the Bankcredit and actually funded can be explained by the fact that a significant part of this technical assistance waseventually funded under Bank-administered Trust Funds, which are shown as cofinancing for the purposes of thistable.
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Annex 3: Economic Costs and Benefits
The ERR for those road sections foreseen initially to be funded under the Bank Credit has been recomputed basedon the assumptions presented in paragraph 4.3 of the main text (see table below). The overall ERR, estimated at42.6% at appraisal, has now been found to have increased to 57%, mainly because short-term traffic growth seemsto have been underestimated during project preparation.
Road Section Appraisal 2000 Actual 2000 ERR at Recalculated ERRAppraisal %
AADT AADT %increase %
Obudovac-Loncari 3486 43 31.2 44.9
Loncari-Brcko 3486 43 39.8 55.4
Brcko-Bijeljina 4113 22 63.1 84.5
Bijeljina-Raca 5775 NA 82.6 94.8
Banja Luka-Gradiska 5121 95 40.2 71.6
Doboj-Samac 3327 50 33.8 45.3
Derventa-Seslije 2760 81 23.6 44.8
D Vakuf- Bugojno 4730 NA 57.6 65.1
Sicki Brod-Cerik 3388 48 35.2 48.5
Cazin-V Kladusa 2605 NA 30.5 33.8
Olovo-Kladanj 2812 78 38.9 64.9
Semizovac-Olovo 3614 38 38.3 52.2
Caplina-Grude 3945 NA 49.7 55.6
Livno-Karlov Han 2469 NA 41.6 46.8
Visoko-Lasva 5855 71 33.1 47.5
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Annex 4. Bank Inputs
(a) Missions: . ..
Stage of Proiect Cvcle No. of Persons and Specialty Performance Rating__ Count(e.g. 2 Economists, I FMS. etc.) Implementation Development
Macro policies O H *SUOM O N O NAZ Sector Policies O H O SU * M O N O NAZ Physical * H OSUOM O N O NAa Financial O H OSUOM O N * NAZ Institutional Development 0 H O SU * M 0 N 0 NA0 Environmental O H O SU O M O N * NA
Sociala Poverty Reduction O H OSUOM O N * NAElGender OH OSUOM ON *NAa Other (Please specify) O H OSUOM O N * NA
a Private sector development 0 H O SUO M 0 N 0 NA0 Public sector management 0 H O SU * M O N 0 NAa Other (Please specify) O H OSUOM O N * NA
FE Lending OHS OS OU OHU• Supervision OHS OS OU OHUZ Overall OHS OS O U O HU
6.2 Borrowerperformance Rating
Z Preparation OHS OS O U O HUZ Government implementation performance O HS O S 0 U 0 HU* Implementation agency performance' OHS OS O u O HU? Overall OHS OS O U O HU
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Annex 7. List of Supporting Documents
* Project Preparation and Supervision Missions' Back-to-Office Reports, various dates.* Bosnia and Herzegovina, Technical Annex, Second Emergency Transport Reconstruction Project,
dated August 8, 1997.* Bosnia and Herzegovina, Priority for Recovery and Growth, prepared by the Central Europe
Department of theWorld Bank and the European Bank for Reconstruction and Development with the Active Cooperation
of the IMGfor the First Donor's Meeting to be held in Brussels on December 20-21, 1995, dated December 8, 1995.
* Bosnia and Herzegovina, The Priority Reconstruction Program: 1996 Achievements and 1997Objectives, prepared
by the European Commission and the Central Europe Department of the World Bank, dated March1997.* Bosnia and Herzegovina, 1996-1998 Lessons and Accomplishments, Review of the Priority
ReconstructionProgram and Looking Ahead Towards Sustainable Economic Development, A Report prepared for the
May 1999Donors Conference, co-hosted by the European Commission and the World Bank.
e Bosnia and Herzegovina, Implementation Completion Report, Emergency Transport ReconstructionProject,
dated December 8, 1999.* Second Emergency Transport Reconstruction Project, Progress Reports prepared by the Federation and
RepublikaSrpska Project Implementation Directorate, various dates.
* International Management Group Task Force Meetings Reports and Update on the EmergencyTransport
Reconstruction Program Implementation Progress, various dates.* Draft of the Bosnia and Herzegovina Transport Master Plan, prepared by Pacific Consultants
Intemational, dated March 2000.
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Additional Annex 8. Borrower's Contribution
1. INTRODUCTION
1.1 Prior to the hostilities, the transport system of Bosnia and Herzegovina (BiH) was organized to meetthe needs of the former Yugoslavia. Inland transport was provided by a road system (including 8,600 km ofmain and regional roads). As with other sectors, the ability of the transport sector to function was seriouslyaffected by the hostilities. Republic of Srpska was excluded from the Emergency Transport ReconstructionProject and, in large part, resulting from sanctions, the donor community provided just 3-4% of resources toRepublic of Srpska till the end of 1997. Starting in 1998, recovery started with large scale of intemationalassistance. The Second Emergency Transport Reconstruction Project (SETRP) combined an adjustmentcomponent in support of the budget of Republic of Srpska (SDR 6,510,000) with a transport investmentcomponent for rehabilitation of roads, reconstruction of bridges, and supply of goods (SDR 10, 760,000). Inthe Federation it contained rehabilitation of roads, bridge reconstruction, mine clearance and consultingservices (SDR 10,940,000).
1.2 Roads: The four years of hostilities affected the entire road network. Virtually no significant roadmaintenance was carried out and this combined with military traffic caused significant deterioration in roadpavements. While some sections of main roads exhibited only superficial signs of apparent wear, they werewell past due periodic maintenance and visible distress was expecied shortly with a more rapid deteriorationsetting in quickly. In the Republic of Srpska it was estimated that approximately 50% and in the Federationapproximately 28% of the main and regional road network required immediate attention, within a new threeyear program, to remedy both damage and the more severe effects of maintenance neglect due to heavy trafficon them.
1.3 Bridges: Bridges were prime strategic targets in military operations and during the four years ofhostilities about 20 bridges in Republic of Srpska and 7 bridges in the Federation were damaged specially byNATO bombing. Additionally, about 10 bridges in Republic of Srpska and 25 in the Federation were madeimpassable. Many of these bridges were on main routes with the principal crossings being maintained throughmakeshift deviations or single lane military bridges. Although, for some of the impassable bridges, both partor all of the superstructure and, in some cases, piers and/or pierheads had been destroyed, many had the piersand abutments still standing and most reconstruction would be confined to replacement of the decks. Withfinancing from the RS Government (for designs), EBRD, IDA, EU and Italian and Japan Grants, most ofthese bridges are by now reconstructed.
1.4 Construction and Maintenance Equipment: Many items of construction and maintenanceequipment were damaged, destroyed or purloined during the hostilities. Much of the remainder suffered fromneglect due to an inability to use the equipment or through lack of spare parts. Shortage of the equipmentinitially hampered reconstruction of the transport system. Under the SETRP, part of urgent needs wereaddressed and 15 trucks were provided for public road maintenance companies. Also, Japan Grant (US$4.5million) and Dutch Grant (US$2.5 million) were used for procurement of construction and maintenanceequipment and it was distributed to public road maintenance companies. RS Road Directorate from DutchGrant procured 60 traffic counters and their installation will be completed by the end of 2000.
1.5 Institutions: Most institutions in B&H suffered a loss of staff and premises and there wasinsufficient budgetary support for their operations. The RS Roads Directorate operated from 1994 and a newLaw of Roads was adopted in 1996. Budget for roads maintenance increased from US$15 million in 1997 toUSS25 million in 2000. Improvement in road maintenance operations is remarkable in both the management
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and financial sector. A new RS Road Directorate building was constructed in 1999 (funded by RSGovernment) and the number of engineers and other technical staff increased.
1.6 Progress regarding institutions in the Federation has been scant. The basic legal framework,especially the Law on Roads which is a prerequisite to formally establish the road administration with itsstructures and duties, has not yet been passed by the Federation parliament. The discussions about such a lawhave been ongoing for several years but without any concrete results yet. Such a seemingly technical lawentails consequences for questions such as centralization vs. decentralization, the role of the cantons, theallocation of tax revenues, etc. and as such will require agreements about fundamental political questions inthe Federation. In the meantime, a small road administration has been put in place but it has been able toperform only minimal duties, such as proposing allocations for budgetary discussions and processingcontracts for maintenance activities on a largely non-competitive basis and without a clear setting ofpriorities. As it is lacking in agreed stature and resources, such basic functions as an agreed upon fundingmechanism, traffic counts, road condition databases, maintenance and construction planning, etc. are alsolacking.
2. PROJECT DESCRIPTION AND OBJECTIVES
2.1 The objective of the SETRP was to reconstruct and repair urgent high priority links and services inthe transport system - particularly roads and bridges, to provide equipment and assistance to prepare,implement and maintain the program works and to provide a framework for the future development andmanagement of the country's transport system in both the Federation and Republika Srpska.
2.2 The SETRP included the following:(i) the rehabilitation of about 405 km in the Federation and 557 km in RS of main and regional roads;(ii) reconstruction of about 9 bridges in the Federation and 7 in RS;(iii) construction and maintenance equipment in RS; and(iv) technical assistance for project preparation, implementation and support to transport institutions
in both RS and the Federation.
2.3 The SETRP continued the reconstruction activities initiated under the ETRP and RS GovernmentTransport Plan, Plan which was distributed in 1997 at the Second Donor Conference for the reconstruction ofBosnia and Herzegovina. Specifically, the SETRP: (i) removed critical bottlenecks - bridges and NorthCorridor link, (ii) resumed operations of major transport network, (iii) ensured connections toZagreb-Beograd motorway (bridges over Sava River), (iv) ensured development of the transport sector andrelated institutions, (v) contributed in the rebuilding of local contracting and the consulting industry. Also,this project supported establishing regular road maintenance activities in RS. The components comprisedmostly those items which were adequately funded and of top priority. Preparation was such that the projectobjectives included the intention that all the contracts would be awarded during 1998 and 1999.
2.4 Project Components
(a) The adjustment component provided 6,510,000 SDR to support key macroeconomics policyreforms in RS.
(b) The investment component concentrated on principal road network in Republic of Srpska(East-West Corridor Novi Grad - Bijeljina) as well as the North-South Corridor (Bijeljina -Trebinje) and the supply of construction/maintenance equipment.
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2.5 Roads: The project included those sections of high priority roads where only a minimal to mediumlevel of design work was required. The total of sections was approximately 405 km in the Federation and 560km in RS.
2.6 Bridges: About nine in the Federation and seven in RS bridges of concrete and compositesteel/concrete were included for repair or reconstruction.
2.7 Technical Assistance: Provision of consultants' services and engineering equipment to assist bothFederal and RS Ministry of Transport and Communications (FMTC and RSMTC) with Project road andbridge design and construction supervision.
2.8 Construction and Maintenance Equipment: Maintenance equipment was supplied to RS publicroad maintenance companies to upgrade their maintenance capacity. This component was dedicated tophysical works equipment, necessary to gradually improve maintenance operations. Office and engineeringequipment was provided through the institution building (IMG) component of the project.
2.9 Vehicles, engineering and design equipment: Equipment and goods were provided for the RSRoads Directorate and local consultants for preparatory work and construction supervision.
2.10 Costs: The estimated cost of the proposed total project was US$ 175 million. Of this US$ 175million, the World Bank would provide US$ 30.0 million from the Trust Fund for Bosnia and Herzegovina(TFBH) and the objectives achieved, utilizing the above US$ 30.0 million, are the subject of thisImplementation Completion Report.
Proposed Project Financin2 Plan
Item Total Cost TFBHUS$(M) US$
.__ _ _ __ Uv[(M )
Roads 50.0 22.3
Bridges 16.1 3.7
Const. & Maint. Equipment 9.0 1.2
Technical Assistance 7.3 2.4
Mine Clearing 1.1 0.1
Institutional building 2.5 0.3
TOTAL 175.0 30.0
2.11 Special Account: In order to facilitate timely project implementation, the Bosnia andHerzegovina Ministry of Foreign Trade and Economic Relations established, maintained and operated, under
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conditions acceptable to the IDA, a Special Account in US dollars in Crown Agent Financial Services,London.
3. PROJECT IMPLEMENTATION
3.1 Organization of Implementation: Initially the SETRP program was commenced at the end of April1997, and became affective on September 25, 1997. The Start Up Services (SUS) consultants providedengineering services and assistance to both FMTC and RSMTC to set up the project, arrange for design andsupervision contracts, conduct additional road condition surveys and prepare specifications in bothFederation and RS, and confirm equipment requirements in RS.
3.2 Project Implementation Directorate (PID) of the Federation of BiH was already established andfully staffed by that time and in the Republic of Srpska Ministry of Transport and Communications(RSMTC) the PID, with a staff comprising a local Director and a small staff, was established at thebeginning of 1997.
3.3 Institutional Arrangements: The project was implemented through the PIDs. Although initially itwas intended that the PIDs would have the responsibility for overseeing the management of the projectthrough the actual implementing agencies such as the Roads Directorates, the early dissolving of the RoadsDirectorate in the Federation meant that the PIDs had to assume full responsibility for the implementing ofthe project, with the assistance of the SUS consultants.
3.4 Roads and Bridges: The SUS consultants therefore assisted the FPID in procuring the services oflocal consultants to undertake designs and construction supervision.
3.5 Procurement, Accounts and Reporting: In view of the urgent nature of the SETRP, the works andthe goods (in RS) as well as services were required to be contracted and supplied quickly so thatreconstruction works could start as soon as possible and also be seen to be starting. Procurement for TFBHfinanced items and those financed from Bank administered finds followed the Bank's Guidelines forprocurement under emergency projects.
3.6 A General Procurement Notice (GPN) was published on March 16, 1997. The GPN advertised theextent of t,he SETRP and invited expressions of interest from interested contractors, suppliers and consultingfirms. For International Competitive Bidding (ICB), the Bank's standard prequalification documents werefollowed. However, for National Competitive Bidding (NCB), special documentation was prepared withcriteria taking into account the general state of the civil engineering industry in Bosnia and Herzegovina andthe lack of work, by contractors, during the period of hostilities.
3.7 In the early stages of the SETRP, contracts were awarded by Simplified National CompetitiveBidding (SNCB), in order to proceed with the program as quickly as possible. As the SETRP progressed,the contractors restored or replaced their equipment and subsequently became more efficient and competitive.Therefore, towards the end of the SETRP, the contracts were then procured by advertising in the nationalpress and awarded using National Competitive Bidding (NCB).
3.8 In all cases, the World Bank's Standard Bidding Documents were used. The documents werecustomized and approved for each component to avoid further reviews. The bidding documents weretranslated into the local language to assist the local contractors and consultants. In order to progress with theprogram as quickly as possible, the period allowed for submission of bids was reduced to four weeks. Bids
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and currencies were limited to the currency in use in B&H following the cessation of hostilities, namely theDeutsche Mark, but for foreign Contractors, it was limited to the US$ in RS.
3.9 Once contracts were awarded, a Special Account was established with ING Bank in Vienna for theFederation and CAFSL (Crown Agents) in London for RS. This account was monitored by the Federal andRS PID Transport respectively and they submitted replenishment applications as required, which includedreconciled bank statements as well as other appropriate supporting documents.
4. ASSESSMENT OF THE PROJECT
Suitability of the project's objectives
4.1 The project's objectives, mentioned in section 2 of this report, were well founded based on the urgentneed to re-establish the transport system and assist in the recovery of economic activity and the unification ofthe country.
4.2 The approach of the Banks to establish the Project Implementation Directorates of Transport incommon work with a "Start Up Services" and "Roads Advisory services" consultants, worked well andbecause of this, the project was able to commence on time and move forward quickly.
4.3 Due to the damage to the transport networks, the priorities of the project's objectives virtuallyestablished themselves. The main objectives for the road network were to re-establish the vital link betweenthe Port of Ploce, and Sarajevo and Zenica to the north in the Federation and Novi Grad and Bijeljina in RSand also to carry out urgent repair works to the vital bridges on the main routes.
4.4 The objective of providing equipment and goods to the Roads Directorate was considered to besuitable and necessary in both the Federation and RS.
Adequacy of the project design and components
4.5 In determining the project components, the International Management Group (IMG) had undertakenvisual inspection of most of the road network, using local consultants to assess the damage repair costs. Theroad program was arrived at by using the collected data together with 1987 traffic data adjusted for changesin traffic patterns. An economic appraisal was also undertaken for each activity proposed in the roadsprogram: reconstruction, rehabilitation and overlays.
4.6 The bridge repair program was determined by reviewing the critical bottlenecks in the road transportsystem caused by bridges destroyed during the course of the hostilities. Temporary bridge structures were inplace on most of the main routes where bridges had been completely destroyed, but they were normally onlysingle lane. Therefore traffic was delayed as a consequence of the reduced capacity and, at certain locations,waiting times were considerable. The project bridges selected for financing were on main road links and theirreconstruction/repair would obviate the use of dangerous and/or lengthy deviations.
4.7 As stated earlier in paragraph 4.2, the establishing of the Project Implementation Directorates ofTransport together with a "Start Up Services" consultants, enabled the project to commence on time andmove forward quickly. Contracts for engineering design work and preparation of bidding documents weresoon awarded to local consultants. These local consultants carried out the designs according to appropriateand consistent standards. Work packages were then assembled to enable a variety of procurement methods tobe adopted.
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Overall quality and speed of project implementation
4.8 The title of the Second Emergency Transport Reconstruction Project speaks for itself of the urgencyfor implementation of this project, especially in view of the project's objectives. The early establishment ofthe "Start Up Services" consultants ensured that, although in the early stages of the program in theFederation, the Roads Directorate was not fully functioning and was eventually dissolved, the programmewas able to progress quickly. Contracts were negotiated and awarded to local consultants and contractorsthrough the PIDs.
4.9 Bearing in mind the state of the civil engineering industry in Bosnia and Herzegovina after thecessation of hostilities, the overall quality of the project implementation was satisfactory from the initialstages of the program and it improved all the time throughout the project. In particular, contractors were keento rebuild their companies and many of them re-invested profits within their companies. This became evidentas new equipment was purchased.
4.10 The other very noticeable occurrence during the project was the increasing competitiveness of thecontractors. Bidding prices fell throughout the project programme and this enabled more roads and bridges tobe repaired than was envisaged in the early stages of the project.
4.11 Although the initial intention of the reconstruction program was for all the contracts to be awardedduring 1998 and, for the most part, disbursements to be made the same year, this was not met. The mainreason was that the timing of the construction contracts was such that in some cases the work was delayeddue to the Bosnian winter. Plans were therefore postponed until 1999 because of the winter weather. Inaddition to this, as stated earlier, the reduction in prices ensured that further schemes were brought into thereconstruction program at the request of the Ministry of Transport and the approval of the World Bank.These could not be undertaken until the construction season of 1998 and 1999. Similarly, further plans havebeen added during 1998 and 1999 as the remaining available funds have been distributed to repair furthersections of the main road network widely through Republic of Srpska and Federation of Bosnia andHerzegovina.
4.12 The Credit Agreement foresaw that 10% of the civil works contracts be paid by the Entities. TheEntity govemrnents have been slow to allocate money for these payments which has meant that thecontractors have been forced to extend a corresponding amount of credit to the governments. The situationdid improve, however, during implementation so that at the end, counterpart payments due correspond moreor less to performance guarantee due to the contractors one year after completion of the works.
Experience gained during project implementation
4.13 The main experience gained during the project has been by the local consultants in undertaking thenecessary design and supervision contracts using World Bank procurement methods. The local consultantshave prepared the necessary Bidding Documents for the construction contracts.
4.14 One of the main problems, encountered more recently during the project, has been the consultants'lack of experience in dealing with a competitive market. The consultants, at the present time, appear unableto adapt their estimating prices to match the contractors' competitive pricing of the contracts. The result ofthis has manifested itself in recent contracts, where the consultants have tailored the road rehabilitation worksto match the available budget and this has been followed by the contractors offering more competitive pricesresulting in a lower contract price.
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4.15 At first, this appears to be a very satisfactory outcome. However, when the state of the existing roadcondition is also taken into account, the budget is never sufficient to undertake all the necessary works. If theconsultants were better able to anticipate the contractors' prices, then they would be able to include morerehabilitation works and still stay within the limited budget when the bids are received. During recentcontracts, this has resulted in both the Federation and RS Ministry of Transport and Communicationsrequesting approval, from the World Bank, for further expenditures during the rehabilitation contracts inorder to utilize the available budget.
4.16 It was also intended as part of the emergency project that the SETRP would result in bringing roadmaintenance activities up to an efficient level by providing the Roads Directorate's road maintenanceorganizations with equipment such as spare parts and appropriate workshop equipment. With the earlydissolving of the Roads Directorates in the Federation, the existing experience in road maintenance was lost.The Federation Ministry of Transport and Communications is now trying to re-establish a RoadsDirectorate, but to date there has been no "follow-up" road maintenance program to continue from therehabilitation works which have so far been undertaken within the SETRP. With the ending of the SETRP,the opportunity to gain maintenance experience from the program has achieved results in RS, but in theFederation it now has been lost.
5. EVALUATION OF PERFORMANCE OF THE RS AND FEDERATION TRANSPORT PIDs
5.1 As stated in the Credit agreement, the execution of the project was given to both the Federation PID,established in 1996, and to the RS PID, established in 1997.
5.2 Both the Federation and RS Transport PIDs were responsible for the rehabilitation of the roads,reconstruction of bridges, associated mine clearance, and for the consultants' services for the necessary roadand bridge design and construction supervision.
5.3 The Federation Transport PID consisted of a Director, two Economists, three Civil Engineers and aSecretary. The FPID Transport was greatly assisted by the consultants, who were based in both FPID andRS PID offices and were experienced in both contract preparation and administration. The RS Transport PIDconsisted of a Director, an Economist, three Civil Engineers and a Secretary.
5.4 The FPID performed the assignments the most professional way possible and the proof of this is themany works which were implemented within grants and credits awarded by various investors. It also must benoted that since the Emergency Transport Reconstruction Project started, the FPID did not have any seriouscontractors' claim addressed or any monitoring objection in view of misprocurement or misunderstanding ofterms or rules.
5.5 Both PIDs would like to stress the significant contribution of the World Bank representatives basedat the Resident Mission in Sarajevo and Washington. Their local support ensured that clarifications andapprovals could be obtained quickly which greatly assisted the speed of implementation of the project.
6. IDA TRUST FUND CREDIT
6.1 The IDA Trust Fund Credit Agreement provided the Federation with US$ 15.13 million towards theSETRP and the RS with US$ 14.627 million.
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6.2 This can be broken down into the respective components as follows:
RS Transport PID ExpendituresRoad and bridge rehabilitation/reconstruction US$ 12.251 millionGoods (Maintenance Equipment) US$ 1.270 millionConsultants' services for roads and bridges US$ 0.139 millionPID Costs US$ 0.213 millionTOTAL US$ 13.892 million
Federal Transport PID Expenditures* Road and bridge rehabilitation/reconstruction US$ 13.944 million
Consultants' services for roads and bridges US$ 0.451 millionMine Clearance US$ 0.0 millionPID Costs US$ 0.192 millionTOTAL US$ 14.587 million
6.3 From the above figures, it can be seen that the most significant expenditure has been within the roadand bridge rehabilitation/reconstruction programme, together with the road maintenance equipment in RS andassociated consultants' design and supervision costs. Therefore, we have taken this opportunity to furtherstudy these costs to evaluate the final costs of the works and to compare them with the original estimatedcosts, the designers' revised estimated costs and how the costs changed during the period of the project. Intotal, 19 contracts in the Federation and I I in RS, were undertaken for civil works. These included 6 bridgereconstructions in the Federation and 2 in RS with the remainder being road rehabilitation contracts.
6.4 For the bridge reconstruction works, the final contract cost was often higher than the bid valuebecause once the reconstruction was underway, additional work became necessary to complete the repairs.
6.5 Looking at the 13 Federation and 9 RS road rehabilitation costs produces different results. In generalterms, the road rehabilitation bid values were always less than the original estimates, with the exception ofone contract in the Federation which was 102% of the estimated figures. In the Federation the average costwas 78% of the original estimated figures. Also in general terms, final contract prices were the same as thebid values allowing for currency exchange rate fluctuations between the Dollar and the Deutsche Mark.
6.6 As stated in paragraphs 4.16 and 4.17 the contractors have become much more competitive and thiscan be seen in three of the last four contracts in RS. However, additional works have been undertaken onthese schemes, using Variation Orders, in order to use more of the budget and the final costs compared withthe original estimates range from 75% to 90%, with the average cost being 85% of the original estimates. Inthe Federation, the same phenomenon was observed, with the average cost being about 72% of the originalestimates in Federation. This downward trend has been much more noticeable at the time prior closing theproject.
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