Document of The World Bank FOR OMCIAL USE ONLY ReportNo. 11128 PROJECT COMPLETION REPORT JAMAICA HIGHWAY MAINTENANCEPROJECT (LOAN 2293-JM) SEPTEMBER 17, 1992 DepartmentIII Infrastructure Division Latin America and the CaribbeanRegional Office This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may 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
Transcript
Document of
The World Bank
FOR OMCIAL USE ONLY
ReportNo. 11128
PROJECT COMPLETION REPORT
JAMAICA
HIGHWAY MAINTENANCE PROJECT(LOAN 2293-JM)
SEPTEMBER 17, 1992
Department IIIInfrastructure DivisionLatin America and the Caribbean Regional Office
This document has a restricted distribution and may be used by recipients only in the performance of
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CURRENCY EQUIVALENTS
Currency Unit - J$
Official Rate Approximate Selling Rate at the
Official Parallel Market(Since January 1983)
US$1.00 - J$1.78 US$1.0 - J$2.60
J$1,000 - US$0.56 J$ 1.0 - US$0.38
GLOSSARY OF ABBREVIATIONS
CDB Caribbean Development BankERR Economic Rate of ReturnDEMS Directorate of Electrical and Mechanical Services (MOC)
DM Directorate of MaintenanceDPB Directorate of Planning and BudgetingCOJ Government of JamaicaHFS Hire Funding SchemeICB International Competitive Bidding
MOC Ministry of Construction (Works)
NPV Net Present ValueRMCS Road Maintenance Works Costing System
RTU Road Training Unit
FISCAL YEARApril 1 to March 31
FOR OFFICIUL USE ONLY
THE WORLD BANKWashington, D.C. 20433
U.S.A.
Office of Director-GeneralOperations Evaluation
September 17, 1992
MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT
SUBJECT: Project Completion Report on Jamaica Highway Maintenance Project
(Loan 2293-JM)
Attached, for information, is a copy of a report entitled "Project
Completion Report on Jamaica Highway Maintenance Project (Loan 2293-JM)"
prepared by the Latin America and the Caribbean Regional Office with Part
II of the report contributed by the Borrower. No audit of this project has
been made by the Operations Evaluation Department at this time.
Attachment
This document has a restricted distribution and may be used by recipients only in the performance of
their official duties. Its contents may not otherwise be disclosed without World Bank authorization.
FOR OFFICIAL USE ONLY
PROJECT COMPLETION REPORT
JAMAICAHIGHWAY MAINTLNANCE PROJECT
(LOAN 2293-JM)
TABLE QF CONTENTS
Page No.Preface ..............................................................Evaluation Summary ..................................... ii
Part I PROJECT REVIEW FROM BANK'S PERSPECTIVE
A. Project Identity .................................... 1B. Background .................................... 1C. Project Objectives and Description. 2D. Project Design and Organization. 3E. Project Implementation. 5F. Project Results. G. Project Sustainability. 9H. Bank Performance and Lessons Learned. 9I. Borrower Performance and Lessons Learned .11J. Bank-Borrower Relationship .12K. Consulting Services .13L. Project Documentation and Data .14
Part II PROJECT REVIEW FROM BORROWER'S PERSPECTIVE
A. Comments on Part I of the Project Completion Report .15B. Evaluation of the Bank's Performance .16C. Evaluation of the Borrower's Performance .16
Part III STATISTICAL INFORMATION
Related Bank Loans .18Project Timetable .19Loan Disbursement .19Project Implementation .20Project Costs and Financing .21Project Results .22Status of Loan Covenants .23Use of Bank Resources .25
This document has a restricted distribution ind may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.
PROJECT COMPLETION REPORT
JAMAICAHIGHWAY MAINTENANCE PROJECT
(LOAN 2293-JM)
PREFACE
This is the Project Completion Report (PCR) on the HighwayMaintenance Project in Jamaica financed under Loan 2293-JM for US$15.0million. Loan 2293-JM was approved on May 26, 1983, and the project wascarried out from 1983 to 1989. The original closing date was June 30, 1987,subsequently extended to June 30, 1989. The loan was fully disbursed, withthe final disbursement made on January 11, 1990.
The PCR was prepared by the Infrastructure Division CountryDepartment III, of Latin America and the Caribbean Regional Office. It isbased on the Staff Appraisal Report, the Loan Agreement, information gleanedfrom the project files, and materials obtained during project completionmission and discussions with Bank staff and MOC(W)'s consultants who wereassociated with the project.
This report contains Parts I and III prepared by the Bank andPart II prepared by the Client. Part II reflects the Borrower's perspectiveof the project's implementation achievements and difficulties.
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PROJECT COMPLETION REPORT
JAMAICAHIGHWAY MAINTENANCE PROJECT
(LOAN 2293-JM)
EVALUATION SUMMARY
Obiectives
1. The Highway Maintenance Project was designed to ensure continuedBank assistance in the road sub-sector to support the Government's strategyfor preserving, rather than expanding, the country's main network. Theproject provided funds for urgently needed maintenance of selected sectionsof the network; procurement of vehicles and maintenance equipment; andstrengthening the institutional capability of the Ministry of Construction(Works) [MOC(W)]. It also supported the re-establishment of a Hire FundingScheme to manage MOC(W)'s equipment and vehicle fleet. The main thrust ofBank assistance in the transport sector was to further the developmentprocess to upgrade the road transport infrastructure, begun under theprevious four Highway Projects, Loans 408-JM, 899-JM, 1032-JM, and 1740-JM.The project was closely linked with the macro policy objectives to fostereconomic development through institutional strengthening and the reduction oftransportation costs (paras. 1 through 3).
Implementation ExRerience
2. From its beginning the project was classified as a "problemproject" and its implementation was substantially at variance with the planagreed at appraisal. Implementation was affected by several problems: (i)delay in declaring the project effective; (ii) delays in procuring technicalassistance consultants and hiring local counterpart staff needed tostrengthen MOC(W)'s project management capabilities; (iii) delays inpurchasing the new equipment; (iv) poor maintenance of MOC(W)'s existingequipment and its low availability when it was badly needed for the forceaccount works; and (v) a critical shortage of counterpart financing. Thelatter was aggravated by untimely releases of funds, lack of coordinationamong the external lending agencies, and price escalation for constructionmaterials. The re-establishment of the Hire Funding Scheme to manageMOC(W)'s equipment fleet constituted a key element of the project. TheScheme could not be organized and operated as intended because of a financialplan problem and the lack of technical assistance consultants, who were neverhired (paras. 15 through 25 and 33).
Results
3. Overall, the project results were not satisfactory. There weresome positive achievements, yet some of its main objectives were notrealized. The project took about seven years to complete 70Z of the 520miles of periodic maintenance agreed at appraisal. The intended equipmentand vehicles for road maintenance were procured. However, the Hire FundingScheme, the axle load control, road safety, and training programs were neverimplemented. The borrower's principal focus was on the maintenance works andpurchase of the road equipment, both of which used up most of the loan funds.The Road Planning Unit (RPU), assisted by consultants, developed thecapability to prepare, in-house, all new projects for appraisal by lendingagencies, with a minimum of external technical assistance (paras. 26 and 27).
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Sustainabilitv
4. The sustainability of the benefits derived from both the workscompleted under the project and the acquisition of maintenance equipment willdepend on the Government's commitment to carry out both routine and periodicmaintenance. This will require strong institutional support and adequatefunding. Poor maintenance practices and the failure to establish the HireFund Scheme may put the project's results in jeopardy. The achievements madewith the Road Planning Unit were not sustained (para. 28).
Findings and Lessons Learned
5. The Bank underestimated both the financial complexity of theProject and the impact of the IMF program on the Government's finances. Abetter financial planning at appraisal and Bank financing of a larger shareof the works component (the original 46S was not realistic) might have helpedto off-set, to some extent, both the shortage of local funds and the effectof price escalation. Furthermore, the Bank was apparently oblivious to thefact that scarce Government's funds were being allocated among numerousdonor-sponsored projects, often with inadequate regard for economic andtechnical priorities. The result was that the Government was not in theposition to fulfill its obligations to meet the budgetary targets for projectimplementation. The problems which affected the implementation of theHighway Maintenance Project were almost identical to those which plaguedimplementation of the previous four road projects, namely: budgetaryshortfalls; variances in the scope of the projects; extensions of the timefor the projects' completion; lack of final engineering and poor costestimates and the resulting cost over-runs; insufficient financial, technicaland administrative capacity of the project executing agency; and lack ofsupport for institutional improvements. This project also underscored theimportance of compliance with the loan covenants, which constitute anintegral part of Bank projects' design. The re-establishment of the HireFunding Scheme was impaired and the expected economic benefits vitiated dueto the non-compliance with the Loan covenant to contract technical assistance(paras. 29 through 31 and 33).
6. MOC(W)'s performance was hampered by the lack of institutionalcapacity for the amount of works under its responsibility. Among others, theMinistry should review its role as an entrepreneur of works, to define theamount of works to be carried out by force account and through privatecontracting. The long recognized need to reorganize the MOC(W) still exists.The Government has placed highest priority on the reform of the publicadministration and the on-going follow-on Road Infrastructure Planning andMaintenance Project provides for the strengthening of the MOC(W)'soperational capabilities through implementation of institutional changes thatwill improve the cost-effectiveness of MOC(W)'s investments. Furthermore,MOC(W) has, for the first time, consolidated all the programs supported bythe various international lending agencies active in the sector in a well-focussed investment program based on economic priorities. The implementationof this program is to be monitored at annual coordinating meetings of MOC(W)and all participating agencies, which will play a catalytic role infurthering the institutional and operational changes pursued under the Bank'sfollow-on project (paras. 32 and 34 through 38).
PROJECT COMPLETION REPORT
JAMAICAHIGHWAY MAINTENANCE PROJECT
(LOAN 2293-JM)
PART I: PROJECT REVIEW FROM BANK'S PERSPECTIVE
A. Proiect Identity
Project Name: Highway Maintenance Project.Loan Number: 2293-JM.RVP Unit: Latin America and Caribbean Region
Country Department IIICountry: JamaicaSector: TransportationSubsector: Roads
B. Background
1. The Highway Maintenance Project was designed to ensure continued Bankassistance in the road sub-sector to support the Government's strategy forpreserving, rather than expanding, the country's main network. The projectprovided funds for urgently needed maintenance of selected sections of thenetwork; procurement of vehicles and maintenance equipment; and strengtheningof the institutional capability of the Ministry of Construction (Works)[MOC(W)], including training for its staff, to plan, program and carry outthe annual road rehabilitation and maintenance operations. The project alsosupported the re-establishment of the Hire Funding Scheme as an autonomousentity that would manage MOC(W)'s equipment and vehicle fleet. The mainthrust of Bank assistance in the transport sector was to further thedevelopment process begun under previous projects to upgrade the roadtransport infrastructure. These were: the First Highway Project, Loan 408-JM(US$5.5 million, April 1965), which financed preparation of final engineeringand the construction of main arterial roads; the Second Highway Project, Loan899-JM (US$9.3 million, May 1973), which supported road maintenance; theThird Highway Project, Loan 1032-JM (US$13.5 million, June 1974), whichfinanced construction of arterial roads and the development of nationaltransportation planning; and the Fourth Highway Project, Loan 1740-JM(US$16.0 million, June 1979), which provided financial support for the Five-Year Maintenance Program (1979-1984), including technical assistance toestablish a permanent Transport Planning Unit and the Equipment Hire FundingScheme.
2. The Highway Maintenance Project was thus the Bank's fifth generationdealing with Jamaica's roads, carrying on a World Bank presence that has beenvirtually continuous since independence. The project was closely linked withthe macro policy objectives to foster economic development throughinstitutional strengthening and the reduction of transportation costs.
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C. Proiect Obiective. and Description
3. Proiect Obiectives. As described in the appraisal report, theproject'a objectives were to: (i) support the Government strategy to preserverather than expand the country's main network by pursuing the strengtheningand expansion of maintenance capacity undertaken under the previous Bank-financed highway projects; (ii) begin a high-priority routine and periodicmaintenance program; (iii) upgrade MOC(W)'s maintenance personnel throughfunctional skill training; (iv) reorganize MOC(W) to relieve it of the burdenmanaging its equipment and vehicle fleet; and (v) implement a program forcontrolling axle loads and a road safety program.
4. Prolect Description The project was designed with the followingcomponents:
a) implementation of a 3-year routine and periodic road maintenanceprogram (YY83/84 - FY85/86) that would reduce a backlog ofdeferred road rehabilitation and maintenance, necessary tosafeguard the physical integrity of the main road network. Theprogram comprised periodic maintenance for 520 miles of roads, ofwhich 160 miles needed pavement overlays and 360 miles had to besealed or resealed. Many road sections to be overlaid neededpreparatory repairs, which MOC(W) chose to carry out by forceaccount, whereas the required periodic maintenance works were tobe executed under contract with private contractors;
b) procurement of equipment for the five-year renewal program ofMOC(W)'s vehicle and equipment fleet, and purchase of workshoptools and spare parts;
c) technical assistance and training for institutional strengtheningof MOC(W)'s capability to plan, program, and to carry out futureroutine and periodic road maintenance programs, including thethree-year program financed under the project. Specifically,consultants were to assist the Ministry in (1) implementing theperiodic maintenance program and other components of the project,(2) operation of the newly established Road Planning Unit, (3)re-establishing the Hire Funding Scheme, and (4) planning andimplementing the training program. To achieve these objectivesMOC(W) agreed to employ qualified staff to fill its existingvacancies. All staff were to receive training in administrativeand technical tasks to ensure cost-effective management of thecountry's investments in roads. The institutional strengtheningprogram also envisaged a reorganization of the MOC(W) to improveits operational capacity including a program under which theMinistry's equipment and vehicle fleet, as well as theresponsibility for its management and maintenance, was to beentrusted to the Hire Funding Scheme (HFS), an entity which wascreated for this purpose under the fourth highway project; and
(d) implementation of the 1978 axle load control program and a reviewand implementation of the road safety program.
D. Proi-ct Design and Ortanization
5. Conceptual Foundation. The project was designed to carry out roadmaintenance activities to generate economic benefits to the national economyand to help MOC(W) develop a cost-effective road management system. Thefocus of the project activities was on intensive periodic and routine roadmaintenance to preserve the country's road network, and institutionalimprovements to better manage MOC(W) equipment through tne Hire FundingScheme. The concept was shared by all relevant parties and was wellunderstood, since similar project objectives had been part of the FourthHighway Project.
6. Support for the Hire Fund Scheme under the Institutional Component wasa step towards an eventual privatization of the equipment managementfunction. MOC(W)'s management of its equipment fleet has been inadequate.A chronic shortage of spare parts and inadequate maintenance practices hadresulted in a low availability of equipment (50S or less), which had beendetrimental to the timely execution of MOC(W)'s scheduled maintenanceprograms. Re-establishment of the HFS as a quasi-commercial operation wasdeemed appropriate to rationalize the use of equipment based on full costrecovery for its use. Specialized training for HFS' and MOC(W)'s personnelwas provided for under the training component.
7. Institutional Development envisaged a take-over by HFS, of both theMOC(W)-owned equipment and vehicle fleet, and the Directorate of Electricaland Mechanical Services' (DEMS) responsibility for the fleet's maintenance,rehabilitation and periodic replacement of economically unserviceable units.HFS's mandate was to operate as an autonomous, quasi-commercial, cost-effective equipment rental company which would ensure that equipment would beavailable to MOC(W), when required, for a fee that should defray the cost ofequipment amortization, its routine and periodic maintenance, and the HFS'operating expenses. This approach to management of MOC(W)'s equipment hadalready been accepted by the Government and included in the Fourth HighwayProject (LN1740-JM) but was not implemented because of the lack of seedcapital funds and postponing the hiring of consultants.
8. The Training component was designed to strengthen MOC(W)'s TrainingUnit and to improve the technical and administrative skills of some 772 roadand equipment maintenance personnel. The component included (i) theupgrading of MOC(W)'s physical training facilities; (ii) overseas trainingfor technical and administrative staff; (iii) acquisition and utilization oftraining equipment and vehicles for use in connection with the trainingactivities, and (iv) provision for 48 man-months of technical assistance byforeign consultants and 96 man-months of local instructors to strengthen theMinistry's operational capabilities in the management of its annual roadmaintenance programs.
9. Innovative AsDects. The project provided for the implementation of aninnovative approach to equipment management through the HFS whose design waspresented in a report prepared by consultants as long ago as December 1974.The report recommended that both the MOC(W)'s equipment and vehicle fleet andDEMS' responsibility for the maintenance of the equipment be transferred tothe HFS, which should be physically and financially independent of MOC(W),and operate as a quasi-private corporation. HFS was to receive a mandatefrom the Government to finance its entire operations with the proceeds from
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rental fees, which HPS would assess in line with prevailing competitivemarket prices and charge for the use of the fleet.
10. Proiect Preparation. The road maintenance component was based on thestudy completed under the Fourth Highway Project by consultants whosefindings were presented in the report entitled "Road Improvement andMaintenance Study, Stage III, October 1982". The findings were based on aroad condition survey carried out by the consultants, covering about 3000miles of the total road mileage maintained by the Directorate of Maintenance(DM). Based on the results of the survey, the consultants had selected forevery road section a suitable level of maintenance (routine, periodic, orrehabilitation), determined its cost and prepared a program of worksaccording to the road's ERR ranking. The cost estimates were prepared at thelevel of preliminary engineering.
11. The surveys were rapid due to time constraints dictated by the projectpreparation schedule. Two consulting engineers carrying out the surveyscovered up to 70 miles per day, assisted by works overseers and regional roadsuperintendents, some of whom were newly appointed and not fully familiarwith the roads under their responsibility. The condition of the roads wasestimated based on the consultants' visual observations of the general damageto the roads, drainage deficiencies and an assessment, by subjectivejudgement, of the existing pavements' surface roughness. A vehicle-mountedbump integrator was used to measure surface roughness on a very limitednumber of test sections, in an attempt to better correlate the engineers'visual observations with generally accepted standards for roughness.Preparation of the Hire Funding Scheme component was minimal given that thecomponent was identical with that included under the fourth highway project.
12. The training component was designed to address the perceived needs ofthe Ministry to carry out future annual maintenance programs.
13. In retrospect, the scope of the project was overly optimistic, givenMOC(W)'s financial, technical and administrative constraints that wereevident before the project's appraisal, and have been deteriorating since.These constraints were amply documented in the Bank's Project CompletionReports and their tenor should have prompted the Bank to analyze a number ofissues before finalizing the scope of the Fifth highway project:
(i) First, it should have made an in-depth analysis of theGovernment's ability to mobilize the necessary counterpartfunding for the project, and to determine MOC(W)'s technical andadministrative capacity to implement the project on schedule,taking into account the Ministry's overall comitm-nts toimplement, concurrently with the Project, similar programsfinanced by the Government and/or other development lendingagencies.
(ii) Second, it should have tested the Government's level ofcommitment to establish the Hire Funding Scheme, given MOC(W)'sweak past support during the implementation of the HFS programunder the Fourth Highway Project, and the fact that theGovernment was expressly considering alternatives to the re-establishment of the HFS as a statutory corporation, in line with
the Government's policy of avoiding the proliferation of suchcorporations.
(iii) Third, it should have reviewed the practicality of executing byforce account as much as 70 percent of the project's preparatoryworks, given MOC(W)'s limited organizational and technicalcapacity. The completion of these works was essential before thepavement overlay and resealing works to be executed bycontractors could be begun.
(iv) Forth, it should have analyzed the implicit impact on theavailability of counterpart financing that would be caused by theimplementation of the IMP's economic restructuring programintroduced in 1982, on the eve of this project. The programfocussed on the curtailment of the Government's expenses, whoseeffect ought to have been factored into the design of the finalscope of the project.
14. Roles and responsibilities. The roles and responsibilities wereclearly defined during project preparation, stated in the SAR, and agreed toby all parties concerned, including the MOC(W), its Directorate ofMaintenance, DEMS, the Personnel Department and the Training Unit.
E. Proiect Imolementation
15. The Loan Agreement was signed on June 31, 1983, and the project becameefofctive six months later, on January 31, 1984. The Project Completion Datewas set as August 31, 1986; the Closing Date of June 30, 1987, was firstextended to June 30, 1988, and then to June 30, 1989. The road maintenanceworks were completed by the end of 1989, and the Loan was fully disbursed inJanuary 1990. The total cost of the project was estimated at appraisal atUS$47 million, of which US$23.5 million was foreign exchange cost. The Bankloan was to finance US$15 million of the foreign exchange cost, while theGovernment would finance the local component of project cost (US$23.5 millionequivalent), as well as any part of the foreign exchange component for whichadditional external financing could not be obtained (Section 3.01 of the LoanAgreement). In April, 1984, the Government received from the CaribbeanDevelopment Bank (CDB) a loan for US$ 9.0 million, comprising US$7.2 millionin "hard funds" and US$1.8 million in "soft funds", for financing of theforeign cost component not covered by the Bank loan.
16. Variances in the Implementation. From its beginning the project wasclassified as a "problem project" and its implementation was substantially atvariance with the plan agreed at appraisal. In retrospect, it is clear thatthe scheduled completion date was unrealistic. The project took about sevenyears to complete 70Z of the 520 miles of periodic maintenance agreed atappraisal; the Hire Funding Scheme, the axle load control, road safety, andtraining programs were never implemented. The Loan was fully disbursed inJanuary 1990, with its largest share having been spent on maintenance worksand procurement of road equipment and vehicles.
17. After appraisal, the economic situation in Jamaica changed drasticallydue to implementation by the Government of an economic restructuring packagerecommended by the IMP, that required devaluation of the Jamaican currency to
deal with the high inflation being experienced. The combined effect of thesemeasures necessitated an immediate cut-back in Government spending andreduced the project's budget allocations for FY83/84 and FY84/85, the firsttwo years of the project. The reduced funding compromised timelycommencement of the preparatory road works, thereby making it impossible alsoto start the pavement overlays and resealing programs.
18. The MOC(W) soon perceived that it could not provide the agreed level offinancing to complete the project by June 31, 1986, the intended completiondate, and in August 1984, re-examined the project's implementation schedulein light of the Government's budgetary projections. As a result, MOC(W)proposed a revised program which retained the project's physical objectivesof carrying out periodic maintenance on 520 miles of roads, but increasingthe percentage of reseals and scaling down overlays to reduce the cost of theworks. The Government requested the Bank to approve the revised program anda two-year project extension. The Bank accepted the proposal on conditionthat the Government would accelerate the project to ensure its completion byMarch 1988. In June 1987, the Bank's Loan Agreement, Schedule I, category(1) works was amended to increase Bank financing from 46 to 70 percent tohelp the Government speed up progress, and the Closing Date was extended toJune 30, 1988. In this context, GOJ agreed with CDB, in December 1986, tomodify the CDB's loan by canceling US$7.0 million of the US$7.2 million "hardfunds" portion, with the understanding that CDB would provide, at a laterdate, additional soft-funds financing of US$3.2 million that was consideredneeded to complete the project. In April 1987, it was agreed that CDB woulddefer its further disbursements, which at the time totalled US$1.6 million,until June 1988, when the Bank's loan was expected to be fully disbursed. InMay 1988, it became evident that the Bank's loan would not be fully disburseduntil June 1989. Under the circumstances, CDB authorized the disbursement,after June 1989, of the remaining US$0.4 million, and in lieu of replenishingthe on-going loan, to provide funds for the completion of this project undera new loan, which was appraised by CDB in March 1989.
19. Actions Affectina Implementation. Project implementation was affectedby several problems: the delay in declaring the project effective; delayedprocurement of technical assistance consultants and delays in hiring localcounterpart staff needed to strengthen MOC(W)'s project managementcapabilities; delayed procurement to purchase new equipment and vehicles;poor maintenance of MOC(W)'s existing equipment; and the resulting lowavailability (50% or less) of MOC(W)'s equipment, which was badly needed forthe force account works. The low availability of equipment continued to bea problem even after the newly purchased equipment was added to the fleet.The critical shortage of counterpart financing for the maintenance works wasaggravated by erratic releases of funds; and by the escalation of prices forasphaltic and other construction materials (in 1984, the cost of overlays andresealing increased 53% and 42% respectively and that of preventivemaintenance operations by 59%). The project's budgets were scaled down andthe project implementation in fact continued through the end of 1989, bywhich time MOC(W) had completed about 70 percent of the targeted maintenanceworks, while the implementation of the institutional development and thetraining components had made no material progress.
20. The re-establishment of the Hire Funding Scheme to manage MOC(C)'sequipment fleet constituted a key element of the project, yet MOC(W)appointed people to the Interim Equipment Management Board (IEMB), who had
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only limited experience in the management of a private equipment rentalcorporation. Upon its appointment in 1985, the Board agreed to prepare anoperational action plan for the HFS, but the plan still was not ready in1988. HFS could not be organized or operate without the support of technicalassistance consultants who were also expected to provide on-the-job trainingfor yet-to-be-hired local counterpart personnel. When competitive proposalswere invited, the Board failed to reach a decision within the validity of theproposals and so the HFS was left without any foreign technical assistance.As further attempts to implement the Hire Funding Scheme becameimpracticable, MOC(W) proposed that another study be made to determine theviability of privatizing the Hire Funding Scheme. The Bank approved theGovernment's request without a formal amendment to the Loan Agreement.
21. The Government was two years late in complying with the Loan'scovenants which required that HFS' Board be appointed and a manager nominatedfor the Hire Funding Scheme before procuring the Bank-financed equipment.This in turn delayed the delivery of the equipment that was urgently neededfor the MOC(W) force account works which had to be completed before theperiodic maintenance overlay and resealing programs could begin. Procurementof the equipment was finalized only during the period January-March 1988(nearly two years beyond the original completion date target), and the delayproved costly to the project.
22. Institutional weaknesses revealed in the project audit reports includeda number of accounting and procurement irregularities, as well asdeficiencies in the quality of the executed works. The FY86/87 Auditmentioned payments made against unauthorized vouchers; and payments for smallcontracts (up to J$150,000) which did not indicate the precise location atwhich works were to be executed, making verification of the works by theauditors difficult. Office Furniture and Equipment Inventory was notproperly structured and omitted acquisitions during the year valued atapproximately J$146,403. Many inventoried items had no positiveidentification marks as to ownership and location. The Audit for FY87/88states that some 34 portable radios costing J$195,840 were not taken oninventory at DEMS and the stock of tubes and tires for the project was notstored separately from those belonging to other projects. Variation ordersfor works contracts ranging from approximately J$0.5 to J$6 million foroverlay works were issued without reference to the Government Contract AwardCommittee and/or the Cabinet. In the auditors' opinion these variationscontravened the Government's contract award policy. In some cases the changeorders substantially exceeded the provisions of the Loan Agreement, Schedule4-C-3, Review of Procurement Decisions, which limited to 10 percent anyincreases of contract costs (without Bank approval). The audit of financialtransactions in FY88/89 disclosed instances of payment vouchers withoutsupporting documents and vouchers which bore no evidence of authorization.
23. The auditors also visited project works sites to verify the projectsfor which expenses were made with the project's funds. The 1984/85 auditreport mentions that an inspection by the auditors of five roads totalling20.3 miles revealed problems of faulty side drains, aggregate stripping andother deficiencies, indicating that the quality of the works was wanting.The FY86/87 audit report mentions faulty preparatory works by the PublicWorks Department in three parishes and poorly constructed drainage thatcontributed to pavement surface failures. The FY87/88 report states thatroad inspection in four rural parishes revealed instances of bleeding,
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stripping of aggregate, faulty transverse joints, scouring, ravelling anddepressions in the pavement's surface. And the FY88/89 report mentioned thatsite inspections of selected overlay works showed, in some instances, poorlyconstructed center joints and pavement surface depressions.
24. Possible avoidance of variances. Whether the variances of the agreedprogram could have been avoided, is a moot point. At the close of theproject the maintenance component was 30 percent short of its physicaltarget. The average per mile cost of the works was higher than estimated atappraisal. A better financial planning at appraisal and Bank financing of alarger share of the works component (the original 46Z was not realistic)might have helped to off-set, to some extent, both the shortage of localfunds and the effect of price escalation. With regards to the delays in theexecution of the preparatory works by force account, it would have beenbetter to package the preparatory works with the overlay and resealing worksto have the works executed by private contractors. Variance in the executionof the maintenance works could possibly have been prevented had the Bankfinanced, from the beginning, 70% of the cost of the works instead of 46X aswas decided at appraisal. The problem was recognized by the Bank duringproject implementation and corrected by the amendment of June 1987, whichincreased Bank reimbursements to 70X, making possible full disbursement ofthe Loan by January 1990. An analysis of the IMP economic restructuringprogram might have avoided the repetition of the problems associated with theimplementation delays experienced on past projects, which led the borrower topay commitment fees on the large undisbursed balance over nearly seven years.
25. The failure to re-establish the Hire Funding Scheme and to carry outthe personnel training component was detrimental to the implementation of theroad maintenance program, whose success depended on an adequate and timelyprovision of equipment for force account works and well trained personnel tomonitor the works' progress. This problem might have been avoided, had theBank been firm in persuading MOC(W) that compliance with the pertinentclauses of the Loan Agreement was essential to proceeding with the project.The Bank should have kept pressure on MOC(W) to give higher priority toinstitutional improvements than to maintenance works. However, a sustaineddialogue was difficult due to a high turnover of Bank staff assigned tosupervise the project during its implementation.
F. Proiect Results
26. Overall, the project results were not very satisfactory. There weresome positive achievements, yet some of its main objectives were notrealized. Under the Road Maintenance Program, the periodic road maintenanceworks completed totalled 368 miles, or 71% of the 520 miles agreed atappraisal. This included 90 miles of overlays and 278 miles of ressals,rather than 160 and 360 miles respectively, agreed at appraisal. Except forthe comments made by the auditors (para.23), the quality of the works wasreported to be generally acceptable; the cost of completion was higher thanappraisal estimates. Procurement of equipment and vehicles for roadmaintenance was also completed. The Road Planning Unit (RPU), assisted byconsultants, developed the capability to prepare, in-house, all new projectsfor appraisal by lending agencies, without any external technical assistanceother than two expatriates working in line positions in the unit. The RPUpersonnel learned to apply a method of evaluation for the selection of feeder
road improvements employing a producer surplus approach which maximized thework that could be done by technicians, and to use the simplified evaluationmethod for ranking candidate roads for the Road Improvement projects based onvehicle operating cost savings and the accurate measurement of traffic andsurface roughness.
27. The objectives not accomplished were the re-establishment of the HireFunding Scheme which was of fundamental importance to ensure that MOC(W) hasthe necessary equipment for the work at hand; and the essential trainingprogram for some 1700 MOC(W) personnel, of which about 772 were to receivetraining, including senior staff, engineers, accountants, superintendents,works overseers, drivers, equipment operators and mechanics. MOC(W)'sfailure to implement the training component will further diminish itscapacity to have well qualified staff to plan, program, schedule, contract,and monitor the quality of the works to be executed.
G. Project Sustainabilitv
28. The sustainability of the road maintenance project will depend on theGovernment's ability to carry out routine and periodic maintenance. Thiswill require strong institutional support to plan, program and schedulemaintenance activities and timely availability of funds to carry out thenecessary works. About 80 miles of heavily trafficked roads which were toreceive overlays, were resealed instead, for reasons of economy. These roadsmay need timely intervention to ensure the sustainability of benefits fromthe works done under the project. Sustainability of the benefits from theacquisition of new equipment and vehicles will depend on the quality of theirmaintenance. To date, DEMS' maintenance practices have been wanting, and thefailure to make functional the Hire Fund Scheme may put this equipment injeopardy. The achievements made with the Road Planning Unit were notsustained. When the Head of the Unit left in 1989, there was no replacementgroomed to take his place, and with subsequent loss of morale and low payscales offered by MOC(W), there was an exodus of the experienced staff.
H. Bank Performance and Lessons Learned
29. Preparation and Appraisal. The definition of the project's scope andits implementation schedule were predicated on the assumption that therequired funds would be available for the project in a timely manner. Thevalidity of this assumption was not tested at appraisal and the Bank'sassessment of the project's risks was flawed. The Bank underestimated thefinancial complexity of the Project and was apparently oblivious to the factthat scarce Government funds were being allocated among numerous donor-sponsored projects, often with inadequate regard for economic and technicalpriorities. The result was that the Government was not in the position tofulfill its obligations to meet the budgetary targets for projectimplementation. Past experience clearly underscored MOC(W)1s technical,administrative and financial limitations, which required that the scope ofthe project be carefully crafted. Also, the impact of the IMF program on theGovernment's finances and on the Highway Maintenance Project cQu1ld have beenanticipated during appraisal and factored into the project to adjust thescope of work accordingly. Since MOC(W) had failed to implement the HireFund Scheme under the previous project, it would have been prudent to test
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MOCIW)'s commitment to proceed with both the implementation of the Scheme andthe personnel training programs.
30. Supervision. The supervision -of the project absorbed about 49 staffweeks during the implementation period mid-1983 to mid-1990 period. Abouteleven missions were made to Jamaica over the seven years. From its verybeginning the project was characterized as a problem project and it had aperformance rating of "3" --denoting major problems-- for more than fouryears; and, then, a rating of "2" --denoting moderate problems-- for aboutthree years. The Bank missions assisted MOC(W) in rescheduling projectimplementation in line with the available budgets to accelerate progress.Most of these efforts were frustrated by untimely releases of the funds bythe Ministry of Finance. A review of the project files, including Bankmission reports, suggests that discussions with MOC(W) focussed mainly on theproblem of slow project implementation and concerns about the low rate ofdisbursements of the Loan. There was hardly a reference in the reportsregarding the quality of the works executed under the project. As alreadynoted (para. 23), comments on the works quality were found in the auditreports prepared by the office of the Auditor General of Jamaica, whosepersonnel visited various sites where the project's works had been completed.The auditors reported instances of pavement distress and other deficienciesthat were observed on several project works sites. They also informed thatthe lapses found in the project's accounts during the audits were dulyreported to MOC(W) and corrected in a timely way.
31. Lessons Learned. Bank appraisal missions should be familiar withBank's experience gained during the implementation of previous projects toavoid repetition of past mistakes and to profit from past successes. Theproblems which affected the implementation of the Highway Maintenance Projectwere almost identical to those which plagued implementation of the previousfour road projects, namely: budgetary shortfalls; variances in the scope ofthe projects; extensions of the time for the projects' completion; lack offinal engineering and poor cost estimates and the resulting cost over-runs;insufficient financial, technical and administrative capacity of the projectexecuting agency; and lack of support for institutional improvements. Thelong recognized need to reorganize the MOC(W) still exists. Thereorganization of the MOC(W) and improved coordination among external donors,two main issues, are being addressed under the Bank's follow-on project.
32. The on-going follow-on Road Infrastructure Planning and MaintenanceProject provides for the strengthening of MOC(W)'s operational capabilitiesthrough implementation of institutional changes designed to improve the cost-effectiveness of MOC(W)'s investments in roads. The salient features ofthese changes include personnel training, road investment studies,concentration of all road maintenance activities within the Directorate ofMaintenance; the creation of an Equipment Management Division to operateMOC(W)-owned equipment and vehicle fleet under a system agreed to with theBank during the preparation of the project; and the creation of theDirectorate of Planning and Budgeting (DPB) which would be solely responsiblefor developing and updating a rolling multi-year road investment program thatwas established under that project to enhance coordination of all the roadprograms funded in the country by various multilateral foreign agencies andGOJ. The program is to be monitored annually, at meetings of all internaland external agencies which are financially active in the sector.
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33. This project also underscored thc importance of compliance with theLoan covenants, which constitute an integral part of Bank projects' design.The re-establishment of the Hire Funding Scheme was impaired and the expectedeconomic benefits vitiated due to the non-compliance with the Loan covenantto contract technical assistance services indispensable to organize andoperate the Scheme. A firmer Bank posture in the framework of a constructivedialogue to persuade the client that Bank considers compliance important,might have convinced MOC(W) to accord priority status to the establishment ofthe Hire Funding Scheme and the implementation of the training component.Furthermore, even though the project was conceptually correct, the financingfor its implementation, which provided loan funds for the technicalassistance services but depended on the provision of seed capital for otherHFS operational expenses, proved unsatisfactory given the Government'sfinancial constraints. This experience has been taken into account in theformulation of the follow-on project: it comprises technical assistance tohelp set up and implement a new equipment management system, rationalize thesize and composition of MOC(W)'s fleet and assets, and develop contracts forequipmental rental and lease, in order to facilitate maintenance of thatequipment which it is more cost-effective for MOC(W) to maintain.
I. Borrower Performance and Lessons Learned
34. Borrower Performance. Borrower performance during projectimplementation was not up to expectations. As already noted, the Borrowerdid not provide the agreed counterpart funds nor did it comply in a timelymanner, if at all, with the loan covenants. The borrower's principalinterest was to carry out the maintenance works, and in fact most of the loanfunds were used for the execution of the road works and the purchase Qf roadequipment. The implementation of the remaining components was hardlystarted. The other two components of equal importance, the Hire FundingScheme, to rationalize the use of HOC(W) road maintenance equipment and itsvehicle fleet, and the training component to strengthen MOC(W) operations,were not implemented; MOC(W) did not recruit counterpart staff for theTraining Unit and the HFS, nor foreign assistance consultants, in accordancewith the plan presented in the Staff Appraisal Report.
35. The preparatory works executed by force account were often poorlycoordinated with the follow-on overlay and resealing works. There wereinstances when contractors had to interrupt their works because thepreparatory works had not yet been finished. The quality of the road workswas not uniform.
36. Implementation of the Axle Load Control and the Traffic SafetyComponents has been on hold since 1984, pending legislative action tointroduce the necessary amendments in the Road Traffic Act.
37. Lessons learned. The Ministry of Construction manages investments inroads on a scale which has outgrown its present organization. MOC(W)'sperformance was hampered by the lack of institutional capacity for the amountof works under its responsibility. To improve MOC(W)'s responsiveness to thedemand for its technical and administrative support it might be desirable forthe Ministry to consider undergoing a comprehensive institutional review withthe help of experienced external consultants, to better define its futurerole in the sector it covers, to review and modernize its internal structure,
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proposing a plan of action regarding shortage of qualified personnel, salarypolicies, financial controls, budget mechanisms, etc. As already mentionedabove, the development and implementation of a new organizational/managementstructure based on effective delivery of services for which the Ministry'sunits are both responsible and accountable, is an integral part of the Bank'sfollow-on project. This is being carried out in tandem with the introductionof the Corporate Plan in the Ministry and a new Program Budgeting System thatis required under the Bank-supported Administrative Reform Program (ARP),which is strongly supported by GOJ's Central Agencies (Ministries of Financeand Public Service). The Government has placed highest priority on thereform of the public administration and it is in this context that thereorganization of the MOC(W) is now under way under the guidance of the staffimplementing the ARP. Furthermore, MOC(W) has, for the first time,consolidated in a well-focused investment program based on economicpriorities, all the programs supported by the various international lendingagencies active in the sector. The implementation of this program is to bemonitored at annual coordinating meetings of MOC(W) and all participatinglending agencies, which in turn will play a catalytic role in furthering theinstitutional and operational changes pursued under the Bank's follow-onproject.
38. Also, the Ministry should review its role as an entrepreneur of works,to define the amount of works to be carried out by force account and throughprivate contracting. The development of the local construction industrywould be enhanced if all civil works, except for minor emergency works, werecontracted with private contractors, with the Ministry limiting itself to asupervisory role. In this regard, MOC(W) is now aware of the need and takingappropriate measures to increase the participation of private contractors inthe delivery of services. MOC(W) considers this necessary, particularly, inview of the reduction of its personnel foreseen under the on-going reforms.
39. As long ago as 1978, the Government formulated an Axle Load. Programwhich included changes to prior regulations. Implementation of the programin three phases during 1979-1982, suffered considerable delays becauselegislative action related to axle load limits and enforcement of axle loadcontrol measures was approved by the cabinet only at the end of the FourthProject, in 1982, but never enacted by the Parliament. Several otherelements of the program such as the purchase of additional weigh bridges andload meters, an increase in patrol strength and the preparation of a roadhaulage study, were not implemented. Despite Government assurances that thisprogram would be implemented under the Highway Maintenance Project, it didnot materialize. Implementation of components which are politicallysensitive should be backed up with a strong covenant in the Loan Agreementthat the Bank is willing to enforce.
J. Bank-Borrower Relationship
40. The Bank-Borrower relationship was appropriate and formal. It appearsthat a sustained dialogue between the Ministry and the Bank was hampered bythe infrequency of Bank staff visits and frequent changes of Bank staffresponsible for the project. A better dialogue might have made it possibleto avoid the major variances noted in the project scope.
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K. Consultint Services
41. Of the four elements of technical assistance included in the project -(1) Road Planning Unit (RPU); (2) Maintenance Directorate; (3) Hire FundScheme; and (4) the Training Program - the last two never took place.
42. The technical assistance to the Directorate of Maintenance was ineffect throughout the duration of the project, and assistance to the RoadPlanning Unit was given for just over three years. The work of the RPU wasmainly associated with the identification and preparation of the worksprograms of the Ministry and the groundwork for the setting up of a NationalRoads Authority. The technical assistance to the Maintenance Directorateincluded project coordination linked to the resealing and overlay contracts,training, hire funding scheme, reporting, institutional aspects ofperformance budgeting, reduction in force account, reorganization of the DM,and preparation of procurement manuals and documents for the procurement ofroad equipment.
43. A prerequisite to the appointment of the technical assistance to theHire Funding Scheme was the setting up of an Interim Board headed by achairman from the private sector (para. 20). The Board was formed ratherlate in 1985 and was not very active and never reached a decision on thechoice of technical assistance consultants who submitted proposals, with theresult that the HFS had no expert assistance. Training terms of referencewere drawn up, short lists made and competitive proposals called for, but thewinning firm was never appointed, due mainly to shortages of counterpartfunds and of MOC(W) training staff.
44. The consultants retained for the key positions in the newly establishedRoad Planning Unit assisted MOC(W) in developing a systematic approach toplanning road investments according to technical and economic criteria (para.26), and to help coordinate the various programs carried out by the Ministry,to prevent overlapping and duplication of effort. The unit was alsoresponsible for formulating the yearly periodic maintenance programs,including the programming and scheduling of maintenance activities, locationof suitable gravel for pavement overlays and resealing programs; and forsupervising the project's road maintenance works. The consultants alsoprovided hands-on training for their local counterparts, who eventually tookover the positions of highway planning engineer, transport economist andsystems analyst, as permanent MOC(W) staff.
45. The presence of consultants was indispensable because the Ministry'sstaff was short-handed and required training. Uncertainties concerningannual budgetary allocations and erratic release of funds made planning andthe scheduling of the project's activities difficult.
46. In the absence of comments in the Bank's mission reports on theconsultants' performance, and considering the observations made by theauditors (para. 28) on the poor quality of some of the works carried out, itis difficult to assess the effectiveness of the Ministry's personnel and itsconsultants in supervising the project maintenance works.
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L. Proiect Documentation and Data
47. Data needed for the preparation of the PCR were generally available inBank files, including the project preparation files, Bank supervisionreports, aide memoires, and the quarterly reports, all of which were helpful.The consultants who assisted MOC(W) and DM during project implementationreported having prepared a pavement roughness inventory after the works werecompleted, and collected traffic data. These data, which may have beensuitable to make an ex-post evaluation of the Economic Rate of Return and theNet Present Value for specific sections of the project, is not available.
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PROJECT COMPLETION REPORT
JAMAICAHIGHWAY MAINTENANCE PROJECT
(LOAN 2293-JM)
PART II: PROJECT REVIEW FROM BORROWER'S PERSPETIVE
A. Comments on Part I of the Project ComDletion Report
1. The analysis in general was considered fair and reasonably accurate,however a few of the findings need some clarification and to be brought inproper perspective.
2. The delay in the Bank declaring the Project effectiveness was mainlydue to certain preconditions not being met by the borrower, which wereoutside the direct control of Ministry of Construction (Works), the executingagency.
3. The degree to which MOC(W)'s performance was hampered by the lack oftechnical and administrative capacity was overstated. While difficulty wasexperienced in retaining and attracting suitable qualified and experiencedlocal staff over the duration of the Project, it is safe to say that theproject implementation progress was never bogged down at any time as a directresult of inadequate technical and administrative staff.
4. The cost estimates prepared at appraisal stage were predicated on thebasis of historical data collected from previous projects of similar nature.As it turned out, such cost overruns as experienced were attributable to:
a. Rapid deterioration of many road sections that occurred betweenthe time of initial surveys and the time when the works wereactually implemented, hence the unavoidable increase of thephysical scope.
b. Significant price movements in the price of basic materials andincrease in rates of hireage of equipment and labor.
c. Devaluations of the Jamaican dollar over the Project's lifeversus the US dollar.
5. The Project's preparatory works carried out through the MOC(W)'s "forceaccount" mechanism needs some clarification. All drainage improvement andlateral support works are given out on a petty contract basis and supervisedby the local Parish/Division office or by Project technical staff if they areunder-utilized at the time the works are being carried out.
6. The work activities which the Ministry mainly involves itself in arepavement repairs and reconstruction. In carrying out these activities,MOC(W) oftentimes hires equipment from private contractors/owners, when itsown equipment fleet are not available; materials are procured directly fromlocal suppliers and the labor force utilized is a combination of unskilledlaborers employed from the respective locations of the works, along with acore of skilled asphalt laborers that have been working with the Ministry fora number of years.
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7. It has been our experience that many of the local contractors who areprequalified to carry out reseal and overlay works, are not very interestedin taking on the preparatory works due to the tedious and time-consumingactivities involved in executing these works. Those contractors who areprepared to undertake this type of works invariably submit high unit rates totry and hedge against the uncertainty of soil conditions frequentlyencountered and other factors outside of their control.
8. Despite the problems experienced in trying to set up a properlyfunctioning Hire Funding Scheme to manage MOC(W)'s equipment fleet, the lowavailability of equipment could have been eased if approval was obtainedearlier from Cabinet in increasing the hireage rates being offered byGovernment to private owners, which rates for too long were unrealisticcompared to the going rates. In certain instances, this would have helped inspeeding up the progress of the works.
9. It is our considered opinion that the general quality of the worksexecuted under the Project was above average and in some cases quite good.There can be no denying that there were instances where the quality of theworks reflected some deficiencies as cited in some of the Auditor General'sreports. However, these occurrences were localized and should not be takenas widespread. These deficiencies were remedied as and when they occurred orwhen brought to our attention.
10. In respect of the issuing of large Variation Orders under the overlaycontracts, these were done with the knowledge of and a "no objection" fromthe Bank together with full support of the highest political leadership atthe time. It was the understanding that the township roads were in dire needof rehabilitation and this route was chosen in order to be able to implementthe works quickly and to be in a position to fully utilize the loan proceedsby the extended Project loan closing date of June 30, 1989. The issuing ofsuch large variations should be regarded as a special circumstance and is notto be taken as the norm in our contract procedure or administration.
11. Finally, it would have been useful if the Bank had the opportunity topursue the response of the executing agency to the various audit observationsraised in the reference Audit Reports. It is our opinion that some of thenoted deficiencies were slightly exaggerated and the deficiencies identifiedwere rectified with dispatch.
B. Evaluation of the Bank's Performance
12. The Bank played a key role in assisting with the planning anddevelopment of the Project. We concur with the observation made by the Bankthat during Appraisal a larger share of the works component should have beenfunded by the Bank.
C. Evaluation of the Borrower's Performance
13. The objective of the Project was solid and consistent with overallGovernment's policy and strategy for road development. The following,however, must be noted:
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a. there seems to be a need in future projects to train more localstaff thereby reducing the input from technical assistance;
b. steps should now be taken to improve the conditions of employmentin order to increase the technical expertise of current staff andalso attract and retain additional staff;
c. the provision of matching funds to projects needs to beregularized to ensure smooth and timely implementation;
d. we concur with the PCR that the effects of devaluation andadverse economic climate which prevailed at that time did impactadversely on the Borrower's ability to carry out the work asscheduled.
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PROJECT COMPLETION REPORT
JAMAICAHIGHWAY MAINTENANCE PROJECT
(LOAN 2293-JM)
PART III: STATISTICAL INFORMATION
1. Related Bank Loans
Prij Name' - -X00 '- ' j 'om'ents
Jamaica First Highway Preparation of final engineering and road April 1965 Completed US$5.5 million. CostProject Ln. 408-JM upgrading and construction March 1973. overruns of 84% due to
Fully underestimation atdisbursed. appraisal and escalation of
Second Highway Reduction of the backlog of deferred May 1973 Completed in US$9.3 million. TimeProject, Ln. 899-JM maintenance; and, technical assistance for FY 1980. overrns due to slow work
institutional development to improve Fully progres by MOC(W)maintenance planning. disbured. force acunt organization.
Phyicl works werereduced. Implementationof institutional componentsnot completed.
Third Highway Project Development of national transport capability. June 1974 Completed in US$13.5 million. LimitedLn. 1032-JM Construction of arterial roads; and, FY 1982. progress achieved in
development of national transportation Fully transport planning and inplanning. disbursed. developing the domestic
construction industry.Poor institutionalperformance.
Fourth Highway Project Road maintenance and procurement of June 1979 Completed US$16.0 million. SevereLn. 1740-JM equipment, Re-etablishment of Hire Funding program in finanal costrints;
Scheme to rationalize the use of MOC(W) 1984. Loan project was revised in 1980equip was 98% to reduce project-financed
disbursed. periodic maintenancelevels, and to adjustequipment purchases.
Kingston Urban Traffic management and improved of three March 1984 On-going US$16 million. RemainingTransport Project main aoridors and several intersections; loan funds (approximatelyLa. 2389-JM support for the road maintenance program in US$4.5 million) are being
the Kingpton Metropolitan Region (KMR); reallocated to Technicaland improvement of management of the KMR Assstance to supporturban transport system. structural reforms in the
transport ector and assistwith preparation of aproposed Trnsport SectorReform Project.
Road Infastructure Reorganization of MOC(W), and development December On-going US$35 million.Planning and of a mult-year infrastructure investment 1990 Implementation of all ofMaintenance Project prgram and mechanism to coordinate the components is inLa. 3275-JM external funding programs esecution of progres
selected civil works; measures to improvemanagement of MOC(W)s equipment fleet;and, development of a comprehensive road
L________ safety progranm. _
- ------ --- --
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2. Proiect Timetable
F .................... .......... .............................. S~~~~~........
....... ....... j Re ia~ Actual.,
Identification _ _ February 1982
Preparation Mission _ _ July, 1982
Appraisal Mission __November, 1982
Loan Negotiations _ _ April, 1983
Board Approval _ May 20, 1983
Loan Signature _ -________ _June 17, 1983
Loan Effectiveness June 30, 1983 __January 31, 1984
Project Completion August 31, 1986 June 30, 1988 December 31, 1989
Loan Closing June 30, 1987 June 30, 1988' June 30, 1989A subsequent extension of the Closing Date to June 30, 1989 was approved by Bank without a formal amendment
to the Loan Agreement.
3. Loan Disbursement
Cumulative Estimated and Actual Disbursements(US$ millions)
84 85 86:::789 90
Appraisal 4.1 9.5 12.5 15.0 15.0 15.0 15.0
Actual 0.6 1.4 2.6 3.6 8.4 12.6 15.0
Actual as Xof Estimates 14 14 20 24 56 84 100
Date of Final Disbursement: March 16, 1990. The deadline for disbursements wasinformally extended to almost seven months after Loan Closing Date. This practice isno longer acceptable now.
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4. Proiect ImDlementation
AnDraisal Estim te ctual
Periodic Road Carry out maintenance work, under Completed 90 miles of overlay and 278Maintenance the 1983-86 Road Maintenance miles of pav emnt reseal*, a total of
progrm, f4nanced jointly by 368 miles vhich were financed solelyIDB|CDB, included preparatory by IBRD. The rema ining 152 siles wouldworks (520 miles), pavement be completed vith CDB financing.overlays (160 miles) and resealing(360 miles)
JA DOLIARS US DOLLARS
TYPE lUE Toal Cod Coe/Mi1 TOI Cost Cog/iSs(is MiSgo) (IS T_InAD) (in M)oe) (In Tho_umi)
Total Cost of Equipment and J$4.96 million J$5.91 millionSpare Parts: (US$2.8 million *q) (US$0.95 million eq)
Re-establishent of the Hire To manage HOC(W) road Not InitiatedFunding Schems maintenance equipmnt, based
on cost recovery for theequipmnt's use
Personnel Training Progrm: To provide training for some Not Initiated772 MOC(W) Personnel forSenior Staff and accountants,engineers drivers, equipmentoperators, store keepermchanice, etc.
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5. Proiect Costs and FinancinaA. Prolect Costs(in US$ million)
Co-Vinancing lntitutione S,500.0 - 2,000.0 (*5 Sh CD0 loa n for 0949.0(Cari bb-n Dvelopmet lank) million we approe d in 4rilLoar Po. 5SISf-OK-J 1954 anid beaC etffective in
October 19J4. At ....... t c
requet it mac reduced to 0952.0
fully diebfureedby *Jamar 1ou90.
Other External Source N14 NA N
Dmetic 2l,500.0 _ 9,120.0
... ... ....... ~lS
1/ Baoe Costa- October 1982 price..T/ Incilueo. US$0 3 millon for dinterent during conttruction
3/ Figure. may not add up to the total due to rounding.
ti) Road Maintenance Preservation of the road network Road users are benefitting in financialProgram and improvement through periodic terms and comfort from improved surface
maintenance of the pavement suface conditions in the 368 miles of roadsroughness to reduce vehicle which received periodic maintenanceoperating costs
(ii) Purchase of To assist MOC(W) to improve their The purchase of new equipment did notequipment for road performance in carrying out road alleviate MOC(W) work schedulingmaintenance by maintenance by force account, problems. MOC(W)-DEMS had no capacity toMOC(W) service the existing equipment and the
new units purchased under the projectfailed to improve the availability ofMOC(W) fleet.
(iii) Technical To strengthen MOC(W) institutional 1. A three-year Technical Assistance toAssistance and capacity for road maintenance the Road Planning Unit was successful inTraining planning, programming, scheduling developing systematic approach to
and the monitoring of road planning road investments according tomaintenance activities, technical and economic criteria.
Achievements made were not sustained.
2. Technical Assistance to theMaintenance Department was necessarybecause the Ministry's staff was short-handed and required training during theimplementation of the project.
Re-establishment of To rationalize the use of MOC(W)'s The scheme was not implemented becausethe aire Funding equipment fleet based on cost- MOC(W) did not retain the services ofScheme recovery for its use. consultants to organize and operate the
Hire Funding Scheme.
The Planning and To strengthen MOC(W)'s Training This component was not implementedimplementation of Unit and to improve the skills of because MOC(W) did not contract thethe Training Program road and equipment maintenance, necessary technical assistance services.
personnel and accounting andauditing staff.
B. Economic Impact
The appraisal ERR was derived from costs and benefits stream over a 15-year period and a sensitivityanalysis was carried out by consultants to test the project's viability allowing for a +- 20 percentvariation of vehicle operating costs; a 3 percent variatlion in the annual traffic growth and a 15 percentvariation in the cost of the required works. Since appraisal, there has been no decrease in vehicle costsnor in the annual traffic growth; the total cost over-run of the project was about 10 percent. The AppraisalERR and current estimates after the completion of the project are as follows:
Vehicle Operating Cost NstMed
:2 Iy ASfter Project Complat'loW
EstimatedERR 50
VOC -202 42.6VOC 50.5VOC +202 56.1
AnnualTraffic Growth
0t 48.132 50.5 49
Construction CostsEstimated Costs 50.5
Costs + 152 45.7 42
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7. Status of Loan Covenants
Loan Covenant Loan Agreement StatusSection
a) Conditions for Loan Effectiveness
Nomination of Counterpart Staff Section 6.01 Partially fulfilled. Training specialistappointed.
b) Condition for Disbursement
Bank's acceptance of a list of Para 4(b) Partially fulfilled. Reseal Phase 1, IIroads to be included in Part Schedule 1 and III accepted. Overlay Phase IA(i), (ii) and (iii) of the accepted.Project; (Category (1))
Counterpart for the Manager of Para 4(c) Chairman of the Interim Equipmentthe Hire Funding Scheme has been Schedule 1 Management Board was designatedappointed (Category (2)) (temporarily) as Manager of the Hire Fund
Scheme.
c) Covenants
Seek external finance for Section 3.01 Fulfilled. Co-financing was secured fromcomponents of the Road (c) CDB, loans were also secured from SaudiMaintenance Program. Funds and IDB for the financing of some
elements of the program.
Borrower to give priority to the Section 3.01 (c) Partially fulfilled in 1985/86. Provisionallocation of local funds for of local funds to the project was aboutcarrying out the Road 461 of requirements.Maintenance Program
Preparation of an implementation Section 3.03 (a) Not fulfilled.plan for the training program by and (b)February 29, 1984
Consultation regarding the list Section 3.04 Fulfilled.of roads to be included in theRoad Maintenance Project
Establish a Road Planning Unit Section 3.05 (a) Partially fulfilled. The unit wasby September 1, 1983 and provide and (b) established. Operational resources notit with resources as required. adequate.
Establish positions for a Section 3.06 FulfilledContracts Engineer and threeField Engineers not later thanSeptember 1, 1983.
Measures to be taken to secure Section 3.08 Fulfilledthe timely supply of materialsof adequate quality and quantity
Submission of Project Audit Section 4.02 (c) Audit reports were submitted.Report
Not fulfilled. Implementation of theImplementation of the 1978 Axle Section 4.02 (a) program is pending subject to approval ofLoad Program to be continued the Road Traffic Act Amendment by
legislature.
Not fulfilled. Vehicle fitness to beCurrent road safety practices to Section 4.03 (b) incorporated in Amendment to Road Trafficbe reviewed and safety programs Act. Other aspects not fulfilled.implemented
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Procedures to be established to Section 4.04 Fulfilledmake foreign exchange availablefor contractore
Bank to be consulted annually Section 4.05 Fulfilled, Bank was informed aboutconcerning budget requiresents yearly budget.
Re-eotabliab the Hire Funding Section 4.07 Not fulfilled. Interim EquipmentScheme Management Board vas appointed in July
1985 but never prepared an action plan.Consultants were invited to submitproposals. No action wva taken and thecontracting of Technical Assistant&deferred pending results of a feasibilitystudy to investigate privatization.
