Document of The World Bank FOR OFFICIAL USE ONLY MICROFICHE COPY Report No. 10551-IND Report No. 10551-IND Type: (SAR) CHARLES, J/ X824922 / A9 043/ EA3IN STAFF APPRAISAL REPORT INDONESIA THIRD KABUPATEN ROADS DEVELOPMENT PROJECT MAY 22, 1992 Infrastructure Operations Division Country Department III East Asia and Pacific Regional Office This document hasa restricted distribution and may be used by recipientsonly 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
Infrastructure Operations DivisionCountry Department IIIEast Asia and Pacific Regional Office
This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.
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CURRENCY EQUIVALENTS(As of January 1992)
Currency Unit - Rupiah (Rp)Rp 1 million - US$502US$1.00 - Rp 1,992
GOVERNMENT OF INDONESIAFISCAL YEAR
April 1 - March 31
UNITS OF MEASURES
1 meter (m) m 39.37 inches1 kilometer (km) = 0.62 miles1 hectare (ha) - 2.47 acres
PRINCIPAL ABBREVIATIONS AND ACRONYMS USED
ADB - Asian Development BankAADT or ADT - Average Annual Daily TrafficAMDAL - Analysis of Environment ImpactsBAPPEDA I and II - Provincial and Kabupaten Development Planning AgencyBAPPENAS - National Development Planning AgencyCTC - Central Technical Con6ultantsDGH - Directorate General of Highways (MPW)DGLC - Directorate General of Land Communications (MOC)DGRD - Directorate General of Regional Development (MHA)DPUK - Kabupaten Office of Public WorksDPUP - Provincial Office of Public WorksEIA - Environmental Impact AssessmentFCI - Field Consultants for ImplementationGOI - Govern.aent of IndonesiaINPRES - Instruksi President (in project context, a central
government grant program to local governments)IPJK - Inpres Peningkatan Jalan Kabupaten (central government
grant for rehabilitation/improvement of kabupaten roads)IRI - International (road) roughness indexP.T. Jasa Marga - Indonesia Toll Road CorporationMHA - Ministry of Home Affairs
HOC - Ministry of CommunicationsMOF - Ministry of FinanceMPW - Ministry of Public Works
OECF - Overseas Economic Cooperation Fund of JapanPBPJK - Proyek Bantuan Peningkatan Jalan Kabupaten (special
provincial road units for assistance to loLilgovernments)
REPELITA - Indonesia National Five Year Development PlanREPPPROT - Regional Physical Planning Program for TransmigrationRUT - Road User TaxSOE - Statement of ExpenditureUSAID - U.S. Agency for International DevelopmentVOC - Vehicle operating cost
FOR OMCIAL USE ONLY
INDONESIA
THIRD KABUPATEN ROADS DEVELOPMENT PROJECT
Loan and Proiect Summary
Borrower: Republic of Indonesia
Amounts US$215 million equivalent
Lending TerMs: Twenty years repayment, including five years of grace, atthe standard variable interest rate.
Proiect Obiectivesand Description: The principal objectives of the project are to improve
access to the main economic centers in 73 kabupatens(districts) in nine provinces (West Java, West Kalimantanand all provinces of Sumatra except Riau) and to increasethe capability of all agencies in the country dealing withkabupaten roads. The project includes the following maincomponents: (a) a road network improvement component,subdivided into three subcomponents: (i) road works andsupervision for the maintenance of an increasing share ofthe maintainable part of the kabupaten road network aswell as rehabilitation/improvement of selected roads inproject kabupatens over three fiscal years starting in1992/93; (ii) workshops and laboratories upgrading andequipping; (iii) provision of equipment, spare parts andsupplies; (b) a training component, including developmentand implementation of priority parts of a nationwidetraining program for kabupaten road staff; and(c) technical assistance and studies for strengtheningsystems and procedures nationwide regarding planning,environmental analysis, and implementation ol' road works,and for helping GOI central agencies in monitoring projectexecution.
Project Benefitsand Risks: Rehabilitation/improvement and better maintenance oE roads
will lead to significant reduction of vehicle operatingcosts in the 73 kabupatens. In addition, the project willincrease GOI's capability to plan and implement kabupatenroad works programs efficiently in the entire countrythereby reducing the costs of road provision and road use.Over time, lower road transport costs will translate intulower agricultural costs, higher rural incomes, and abetter integration of the Indonesian economy. The mainproject risk is that the substantial changes that thisproject will introduce in the way kabupaten road works
This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank autherization.
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progrems are prepared and implemented vill take longerthan expected to take root, particularly in view of thestill evolving allocation of responsibilities between MPWand MHA and the limited capacity of the central andprovincial agencies in charge of assisting and supervisingkabupatens. To reduce this risk, GOI's DevelopmentPlanning Agency, BAPPERAS, will continue to play a strongcoordinating role and a project mid-term implementationreview will be carried out around September 1993. Anotherrisk is that project-assisted kabupatens may be reluctantto increase their funding of maintenance as expected tofulfill project's targets. To reduce this risk, thet :gets have been carefully designed and adequacy ofK intenance will be for each kabupaten a condition ofparticipation in the project's annual rehabilitation/improvement programs.
Estimated Costs: L/ Local Foreign Total------ US$ million ------
A. Road network improvement1. Road worko 271.7 128.7 400.42. Workshops, laboratories 1.3 2.0 3.33. Equipment program 0.9 4.9 5.8
Subtotal 273.9 135.6 409.5
B. Training 4.6 3.6 8.2C. Institltech. devt. 4.4 5.4 9.8
Vehicle Fleet and Traffic . .... .. .... 4Road Transport Industry and Regulations 5Road User Taxaton ....... ................... 6Traffic Safety . . .. . . . . . . . . . . . . . . . . . 6
C. Road Infrastructure 6Institutional Aspects 6Planning/Progr.mming/Budgeting and Expenditures . . . . 9Technical Aspects . .............. .... . 10Environmental Aspects a . * .............. *..... 13
D. Policy Statement anc Action Plan for Road Infrastructureand Road Traffic and Transport . . . . . . 13Background and Descrlption. . 13Main Achievements . . . .... . . . . . . . ... . .. . 14
III. PAST BANK INVOLVEMENT IN THE ROAD SUBSECTOR AND LESSONSLKA D . . . .. . .. 9.. .9.9 ..... 9. . . .. . . .. 15
A. Past Bank Involvement . ........... ...... 15B. Man Lessons Learned sL nad................ 15
This report is based on the findings of an appraisal mission which visitedIndonesia in January/February 1992, comprising Jean-Charles Crochet (SeniorTransport Economist, task manager), Jacques Tolli6 (Senior Highway Engineer)and Jun Zhang (Infrastructure Economist). Messrs. Cittati (Senior HighwayEngineer), Segerstrom (Training Specialist) and Martin (EnvironmentalSpecialist, consultant) and Ms. Sharma (Procurement Specialist) alsoparticipated in the preparation of the project. Peor Reviewers wereMessrs. Beenhakker (economic aspects) and Long (technical aspects).Mrs. Haug, Director, EA3, and Mr. Khanna, Division Chief, EA3IN, have endorsedthe project.
1. Outline Methodology for Preparation of Maintenance Programs2. Training Component: Content and Implementation3. Project Economic Evaluation Methodology and Planning Procedures4. Road Network Length by Road Class and Island Group'; Road Pavement by Road Class and Island Groupv. Condition of the L' 'ional, Provincial, and Kabupaten Road Networks). Registered Motor VeLdlcles (1980-1990) in Indonesia8. Project Kabupatens and Their Road Network9. Design Standards for Rabupaten Roads and Bridges10. List of Equipment11. Detailed Cost Table and Summary Account by Project Component12. Implementation Schedule13. Estimated Disbursement Schedule14. Reporting Requirements15. Supervision Plan16. Main Economic Features of Proposed First Year Rehabilitation/Improvement
Works17. Selected Documents and Data Available in Project File
CHARTS
1. Organization of the Directorate General of Highways (DGH)2. Organization of the Directorate General of Regional Development (DGRD)3. Organization of the Provincial Public Works Offices (DPUP)4. Organization of the Kabupaten Public Works Offices (DPUK)
MAP IBRD No. 23640R
STAFF APPRAISAL L tORT
INDONESIA
THIRD KABUPATEN ROADS DEVELOPMENT PROJECT
I. THE TRANSPORT SECTOR
A. Economic and Sector Setting
1.1 Indonesia, the world's largest archipelago, extends some 5,100 kmfrom east to vest and 1,800 km from north to south. It has a land area ofabout 1.9 million km2 with a wide diversity of geographic conditions. Thepopulation over 180 million in 1990 is very unevenly distributed withextremes ranging from a density of over 800 people/km2 in Java to less thar 4people/km2 in Irian Jaya. Despite high urban growth, about 70 percent of thepopulation still lives in rural areas.
1.2 The Indonesian economy has performed relatively well over the longterm. For example, between 1985 and 1990, real GNP grew at an average of 5.8percent p.a. This period has been marked by rapid structural change and agrowing diversification of the economy as a result of GOI's effort at reducinginternal and external imbalAnces and promoting private sector development.Agriculture, which still accounts for about 20 percent of GNP and 50 percentof non oil exports (including timber) and provides employment to more than 50percent of the population, will continue to be a key economic sector.
1.3 Because of the vast size of the cotmntry and the uneven distributionof population, natural resources and economic activity, transport is ofspecial importance to the Indonesian economy and an extensive transport systemhas been developed over time. All transporz modes-road, rail, shipping, civilaviation, inland waterways, and pipeliner -,are represented in this system butroad is the dominant mode accounting for an estimated 53 percent of medium-and long-distance freight transport and 88 percent of passenger traffic. Ingeneral, the modes tend to complement one another; only in Java and in a fewcorridors in other regions is there inter-modal competition. There is scopefor considerable improvement in the efficiency of the Indonesiantransportation sector (para. 1.6). In the near future, given budgetconstrairts, this will be the sector's main challenge if it is to satisfy therapidly growing and diversifying demands of the Indonesian economy.
B. Sector Orasnization
1.4 Indonesia has a unitary form of government, with four mainadministrative levels: central, provincial (with 27 provinces includingJakarta), district (with 242 rural districts, called kabupatens, and 54 urbandistricts, called kotamadyas), and village. At the central level, fouragencies play a key role in the transport sector. The Ministry of PublicWorks (MPW), through its Directorate General of Highways (DGH), is responsiblefor administration of national roads, operational and technical policies andguidelines as well as general planning for all roads, and execution of allprojects funded under the central budget. The Ministry of Communication (MOC)is responsible for setting and enforcing regulations for all transportservices, and providing the infrastructure and many of the services for theair, sea, inland water and rail transport modes either directly or through
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public onterprises (PEs). In particular, MOC's Directorate General of LandCommunications (DGLC) has responsibility for regulating road transport. TheMinistry of Home Affairs (MHA) is responsible for coordination andadministrative supervision of lover levels governments. Finally, the NationalDevelopment Planning Agency (BAPPENAS) has werall respoisibility forpreparation and supervision of execution of the annual development budget andfive-year development plan (REPELITA). Other agencies (for example theMinistries of Finance and Industry) also play an important role on specificmatters. Devolution of central government reeponsibilities to lower levelgovernments, whenever better suitn_d and adequately equipped for given tasks,is an important objective in Indonesia and takes place under the forms ofdecentralization, deconcentration and co-administration. Practicalarrangements are varied, often complex, cometimes amtiguous. The provincialand kabupaten/kotamadya governments are thus in charge of regional and localroads, although many of the expenditures on these roads are still directlyfinanced from the Central Government with shared or decentralizedimplementation depGnding on the cases. These subnational levels of governmentalso have regulatory responsibilities which are shared with or delegated bythe central government. In addition, most central agencies have provincialrepresentation. The Governors in the provinces and the Bupatis and Walikotasin the kabupatens and kotamadyas, respectively, are responsible forcoordinating government action at their respective levels, therefore beingagents of the entire government although administratively under MHA.
1.5 Many PEs are involved in the transport sector, providinginfrastructure and/or transport services. The most important ones are thenational airline (P.T. Garuda), the ports corporations (PERUMPELs), thenational railway (PERUMKA), the toll roads corporation (P.T. Jasa Marga), theairport corporations (PAPs). several shipping lines (P.T. Jakarta Lloyd, P.T.Pelni and P.T. Bahtera Adhiguna) and two bus companies (PPD and DAMRI). Theprivate sector is also important and growing. All road freight transport,most inter-urban passenger services, and most inland watar and ferry servicesare provided by private companies. The share of the private sector is alsodominant in international and domestic shipping and is growing, although froma small base, in air transport. In addition, the Government is activelypromoting private sector provision of infrastructure mostly, at this time,through build-operate transfer (BOT) schemes in toll roads, ports and urbantransportation infrastructure.
C. Sector Performance
1.6 In general, the transport sector has been able to meet the rapidlygrowing transport needs of the economy at a reasonable financial cost to theuser. Yet, there are many inefriciencies in the sector which have seriouseconomic consequences in '.e short and long-term. In particular, despiteprogress in the recent past, there are some major weaknesses in the incentivesyatems (especially, insufficient cost recovery in road and rail transport andinappropriate content and enforcement of regulations in road and urbantransport), in the supply of infrastructure (especially, insufficient qualityof construction and level of maintenance of many facilities) and in theorganization, management, and staffing of government agencies and PEs. GOIhas been aware of most of these shortcomings and has taken importantcorrective measures in recent years as described briefly in section D belowand, with more details for the road subsector, in Chapter II.
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D. Government Obiectives ahnd Policies
1.7 GOI has consistently placed much importance in the past on thetransportation sector as a key means to promote economic growth (andespecially export growth), develop regional equity and national unity, andensure national security. In gpneral, GOI's emphasie has therefore been onserving the needs of tItt prodt cAve sectors and improving access to isolatedparts of the country. The implemei.;:ation of these objectives has been pursuedthrough the funding af large expenditure programs, improvements in pricing andregulations, and to a lesser extent, institutional development. Transportexpenditures as a share of the country's developmant expenditures haveincreased dramatically from about 12 percent in the mid-1980s to about 22-25percent in recent years, which makes transport the most important sector inthe development budget. Maint Ance -xpenditures, in particular for nationaland provincial roads have recel an inrcreasing share. GOI has also takenactions to improve the pricing of trap- ort services and the sector'sregulator7 framework. In particular, prices for freight services for road,maritime and, to a large extent, rail transport, are now set by the market,and almost all regulations which were hampering development of maritimetransport have been removed in two drastic packages of reforms in 1985 and1988. Steps have also been taken continuously to improve the operationalefficiency of PEs and the allocation of rest nsibilities to and withingovernmental ageincies. Despite these achievements, much remains to be done.The ongoing Bank financed Highway Sector, First Jabotabek Urban Development,Railway Technical Assistance, and National Ports Development Projects arehelping GOI address some of the key sector issues. The main purpose of theproposed project is to continue improvement in the kabupaten road subsector.
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II. THE ROAD SUBSECTOR
A. The Network
2.1 Indonesia's public roads network has been expanded rapidly in recentyears, from about 136,000 km in 1979 to a total of about 250,000 km in 1990(national roadst 17,500 km; provincial roads: v5,100 km; kabupaten roads:155*600 kmt munici1al roads: 36,100 km; and transmigration roads: 5,300 km;see Annex 4 1/). This growth occurred mainly in the kabupaten roads (about100 percent since 1980) and resulted more from absorption into the network ofexiiting but unclassified roads rather than from new construction, which hasbeen limited in the last several years as the emphasis for all road classeshas been on rehabilitation and improviment.
2.2 The condition of the network has improved steadily since itsrehabilitation began in the late 1960.k In 1988, about 50 percent of thetotal public roads network was reported paved (83 percent of natioral roads,66 percent of provincial roads, 39 percent of kabupaten roads, se. Annex 5);compared to about 33 percent in 1980. Condition surveys show that some 58percent of the national and provincial road network is now in good and faircondition (Annex 6). For kabupaten roads, however, available data suggestthat only some 30 to 40 percent may be in good and fair condition.
2.3 In addition to the public roads network, there are also elevensections of toll roads of 2-6 lanes, with a total length of 348 km, and fourtoll bridges, with a total length of 1,800 m, being operated by PT Jasa Marga.Construction of another three sections of about 105 km length is expected tostart soon. More than half of the length of toll roads serves the Jakartaarea and some sections are within the city. Other sections are bypasses ofimportant cities and a few are interurban. All toll roads are in Java, exceptone in Sumatra. All of these roads are in good to excellent condition.
B. Road transport
Vehicle Fleet and Traffic
2.4 Vehicle Fleet. There were about 8.9 million motor vehiclesregistered by the end of 1990 ana about 32 percent (2.8 million) of these werefour-wheel vehicles. Commercial vehicles-buses and trucks-accounted for53 percent of four-wheel motor vehicles with cars and pickups making up theremainder (Annex 7). The fleet has grown rapidly in the last 15 years,averaging around 11 percent growth between 1980 and 1990.
2.5 Traffic. The high economic growth of the 1970. produced averagegrowth rates in traffic volumes as high as 20 percent per annum. During1980-90, road traffic, excluding motorcycles, on national and provincial roadsgrew by an average of six to seven percent per annum. Growth rates werelowest in Java and Bali (6.5 percent) with higher rates in Sumat-a(11 percent) and in parts of the outer islands. Average traffic levels onmost national roads are between 3,000 and 10,000 vehicles per day (vpd) while
1/ There are also unknown lengths of village roads and other unclassifiedroads.
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the large majority of provincial roads carry traffic volumes of less than3.000 vpd. TI.e highest traffic flows occur on approach roads to Jakarta,Surabaya and Bandung, where volumes range from 40,000 vpd to 110,000 vpd.Road capacity problems are developing in some major corridors due in part totraffic growth but also to interurban road capacities being reduced byspreading urbanization and ribbon development. Available data on traffic onkabupaten roads suggest levels of several hundred vpd in Java and Bali, one totwo hundred in the developed parts of the other islands, and up to fifty ini,ne rest of the country. In addition, motorcycle and non-motorized trafficcan be very substantial.
Road Transport Industry and Rezulations
2.6 Truckinx. Road transport is generally preferred to other modes forthe movement of non-bulk freight over short, medium and even long distances onaccount of cost, speed and reliability considerations. Road transportconsists of pub) c carrier 'for hire' services (30 percent) and own-accountoperations by private sector firms (45 percent) and Government corporations(25 percent). The majority of for-hire operators own from one to five trucks,but there are some large, privately owned fleets. Trucking companies requirean operator's licerse. For trucking operations across provincial boundariesin Java, a route license is also required. In practice, many regulationsconcerning road transport are obsolete and often poorly enforced. Tariffs for"for-hire" trucking are no longer regulated and vary considerably depending onfactors such as commodity type, availability of return load, and route.
2.7 The ease of entry into the trucking market, the relatively flexibleenforcement of regulations, and the relaxation of tariff restrictions a fewyears ago have generated conditions (in particular competition) such that theservice to users is perceived as good and responsive. From the broadereconomic point of view, however, the trucking industry is not as efficient asit could be. First, Indonesia is not taking full advantage of the importantefficiency gains which could be derived from the greater use of large multi-axled trucks operating on an adequately built and maintained network. Second,overloading (mainly of 2-axle trucks) beyond the structural capacity ofexisting roads is relatively widespread causing serious road damage andeconomic costs which are not borne by the industry. These deficiencies aremainly the result of the poor system of road user taxation and the inadequacyand poor enforcement of vehicle weight and dimension regulations. GOI isaddressing them in a variety of ways (para. 2.29).
2.8 Bus Services. Interurban bus services are mainly operated by theprivate sector and are reasonably efficient. On the trunk routes, servicesare frequent and fast given variable road conditions. There is justifiedconcern, however, over safety standards. Tariffs are regulated but this hasgenerally not been a major problem and companies compete on quality ofservice. Urban bus services--whether operated by the public or private sector-suffer frow many shortcomings. Speeds are slow, breakdowns are common, andbuses are oiten crowded during peak hours. These problems are beginning to beaddressed with assistance in particular from the Bank's urban transportprojects.
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Road Uger Taxation
2.9 Indonesia applies all three main forms of road user taxes:(i) purchase related (import duty, VAT and, in some instances, luxury goodssales tax on new vehicles, and ownership transfer tax when vehicles changehands); (ii) ownership related (the annual registration fee); (iii) userelated (import duty and VAT on spare parts, tires, and lubricants, implicittax element on the pump price of gasoline, and toll fees). In the past, totalGovernment revenues from road users have not covered total expenditures onroads except in FY1986/87, despite the substantial level of taxes raised fromcar users. Moreover, trucks and, to a lesser extent, buses, which cause mostof the road damage and require the construction of higher standards roads,contribute very little, if any, to their marginal attributable cost of roaddeterioration and congestion. This distortion, which is a long-standingfeature of the road user taxation system in Indonesia, mainly arises from thefact that the incentive aspects of cost recovery have so far only played aminimal role in road taxation policies. Decisions on the structure and levelof road user taxes have been made primarily on grounds of resourcemobilization, trade and industrial policy, anti-inflation policies andperceived ability to pay. An important reason for this is that decisions onthe various road user taxes are made by different Government departments whichhave not been sufficiently well coordinated in the past.
2.10 Two prin-zpal measures are required to correct this situation.First, the diesel oil price needs to be raised to cover at least border price,transportation and distribution costs plus a minimum road user tax element.Second, the annual vehicle registration tax on trucks needs to be restructuredand its general level increased so that it becomes better related to theactual road deterioration caused by various types of trucks, provides adisincentive against the use of categories of trucks that are most likely tobe overloaded, and, together with the road user tax element on diesel, ensuresadequate cost recovery. Basic studies outlining the required changes havebeen completed recently. GOI has also begun to tackle the implementationaspects (para. 2.29).
Traffic Safetv
2.11 Road traffic accidents are a serious socioeconomic problem inIndonesia. The limited data available indicate about 11,OCO fatalitiesannually with nearly 50,000 people seriously injured. Although fatality ratesseem to have been declining recently, they are still much higher than in mostindustrialized countries. Studies financed under previous Bank highwayprojects have identified the major causes as: inadequacies in laws andregulations regarding vehicles and traffic, deficiencies in their enforcement,and deficiencies in the standards and condition of roads. These problems arerecognized and GOI has now begun to address the most critical road safetyissues (para. 2.29).
C. Road Infrastructure
Institutional Aspects
2.12 Allocation of Responsibilities Between Government Agencies. Mainresponsibilities for the various government functions related to the roadnetwork are defined in a vast number of laws and regulations. The public
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works agencies of the various levels of government in Indonesia areresponsible in general for the administraticn of the road network and, inparticular, for the planning/programming, design and implementation of roadworks. The Directorate General of Highways (DGH) of NPW is the road agency atthe central level (Chart 1), while agencies at lower levels are the ProvincialPublic Works Office (DPUP - Chart 3) 2/ and the Kabupaten/Kotamadya PublicWorks Office (DPUK - Chart 4). In principle, DGH, DPUPs and DPUKs areresponsible for national, provin:-ial and kabupaten/kotamadya roads,respectively. DGH is also responsible for setting policies, procedures andguidelines concerning the planning and implementation of all road programs andassisting and supervising provincial and local agencies in their use. Inpractice, this clear, decentralized approach has only partially beenimplemented so far and the degree of actual implementation depends in mostcases on the capabilities of the various provincial and local agencies. As aresult, responsibilities are often mixed and lines of authority sometimesunclear. DGH is, for example, still used by the central government to channeldirectly some of its funding to provincial and kotamadya governments andtherefore, much involved in the planning and implementation of thesegovernments' road programs. On the other side, the planning andimplementation of maintenance of national roads is now delegated to the DPUPs,with DGH playing more of a guiding role.
2.13 The Directorate General of Regional Development (DGRD - Chart 2) andthe Directorate General of General Administration and Regional Autonomy (PUOD)of MRA also play a substantial role in the road sector. With thi4rcorresponding agencies at provincial and kabupaten/kotamadya leveis, DGRD andPUOD are, in particular, responsible for regulating and monitoring thenontechnical aspects of central government's grant programs (Inpres programs)to lower level governments, for regulating staffing and salaries, and for theappointment and supervision of provincial and local governments' seniorofficials.
2.14 Although the distinction between the technical role of the PublicWorks agencies and the nontechnical or administrative role of the Home Affairsagencies is clear in principle, there have been many ambiguities andinefficiencies in practice. The problem has been most serious for kabupatenroads. First, the technical role of DGH and the DPUPs (to which DGH hasdelegated part of its role of assistance and supervision of kabupatengovernments) was not fully recognized until recently by all parties involved.Second, DGH and the DPUPs have tried only partially to exercise their role inthe recent past; they have focussed on national and provincial roads and havenot had sufficient capability to work with kabupaten governments. As aresult, these have not been adequately supervised nor held accountable for thetechnical aspects of their road programs, although by far the most important.Improvements in general organization have been underway for several yearsthough. DGH and the DPUPs now play an increasingly active role in thekabupaten roads subsector. In particular, a detailed allocation ofresponsibilities which provides for more effective management of kabupatenroad programs (in particular through clearer and better definition of therespective roles of the Public Works and Home Affairs agencies) has recentlybeen informally agreed (para. 4.20); it shoule be formalized as soon as some
ai In some larger provinceso, separate provincial agencies have beenestablished for the various public works sectors. In such cases, thereis a separate provincial road department (DBM).
experience is gained in its application. Special provincial units forassisting local governments in their road programs (PBPJKs), headed by DPUPstaff, have also been established in all provinces. These units haveincreased DPUPs' capabilities and created an effective link between DGH andthe kabupatens.
2.15 Staffing. The rapidly increasing volume of work of the past fiveyears and the much higher complexity of the engineering and implementationprocesses required for increasing the efficiency and quality of road worksprograms have resulted in a serious staffing problem for DGH, the DPUPs andespecially the DPUKe. DGH has about 5,000 permanent and temporary staff,about 1,200 of which are engineers. Traditionally, many have been seconded toDPUPs. Recently, DGH has also started to recruit young engineers and secondthem to DPUKs. This was an important progress since DGH can recruit betterpeople than the provincial and kabupaten administrations because of the bettercareer prospects that it offers. There is no reliable estimate of the numberof staff working at DPUP and DPUK level on road works programs, but it islikely to be well above 15,000. In addition, many local consultants areinvolved in design and supervision activities. In general, promotion criteriaand the culture of the institutions emphasize administrative skills, which arein general well developed. On the contrary, technical skills, particularlyregarding engineering and implementation of works, need urgently to beupgraded. This need is especially felt at DPUK level where the acute shortageof skilled staff now makes it very difficult to improve the quality ofplanning and construction as much as required. Over the long term, theconditions of civil service will also need to be overhauled as currentconditions are proving to be a major constraint to recruit and retain higherquality people.
2.16 Training. As road agencies have concentrated all their attention inthe past on improving the quality of the road network, long term manpowerdevelopment has been relatively neglected. Technical training of road staffis mainly the responsibility of PUSDIKLAT, the main training unit of MPW, andits specialized road section, DIKLAT Bina Marga, which has a close technicalrelationship with DGH from which it receives part of its budget. Some non-technical training is also provided by MBA to DPUP and DPUK staff. Ingeneral, there are serious weaknesses with the training programs for roadstaff. Given that training is funded under many different sources withvarious, sometimes unconnected implementation arrangements, approaches are notstandardized. There is also no estimate of total training performed annually,although the numbers may be substantial, mainly for DGH and DPUP staff. Inaddition, although training programs are usually initiated to fill a perceivedgap in qualifications, they are not yet systematically related to needs.Furthermore, DIKLAT Bina Marga is understaffed and the personnel units of theDPUPs on which it needs to rely to implement training at that level requiremuch development. As the road agencies, under DGH's lead, are becoming moremature, manpower development is being given increasing attention. Inparticular, a major step was taken recently with the preparation of acomprehensive analysis of training needs for kabupaten road staff and, on thisbasis, of a five year Kabupaten Road Master Training Plan (KRMTP) which hasdefined training activities responsive to needs and a detailed implementationstrategy. Implementation of the priority parts of KRMTP is an importantcomponent of the project.
Plannina/ProgramminR/Budfeting (PPB) and Expenditures
2.17 The Annual PPB Process. The main characteristics of the PPB processin Indonesia are its bottom-up approach and the variety of funding sources fordevelopment expenditures. Annual road works programs and budgets are preparedthrough a series of meetings from about June to November each year at village,kabupaten/kotamadya, provincial, and national levels to review budgetproposals in a progressively more comprehensive context. On this basis, theroad components of the national development budget are prepared and budgetenvelopes are announced early January for each of the main funding programsand subsequently for each province and kabupaten/kotamadya. Coordinationmeetings are then held to firm up lists of approved road works- This processis somewhat cumbersome and time consuming, but it ensures that information onexpenditure needs and locally perceived priorities filters up to seniordecision makers and that a consensus is reached between all parties involved.
2.18 A relatively large number of funding programs are used to channelresources to various sectors and levels of government. While DGH's own budgetis the only source of funds for national roads, works on provincial andkabupaten/kotamadya roads may be funded through (a) block grants received fromcentral government (Inpres Dati I and II), (b) earmarked central governmentgrants for road rehabilitation (IPJP and IPJK), (c) DGH's own budget, and(d) the provincial and local governments' own resources. Foreign aid ischannelled mainly through (c) for provincial roads and (a) and (b) forkabupaten/kotamadya roads and has often been used informally by centralgovernment to influence the selection of priorities at provincial and locallevels. Given that different guidelines and types of control apply to eachfunding program, there is a great risk of distortion in the PPB process. Thisrisk is well addressed for national and provincial roads by the preparation ofan integrated draft work program (Satuan III) which deE.s with all types ofroad works, including maintenance, and all sources of funCs. There is notsuch a document yet for kabupaten roads but it is expected that it would bedeveloped during the implementation period of the proposed project. As afirst step, DGH has agreed that the IPJK, which funds about 60 percent of allroad works on kabupaten roads, would also be used for periodic maintenancestarting in FY 1992/93.
2.19 Various methods are used to assess quantitatively the economicpriority of proposed road works. The methods used for programmingmaintenance, rehabilitation and minor improvement works on national andprovincial roads include an extensive annual data collection and sophisticatedcomputer programs which incorporate, in particular, the Bank's Highway DesignModel. These methods are exemplary by international standards. As DGH andprovincial staff are becoming more adept in their use, they are bringing amuch higher degree of rationality in the PPB process on national andprovincial roads. A different approach, based on specific feasibilitystudies, is also being developed for major improvement and construction works.On kabupaten roads, systematic programming methods are in place only forrehabilitation/improvement works. These methods, which are discussed inChapter V, are much more simple, although economically sound and adapted tothe limited capability of staff at local level. They have been applied in 75kabupatens since 1988 under the Bank-assisted Second Rural Roads DevelopmentProject and were generalized to the entire country in 1990. Much support isstill necessary, however, to assist kabupatens in their use and DGH in itscontrol and evaluation. The project will provide such support. Untilrecently, methods used for preparing maintenance programs on kabupaten roads
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were incomplete and, in any case, often not applied systematically despite theprogress achieved under the Second Rural Roads Development Project. Partlyfor this reason, the funding of maintenance has generally been inadequate(para. 2.20). These methods have been improved, however, during thepreparation of the project, including a field test, and are ready to beapplied on a large number of kabupatens, vhich will be done as part of theprojecL. It is expected that, as experience is gained, the methods will becontinuously improved and this is also supported by the project.
2.20 Ex2enditures. GOI has given high priority to the funding of roadexpenditures in recent years. The increase has been striking, from about Rp875 billion3/ in 1985/86 to about Rp 3,810 billion in 1991/92, including allsources of funds, an increase of about 340 percent in nominal terms and190 percent in real terms. Thus, total budget allocations to the roadsubsector have reached close to 20 percent of the national development budget.During this period, the expenditures on kabupaten roads have increasedproportionately slightly less, from about Rp 290 billion in 1985/86 to aboutRp 1,160 billion in 1991/92. Expenditures on national and provincial roadshave mainly been for rehabilitation/improvement of the existing network andfor maintenance. Only few roads have been added to the national andprovincial road network. An important feature has been the large increase inmaintenance funding to levels which are adequate to satisfy the full routineand periodic needs. For kabupaten roads, on the other hand, most of theexpenditures ha'i been for rehabilitation/improvement of the network,including in particular many village roads and roads built under areadevelopment schemes (such as transmigration projects) which have been absorbedin the kabupaten road network. On the whole, despite progress achieved underforeign funded projects, maintenance of kabupaten roads has been neglected,with the consequence that many roads, which *e e in general poorlyconstructed, have deteriorated very quickly. GOI has recognized this issueand taken initiatives, within constraints of the budget system, so that thefunding of maintenance is increased, particularly out of the Inpres Dati IIblock grant. In parallel, measures are taken to improve maintenanceprogramming methods (para. 2.19) and execution of works (para. 2.24). A mainobjective of the project is to assist the 73 project kabupatens increase thefunding of maintenance from about 30 percent of the needs of theirmaintainable networ'- at the present time to 100 percent in FY 1994/95. In thelong term, it will also be important to stabilize and possibly decrease thesize of the kabupaten road network to a level consistent with the capabilityof kabupaten governments to fund maintenance. The project includes a study tothis effect.
Technical Asvects
2.21 Technoloeies and Design. There is a very large variety in thetechnologies and the design processes used in the road subsector in Indonesia,ranging from the most modern approaches to obsolete techniques. In general,the approaches used on national and provincial roads are sound and welladapted to Indonesia's capabilities in terms of administration, contractingindustry, and natural resources. Pavements generally consist of one orseveral asphalt concrete layers placed on an old pavement or on crushedaggregate base and sub-base. Indonesia, as a tropical country, has been a
3/ With the exception of expenditures on toll roads.
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pioneer in the use of high bitumen content, gap graded asphalt concrete, atechnology particularly well adapted to its circumstances. Cementstabilization for base layers and bituminous surface treatment as a wearingcourse are also used depending on contractors' skills and the availability ofconstruction materials. In addition, efforts have been underway for manyyears to use under a variety of techniques the natural rock asphalt from SouthEast Sulawesi. Designs for maintenance and rehabilitation works are preparedat provincial level with the assistance of an advanced computer model.Designs for major improvement and construction works are prepared at centrallevel, sometimes with the assistance of consultants.
2.22 The situation is a lot more problematic for kabupater roads, wherethe choice of technology and the designs could often be much better.Penetration macadam overlays are used for sealed roads in general. This oldlabor-intensive technology is well adapted to available resources in manyparts of Indonesia but in most cases it is poorly implemented (para. 2.24).It should be used in conjunction with more modern technologies (bitumenemulsions for example) and better execution methods. Some of the gravel roadsalso use a Telford pavement, consisting of large flat stones, an ancienttechnique that should be abandoned. In general, moreover, designs areprepared on the basis of inadequate surveys and standard drawings, and areoften not adapted to site conditions and available materials. Many of theseproblems have been tackled, however, and improvements are being implemented.In particular, detailed technical guidelines for all engineering aspects ofroad works (including bridges) have been prepared by DGH (see Project File)and are being disseminated to all kabupatens. The PBPJKs are now assistingand checking the preparation of designs by staff of DPUKs. In addition,specifications have been prepared for more modern technologies (such asbitumen emulsions) and private firms have been encouraged to invest inproduction and distribution facilities whenever possible. Furthermore, anaction plan for technology development and dissemination has been preparedwhich is expected to be implemented as part of a subsequent project proposedfor Bank financing, the East Indonesia Kabupaten Roads (KREI) Project.
2.23 Tenderin,. Construction and SuDervision. Much progress has beenachieved in the past ten years in this area for national and provincial roads.All periodic maintenance and rehabilitation/improvement works are now carriedout by private contractors. Standard contractor pre-qualification proceduresand bidding and contract documents, which are satisfactory although still inneed of a few major improvements, have been developed and used nationwide.The average size of contracts has also been much increased and multi-yearcontracts are now commonly used for all works. Supervision is in general doneby consultants. Yet, in general, the quality of construction remainsunsatisfactory, mainly because of the weakness of the contracting industry andinadequate quality control. Also, a "quality culture" is only now taking rootthroughout the road agencies. DGH is aware of these issues and is nowaddressing them.
2.24 In this area as in the area of technology and design, problems are alot more acute for kabupaten roads despite commendable progress achievedrecently, in particular in the context of the Second Rural Roads DevelopmentProject. Most aspects of road works implementation have serious weaknesses
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that too often result in a product of poor-quality and short economiclife.4/ Tendering is not efficient. Contract documents place anunreasonable burden on the contractors. Contracts are often for very smallworks (with a cost below US$250,000) and of a short duration (less than ninemonths in most cases). Contractors are too dependent on poor qualityequipment supplied by the public sector. Supervision is inadequate andcontract specifications are often not adequately enforced. These problems arenow being recognized, especially since DGH and the DPUPs have begun to play amore substantial role in the preparation and implementation of kabupaten roadworks programs. As a result, improvements in human resources and organizatio..at kabupaten level are beginning to be a priority, and the need for assistanceand supervision by DPUPs and DGH is now acknowledged. More specifically, thetechnical guidelines mentioned in para. 2.22 include guidelines on executionof works and quality control. Better procedures for contracting road works(including better contractor prequalification procedures and standard biddingdocuments) have also been formulated. One of the main objectives of theproject is to introduce these improvements in the 73 project kabupatens.
2.25 Domestic Construction Industrv. Until the early 1980s, Indonesiaonly had a relatively small number of experienced contracting firms capable ofexecuting major road works, and therefore, DGH used mainly foreign contractorsfor such jobs. Since then, local capability has developed so that there arenow about 500 class "A" (with no upper limit of contract price) and severalthousand class "B" (eligible to bid on contracts up to Rp 500 million(US$250,000)) domestic contracting firms registered in Indonesia. Inaddition, there are many thousands of small contractors, registered as class"C" (eligibility ceiling of Rp 100 million (US$50,000)) carrying out smallcontracts and providing unskilled labor and production and transportation ofmaterials for larger contractors and government agencies. GOI has longrecognized the need to improve the capabilities of domestic contractors.Several studies carried out in recent years have highlighted the sector's mainweaknesses: (a) shortage of skilled manpower and insufficient organizationand technical capabilities of most contractors; (b) poor contractor selection,contract administration and supervision procedures, in general, as well asinsufficient size and duration of contracts; (c) weak support institutionswithin GOI and llmited role played by the two main contractors associations;and (d) some inadequacies ir the business environment (particularly in theareas of finance, insurance, equipment, and standards). GOI has taken actionsto address some of these problems such as setting up and delivering sometraining programs for the personnel of contractors and supervisionconsultants, providing technical assistance to contractors under severalforeign funded projects, including road projects, and improving the system forlicensing contractors. A more comprehensive approach is needed, however, andthis has been the subject of a regular dialogue between GOI and the Bank, towhich the associations of contractors have also contributed. In the short tomedium term, step-by-step improvements should be sought in the context ofspecific sectors. The proposed project includes such improvements(para. 2.24).
4/ As shown by past Bank experience and a 1991 study of contractorperformance prepared under the USAID-financed Rural Roads MaintenanceSystem Project (see Project File).
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Environmental AsDects
2.26 Indonesia has established a significant body of laws and regulationsfor the protection of the environment which provides a framework for specificguidelines and institutional development measures now being implemented bysector ministries. Of particular importance for the infrastructure sectorsare the regulations ... the analysis of environmental impacts (AMDAL). Inrecent years, MPW has much developed its capability to implement AMDALregulations with substantial assistance from ADB in particular. In 1989 and1990, a series of guidelines and directives on the environmental evaluationand control of all types of public works projects were developed in MPW. In1991, detailed draft manuals for implementing these guidelines, covering allphases of the project cycle, have also been prepared for the road subsector.In addition, some substantial training of staff has been provided to MPW andDGH. As a result, a sound basis is now available to MPW and DGH for assessingand controlling the environmental impacts of road works.
2.27 Vehicle emission control, including the setting of standards andimplementation of programs form part of GOI's general air pollution monitoringand control efforts. With assistance provided under the Bank-assisted FirstJabotabek Urban Development Project, monitoring of vehicle-related airpollution has been initiated and, on this basis, a national strategy forcontrolling vehicle emission is being developed.
D. Policy Statement and Action Plan for Road Infrastructure andRoad Traffic and Transport
Background and Description
2.28 The Policy Statement and Action Plan for Road Infrastructure andRoad Traffic and Transport (PSAP) issued in October 1989 is GOI's main programfor improving incentives, regulations, and performance of institutions in thesubsector. The Policy Statement itself covers all major policy matters -i thesubsector and proposes adequate policy guidelines and reforms concerning inparticular: (a) laws and regulations on road traffic and transport; (b)development of subsector institutions; (c) transport sector policy formulationand planning; (d) planning and execution of road works; (e) road usertaxation; (f) vehicle weights and dimensions regulations; and (g) road safety.Since it was issued, the Policy Statement has been the reference for GOI'smain initiatives in the subsector. It remains an adequate guide for furtherprogress in future years and GOI is committed to its content. The PolicyStatement was complemented by an Action Plan which set out the detailed step-by-step actions which GOI expected to take in the following three years toimplement the Policy Statement. It includes the following: (a) finalizationand submission to Parliament of a new draft transport law; (b) finalization ofnew draft regu:ations on road traffic and transport matters; (c)decentralization to provincial and local governments of the responsibility toimplement road traffic and transport regulations; (d) preparation of measuresfor the institutional development of DGLC and of provincial and local roadtraffic and transport units; (e) execution of various sector planning studiesincluding a national origin/destination (OD) survey; (f) improvement ofprocedures and guidelines used on national and provincial roads for theplanning/programming, design, implementation and monitoring of road works, andfor taking account of environmental impact, (g) formulation of a strategy toimprove road user taxation and implementation of key first steps, particularly
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regarding the vehicle registration tax; (h) preparation and implementation ofnew regulations on vehicle weights and dimensions and of measures to improveenforcement; and (i) preparation and implementation, whenever possible, ofselected key measures to improve road safety.
Main Achievements
2.29 In general, progress in implementation of the Action Plan has beensati3factory. GOI has initiated action in all the areas covered in the Plan,although some of them are politically sensitive and/or require complexpreparation and consultation, and there have been some substantialachievements. First, progress in improving the road transport regulatoryframework has been important. A new transport law has been prepared andapproved by the Parliament and draft implementing regulations have beenfinalized. A government decision to decentralize the implementation oftraffic and transport regulations has also been enacted and is beingimplemented. In addition, restrictions on the movement of containers by roadhave been removed and draft new regulations on vehicle weights and dimensionshave been prepared. Measures for their implementation, including enforcement,are now being formulated and there is progrePs on the definition of a networkof key "freight" routes. Second, progress has also been satisfactoryregarding road works planning and execution. Improved procedures andguidelines have in particular been put in place for road works planning/programming and formulated for environmental impact assessment. Third, someprogress has occurred, although below expectation, regarding road usertaxation (RUT). An inter-ministerial team has prepared proposals forrationalizing the RUT regime. These proposals provide a basis for revisingthe structure and the level of the vehicle registration tax. Also, since thePlan was issued, the price of gasoline and diesel oil has been increased twiceby a total of about 30 percent in real terms. This improved substantiallytotal cost recovery. However, since diesel oil remains subsidized, (when itsprice is compared to its actual resource cost) this addressed only partiallythe issue of insufficient cost recovery from truckers. Fourth, GOI has alsotaken or at least initiated action on the other parts of the Plan. Thenational OD survey has been carried out to acceptable standards. Majorstudies are also well underway regarding land transport planning and theinstitutional development of DGLC. In addition, substantial funding has beenprovided in GOI 1991/92 budget to start removing some of the country's worstsafety black spots, a modern system for accident data reporting is beingimplemented, and a systematic review of road safety measures has recentlystarted.
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III. PAST BANK INVOLVEMENT IN THE ROAD SUBSECTOR AND LESSOIS LEARNED
A. Past Bank Involvement
3.1 The Bank has had a substantial involvement in the transport sectorof Indonesia over the past two decades. It has financed four maritimetransport projects (two shipping and two ports projects), two railwayprojects, two fertilizer distribution projects, and eleven road projects.Bank involvement has been particularly important in the road subsector, withtotal lending of about US$1,600 million since 1969, corresponding, inparticular, to disbursements of about US$1,200 million since the early 1980sor about 12 percent of all GOI expenditures (from local and foreign sources)on the road network. Nine of the road projects have been completed. TheHighway Sector Project (FY90) and the Second Rural Roads Development Project(FY88) are still ongoing. PPARs have been issued for the Second and ThirdHighway Projects in 1980 and for the Fifth Highway Project in 1989. PCRs havealso been issued for the Fourth Highway Project in 1985 and for the FirstRural Roads Development, Highway Betterment, Jakarta-Cikampek, and HighwayMaintenance and Betterment Projects between 1989 and 1991. In addition,sector reports have been prepared at different times; most recently, a highwaymaintenance review was discussed with GOI in October 1988. The experienceunder the road projects is briefly reviewed below.
3.2 All road projects have had bioadly similar objectives. They aimedat: (i) improving the quality of the network through road construction,improvement, rehabilitation, and maintenance, with the emphasis during thepast ten years being to a very large extent on the last two; (ii) developingthe capability of road agencies through technical support and training ofstaff as well as through improvements in planning/programming systems, intechnologies, and in procedures and guidelines for preparing, implementing andmonitoring road works; and (iii) improving the incentives and regulations forroad transport and their enforcement. The emphasis given to these objectivesdiffered substantially between projects, however. The toll road project(Jakarts-Cikampek Project) and the iabupaten roads projects (First and SecondRural Roads Development Projects) focused on the problems of correspondingparts of the road network. The other projects shifted gradually from a focuson national roads, civil works, and DGH organization to a broader concern forthe entire national and provincial road network, detailed improvements in thefunctioning of all road agencies, and to varying degrees, incentives andregulations pertaining to road transport.
B. Main Lessons Learned
3.3 Civil Works. In general, civil works programs have been implementedsatisfactorily in terms of timeliness but with uneven results in terms ofquality of construction. An obvious lesson has been that projects with roadworks well prepared and implementation initiated by the time of loan approval,have gone ahead about on schedule, When, because of a sector approach orinsufficient preparation, the composition of the civil works program was notready early on and/or extensive reviews were necessary, for example for theformulation of subsequent phases of the program, delays have occurred. On thewhole, the major reason for delays has been that the planning/programming andengineering capability of DGH has improved only gradually and that, withsteadily increasing allocation of funds during the 1980s, this capability has
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often been over-stretched. In the Second Rural Roads Development Project,annual planning/programming of works has been initiated well ahead of timeevery year and decisions on priorities confined to one main review in thecontext of the budget process (rather than spread over the entire year with noprecise relationship to the budget process as in many donor assisted roadprojects) and, as a result, project implementation has been timely despite thesubsector approach. This will be replicated with further improvements, in theproposed project.
3.4 Quality of construction has been uneven mainly because of deep-seated problems discussed in paras. 2.21 to 2.25 above. Results have beenespecially poor in projects which included a large number of small contractswith weak implementation arrangements as in the First Rural Roads DevelopmentProject and in the first maintenance ccuponent of the Highway Maintenance andBetterment Project. Experience in the two follow up projects (Second RuralRoads Development and Highway Sector Projects) has shown that with betterimplementation processes, including in particular intensive supervision,better results could be achieved. As a result, preparation of the proposedproject has focussed, inter alia, on devising and agreeing with GOI furtherimprovements in implementation arrangements. A main objective of theproject's supervision should also be to ensure that these arrangements areproperly applied by all kabupatens and the results monitored and evaluated.
3.5 Through its projects' civil works programs as well as loanconditions, the Bank has also tried to steer GOI towards a greater funding andbetter execution of maintenance. Experience has shown that conditionality byitself cannot work, mainly because of entrenched habits, especially amongprovincial and local governments, and the difficulty of preparing andimplementing maintenance programs satisfactorily. Starting in 1987 with theHighway Maintenance and Betterment Project, the Bank, therefore, undertook tofinance maintenance on national and provincial roads as well as the technicalsupport and the supervision needed to make it successful. This helped GOIincrease the funding of maintenance dramatically and obtain satisfactoryresults with it. Other factors contributing to success were that the previousproject (as well as an ADB TA project) had helped set up better programmingprocedures for maintenance and that maintenance was the project's mainobjective and, therefore, received considerable attention. The experiencewith the Second Rural Roads Development Project has confirmed this lesson. Ithas shown that increased funding is not sufficient to achieve success;procedures for preparing and supervising maintenance programs adequately alsoneed to be in place and maintenance must be a priority of supervisory andkabupaten staff. The proposed project takes account of this experience:improved maintenance has been made the project's first objective, satisfactoryprocedures are in place, and adequate technical support and substantialfinancing will be provided.
3.6 Institutional and Technical Developments. Success, in terms ofimproving the performance of the agencies involved in the preparation andimplementation of road works programs, has been mixed. Overall, theseagencies are much more capable today than they were in the early 1980s, whichhas allowed GOI to extend the scope and complexity of its activities. Yet,progress (which has been led by GOI, with the Bank bringing mainly advice andassistance in implementation) has often been frustrating, slower thanexpected, and in many cases, incomplete. The main lesson of experience hasbeen that major improvements of an institutional or technical nature require(a) eonsiderable staff resources over a long period of time (from GOI and
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their consultants as well as Bank staff), (b) the preparation of detailedimplementation arrangements, (c) continuous attention by decision makers, and(d) a flexible approach so that improvements take account of and are wellintegrated into GOI's normal systems and procedures. Only a limited number ofobjectives can and should therefore be pursued at any point of time and theBank should select very carefully the few institutional objectives of anysingle project. For this reason, the proposed project's institutionalobjectives have been limited as much as possible to a few key areas withprecise measures agreed with GOI from the outset and adequate resourcessupplied for implementation.
3.7 The development of human resources through training has also beenonly partly successful. Training programs have been implemented, often withdelays, buz the impact on the overall institutional performance has beenunclear mainly because the selection of training activities included in theprojects as well as their content often did not address many of the agencies'priority needs. This lesson has been taken into account. GOI has agreed toprepare a detailed analysis of training needs of kaoupaten road staff and acomprehensive training plan as a basis of the training component of theproposed project
3.8 Improvements in Incentives and Reaulations for Road Transport. Onthe whole, progress has been slow with project activities aimed at improvingincentives and regulations as well as with the Bank parallel dialogue with GOIin this area. There are two main reasons for this. First, concerning roaduser taxation, although the various aspects of this issuw have been understoodand solutions formulated as part of the Bank's road projects, such projectsmay not have been appropriate vehicles for implementing action, given that inthe Indonesian context, energy pricing policies and other economic andpolitical concerns have been considered more important than efficiency withinthe transport sector. The results achieved recently (para. 2.29) may belinked with the dialogue in those areas rather than on transport policies.Second, the slowness in achieving progress in road transport regulations hasbeen due mainly to the lack, until recently, of a thorough understanding ofthe key reasons of observed problems, the lack of detailed implementationplans, and, possibly, the insufficient concern from MOC. In addition, staffresources allocated to this subject have been inadequate as experience hasshown repeatedly that projects' physical implementation and, to a lesserextent, institutional objectives tend to dominate the attention of GOI andBank staff once a project is under way. These lessons have been taken intoaccount in the design of the FY90 Highway Sector Project, for which a detailedaction plan for improving, inter alia, incentives and regulations has beenagreed with GOI and has been a main focus of supervision. A review of theplan's achievements to date is in paragraph 2.29. Further progress should bepursued in the context of another sector project as well as through dialogueat macro level. A Second Highway Sector Project is under preparation.
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IV. THE PROJECT
A. Oblectives
4.1 The principal objectives of the project are to improve access to themain economic centers in 73 kabupatens in nine provinces (Weut Java, WestKalimantan and all provinces of Sumatra except Riau) and to increase thecapability of all agencies in the country dealing with kabupaten roads. Morespecifically, the project aims at: (a) improving systems and procedures forroad maintenance and ensuring that the maintainable network of all project-assisted kabupatens (about 25,000 km) is satisfectorily maintained;(b) rehabilitating/improving about 4,200 km of roads; (c) improving thecapability of staff involved in the subsector nationwide at all levels; and(d) strengthening institutional arrangements and improving the technicalenvironment for planning and implementing kabupaten road works programs. Thelist of 73 project-assisted kabupatens is ir. Annex 8, with some basic data ontheir road network. The kabupatens were seiected by GOI in coordination withprojects financed by other donors. The Bank will be the only source offoreign funding for kabupaten roads in the project's nine provinces and allkabupatens of each province will participate in the project. An additional 45kabupa ens, most of Indonesia's eastern region, are expected to be covered bythe forthcoming Eastern Indonesia Kabupaten Roads (RREI) Project.
B. Rationale for Bank Involvement
4.2 Continued Bank support to the kabupaten road subsector is needed forthe following reasons: (a) good access is a prerequisite for most developmentactivities in rural areas and is particularly important to reduce ruralpoverty; (b) a sizable part of GOI's development budget is now aimed atimproving kabupaten roads and it is important that these funds be used asefficiently as possible and that the onvironmental impacts be addressedsystematically; (c) the Bank can provide key assistance to GOI in theformulation and implementation of institutional and technical improvements atsubsector level, especially in view of GOI's shortage of expertise; and(d) Bank's involvement can help GOI give high priority to road maintenance andless emphasis to meeting the ambitious physical targets set in REPELITA V forrehabilitation/improvement of the kabupaten road network.
C. Project Description
4.3 The project will have the following main components:
(a) a road network improvement and maintenance component, comprising:(i) routine and periodic maintenance of the entire kabupaten roadnetwork as well as rehabilitation/improvement of selected roads inthe 73 project-assisted kabupatens o'er three GOI fiscal yearsstarting in 1992/93 (except in the eight kabupatens of South Sumatrawhere the project will start in 1993/94); (ii) workshops andlabor&cories upgrading and equipping; (iii) provision of equipment,spare parts, and supplies; and (iv) supervision of works.
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(b) a training component, including detailed preparation andimplementation of priority parts of a nationwide training programfor kabupaten road staff based on a comprehensive training needsanalysist and
(c) technical assistance and studies for strengthening systems andprocedures nationwide regarding planning, environmental analysis,and implementation of road works, and for helping GOI centralagencies in monitoring project execution.
D. Road Network Imrrovement and Maintenance
Maintenance
4.4 Despite the efforts made during the Second Rural Roads DevelopmentProject, road maintenance remains inadequate due to the lack of understandingand implementation capacity at local level, and the poor overall technicalframework (para. 2.20). The Bank's past experience ir. the roads subsector hasshown that its involvement in all aspects of road maintenance can helpconsiderably bring about the major changes that are required (para 3.5).Therefore, the project's civil work. program gives priority to maintenance inorder to: (i) ernsure that the better procedures and guidelines which havebeen developed under the Second Rural Roads Development Project are used earlyon a large scale and are well monitored; (ii) encourage kabupatens to increasefunding of maintenance (project funds would match their own financing); and(iii) concentrate the attention and support of the project's GOI staff andsupervision consultants on maintenance.
4.5 The road maintenance component will comprise the entire annualkabupaten road maintenance programs in the 73 kabupatens over the years1992/93 to 1994/95 except in South Sumatra (para. 4.3(a)). The target to bereached by the third year of the project is that 100 percent of themaintainable network, i.e., about 25,000 km, should be maintained. Thistarget will be met gradually, by 50 percent for the first year and 75 percentfor the second year for periodic maintenance, and 70 percent the first yearand 85 percent the second year for routine maintenance. However, for a fewkabupatens (Tapanuli Utara, Karo, Simalungun, and Dairi in North Sumatra, andSolok in West Sumatra) which could have financial difficulty in meeting thesetargets, lower targets have been agreed for periodic maintenance (35 percentthe first year, 60 percent the second year, and 85 percent the third year) aswell as for routine maintenance (50 percent, 65 percent and 85 percentrespectively). Draft first year maintenance programs for each projectkabupaten were reviewed at appraisal; they are now further developed takingBank comments into account on the basis of the methodology presented inChapter V and with reference to the above targets. At nezotiations. aareementwas reached with GOI that it would cause each project kabunaten to (a) prepareits annual road maintenance program for the fiscal lears 1993194 and 1994/95in accordance with a methodoloav and criteria aareed to by the Bank (ChanterV). (b) submit this program for the Bank's review and comments before December31. 1992. and December 31. 1993. respectively. and Ic) finalize and implementthis Program taking into account the comments. if any, by the Bank. Agreementwas also reached that GOI would select subproiects for the maintenancecomnonent of the vroiect in accordance vith criteria and proceduressatisfactory to the Bank. It was understood in particular that subprojects
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would be included in a kabupaten road maintenance program prepared as agreed,and designed in accordance with DGH's technical guidelines. In addition, inorder to give a strong incentive to project kabupatens to me3t the abovemaintenance targets, it was understood that satisfactory preparation andimplementation of maintenance programs will be a condition of each kabupaten'seligibility for the project's rehabilitation/improvement component (para. 4.7)Implementation of the maintenance programs would be monitored through periodicreports on the bas-'.s of progress certification issued by the supervisionconsultants (para. 4.8).
Road Rehabilitation/Improvemeut
4.6 This component is relatively limited as a result of the project'semphasis on maintenance (para. 4.4). The 4,200 km of rehabilitation/improvement works will include several hundred sections of roads in poor orbad condition. This amounts to about 20 km of major works per year perkabupaten, representing about 25 percent of the rehabilitation bac:klog. Theroads will be brought up to minimum standards based on projected trafficvolumes and topograph- (Annex 9); existing alignment will be retained to theextent possible. Works will be designed for a ten year lifetime and willinclude, as required, rehabilitation of pavement layers, shoulders, side andcross drainage and bridges. The traditional pavement surfacing on kabupatenroads (penetration macadam carried out by labor-based methods), for whichimprovements were introduced under the Second Rural Roads Development Projectthrough new specifications and technical assistance, will continue to beutilized and improved, together with other paving methods such as bitumenemulsion, softer-grade bitumen, graded aggregate paving materials, cold mixasphalt, soil stabilization. Fine-grain asbuton may also be used on a pilotbasis.
4.7 Draft first year rehabilitation/improvement programs for eachkabupaten, prepared on the basis of the methodology presented in Chapter Vwere reviewed at appraisal. Detail design is now being completed. About27 percent of works in the first year are expected to be rehabilitation ofsealed roads. The balance are existing gravel, stone or earth roads requiringbetterment/upgrading to seal or gravel standards. A sealed surface isproposed for about 80 percent of the program, the rest are mainly earth roadswith estimated traffic potential of less than 50 ADT recommended forgraveling. About 10 percent of the program would be build to pavement widthsof 4,5 m or more and represent in most cases widening projects for roads withmore than 500 ADT. Pavement width of 3.0 or 3.5 m are proposed for otherprojects based on minimum etandards for roads with projected traffic below 500ADT. Implementation is expected to start in July 1992. The selection andevaluation of subprojects for the second year program has already started.At negotiations. agreement was reached with GOI that it would cause eachproiect kabuvaten to (a) Rrepare its annual rehabilitation and imvrovementworks program in resRect of the proiect for the fiscal years 1933/94 and1994/95 in accordance with a methodology and criteria agreed to by the Bank(Chapter V). (b) submit this grogram for the Bank's review and comments beforeDecember 31. 1992. and December 31. 1993. resvectivelv. and (c) finalize andimplement this proaram takint into account the comments. if any. by the Bank.Agreement was also reached that GOI would select subgroiects for therehabilitation/improvement comgonent of the nroiect in accordance withcriteria and procedures (including environmental assessment 2rocedures)satisfactorv to the Bank. It was understood in particular that the following
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would applyt (a) the kabupaten in which the subproject is located needs tohave submitted an acceptable annual maintenance program for the correspondingfiscal year, and implemented satisfactorily its maintenance program in theprevious fiscal year; (b) the subproject is included in an annual roadrehabilitation/improvement program prepared as agreed, and has been designedin accordance with DGH's technical guidelines; (c) the subproject economicrate of return is at least 10 percent; and (d) the subproject has beensubmitted to the environmental screening, assessment and review processpresented in para. 4.35 below.
Road Works Proarams Supervision
4.8 Technical quality of works has improved gradual y during the SecondRural Roads Development Project. However, a technical audit carried out inlate 1990 showed serious deficiencies in many aspects of the works, indicatinglack of detailed supervision. Therefore, the project provides full support tothe decentralized units (73 DPUKs and 9 DPUP/PBPJKs) for the implementation ofthe annual programs of maintenance and rehabilitation of kabupaten roads,including engineering preparation, contractor prequalification and tenderevaluation, quality control and monitoring, and on-the-job training of DPUK/DPUP staff in these fields. GOI will employ foreign and local consultants forthis purpose, some of whom will be stationed in the provincial centers andothers in the kabupaten centers to work with DPUP and DPUK counterpart staffon a daily basis. To facilitate administration and coordination, the serviceswill be divided into two Field Consultants for Implementation (FCI) teams forthe Western and for the Central Regions, which will act as the "engineer"fully empowered to supervise the contracts, including certification of works.The services would include about 535 staff-months of foreign and 15,200 staff-months of local consultants (of which 2,880 of professionals, 6,000 ofsubprofessionals, and 6,320 of inspectors/surveyors). These consultantsshould mobilize when the first year program is due to start. Therefore, theterms of reference (included in the Project File) were agreed during projectpreparation, so that contracts could be awarded and started by July 1, 1992.
Workshops and Laboratories
4.9 New guidelines for workshop and equipment management (para. 4.10)call for major repair and overhaul of kabupaten equipment to be carried out inthe provincial workshops, and servicing and preventive maintenance to becarried out in kabupaten workshops facilities. Such facilities, includinglaboratories for basic testing of soils and materials, already exist in mostof the 73 project kabupatens, but they will be upgraded. In addition, fivenew laboratories will be built in kabupatens where no such facility exists.Equipment will be provided for all laboratories as well as for some workshops,as summarized in Annex 10.
Road Construction and Maintenance Eauipment
4.10 Kabupaten equipment fleets are used partly to carry out road worksby force account and partly to lease out to contractors who lack certainessential equipment. Performance of these fleets has been unsatisfactory,mainly due to weak management. A set of guidelines for workshop and equipmentmanagement Was prspared under the Second Rural Roads Development Project,providing a practical framework for more efficient management, includingmessures to ensure that rental rates of kabupaten equipment fully reflect
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ownership and maintenance costs. GOI now intends to implement theseguidelines in all kabupatens and ensure that kabupatens provide sufficientfunding for the operation and maintenance of their equipment.
4.11 As an alternative to continue providing equipment to the kabupatens,the Project attempts to create the conditions for a larger involvement of theprivate sector, e.g., larger contract packages, multi-year contracts, improvedprocedures for prequalification and for enforcement of contract obligations,etc. However, this will not be possible or sufficient in all the kabupatens,and some equipment is still needed for carrying out expected works. Annex 10shows the equipment and spare parts required for some kabupatens, which willbe procured under the project. This list was confirmed at negotiations.
E. Training
4.12 A nationwide Kabupaten Roads Master Training Plan (KRMTP) wasprepared recently by GOI (para 2.16). Priority parts of KRMTP will beincluded in the project. They include: (i) preparation of training programsincluding course design and materials development; (ii) provision of equipmentand supplies for training programs preparation and delivery; (iii) training oftrainers; (iv) delivery of training programs, including professional stafftraining programs which will be contracted out; and (v) strengthening of theinstitutions involved in training, including the setting up of systems fortraining needs analysis and monitoring and evaluation. The objective,confirmed at negotiations, is to provide about 620 training sessions (or150,000 trainee-days) in about 25 priority subject matters to about 6,200staff over a five-year period. Only the first three years of the componentwill be included in the project. The last two years are expected to beincluded in the forthcoming Eastern Indonesia Kabupaten Roads (KREI) Project.At nexotiations. agreement was reached with GOI that (a) by June 30. 1993.December 31. 1993. and December 31. 1994 it would prepare and submit for theBank's review and approval its annual program for in-house delivery oftrainina. for the fiscal years 1993/94. 1994/95 and 1995/96. respectively: and(b) finalize and implement this proaram takina into account the comments. ifany. by the Bank. More details on this component are in Annex 2.
4.13 To assist in the implementation of the training component, GOI willemploy foreign and local consultants. The services will include about 144staff months of foreign and about 1,400 staff months of local consultants (ofwhich about 700 of professionals and 700 of subprofessionals). Draft terms ofreference (included in the Project File) were agreed in principle atnegotiations. Services would start by January 1, 1993.
P. Technical Assistance for Institutional and Technical Development
4.14 GOI central agencies, mainly DGH, need support to continue improvingthe institutional and technical framework for preparation and implementationof kabupaten road works programs as well as to guide and monitor projectexecution. Accordingly, the project would include: (a) technical support andlia'son for engineering aspects, including evaluation of implementation oftechnical guidelines and specifications, and for technical audits; (b) generalassistance in planning, including further development of the planningmethodologies, carrying out special studies of road works needs in under-
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developed areas, analyzing the current situation and issues regarding villageroads, assessing the size of the road network that kapubatens can economicallyand financially maintain and rehabilitate, and assessing the long-termindirect impact of road rehabilitation/improvement on the environment (forexample, through land development and deforestation); (c) assistance in themonitoring and coordination of project activities, including the coordinationof the separate teams of PCI and training consultants, the monitoring ofproject environmental impact, and the preparation of project implementationreports; (d) support 1t the preparation of annual road works programsincluding, inter alia, the environmental screening of proposed subprojects,the carrying out of site-specific environmental assessments when required, thesystematic review of subprojects' economic viability, and the extension ofplanning methodologies to non-project kabupatens; and (e) support to MPW inits review of site-specific environmental assessments.
4.15 For the above purpose, GOI will employ foreign and local consultantsunder a Central Technical Consultants (CTC) team, and assign counterpart staff(as described in the Terms of Reference) as an essential component of staffingto enable achievement of project objectives. The services would include about273 staff-months of foreign and 824 staff-months of local consultants, tostart at the very beginning of the project. In addition, there would be aseparate contract for about 36 staff-months of local consultants for theenvironmental support to MPW. The CTC Terms of Reference (included in theProject File) were agreed during project preparation, in time for theconsultants to be selected and mobilized by July 1, 1992.
0. Cost Estimates
4.16 The total project cost is estimated at US$499 million (Rp 1,031billion equivalent), including taxes and duties of US$45.4 million equivalent.It includes: (a) physical contingencies of 10 percent on the base cost of allcomponents; and (b) price contingencies of 3.7 percent on the foreigncomponent and of 6.0 percent on the local component each year throughoutproject implementation. The foreign exchange component is estimated at US$169million or 34 percent of total costs. Detailed cost estimates are given inAnnex 11 and summarized in Table 4.1 below.
4.17 The base costs including taxes are estimated as of January 1992. Inthe case of civil works, estimates are based on updated and adjusted recentunit prices for similar works. Rehabilitation/improvement works are estimatedto cost about US$40,000 per km. Routine maintenance is estimated to costabout US$1,200 per km. Periodic maintenance is estimated to cost US$13,000per km for sealed roads and US$5,600 for gravel roads. A new workshop isestimated at US$50,000 and rehabilitation of existing ones about US$15,000.The cost of equipment for construction and maintenance operations, forworkshops, and for laboratories is based on recent bids. The cost ofconsultant services is also based on recent contracts. Regarding training,the cost is based on ongoing similar programs both in-country and overseas.
H. Financina
4.18 Financing of the proposed project is shown in Table 4.2 below.
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Table 4.1: PROJECT COST SUMMARY
Rupiah (million) USS (million) ForeignLocal Foreign Total LOcal Foreign Total exchange
Total prolects costs 682.716 348.719 1.031.435 330.4 168.8 499.2 34
Table 4.2: PROJECT FINANCING PLAN
(US$ million)
Source of Finance Local Foreign Taxes Total
*OI 238.8 0.0 45.4 284.2
Bank 46.3 168.8 0.0 215.0
Total 285.0 168.8 45.4 499.2
The proposed Bank loan of US$215 million would finance about 43 percernt of
total project cost, or about 47 percent net of taxes and duties, representing
100 percent of foreign cost and 16 percent of local cost. GOI would finance
the remaining US$284.2 million equivalent, or about 57 percent of the total
estimated project cost, mainly through annual budgetary allocations from the
central government grant programs, IPJR and Inpres Dati II.
I. Implementation and Monitoring
4.19 The project's civil work. will be implemented by the DPUKs in the 73
project kabupatens, assisted by DPUP technical staff and technical assistance
consultants. The other project components (provision of equipment, training,
supervision of works, and technical assistance) will be implemented by DGH.
The project is expected to become effective in September 1992, but the first
contracts would have been let by July 1992 (para. 4.30). Execution would be
completed bv March 31; 1996, about 3-3/4 years after start-up. The loan
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closing date is scheduled for September 30, 1996. The implementationschedule, as shown in Annex 12, was confirmed by GOI during negotiations.
4.20 In addition to the direct implementation responsibilities mentionedin para. 4.19, the main agencies involved in the project are MPW for technicalaspects, MHA for institutional aspects, BAPPENAS for development planningaspects, and MOF for financial aspects. The detailed responsibilities ofthese agencies and corresponding offices at kabupaten, provincial, and centrallevels have been defined (para. 2.14). Agencies will be coordinated by acommittee at Director General level chaired by BAPPENAS. This committee willbe assisted by a Project Secretariat in coordinating tue preparation ofactions to be taken by the agencies as part of project implementation and inmonitoring the execution of these actions. The Project Secretariat willinclude Director level representatives of BAPPENAS, MPW, MHA, and MOF. Atnegotiations. it was agreed that GOI would establish the Proiect Secretariatby November 1. 1992.
4.21 A Project Implementation Unit (PIU) will also be needed to monitorprogress in project implementation, including preparation of annual programs,procurement, physical achievements, and expenditures. At negotiations. it wasagreed that GOI would establish this unit in DGH by November 1. 1992. DGHwill also be designated as project executing agency. Monthly reports providedby the DPUKs through the Field Consultants for Implementation teams and theCTC's and training consultants' monthly reports will provide the basis formonitoring. Progress on the project will be communicated to the Bank by meansof periodic progress reports, the first one to be due by October 1992. Thesereports will include both consolidated information for the total project andindividual reports for each province, to meet the reporting requirements asstated in Annex 14 including specific monitoring indicators. The PIU willprepare a detailed project completion report and submit it to the Bank notlater than six months after the loan closing date.
J. Procurement
4.22 The project civil works are scattered over vast areas and althoughworks will be packaged as explained below (para. 4.23), the size of contractsis expected to be too small (about US$300,000 on average for rehabilitation/improvement works, which are the most important) to attract foreigncontractors. Civil works will therefore be carried out by contracts awardedunder local competitive bidding (LCB) procedures acceptable to the Bank andopen for participation by foreign contractors. All contractors will besubjected to prequalification under procedures satisfactory to the Bank. Suchprocedures have been finalized for the first year works program. Standardbidding documents for civil works acceptable to the Bank will be used.Improvements have also been finalized to draft bidding documents submitted byGOI.
4.23 One of the means to improve quality of works is to increase theefficiency of the contracting process (para. 2.24). To this end, it wasagreed at negotiations that civil works contracts would be nackaged inaccordance with criteria satisfactory to the Bank. It was understood thatarrangements described here below would be used in order to (i) attract amaximum of Class A and Class B1 (para. 2.25) contractors, and (ii) givecontractors an incentive to invest in new equipment through the award ofcontracto of a longer duration (para. 4.11):
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(a) for rehabilitation/improvement works, a minimum share of allcontracts would be of a size of Rp 500 million or more (so that theycan be carried out by Class A contractors); a minimum would also beof contracts with a construction period over one fiscal year.Specifics are shown in Table 4.3 below which defines for two groupsof provinces, the minimum shares of the value of all contracts eachyear in a kabupaten to be made of larger and of longer contracts.The five provinces of the first group in Table 4.3 have already madesubstantial use of class A contractors, which is not the case forthe four provinces in the second group which need more time to makethe adjustment. For year 1 for the first group and for all yearsfor the second group of provinces, the share will be calculated asar average over all kabupatens of each province. Otherwise, theshare will be calculated for each kabupaten. All otherrehabilitation/improvement contracts will be carried out by Class Blcontractors.
Table 4.3: CONTRACT PACKAGING FOR REHABILITATION/IMPROVEMENT WORKS
Minimum Share(expressed as a percentage ofthe value of all contracts)
Year 1 Year 2 Year 3
1. Aceh (i) Contracts above 502 50% 75ZWest Sumatra Rp 500 millionLampungWest Java (ii) Contracts with 02 50X 502West Kalimantan construction over
one fiscal year
2. North Sumatra (i) Contracts above OZ 50% 50ZBengkulu Rp 500 millionJambiSouth Sumatra (ii) Contracts with 02 502 50Z
construction overone fiscal year
Note: Categories (i) and (ii) above are not exclusive.
(b) for periodic maintenance works, packages will be valued above Rp 200million, so that they are carried out by class Bl contractors; and
(c) routine maintenance will be carried out partly by force account, upto a maximum share of 50 percent or an aggregate amount of US$44million equivalent, and partly by small contractors.
4.24 Equipment, spare parts, and supplies will be procured in accordancewith ICB procedures, except for minor items or groups of items estimated to
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cost less than US$200,000 per contract, which may be procured on the basis ofinternational shopping, after a minimum of three price quotations. Itemsestimated to cost less than US$50,000 per contract may be procured throughoff-the-shelf shopping. The maximum aggregated value of contracts procuredthrough international shopping is US$0.7 million and through off-the-shelfshopping US$0.3 million. Contracts for spare parts, up to an aggregate amountof US$0.5 million, may be awarded after direct negotiations with suppliers.Items should be grouped to the extent possible. In bid comparison andevaluation under ICB, domestic manufacturers may be granted a margin ofpreference of 15 oercent or the prevailing import duty, whichever is lower.Consultanto will be appointed in accordance with Bank guidelines for use ofconsultants and on terms and conditions acceptable to the Bank. Professionaltraining as well as in-house training delivery will be carried out underprocedures and conditions acceptable to the Bank.
4.25 Bank prior review will apply to the following contracts: (i) civilworks above US$2.0 million, (ii) equipment above US$200,000, and (iii) allconsultants' services and professional training. Other nontracts will besubmitted to post-review. This will result in a prior rc.iew of about 12percent of all contracts in value or 26 percent of the amounts financed by theBank. To compensate for this relatively low level of prior review, projectpreparation has put emphasis on improving the quality of the prequalificationprocedures and standard bidding documents to be used for civil works. Asystematic post-review of civil works will also be carried out on a randombasis during supervision. The experience of such post-reviews under theongoing Highway Sector Project has been successful. Training delivery will bein accordance with a detailed program and cost estimates prepared annually andsubmitted to Bank's prior approval (para. 4.12).
4.26 Procurement administration will mainly be the responsibility of theDPUKs for civil works and DGH for equipment, consultancy services, andtraining. Final decisions on awards will rest with the authority designatedin the relevant procurement regulations (Project File, item 1(b)], whichdefine different levels depending on the contract value. DPUKs have shownunder the Second Rural Roads Development Project their capability to carry outsatisfactorily the procurement of works. They will also be assisted by theFCI and the procurement process will be monitored by DGH. Duringnegotiations, GOI agreed to all the above procurement arrangements. Table 4.4below gives a breakdown of the project by procurement method.
K. Disbursements
4.27 Loan funds will be disbursed on the following basis:
(a) Civil Works: 40 percent of expenditures;
(b) Equipment. S2are Parts, and SuDDlies: 100 percent of foreignexpenditures for directly imported items; or 100 percent of localexpenditures (ex-factory) of locally manufactured items, or65 percent of expenditures for other locally procured items;
(c) Consultancy Services: 100 percent of expenditures; and
(d) In-house Trainina Delivery: 75 percent of expenditures.
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Table 4.4: PROCUREMENT ARRANGEMENTS(US$ million)
Procurement method /a TotalProject element ICB LCB Other cost
Equipment, spare parts & supplies 8.4 1.5/c 9.9for road works, workshops, (7.6) (1.3) (8.9)labs, & training
Consultancy services 49.3/d 49.3(44.8) (44.8)
In-house training delivery 1.5/e 1.5(1.0) (1.0)
Professional training 0.8/e 0.8(0.7) (0.7)
Total 8.4 393.7 97.1 499.2(7.6) (143.6) (63.8) (215.0)
La Figures in parentheses are the respective amounts financed by the Bankloan and include contingencies.
Lb Force account./L Intern-tional shopping, off-the-shelf shopping, and, for spare parts,
direct contracting./d In accordance with Bank's Guidelines for use of Consultants.le Under arrangements satisfactory to the Bank.
(e) Professional Training: 100 percent of expenditures.
Disbursements under the project will be made against full documentation ofexpenditure except for the following items, for which disbursements would beon the basis of Statements of Expenditures (SOEs): (i) civil works underUS$2.0 million, (ii) equipment, spare parts, and supplies under US$200,000,and (iii) training delivery. Withdrawal applications will be aggregated inamounts of not less than US$100,000 equivalent, prior to their submission tothe Bank. SOE records would be made available to Bank staff as required forinspection during supervision. The schedu_.e of estimated disbursements isshown in Annex 13; it differs substantially from the disbursement profile for
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standard highway projects (which require some six years for completion),mainly because the inroject is limited to three consecutive annual programs ofroad works in the 73 project kabupatens. Disbursements are expected to becompleted in about 4I years. The experience under the Second Rural RoadsDevelopment Project has shown this schedule to be realistic.
4.28 Bank disbursements for road maintenance expenditures would be at aconstant percentage (40 percent) rather than on a declining basis, mainly foradministrative simplicity. However, because of the increasing annual targetsfor maintenance (para. 4.5), GOI's funding of maintenance will double fromabout 30 percent of total needs in the project's first year to 60 percent inits last. GOI's share of funding of incremental maintenance will alsoincrease to 45 percent. Because of the project's short duration, and thecurrent neglect of maintenance on kabupaten roads, it would not be realisticto aim at higher percentages. The Bank's disbursement share has in fact beenset at the minimum value expected to give an incentive to the kabupatens toincrease considerably their own allocation of funds to maintenance as well asadopt better planning/programming and implementation methods.
4.29 In order to expedite and facilitate disbursements, GOI intends toset up a Special Account in the Bank of Indonesia with an initial deposit fromthe loan of US$15.0 million (equivalent to four months' estimated average loandisbursements). The account would be maintained in US dollars. Applicationsfor replenishment of the Special Account would be made quarterly or wheneverthe Account is drawn down to 50 percent of the initial deposit, whichevercomes first.
L. Accounts and Audits
4.30 The PIU will have overall responsibility for establishing andmonitoring the use of a uniform project accounting system. Financial recordsand accounts by subprojects will be retained by the DPUKs based on copies offinancial and supporting documents obtained from project managers and relevantagencies concerned with project funding, payment and reimbursement. The PIUwill maintain accounts for equipment procured on behalf of the project and fortraining and technical assistance. The DPUKs through the Field Consultantsfor Implementation will transmit up-4 date project accounts to the PIU on aregular basis. The PIU comptroller w. 1 consolidate all accounts from the 73kabupatens into a single project account on a quarterl;- basis for monitoringpurposes, and annually for audit purposes. During negotiations, GOI agreedthat: (a) the project's records and accounts, including for the SOEs and theSpecial Account, will be audited annually in a timely fashion by independentauditors acceptable to the Bank; and (b) it will submit to the Bank certifiedcopies of the audit reports starting December 31, 1993, and subsequently nolater than nine months after the end of each fiscal year. In the case ofSOEs, the audit report will contain a separate opinion as to whether the SOEssubmitted during such fiscal year, together with the procedures and internalcontrols involved in their preparation, can be relied upon to support therelated withdrawals.
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M. Retroactive Financing
4.31 Retroactive financing for civil works and consulting services, notto exceed US$12.0 million, would be provided under the project forexpenditures incurred after March 1, 1992, and before the date of the loanagreement.
N. Environmental Impact
4.32 Potential Environmental Impact. Among the project's works, onlythose for road rehabilitation/improvement may be expected to have impacts ofsome significance on the environment. These impacts may be direct, throughloss of vegetation and natural habitat, unsuitable construction practices,increases in run-offs and erosion, dust, noise and traffic safety hazards.They may also be indirect, through induced development and its uncontrolledeffects such as deforestation and loss of soil through poor agriculturepractices and erosion. Given that kabupaten roads are narrow (three to fourmeters pavement in general) and follow the terrain, with in general little orno earthworks, the direct impacts of project works are generally of a verysmall scale, with very little land acquisition and almost no building removal.Moreover, given that road sections to be rehabilitated/improved are in generalless than ten kilometers long, the areas where indirect impacts may be feltare limited.
4.33 ImRact Assessment. GOI has prepared a sectoral environmental impactassessment (EIA) for the project (included in the Project File). This EIAreviews the legal framework for environmental assessment in Indonesia andanalyzes the major impacts to be expected from project works grouped intoseven main representative categories. It concludes that, except for works onroad sections not previously open to year round four-wheel traffic and goingthrough or providing access to "fragile" areas, project works would only haveminor impacts on the environment and that these impacts could be mitigatedthrough the use of codes of sound environmental practice at survey/design andworks implementation stages. "Fragile" areas are defined on the basis of theREPPPROT maps, which are maps prepared between 1982 and 1988, for the planningof transmigration projects. These maps cover all of Indonesia and are widelyrecognized as one of the best data source on the natural environment ofIndonesia. "Fragile" areas include in particular conservation areas, forestreserves, wetlands, coastal zones, and any area with potential erosionproblems. According to the EIA, road works which may have a significantenvironmental impact, are expected to be less than 10 percent of allrehabilitation/improvement works proposed by the kabupatens for Bankfinancing. For those works, the EIA recommends that site specificenvironmental assessments be prepared in accordance wvih GOI's environmentalregulations.
4.34 The appraisal mission reviewed the EIA and found its conclusions andrecommendations sound in general. On this basis, specific agreements with GOIhave been formulated (para 4.35). The appraisal mission found, however, thatthe indirect impacts of proposed road works that would provide access to someof the fragile areas might be more significant than assessed in the EIA.Given the scarcity of data and analysis, there is no conclusive evidence as towhat the relationship is between improved access, induced development, andindirect impacts. However, through consideration of rural population density
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and growth, and percentag:3 forest cover, as well as through discussions withexperts involved in environmental work in Indonesia, the appraisal missionidentified fifteen kabupatens 5/ where the risk of indirect impacts neededto be considered.
4.35 Recommended Actions. At negotiations, an understanding was reachedwith GOI that the criteria and procedures on the basis of whichrehabilitation/ improvement subprojects would be selected (para 4.7) wouldinclude the following: (a) road works in the draft program submitted annuallyto the Bank (para 4.7) will be screened so as to identify those on roadsections not previously open to four-wheel traffic and providing access tofragile areas; (b) such road -orks will be submitted to a site specificenvironmental assessment in act.ordance with MPW's environmental procedures;(c) only road works which have been found acceptable by both GOI and the Bankas a result of the environmental assessment will be eligible for Bankfinancing; (d) any road works financed by the Bank will be designed andimplemented in accordance with agreed environmental codes of practice and thiswill be regularly monitored; (e) no road works will be eligible for Bankfinancing if they provide access to conservation or forest reserve areas 6/in any project-assisted kabupaten, or to protected forest areas 6/ in thefifteen kabupatens where induced development may have significant indirectimpacts; such road works will be screened out as part of the alnual programpreparation procedures (Chapter V); the list of fifteen kabupatens will bereviewed and, if necessary, revised annually to take account of additiou.alinformation that may become available from various sources, including thestudy of long term indirect environmental impact of rehabilitation/improvementworks (para 4.14).
4.36 Actions have already been initiated by GOI and support is providedin the project to enable GOI to fulfill the above agreements. The proposedfirst year road works program has already been screened and any road workscorresponding to conditions (a) and (e) above, have been excluded. Thosecorresponding to conditions (a) above will be submitted to an environmentalassessment and may be included in the second or third year programs if foundacceptable. The assessments will be carried out by the Central TechnicalConsultants (para 4.15). In addition, separate support will be provided tothe environmental group of DGH (Tim Kerja) and the en.vironmental commission ofMPW (Komisi Pusat) to assist them in their review of the assessments (para4.15). Codes of sound environmental practice have been prepared and foundacceptable by the appraisal mission. They have been integrated in the newtechnical guidelines for preparation and implementation of kabupaten roadworks (para 2.22). The use of the codes of practice and the implementation ofenvironmental management and monitoring plans, whenever required, will beassisted by the Field Consultants for Implementation and monitored by theCentral Technical Consultants.
5/ Aceh Timor, Aceh Utara, Aceh Besar, and Pidie in Aceh province; Nias,Asahan, and Simalungan in North Sumatra; Agam in West Sumatra; BengkuluUtara, Bengkulu Selatan, and Rejang Lebong in Bengkulu; Batang Hari inJambi; and Pontianak, Sanggau and Sambas in West Kalimantan.
6/ As defined by the REPPPROT maps.
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4.37 Road works that will not have been found acceptable by the Bank as aresult of a site specific environmental assessment or because they willcorrespond to condition (e) in para 4.35 above, could in principle still beexecuted by GOI with its own funds. However, such road works would still haveto be cleared by GOI's own environmental review (AMDAL process, para. 2.26).Although the ANDAL process is only beginning to be implemented forkabupaten roads, the Bank's rejection of the proposed works, when it occurs,may be expected to trigger a detailed review by the environmental commissionof MPW. More generally, environmental activities under the Project, includingthe study of long term indirect impacts of rehabilitation/improvement works(para 4.14), are expected to have a demonstrative effect and introduce simplepractical procedures which complement GOI's ANDAL process; these activitieswill thus have benefits beyond the project itself.
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V. ECONOMIC EVALUATION
A. Benefits and Beneficiaries
5.1 In general, the project will provide or significantly improve accessto rural areas in more than one quarter of all kabupatens of Indonesia, andthus will help mobilize rural trade, increase the pace of rural economicgrowth, and promote equitable regional development. Its most direct economicbenefits include (a) savings in operating costs of motorized and non-motorizedvehicles; (b) savings 4.n the personal time cost of travellers; and (c) savingsfrom modal transfer and generated traffic. Private users such as individualcar drivers, car and bus passengers, and firms using transport on their ownaccount will capture these benefits directly. In addition, the benefitsaccruing to Indonesia's trucking and inter-urban bus industries, which arecompetitive, will be passed on to producers and consumers through lower pricesof goods and services.
5.2 In addition, the project will provide valuable support for GOI'sdecentralization policy by strengthening the implementation capacity of thekabupaten, and the capacity of central and provincial agencies to assist andsupervise kabupatens. The project will, in particular, (a) reinforce theplanning-programming-budgeting system developed during the Second Rural RoadsDevelopment Project; (b) introduce measures to improve construction quality;and (c) institute road maintenance on a systematic basis.
5.3 Most project-affected areas are not reached by national orprovincial roads and include low-income rural households who lack access topublic health and education facilities and for whom the lack of jobeopportunities encourages migration to already crowded cities. The projectwill also contribute to alleviate these problems. In addition, its povertyalleviation impact, albeit indirect, will be considerable. The project willcreate about 3.3 million unskilled worker-days per annum for various types ofmajor works, another 2.8 million for routine maintenance and 2.0 million forperiodic maintenance. In all, the project will generate about 24 millionunskilled worker-days during the 3-year implementation. As a result, aboutRp 80 billion will be paid out in wages, much of which is expected to beearned by the poorer section of the population.
B. Preparation of the Annual Road Works Proarams
5.4 Road maintenance and rehabilitation/improvement works to be includedin the project will be selected annually in the context of the budgetpreparation process in accordance with procedures developed during the SecondRural Roads Development Project. These procedures are briefly described andassessed below. Further details are in Annexes 1 and 3.
5.5 Maintenance Works. Guidelines for the preparation of annualmaintenance programs in each kabupaten were prepared in 1990 and reviewed in1991 after field testing. They have been tailor-made to produce maintenanceprograms in kabupatens where little or no condition data existed previously.They include the following steps in each kabupaten: (a) inventory of thepotentially maintainable network, (b) preliminary identification of roadsections that may require routine or periodic maintenance, (c) preparation of
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separate periodic and routine maintenance work programs and detailed costestimates which are then fed into the budget decision making process.
5.6 Item (a) above is based on available information on road conditionand consideration of previous years' rehabilitation/improvement programs.Item (b) includes a preliminary survey of the maintainable network and aqualitative assessment of which road sections require routine or periodicmaintenance. Item (c) includes (i) a detailed survey of the sectionsidentified for periodic maintenance with quantitative assessment of defects(such as stripping, potholes, cracking, and rutting), and the preparation ofthe annual periodic maintenance work program based on well specifiedintervention levels, and (ii) preparation of an indicative routine maintenancewo-k program, costed on a per kilometer rate basis, which is specified lateron at the time of works implementation.
5.7 These guidelines and the criteria that they include are based oninternational experience and on the lessons of experience under the SecondRural Roads Development Project. They are sound as a first step but will needcontinuous improvement during project implementation. The Field Consultantsfor Implementation will assist kabupaten staff prepare and implement theirmaintenance programs and DGH/DPUPs monitor achievements (para 4.5 and 4.8).The Central Technical Consultants will assist DGH assess periodically thequality of the guidelines and formulate improvements (para 4.14).
5.8 As most kabupatens have not given sufficient emphasis to maintenancein the past and are therefore not adequately prepared to efficiently implementthe large maintenance programs that are required on their networks, it hasbeen agreed that the actual maintenance carried out under the project would beincreased in stages with 100 percent of the maintenance needs (as defined bythe use of the above guidelines) being satisfied only in the project's thirdyear. Agreed targets (para 4.5) are ambitious and progress in achieving themwill need continuous attention from both GOI and the Bank.
5.9 Rehabilitation/Improvement Works. Selection procedures weredeveloped in 1987 and have constantly been improved since then on the basis ofexperience. They were conceived for the use of kabupaten staff (whose skillsare limited) with checks and supervision from DPUPs and DGH. They include thefollowing main stepss (a) updating the kabupaten road inventory;(b) conducting basic traffic and road condition surveys on part of thenetwork; (c) analyzing data; (d) estimating the costs and economic benefits ofeach road works proposal; (e) preparing a draft annual work program; and(f) deciding on the annual budget. Items (a) through (d) are undertaken bykabupaten teams, with assistance from DGH and DPUPs.7/ Item (e) is for thelocal decision-makers (including the bupatis) to establish, with the economicinformation made available to them. Item (f) is part of the national budgetprocess, with the RATEK - the national budget coordination conference, whichtakes place in January and February each year - being the final step. About13 to 18 months are required to complete a full cycle of the procedures.
7/ The kabupaten teams are made of four to eight part-time staff fromBAPPEDA II, DPUK, and Biro Pembangunan (the kabupaten liaison unit withMRA). Team members are given a four-week off-duty training and ad-hoc onthe job training.
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5.10 Two evaluation alternatives are used for step (d)s (i) the "trafficcounts model" for the normal trafficable roads, which is a simplifiedconventional evaluation of the road user savings and maintenance changesbetween "with" and "without" project alternatives; and (ii) the "populationmodel" for roads or footpaths that are unmotorable over 26 week. per year.The latter is based on the "suppressed trip value" concept, defined as theeconomic value of the trips that would have been made if road user costs hadnot been prohibitively high. Statistical analysis is used to determine theprohibitive cost in relation to the travelling costs on a motorable road andto predict the trip rates before and after access is improved. The costsaving per pedestrian trip is then converted to motorized trips. The modelshave the following characteristics:
(a) discrete categories of road condition, each associated withroughness and speed assumption, are used to assess VOC/time costs;
(b) standardized assumptions are used regarding (i) traffic compositionand passenger load observed on kabupaten roads; (ii) benefits fromgenerated traffic and modal transfer; (iii) traffic growth byregion; and (iv) "with" and "without" project maintenance costs.
(c) savings to non-motorized traffic are included by adjusting them tofour-wheel vehicle equivalents in terms of benefits expected;
(d) net economic benefits are expressed in net present value/kilometer(NPV/km), using parameters of 10 years for road service life and10 percent for discount rate and excluding residual values ofinitial project investment;
(e) the engineering cost is based on a detailed model which takesaccount of the costs of local materials and labor.
5.11 In accordance with the selection procedures, kabupaten staff arerequired to conduct basic surveys to complete a series of standard inventory,analysis, and planning forms, which, in combination with the use of wellconceived calculation tables, enable them to obtain the NPV/km of each roadwork proposed. Only the proposals that have a positive NPV (i.e., an KIRRabove 10 percent), are eligible for IBRD funding as well as other IPJKfunding, a condition consistent with national planning guidelines.
5.12 In some cases where there is little traffic and population but wheregreat agricultural and other development potential exists, use of the standardevaluation models becomes inappropriate. Special procedures have thereforebeen developed which combine some elementary regional planning with the use ofa site specific economic evaluation. Such procedures may be used in a fewcases during project implementation.
5.13 Based on the experience of the Second Rural Roads DevelopmentProject, the appraisal mission has concluded that these selection proceduresare sound. They are simple enough for satisfactory and consistent applicationby kabupaten staff but retain analytical rigor to ensure that selectedprojects are economically justifiable. Marginal improvements are expected tobe incorporated continuously in the procedures as more experience is gainedand further research is carried out on some of the major parameters andrelationships used in the evaluation models. A specific program of
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improvements was confirmed at negotiations. This will aim in particular atachieving a better integration of the procedures into the normal budgetpreparation process of the kabupatens through, inter alia, better coordinationof schedules and format of documents. Such improvements are especiallyimportant because the procedures have become, since 1990, the nationwideguidelines for preparation of the IPJK component of the kabupatens' budget.
5.14 Two issues that emerged from the Second Rural Roads DevelopmentProject will also need to be given special attent'on during projectimplementation: (i) The quality of planning work nas been impaired due totransfer of trained staff out of the kabupaten and provincial planning units.It was reported that this has involved so far as much as half of the stafftra4.ned. Except in exceptional circumstances, staff should not be eligiblefor a within-the-grade transfer within two years of their training. (it) In alarge number of kabupatens the traffic counts are also not reliable. Toaddress this problem, a random checking routine is now being built into thesystem to check the traffic counts and guide a data audit process that has nowbeen established.
5.15 The kabupatens's capacity to implement the procedures and that ofDPUPs/DGH to assist and check the results still need to be strengthened. Forthis purpose, the project will provide local and foreign consultants to helpat key stages, monitor progress and quality of output, fine tune theevaluation models and procedures, and help DGH take full chargo of the entiresystem. These services will be provided by the Central Technical Consultants.
C. Project Economic Returns and Sensitivity Tests
5.16 The first-year planning survey covered 1,745 road links with anaggregate length of 9,151 km in 65 of the 73 project assisted kabupatens (allprovinces except South Sumatra). Of the links evaluated, about 40 percent arerecommended for maintenance; another 40 percent are considered viable forrehabilitation/improvement works (i.e., with an EIRR above 10 percent); about10 percent are below the EIRR cut-off line; and the remaining, slightly lessthan 10 percent, need to be re-evaluated due to poor evaluation.
5.17 Economic returns could be estimated reliably only for the project'sdraft first year program which was available during the project appraisal.However, these can be considered as a good indication of the returns of theentire project. Indeed, although the returns of the second and third years'program may be expected to be lower than those of the first year (if the mosteconomically viable works are executed first, as they indeed should be), thedeterioration of the roads on which no work is undertaken the first year wouldmake the delayed works more valuable in any case.
5.18 The NPV and EIRR and sensitivity tests are summarized in Table 5-1.The NPVs of the rehabilitation/improvement works are those estimated bykabupaten staff under supervision of consultants. The first-year program,which contains 345 links with a total length of 1,903 km, was drawn from apool of 1,349 economically viable links with 7,079 km (some descriptivestatistics are in Annex 16). The NPV of the base case is Rp 94 billion, withan EIRR of 24 perceat. These estimates are sensitive to possible variationsin the costs and benefits streams. If the construction was badly executedand/or routine maintenance inadequate, the road would deteriorate faster than
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assumed, necessitating earlier periodic maintenance/strengthening, therebyincreasing the costs stream. In these circumstances and, also, if actualtraffic does n.c grow as expected, the savings in vehicle operating costs maybe lower than estimated. Several sensitivity scenarios have been analyzed totake account of these risks. Results are in Table 5.1. In particular, ifbenefits are reduced by 20 percent while costs are increased by 20 percent,the EIRR drops to 13 percent, a low but acceptable value.
5.19 The economic returns of the maintenance program are estimated by asimplified evaluation mouel, which assumes that in the "without" situation theroughness of roads will increase from IRI 7/8 (Seal/Gravel) to IRI 14 in the6/7th year, with the road requiring annual holding works from then on; in the"with" situation, periodic maintenance will be performed in years 0 and 5 (inline with the maintenance policy recommended under the project) and, due tothe proper maintenance, the roughness will stabilize at levels of IRI 7/8 forthe first four years, and then IRI 8/9 for years 5-10. Benefits are the VOCsavings associated with the differential of road roughness based on ADTsobserved, A standard annual traffic growth rate (4.5 percent) is adopted. Inaddition, standard costs for routine and periodic maintenance on seal andgravel roads are used.
5.20 The EIRR is calculated with this model on a sample of 100 randomlyselected links out of a total of over 1,800 links recommended for the firstyear maintenance program. As shown in Table 5.1, the Base case EIRR of thesample is 45 percent. In the situation where benefits are reduced by20 percent and costs increased by 20 percent, the EIRR is still 36 percent.
5.21 The cost-weighted overall project EIRR (base case) is 36 percent.If the costs are increased by 20 percent while the benefits remain the same,the EIRR drops to 31 percent. If the benefits are down by 20 percent andcosts up by 20 percent, the EIRR would still be about 26 percent.
Table 5.1: ECONOMIC RETURNS AND SENSITIVITY TESTS
Total Project Maior Works MaintenanceScenario EIRR (2) NPV (Rp Mln) EIRR (x) EIRR (Z)
Base Case 36.2 93,841 23.8 45.3B-102, C <> 33.5 71,881 20.9 42.7B+10O, C <> 38.3 115,800 26.7 47.8B <>, C+20Z 31.5 68,690 18.8 40.9B-202, C+202 26.3 24,771 13.4 35.8
Key: B - Benefit; C - Cost; - - Decrease; <> - Constant; + - Increase.Discount Rate - 102.
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D. Risks
5.22 The main project risk is that the substantial changes that theproject would introduce in the way kabupaten road programs are prepared andimplemented, may take longer than expected to take root, particularly in viewof the still evolving allocation of responsibilities between MPW and MHA andthe limited capacity of the central and provincial agencies in charge ofassisting and supervising kabupatens. To reduce this risk, GOI's NationalDevelopment Planning Agency (BAPPENAS) will continue to play a strongcoordinating role and a project mid-term implementation review will be carriedout around September 1993.
5.23 Another risk is related to the emphasis on road maintenance t d theneed for the kabupatens to reach a proper balance between betterment andmaintenance of the network. To mitigate any risk of slippage in this area,the project includes two features: (i) the physical targets have beencarefully designed to allow for a gradual attainment of the objective of fullmaintenance in the project's last year; and (ii) participation of eachkabupaten in the project's rehabilitation/improvement program for 1993/94 and1994/95 is made contingent upon submission by the kabputen of an acceptablemaintenance program for each of these years and satisfactory implementation bythe kabupaten of its maintenance program for the previous year (para 4.5).
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VI. MAIN AGREEMENTS REACHED AND RECOMMENDATION
6.1 During negotiations, GOI agreed that it wouldt
(a) cause each project kabupaten to (i) prepare its annual roadmaintenance program for the fiscal years 1993/94 and 1994/95 inaccordance with a methodology and criteria agreed to by the Bank;(ii) submit this program for the Bank's review and comments beforeDecember 31, 1992 and December 31, 1993, respectively; a.t (4ii)finalize and implement this program taking into account thecomments, if any, by the Bank (para 4.5);
(b) cause each project kabupaten to (i) prepare its annualrehabilitation and improvement works program in respect of theproject for the fiscal years 1993/94 and 1994/95 in accordance witha methodology and criteria agreed to by the Bank; (ii) submit thisprogram for the Bank's review and comments before December 31, 1992and December 31, 1993, respectively; and (iii) finalize andimplement this program taking into account the comments, if any, bythe Bank (para 4.7);
(c) select sub-projects for the maintenance and rehabilitation/improvement components of the project in accordance with criteriaand procedures (including environmental assessment procedures)satisfactory to the Bank (paras 4.5 and 4.7);
(d) by Jure 30, 1993, December 31, 1993, and December 31, 1994, prepareand submit for the Bank's review and comments its annual program forin-house delivery of training programs for the fiscal years 1993/94,1994/95, and 1995/96, respectively, and finalize and implement thisprogram taking into account the comments, if any, by the Bank (para4.12);
(e) by November 1, 1992, establish a Project Secretariat comprisingDirector level representatives of BAPPENAS, MPW, MHA, and MOF, forthe purpose of assisting the Project Coordinating Committee incoordinating the preparation of actions to be taken by the aboveagencies as part of project implementation and in monitoring theexecution of these actions (para 4.20);
(f) by November 1, 1992, establish a Project Implementation Unit in DGHto monitor progress in project implementation including preparationof annual programs, procurement, physical achievements, andexpenditures (para 4.21);
(g) package civil works contracts in accordance with criteriasatisfactory to the Bank (para 4.23).
6 2 On the basis of the above agreements, the project is suitable for aBank loan of US$ 215 million equivalent to the Republic of Indonesia for 20years, including 5 years of grace, at the Bank's standard variable interestrate.
I * I * U - -ME * * M _ _ - _ _ . n _ _ _ _
ANNEX 1
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INDONESIA
THIRD KABUPATEN ROADS DEVELOPMENT PROJECT
Outline Methodology for Preparation of Maintenance Programs
1. The kabupaten road maintenance strategy, as developed under the SecondRural Roads Project, aims at:
a. providing effective maintenance of all kabupaten roads in good andfair condition;
b. providing clear and consistent definitions of maintenance works;
c. giving high priority for training in maintenance planning andimplementation;
d. allocating clear responsibilities for maintenance within thekabupaten organization;
e. developing a maintenance organization in each kabupaten capable ofmanaging and supervising a yearly maintenance works program.
2. To facilitate the implementation of that strategy, GOI has preparedspecific guidelines which will be used for the first time for the preparation ineach kabupaten of their 1992/93 road maintenance programs. It is expected that*these guidelines will be further refined during the implementation of theproject.
Guidelines for the Preparation of Kabupaten Road Maintenance Programs
3. These guidelines spell out activities to be carried out by the kabupatensto identify the links to be assessed for their annual maintenance programs, carryout condition surveys on these links, estimate costs, and prepare the detailedprograms. The guidelines have been tailor-made to produce maintenance programsin kabupatens where little or no condition data exits. The process followslogically on from the project screening list (form P1) prepared as detailed inthe Technical Guidelines for the Planning and Programming of Kabupaten Roads(Annex 3). Other guidelines covering work methods and techniques, theorganization, implementation and monitoring of road maintenance are provided inseparate documents (included in the Project File).
4. The procedures are outlined in Table 1 of this Annex. They include:
a. selection of links (initiation of the P1 list);
b. identification procedures (definition of periodic and routinesegments;
c. preparation procedures, which are different for periodic and routineprograms (paras 5 to 12 below).
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In particular, Table 1 shows that the timing of the various actions is veryimportant to ensure that proper budget documentation (DURP) is ready by the timeof budget discussions (RATEK), generally in January/February each year.
Procedures for Periodic Maintenance
5. They involve detailed surveys for identifying road zondition anddetermining annual needs, determination of quantity and costs for the DURPs, andthen procurement, implementation and monitoring. Most of these procedures arestandardized, using special forms to be filled in by kabupaten staff. Monitoringis essential to check for excess costs and quantity, to help assemble or updatethe kabupaten tables of unit costs, and to complete the details in the P1 listas feedback for prejaration of the following years maintenance program.
6. Condition survey is the central part of the system. In the currentsimplified maintenance management system, kabupaten staff have to rely on visualinspection, simple geometric measurements, and engineering judgement (hence theimportance of training). As skills and resources permit, the use of automatedsurveys might be introduced. The parameters rated are: texture, potholes,depressions, cracking and wheel-track rutting for sealed roads; potholes, softspots, surface erosion, wheel-track rutting and corrugations for gravel roads.In addition, camber (surface run-off) and shoulder condition are assessed. Thequantity and severity of defects per kilometer, are measured and road conditionis rated as shown in Table 2, allowing the classification of kabupaten roadswithin the four categories: good, fair, poor, bad.
7. The next main step is to prepare an annual work program based on aninterpretation of the survey inspection results. To assist in this task, a setof intervention levels, as shown in Table 3, have been defined to recommend thevarious limits of distress at which time appropriate repair works should becarried out. Comparison of Tables 2 and 3 shows that the minimum recommendedintervention levels equate to the threshold of condition rating "fair", meaningthat the aim is to treat defects early in their development. Of course, theselevels should be suited to the particular local conditions.
8. For tendering, the same documentation as for betterment projects will beused. Implementation should commence in early April, and periodic maintenanceshould ideally be completed well before the wet season (generally November-December) so that the warranty period could cover at least a full rainy season.
Procedures for Routine Maintenance
9. Routine maintenance has to be seen as a continuous, regular 12-month-a-yearactivity, starting immediately after the warranty period is over on a newlyconstructed or improved road. The main differences with periodic maintenancerelate to surveys, tendering and implementation.
10. Routine maintenance as an ongoing feature does not require detailedmaintenance surveys. However, in view of the importance of having reliable ratesfor costing different types of works, kabupatens are expected to carry outselective surveys to verify the rates per kilometer used for routine maintenance.
11. Tendering need not be as complex as for periodic maintenance. Much simpler
.___-l*m.- * .inu__ 11EUEU---_ _r __ * mm m mm ME * * 11
- 42- ANNEX 1Page 3
types of contracts are expected to be used (for instance lump sum contractsdefining activity schedules and allowing for payments per kilometer, etc.).Adequate and cost-effective methods and standard documents are needed tofacilitate the administration of many small contracts, expected to amount to atleast 502 of the total routine maintenance activities. The rest will be carriedout by force account teams, which can significantly enhance their efficiencythrough using a similar approach: more accurate definitions of the tasks, carefulpreparation, better quality, and finally lower costs of the works.
12. Implementation should commence early April, and proceed on a regular basisthroughout the year. It is important to ensure that sufficient funds should beleft to cope with the routine maintenance workload immediately after the wetseason, i.e. during February and March.
Specific Issues to be Addressed
13. Difficulties encountered with the preparation and implementation of roadmaintenance programs under the Second Rural Roads Project, have led to theidentification of four specific issues:
a. The requirement for complete surveys to produce finite quantities forbudgeting routine maintenance is a tedious, time consuming exercise and is notadapted to the nature of the works. Deletion of this survey and a move to globalcosting will simplify the process and speed up operations, which is necessary tomeet the scale of the needs.
b. Many kabupatens claim that they are not permitted to implement morethan one work type on an individual road section in one year. This severelyrestricts kabupaten operations and makes the implementation of maintenance underthe normal headings of routine and periodic impossible within a reasonable timescale on some road sections. It may also cause unacceptable delays to theimplementation of the first round of routine maintenance on newly constructedprojects. Rescinding this ruling whenever necessary will allow theimplementation of as many work types as necessary on a road section in a year.
C. Some kabupatens also claim that no maintenance can be undertaken ona section until the defects reach a certain level. Obviously, this would inhibitgood road maintenance practice and go against the desirability of a plannedmaintenance program based on reasonable needs. It should be clarified to allkabupatens that such a ruling has no validity.
d. The late release of maintenance funds has had two consequences: (i)the delayed carrying out of the maintenance program has been affected by therainy season, and (ii) it has promoted the expenditure of routine maintenancerapidly over a too short period. An early release of maintenance funding,apportioned to routine and periodic, is a condition sine qua non for an efficientutilization of the funds.
14. To allow kabupatens to implement sound and practical road maintenanceprograms, GOI has agreed to remove the above constraints. It is essential tomonitor the outcome, especially regarding the last point (para 13.d ).
BR?. X~~~~NTUVBN-TYPEO m or DElICT TIO IXT3NT ACTIO'N NOTES
LEVEL
A TatxtUrs o2/bs *a/bk Local seeling A toq sprWay o emulsion * Y bes.ippinq or tretting zoo :00-400 sufficient to renew tho surface.
400 Surfsace Dressin
a PothoLc- Ma/bs Extensive pat-hol&nq or raoid(11 Shallow < 10 co 40 Patch dteerloration ot the road s4ruc-
(2) Deep > 10 Ca AnY Patch or p-v"ernt lack of offectcxvo sfi nt n nce.repairs the caus* must b octerained and
a*,proVto ationL takn.
Depressions *Z/kmC (I) snallow < 5 co zoo Surface patching Depressions ar- usually caused
and levellng by poor pavaemnt copaction orS u ubgrad. m*olture problems.C (2) Deep >5 co Any _ scavate to aub - Pavement thickness is alsoA grade compact and a factor Vd drainage should beL /or strengthen checked. The cause oust be do -3 euba rde termined and appropriate actionO -_ ___ _ _ __ _ ___ __ _ _ _ _ _ _ _ _ _ _ ___ taken._
a D Cracking m2lb/O (Alligator TYPe) 100 Soal cracks with Sprayed surfacing or crack sea-A bitumn emulsion ling may be aufficiont if theO cranking is non-structural (:ur-S face). Where cracking is caused
by structural failure cracit sea-Ling will temporally solve theproblm but the cause mout bedetermined and ppropriate acti-on taken.
8 Whoel track rutting m2/k/(including dgo fai -lur-)
(1) Shallow S cm 100 - Level with tor rutting the sam commentsbituminou six as for reference code C (Depre-(hot or cold) saion apply.
(2) Deep ,S co Any - Repair with hotasphalt or pone -tration Macadam
r Potholes a2/be *2/ko50 50-200 till or regrade Care should be taken in the
selectioa of gravel for repair-ing pothole-. Both grading and
> 200 Rqgravel pLasticity saould be checked.
Soft apots *zibetoo xcavate and Soft spots are usually caused
relnsate by poor pavement material oam-bied with moisture or subgradN
U moisture problem. The causeN must be determined nd the ap -S propiate actoan take.
A H Surface Erosien *2/bI Ma/biL (by we" or somw) L00 100-200 nila or regrmad See rterence code (0) Potblelo
U ~~~~~~~~~~~~~~~~for noet. on the selection ot_ , 200 egravel gravel.
3 m~~~~~~~~2lbe .Ziben0 Wheel track ruttint 200 200-500 till or regrade See reference code (a) PotholesA for ntes oan the seletion ofD _ 200 Regravel gravel.S _ n2/= -2b
.2/be eR/beJ Corrugations l00 serad (scerlfY- The ex^me of corrugations
ing nay be requi- should be ace panled by localred) regravelling where the loss of
L Shoulders _lO - _ Correct by trim- No extent is given. the dfect.wing or adding even in short lengths. ti ha -
__________________ gravel. z.rdous and should be corrcted.
Notes These intervention levels ar in quantitiea per kilometre.
SOURCE: DGH - Guidelines for Preparation of the Kabupaten Road Maintenance Program,November 1991
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ANNEX 2Page 1
INDONESIA
THIRD KABUPATEN ROADS DEVELOPMENT PROJECT
Training Component: Content and Implementation
Manpower Situation
1. The Ministry of Public Works, employs a total of 14,000 staff at thecentral level, with about 3,500 in DGH and 1,500 seconded to DPUPs an, DPUKs.Professional staff directly involved with kabupaten roads at the central levelamount to about 130. At the DPUP and DPUK levels, it is not possible tosingle out the numbers involved with kabupaten roads. There is a totalemployment of 48,000 for public works activities in the kabupatens. Itappears that most staff at this level are somehow involved with technicalwork, but in many cases, they have multi-disciplinary technicalresponsibilities.
2. At present, quality of operations and efficiency of work in thesubsector P.e seriously hampered by the shortage of skills at technical aswell as at managerial levels. Even though substantial investment has beenallocated for manpower development and training in the past, particularlythrough consultancy services and training abroad, the quality of personnel hasnot increased as fast as necessary. The reason for this slow develop -nt isthat training has not been integrated with actual operations, not bee; drivenby demand, and not been based on job performance. 'raining has been cferedbecause it has been considered to be something good, but has not beoe matchedwith requirements of jobs and its impact on job performance has 0'o.Lerally notbeen assessed. Also, administration and management of training has been weak,and DIKLAT Bina Marga is understaffed and lacks awareness of modern approachesto training. In addition, the training offered has not been perceived bypotential trainees as improving career prospects and therefore has often notbeen considered worthwhile. Linked with this is the problem that careerdevelopment is generally based more on administrative than technicalcompetence. Finally, investment in training abroad dess not appear to havebenefitted the selected staff to the expected extent as conditions and workmethods differ substantially between Indonesia and the countries offering thetraining.
Organization of Training
3. The organization for public works is complex in Indonesia with dualrelationships and responsibilities including involvement of both Ministries ofPublic Works and Home Affairs at the provincial and kabupaten levels. This
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ANNEX 2Page 2
complexity is also reflected in the organization of manpower development. Theresponsibility for road training rests with DIKLAT Bina Marga, which isstructurally responsible to PUSDIKLAT of MPW. However, some of the staff ofDIKLAT Bina Marga are from DGH and nuch of the budget for training operationsis provided by the Secretariat of DGH. At the provincial level, training isthe responsibility of the Pedikprop, who is the provincial training officer ofthe personnel department of the DPUP, which in turn reports to the provincialGovernor and structurally belongs to the Ministry of Home Affairs.
4. At the Kabupater. level, the personnel officer of the DPUK isresponsiblo for training. As regards financing of training, both at theprovincial and Kabupaten levels, it is provided through DIKLAT Bina Marga atthe central level. At present, about 15 professional staff are involved withtraining at the central level, while at the provincial and district levelsonly a few administrators organize training programs. The coordination of alltraining activities in MPW by PUSDIKLAT is still not well developed, resultingin duplication and lack of standardization.
Training Needs Analysis
5. As a result of slow progress in manpower development, GOI decided toaddress the issues described above in a more systematic and scientific way forstaff working at all levels on kapupaten roads programs. With the help ofconsultants, a training needs analysis (TNA) was carried out during the firstpart of 1991 using a representative sample of 26 kabupatens and surveyin, anadditional 67.
6. The TNA. has assessed the training needs by matching job descriptionswith actual qualifications and experience of employees, thereby establishingthe gaps translating into needs for training at the levels of DPUK, DPUP andthe Central Ministries. These needs have been divided into four generalcategories; management, technical, administration, and professionaldevelopment. In general, the need for training stems from a low level offormal education, lack of exposure to vocational training and inadequateknowledge of procedures both technical and administrative; one of the highestpriorities is training for project managers.
Five-Year Training Plan
7. The training needs analysis has provided the basis for a five-year.Zabupaten Road Master Training Plan (KRMTP) recently prepared by GOI. Thetraining plan goes much further than proposing courses and programs to meettraining needs. It also specifies the institutional arrangements, theinfrastructure, and the linkages with other departments necessary forsuccessful implementation of all training activities.
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ANNEX 2Page 3
8. The scope of KRHMTP in terms of actual training encompasses technical,administrative, managerial, and supervisory cources and addresses the trainingneeds at the DPUK level, the provincial level and the central level. Thetraining sessions would vary between 3 and 10 days and would be carried out ashighly job related, often on-the-job sessions. The performance of traineeswould later be continuously monitored by the stakeholders; supervisors,foremen, etc. These supervisors would therefore also be trained to assessperformance, increase productivity, etc. The concept of performance basedtraining means that all courses would be biased towards the practicaltechnical operations and that the training would be continuous, alsoencompassing the actual performance in the job situation. The impact oftraining would be measured against job performance, not as passing a test orreceiving a certificate as a step towards potential promotion. Trainingprograms to be offered address training needs in the area of projectmanagement, road and bridge maintenance, road planning, work supervision,laboratory practices, etc. The sessions are phased over five years andarranged in chronological order based on estimated priorities.
9. The full KRMTP includes 78 different training activities in supportof training for up to 14,000 staff through about 4,800 sessions. Givenimplementation constraints, these targets could be achieved only on the verylong term. It has been estimated that offering a total of about 150,000trainee-days in the most important training subjects (about 25) to about 6,200staff in about 620 sessions would meet the priority requirements, would giveoptimum productivity increase, and would be compatible with implementationcapability. This priority part of KRHTP would be included in the project.
Implementation
10. The implementation of KRMTP necessitates a number of objectives to bereached and related activities to be carried out as followss
(i) establishment of a continuous training needs analysisprocess;
(ii) establishment of standard job classifications, jobdescriptions and organizational arrangements in the DPUKs:
(iii) improved training methods including materials, to achievehigher standards based on competency and performance;
(iv) decentralization of training delivery to the most costeffective levels;
(v) development of DIKLAT Bina Marga staff;
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ANNEX 2Page 4
(vi) development of measurable links between training inputs andtechnical work performance; and
(vii) establishing a continuous monitoring and evaluation systemfor nationwide kabupaten staff training.
11. The present organization and staffing for manpower development atcentral, provincial, and kabupaten levels need to be strengthened tosuccessfully implement the part of KRMTP included in the project. Therefore,new staff need to be recruited by DIKLAT Bina Marga and consultants need to beused to assist with key aspects of KRMTP and to prepare present and newlyrecruited DIKLAT Bina Marga staff to be fully responsible for training at theend of the project period.
12. To achieve the targets within the stipulated time, key seniorconsultants will be placed in line positions temporarily and haveresponsibility for the initial implementation of the project's trainingcomponent. In parallel, a small number (about eight to ten) of graduate civilengineers with basic experience (minimum two years) will be recruited toassist the consultants and be exposed to prevalent issues in kapupaten roadtraining. These recruits will then participate in a short overseas tailormade program, exposing them to essential aspects of training for such types ofroads, including course design, course delivery, on-the-job training, trainingof trainers and stakeholders, course evaluation, materials preparation andproduction etc. Meanwhile, tho consultants' team will have initiatedcurriculum design, course preparation, training of trainers, etc. At thereturn of the recruits, it is expected that the professional standard ofDIKLAT Bina Marga will be raised much and that it will take fullresponsibility for the training of kabupaten road staff. There will still becontinued reliance on consultants beyond the end of the project period forspecial and complex assignments.
13. Consultancy services would include about 144 staff-months of foreignconsultants and about 1400 staff-months of local consultants (700 atprofessional and 700 at sub-professional level) for management of theimplementation of the component, training needs analysis, program design,training materials development, production of audiovisual aids, training oftrainers, monitoring and evaluation, and coordination in the field.
Estimated Cost
14. The cost of implementation of the part of the plan identified forBank financing is presently estimated at about Rp. 23,516 million (US$11.8million). This includes consultancy services, training of trainers in-countryand abroad, professional development of engineers in-country, development ofcourses, training programs and associated materials, delivery of trainingprograms, and procurement of equipment. Below is a summary cost estimates
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ANNEX 2Page 5
Table A2-1: TRAINING COMPONENT SUMMARY COST
Local Foreign Total-----------US$ thousand-----------
Fellowship training of 80 trainees for 6o each 90 406 495incl. local language training predep
Professional Dovelopment Training. (Local) 400 --- 400
Equipmnt for Course Development
a. Bine Marge Level 46 48 92b. Provincial Lovel 62 62 124C. Kabupaten Level 68 6a 126
Conausable Materials for Prolect Period
a. Sins Marga Level as as 76b. Provincial Level 168 156 812C. Kabupaten Levol 220 220 440
Training Package Preparation 284 284 468
Delivery of Programs
Travel, subsistenc4, per dlem.a. OPUP, locatej 760 --- 760b. RTC, located 2,120 --- 2,120c. DPUK, Locat4ml 710 --- 710
rotal Base Cost ,ae4 a.894 11.768
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ANNEX 3Page 1
INDONESIATHIRD KABUPATEN ROADS DEVELOPMENT PROJECT
Pro3ect Economic Evaluation Metnadology and Plannint Procedures
I. Overview
1. In support of GOI's decentralization policy, a planning-programming-budgeting system (PPB) for kabupaten roads was developed during Bank's SecondRural Roads Development Project. This system takes into full account thecurrent GOI budgeting framework which consists of a set of bottom-up and top-down inter- and intra-governmental conferences (RAKORBANG, RAKORNAS, andRATEK). To overcome the existing institutional constraint, the initial designof the system has been focused on: i) adoption of simplified economicevaluation model that is simple enough for application by kabupaten staff butretains analytical rigor in project selection; and ii) establishment ofprocedures that ensure the application by kabupaten staff is consistent andcomparable.
2. Based on the experience of the Second Rural Roads Development Project,the appraisal mission has concluded that the evaluation models and proceduresare sound. Marginal improvements are expected to be incorporated continuouslyin the procedures as more experience is gained and further research is carriedout on some of the major parameters and relationships used in the e'aluationmodels. Further improvements will be made aiming in particular at achieving abetter integration of the procedures into the normal budget preparationprocess of the kabupatens through, inter alia, better coordination ofschedules and format of documents. Such improvements are especially importantbecause the procedures have become, since 1990, the nationwide guidelines forpreparation of the IPJK component of the kabupaten budget.
3. The gove.nment executing agencies are kabupaten planning teams,provincial planning units (PBPJK within DPUP) and DGH. The kabupaten team ismade of four to eight part-time professionals from BAPPEDA II and DPUK, with15 staff-months per annum allocatei to carry out the basic planning survey,engineering survey and design, to assist in preparation annual work programand budget, and to supervise engineering work. Team members would be given afour-week off-duty training; on-the-job training is also provided on an ad hocbasis. PBPJK is a full-time project unit, consisting of four to sevenprofessional staff. It is intended to serve as a link between DGH andkabupatens. PBPJK's role will be strengthened by gradually taking over theroutine supervision and monitoring functions provided by Central TechnicalConsultants (see below).
4. In view of the situation that the kabupatens's capacity to implementthe procedures and that of DPUPs/DGH to assist and check the results whichstill need to be strengthened, the project will provide local and foreignconsultants to help at key stages, monitor progress and quality of output,fine tune the evaluation models and procedures, and help DGH take full chargeof the entire system. These services will be provided by Central Technical
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ANNEX 3Page 2
Consultants (CTC)1/. Furthermore, CTC is required to provide training forall the kabupaten and PBPJK staff throughout Indonesia and to transfer thecore planning methodologies to its DGH counterpart, BIPRAN.
II. Project Economic Evaluation Models
5. The following algorithm is used in designing the models: i) estimatingthe unit road user cost; ii) assessing traffic composition and developments;iii) determining traffic design class; iv) adjusting for maintenancerequirement; v) aggregating the results into "look-up tables"; and vi)costing. At present the models only evaluate major works (betterment andrehabilitation). The models have the following characteristics:
a) discrete road condition categories, each of which associated withroughness and speed assumption, are used to assess VOC/time costs;
b) standardized assumptions are used regarding i) traffic composition andpassenger load; ii) benefits from generated traffic and modaltransfer; iii) traffic growth by region; and iv) maintenance costs of*with' and 'without" project;
c) savings to non-motorized traffic are included by adjusting them tofour-wheel vehicle equivalents;
d) net economic benefits are expressed in net present value/kilometer(NPV/km), with assumption of 10 years road service life and 1lOdiscount rate; residual values of initial project investment areexcluded;
e) engineering costing is based on a detailed model which takes accountof the costs of local materials and labor.
A. Road User Costs
6. Road user costs have two components: i) VOC, and ii) Passenger timecost. The RUC saving between "without" and "with" project alternatives isestimated for representative vehicles and non-motorized modes.
(i) Vehicle Operating Cost
7. VOC of Motorized Vehicles. The motorized VOCs consist of distance andtime costs. Distance costs are calculated per km and are the sum of fuelconsumption, oil consumption, tire wear, repairs and maintenance, and distancedepreciation. The time costs are calculated per hour and are the sum of timedepreciation, interest, crew wages and related payments. These costs arefurther affected by: (a) road surface condition (measured by roughness); (b)travel speed; (c) traffic congestion (measured by the volume-capacity ratio);and (d) road gradient. To simplified model, the road surface condition andtravel speed are reduced into one category, i.e., the roughness of the roaddictates the travel speed. Furthermore, the lowest level of congestion
1/ Services of the same type were already provided under the Second RuralRoads Development Project.
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ANNEX 3Page 3
(vcr=.6), reflecting free-flow conditionR, is assumed for all links. Two roadgradients are adopted: flat/rolling (0-5Z) and hilly (3-7Z). It is alsoassumed that travel speed on hilly roads is 5 kph less than on flat roads onthe same roughness condition.
8. The simplified VOC data were generated by an adapted GENMERRImodel2/. Physical consumption and financial prices are converted into theeconomic costs, with the following adjustments:
- netting out taxes, duties, and subsidies and shadow pricing;- excluding the financial overhead costs;- applying the 'fleet substitutability factor," i.e., converting thevehicle time saved into increased distance utilization (therebyreduce the total fleet requirement)
Table A3-l: TECHNICAL PROFILE OF REPRESENTATIVE VEHICLES (1990 price)
9. VOC of Non-motorized Traffic. In addition to the VOCs of themotorized vehicles, the VOCs of non-motorized traffic, including pedestrians,pikulan, bicycles, becaks, and animal carts are also estimated, on the groundthat (a) they represent a significant amount of the kabupaten road traffic;and (b) the diversion of traffic from non-motorized to motorized transportfollowing road improvement produces substantial RUC savings. Calculation ofeconomic costs of non-motorized traffic is based on relatively weak empiricalevidence. The main sources used are the surveys of non-motorized transportcarried out in six kabupatens in 1986/87.
10. The personal time costs are the dominant non-motorized cost item. Adistinction is drawn between "commercial" time, i.e.," operators" plying for:ire, and "private" travel time, i.e., "operators" travelling principally ontheir own account for personal reasons. It is assumed that half of observedmovements of pikulan, ox-carts, and packhorses are commercial and half areprivate. Passenger bicycles and pedestrian movements are treated wholly
21 Generalized model for the evaluation of rural roads improvements, amodel first developed in Australia and used on national and provincialroads in Indonesia throughout the 19809, based on the technicalprofile of eight representative vehicles (Table A3-l).
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ANNEX 3Page 4
private, while becak, horse-cart, and freight bicycles are treated whollycommercial. Only the portion of time saving used at the same level oftransport demand is considered in the benefit of fleet reduction. To beconservative, no more than one-third of commercial time savings is allowed inthe calculation. Whereas modal transfer is considered, however, for pikulan,packhorses, ox-carts, time savings are fully credited since motor vehicles arethen explicitly substituted for non-motorized vehicle movements.
(ii) Passenger Time Cost
11. The time saved that could be diverted to wage-earning activities isvalued in reference to "unskilled rural labor wage rates. "Shadow wage"factors (.65-.8) were used to adjust for opportunity cost. Currently threevalue-bands were used: high (Rp l90/hr) for Aceh, Sumut, Sumsel, and OuterIslands, medium (Rp 155/hr) for Sumatra, and low (Rp 120/hr) for Java and NTT.A further adjustment was made to assign a higher proportion of time value tothe situation where trip time savings represent a significant part of theworking day: 1.0 is used for all the currently non-motorable roads withdistance over 15 ki; .75 for distance between 5 and 15 km, and .5 for lessthan 5 km. A factor of .5 is used for all the currently motorable roads.
12. The time savings are generally accounted for 32 (heavy trucks) to 201(passenge. pick-up's) of the total RUC. The total RUCs are summarized byregion (High, medium, and low) and by road gradient (flat, hilly), and by typeof vehicles.
B. Evaluation of Traffic Developments
13. Two basic models are used to evaluate traffic developments: i) the"traffic counts method" for trafficable roads: and ii) the 'populationmethod" for where significant "suppressed traffic" presents due to accessconstraints.
(i) The Traffic Counts Model
14. Existing and Future Traffic. Twelve-hour classified volume countswere taken on one station per project link, covering one market day and onenon-market day. The counts were adjusted for hourly and daily variations(Seasonal adjustment is not made due to lack of reliable statisticalreference). Standard benefit adjustment factors were used to calculate thefour-wheel vehicle equivalent for each region. In addition, since statisticalanalysis of traffic composition revealed little significant variation in mixof four-wheel vehicles between different classes of kabupaten roads a uniformtraffic composition was assumed for all the links.
15. In anticipating the traffic growth, tailoring growth projections toeach individual project was impractical, for over 1,000 links need to beevaluated each year; based on regional growth projections and assuming ademand elasticity of income of about 1.0, two standard traffic growth rateswere adopted: 3-62 for Java and Kalbar; 6-9Z for Sumatra, Sulteng, and NTT.
16. Traffic Generation. It is assumed that most the RUC savings would bepassed straightforward onto producers and consumers due to a relativelycompetitive trucking industry in Indonesia. The standard traffic generation
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factors are estimated in Table A3-2. The reduced VOC cost was translatedinto the traffic generation benefit, assuming the price elasticity oftransport demand is about -1.0. Furthermore, the traffic generation effectsare assumed to be realized gradually: Year 0: 0 of full effect; Years 1-2:25?; Years 3-4s 50?; 5 Year onward: 10O?. This translates into a .85 trafficgeneration factor (with the discount rate of 10Z).
* Implied by change fro existing to improved road state
17. Modal Transfer. Transfer of non-motorized to motorized trafficfollowing road improvement constitutes a large part of the project benefit,especially for low traffic roads. Based on the empirical evidence,assumptions were made for roads improved from "bad" to "good/fair." Standardpassenger/freight load conversions are set as follows: For passenger pick-up:7 passengers - 7 pedestrians; for freight pick-up: 600kg = 3 ox-carts = 24pikulan - 12 backhorses. Modal transfer savings were converted to four-wheelequivalents. Since modal transfer benefit is only significant in low trafficroads, reductions have taken in benefit "look-up" tables from 100 ADT upwards.
(Ui) The Population Model
18. The "traffic counts model" is not appropriate in dealing with thesituation where excessive access constraints exist, e.g., for earth tracks, orfootpaths where little motorized traffic could be observed. A model based onthe "suppressed trips" concept was developed. The "suppressed trips" are thepotential motorized trips that could not take place because their costs areprohibitive. Chart A3-1 illustrates the relationship and difference betweenthe "normal" traffic model and the "suppressed" trip model. It shows that thesuppressed trip savings is simply the additional project benefit, to theconventional normal and generated traffic savings. Chart A3-1 also indicatesthat three pieces of information are required to calculate the project saving:a) VOC of the improved road; b) traffic volume of the improved road; and c)"prohibitive" cost.
19. The Basic Value of a Suppressed Trip. A controlled analysis estimatedthat the motorized traffic on severely constraint roads was only about 5? ofthat of a motorable road (controlling for population, income, distance tomarket, etc.) Assuming an average price elasticity of demand is in the range
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Chart A3-1 Page 6
HYPOTHETICAL ILLUSTRATION OF SUPPRESSED TRAFFIC PROJECTCOMPARED WITH A CONVENTIONAL GENERATED TRAFFIC PROJECT
NOMINAL NORMAL TRAFFIC SAVINrS60 5
Cl - PROHIBITIVE' COST
140
POTENTIAL SUPPRESSED TRIP SAVINGS120
!0O /
', 801 K CONVENTIONAL GENERATED
TrPAFFIC SAVINGS00
g 40 ' /E? ~ ~ /
(DC3e t //1 _ WTH' PROJECT COST
20
0 10 20 30 40 50 60 70 sO 90 100
T ITl T2 T3
Traffic volume (Trips day)
Conventional g _nerated traffic nroiet (rough road surface, but nosignificant acceas constraint)
Existing traffic = T2; projected traffic after improvement a T3Existing cost a C2; projecteu cost after improvement = C3
Savings to existing ('normal') traffic = (C2-C3)T2 3250Savings from generated traffic = 1/2 (C2-C3)(T3-T2) 1,625
Data required : C2, C3 (VOC data), T2 (traffic count), T3 from standardgeneration factor related to road condition
Existing traffic Tl z nominal 5Z of potential traffic afterimprovement which T3Prohibitive cost C1; projected cost after improvement C3
Savings to nominal ('normal') traffic = (Ci-C3) Ti - 625Savings from suppresaed traffic = 1/2 (Cl-C3) (T3-Tl) = 5937
Data required : C3 (VOC data), T3 based on projected trip rate forpopulation/area; Cl determined by asaumed elasticity of demand curve.
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ANNEX 3Page 7
of -1.2 to -1.5, this implies a prohibitive cost of Rp 125-175/km (typicalpassenger pick-up fares on 'good' roads are around Rp 25 per passenger km).Independently, a study of 35 transmigration sites provided supporting evidencethat passengers on the worst road conditions often paid an equivalent of 6-7times of the fare on the good/fair roads. The value of suppressed motorizedtrip is therefore set as 6 times of the VOC of the motorable roads. Thesuppressed trip benefit was then obtained by deducting average 'with' projecteconomic VOC/time cost per trip (weighted motorized trips). A factor of .15was introduced to take into consideration an assumed lag in generated tripdevelopment following road improvement. The formula to calculate the unitsuppressed trip benefit becomes: 5 x VOC of "good" motorable road x .5 x .85
20. Access Constraint Assessment. Two types of access constraints,reliability and distance constraints, are identified to "fine-tune" thesuppressed trip values. The "reliability constraint" was classified into fivecategories, measured by weeks of closure in a year. The "distance constraint"was classified into three groups: (a) below 5km, which could be covered onfoot about one hour, implying a relatively low perceived cost in terms of timeand effort; (b) between 5-15km, which would take 2-4 hours to cover, implyinga higher cost of travel, but still allowing the same day return trips to bemade; and (c) over 15km, implying a sharp increase in perceived cost oftravel, bacause return trips on the same day is difficult. Higher values areassigned (arbitrarily) to links with higher access constraints (see para 12).
21. Measurement of Trip Rates. A multiple regression analysis was carriedout on a data set of some 440 links under the Second Rural Roads DevelopmentProject to explain the variation in motorized trips per capita per year.Based on this exercise, a set of per capita per annum trip rates, by incomeand trip distance was predicted. These results were used in aggregating thetotal benefits.
22. Valuation of Trip Benefits. The total benefit is a sum of varioustypes of trips that are made ("suppressed," normal, generated, and modaltransfer). Explicit assumptions were made about the composition of trips foreach level of constraints identified above. By using standard benefit growthrate (slightly above the growth of regional economy but with a ceiling of10-12Z per annum) and a 10? discount rate, the present valued benefits pertrip were obtained for different degrees of access constraints and regions.
C. Traffic Design Class
23. To facilitate a manual analysis, a matrix of traffic thresholds wascalculated for a range of road conditions and traffic growth rates whichindicated what level of existing traffic was needed to make switching to ahigher traffic design class likely following road improvement. For lowtraffic roads allowance was made for diversion from non-motorized modes. Forsimplicity, the traffic design class data were also incorporated in the "look-up" tables used for the "population method."
D. Treatment of Maintenance Costs
24. The model assumes that the roads would be maintained properly, i.e.,interventions would occur during the project life span (routine maintenanceevery year; periodic maintenance every three years for gravel roads and four
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ANNEX 3Page 8
for sealed roads); intervention would keep the roads in the average existingstate, in the case of 'without' project, and average proposed state, in thecase of 'with" project. The present value of maintenance costs change perkilometer (the difference between "with" and "without" project) wasincorporated as the net benefit in the "look-up" tables.
E. Deriving of "Look-up" Tables
25. The 'look-up" tables show in aggregated form the present value ofgross benefits per kilometer expected from standard improvement of roads.Different formats were used for "traffic count' and 'population' models. Fortraffic counts model, the saving of road user costs and the net maintenancecost change between 'with" and 'without' project were the basis for thebenefit 'look-up' tables that relate the existing traffic (four-wheelequivalent ADT) to the existing road surface type/condition. The tables wereseparately made for flat and hilly terrain roads, as well as regions. Thepresent value of the gross benefit/kilometer (PVGB) was calculated as:
PVGB - 1 (ADT x VPS x .85) - MC ] x TF
Where -VPS : present value of annual savings per km in VOC/time for existing
traffic growing at a standard rate for the region;.85 : present value of traffic generating factor;HC : present value of standardized net maintenance change per km;TF : terrain factor (=1.0: flat; 1.1 hilly).
26. The benefits arrived by the "population method' was obtained from amatrix of 'access code range" by population. A traffic design class code,which was solely based on the size of population, was also included in thetable. The present value of the gross benefit (PVGB) was calculated as:
PVGB = (D x E x P) - M
Where -
D : benefit value/trip/kmE : predicted motorized trips per capita with a good roadP : the population served by the projectM : the net maintenance costs per kilometer
F. Costing
27. Standard engineering costing was adopted. The costs of localmaterials and labor were incorporated in costing and traffic design 'look-up'tables. With the road surface type, and condition, width, sub-grade quality(measured by the CBR), ADT, and corresponding road design class number, thetotal costs are indicated by these tables.
III. Planning Procedures
28. The cycle of kabupaten road planning, programming, and budgetingconstitutes: A) Basic Planning, B) Audit and Follow-up, C) Design and DURPPreparation, and D) Eligibility Review and Certification (Chart A3-2). Inaddition, 'post-construction monitoring' routines are conducted to monitor
Chart A3-2
PLANNING PREPARATION AND REVIEW PROCEDURES FOR MAJOR WORKS
DEC JAN FEB MMR I APR MAY _ JUL AUG SEP OCT NOV DEC JAN FEB MAR APM
PREPARATION * BA SIC PLANNING STUDIESI FRIN_E WOVK B ASIC PLANNIGI STUUDEESPLAN NING SVEYS
PROGRAMMING
DESKA UDIT
COMPUTER
L ! II T=DL.TtAUDIFIELD
AUDITI FOLLOW -UP
111 DESIGN + DURPPREPARATION
IV ELIGIBILITY REVIEW_____ + CERTIFICATION
4 4* ~~~~z
o 0
I-~~~~
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ANNEX 3Page 10
construction quality and to accumulate time-series traffic and road data.
A. Basic Planning
29. The basic planning is carried out by kabupaten planning teams inaccordance with the procedures laid out in the "Technical Guidelines forPlanning and Preliminary Programming of Kabupaten Roads."
30. Framework and Preparatory Work. The Framework and Preparatory Workusually starts in December/January, fifteen months before the fiscal yearcommences. The output is a series of completed or partially completedinventory data forms, preliminary programming forms, and working maps.
31. Basic Surveys. The field survey starts one month following thecommencement of the Framework and Preparatory Work. The outputs are completedsurvey forms for project costing, benefit estimation, and engineering design.
32. Data Analysis and Evaluation. This process usually starts in earlyApril, upon completion of the basic surveys. Currently only about 1/3 of thekabupaten teams can perform this task without help from Field Advisors/PBPJK.During the implementation of this project, it is intended that remainingkabupaten and PBPJK staff be trained to do data analysis on their own. Bycompletion of this step, the cost, benefits, and NPV/KM for the trafficablelinks would be obtained.
33. Supplementary Studies. For links where "normal" traffic is suppresseddue to high access constraints, the population and other parameters are usedto estimate the expected "normal" trip rates and, subsequently, the benefit.By completing there steps, the costs, benefits, and NPV/KK for all the linksin the absence of "normal" traffic would be obtained.
34. Preliminary Programming. Preliminary programming involves preparing"long" and "short" lists for major works and annual maintenance programs. Thelong list contains all the candidate projects which are ranked by kabupatendecision-makers, with benefit of knowing the NPV/KM of each link.
B. Audit and Follow-up Activities
35. Audit starts in early July, as the planning data gradually becomeavailable, and ends in November/December. To exert "quality control" over theBasic Planning work is the mAain objective. Under the Second Rural RoadsDevelopment Project, this work has been largely undertaken by CTC.
36. Desk Audit. Desk audit comprises review and checking of raw surveydata, photos and analysis forms, in order to (a) identify obvious omissions ordeficiencies in basic eurvey tabulation; (b) check judgement made in analysis,especially project definition, road condition assessment and costing, and (c)check the accuracy in completion of analysis forms. On average it is possiblefor one of the CTC's planning staff to cover 20-25 projects per day, which areabout one average kabupaten annual program. If the upstream work was donepoorly, or the evaluations were predominantly done bl 'pop, -tion method,"desk audit could be time-consuming. An audit status code (aL ?ted, needsfollow-up, and rejected) is added to the project.
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ANNEX 3Page 11
37. Computer Audit. The project data are entered in a computer databaseat CTC. A number of error and consistency checks are incorporated in thedatabase programming to flag out apparent arithmetic errors, inconsistencies,and improbable combinations of data. These may lead to further desk checkingand revision of analysis sheets or change in the recommendation code, flaggingfurther follow-up needs. The computer audit is fast and comprehensive, andusually throws up discrepancies missed at the time of desk audit. However,the computer audit is not a substitute for the desk audit as it is purelymechanical and does not address issues of judgement.
38. Field Audit. Follow-up field visits are usually made by CTC staff fora sample of projects over the period October to December. The scope of fieldaudit has been varying from year to year. In 1989 a large field audit inSumatra confirmed suspected widespread traffic data falsification; in 1;90 aprogram of simultaneous spot-checking of traffic counts was undertaken bykabupaten staff. These were generally directed at specific areas and projectswhere problems had been identified.
39. A systematic field audit procedure was instituted in 1991 whereby CTCstaff visited all IBRD funded kabupatens and checked most aspects of theoriginal survey and analysis performed by the kabupaten, including a review of"carry-over" projects studied in earlier years. In most cases a cne-hour"spot-check" count of traffic was carried out at the site of the originalcount and the results were compared with the same hour in the original count.In the end of the exercise, 44Z projects were accepted, 36? were accepted withmajor changes, 8Z were rejected, and 12X were identified for further review.
C. Engineering Design and DURP Preparation
40. Planning data in the "short-list" and "eligibility" forms for eachcandidate project are passed to kabupaten DPUK and the field supervisingconsultants as a basis for technical preparation of project documents(engineering design and costing, budget preparation, etc.) for .pproval atRATEK. This process takes place over the period October to March.
D. Planning and Design Eligibility Review
41. An eligibility rev.ew procedure has been installed. Standard formsare used for key planning data for each project to be included for design.The forms are intended to be completed by the TA Consultants or PBPJKresponsible for assisting the kabupaten. The purpose of this procedure is toprovide information to DGH on the status of project eligibility on both designand planning grounds in the period between completion of the planning phaseand completion of the main IPJK budget document (SPABP) after RATEK. Atargeted timetable that details the events and timeframe is summarized inTable A3-4.
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ANNEX 3Page 12
Table A3-4 TARGETED TIMETABLE FOR CRUCIAL PLANNING ACTIONS
TIME ACTION OUTPUT TAKEN BY
Doe/Jan Framework and preparation studies Selection of survey Kare/network
Jan-March Basic survoy on road conditions; speed; K- and S-foms K, aidedtraffic volumjpopulation by P/C
April-June Analysis and evaluation A1,A2,A3; Manual P2 K, aidedby P/C
June 16 Preliminary programing; ranking Ranked manual P2 at Kprojects on manual P2, and submitting It kabupatonsto PBPJK/CTC
June 80 CTC ree ives Manual P2 Ranked Manual P2 at PCTC
Late June Preparation of mjor works list for Pre-RAKORBANG D8.6; KRAKORBANG Ps
mid-July PBPJK/CTC receive copy of formal D8.6/P8 Post-RAKORBANG D8.5; K/P
July-Sep Matching, checking, and auditing; Audited P2,P8; Blank CPreparation of PEI; Data process:ng PEI
August P1 to CTC Manual P1 K/P
Sep-Nov Field audit and follow-up Further audited PS C/P
Oct 1 PS to Kabupaten to note viable Audited PS in C/Pprojects computer
October Audited P1 to return to Kabupaten Audited P1 C/P
Oct-Jan Design and DURP preparation DURP K/F/PDec a1 Final PS to IBRD with tentative funding Final Pg Bine
Before Summarizina certification from PE1; P8 + Planning and CRATEK Results to Bina Marge enginoering
_ _ _ _ __ eligibilityBefore Checking RPPIP2; Cancel projects not on Signed RPPIP2 CRPPIP2 Certification Table
After Copy of RPPIP2 to CTC Final RPPIP2 Bin& MargeRPPIP2
June 1 HR-1 to IBRO HR1 CTC
Agency key: K = kabupaten; P = PBPJK; C = CTC; F = Flld Implementation Consultants
E. Post Monitoring
42. A small benefit monitoring program has been carried out since 1984,covering two links of each of the 11 kabupatens covered by the First RuralRoads Development Project. It was subsequently expanded during the SecondRural Roads Development Project. Currently 118 links are under closelymonitoring (including annual surveys of traffic volume, road condition/photo,and traffic speed). Collection of soc!'o-economic data was not includedbecause satisfactory results had not been produced in the past.
43. T..e purpose of this program is to (a) monitor general trends intraffic and road condition; (b) assess the impact of road improvement ontraffic, and (c) provide feedback to the planning progress. Many of the same
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ANNEX 3Page 13
links are also covered by a separate "post-construction" monitoring in whichthe Engineering Consultants monitor the construction quality by means ofdetailed road surveys and photographic documentation every six months.
IV. Special Studies
44. Special studies are conducted for areas there the "traffic counts" and"population" models cannot be adequately applied, mainly for areas with greatdevelopment potential. A 'tailor-made' evaluatit- is used to handle thissituation. To do so, the analysts must have the basic economic evaluationknowledge, which is the technical competence not generally po.ssessed bykabupaten and provincial staff. Under the current arrangements, the kabupatenwill first conduct a "checklist" survey, which would confirm to CTC that it isworthwhile sending staff to the field to conduct a special project evaluation;then the Special Studies would be conducted selectively by CTC staff. Thesewill be feasibility studies based mainly on agricultural development benefits.Standard TORs for these studies will be agreed with the Bank. It is expectedthat only very few sub-projects may be justified by special studies.
V. Assessment of the Application and Future Improvements
45. It is apparent that the objective to develop a planning system that issimple enough for application consistently by kabupaten staff, but retainsanalytical rigor to ensure that projects selected are economicallyjustifiable, has been achieved. The new system has successfully replaced theold one, prior to the Second Rural Roads Development Project, that consistedmainly of ad hoc pz.oposal submitted by kabupatens, unsupported by planningdata or evaluation of alternative options. Bank's field visits confirmed thatthe kabupatens had been able to follow the planning procedures in the"Guideline" book, and completed physical surveys on a substantial part oftheir networks to a generally acceptable standard, with little supervisionfrom the Central and Provincial Governments. Some kabupatens were also ableto mechanically complete the analysis of the survey data and formulate thepreliminary programming form (P2 Long-list Form).
46. There are, however, several issues that have to be dealt with in orderto make this system sustainable. The instability of staffing at the locallevels merits a concern. A CTC's survey of 50 originally trained PBPJK staffindicated that about 40? of them had left. Similar incidents were alsoreported at tle kabupaten level. Bank has recommended that DGH seek guaranteefrom the local governments so that a trained staffer would not be allowed to awithin-the-grade transfer for two years after training.
47. Falsification of traffic counts is another issue. A systematicauditing conducted by CTC in 89/90 revealed that traffic counts for two-thirdsof the projects might have been tampered for various reasons. It has beendecided that in this project the audit mechanisms would be strengthened.
48. In this project, CTC is required to transfer the core evaluationtechnology to DGH. This requires it to: (a) make certain that themethodologies used the "Guidelines, are conceptually and theoretically sound;(b) abstract the essence of the methodologies and further simplify them tosuch a level such that updating can be mechanically carried out by staff inthe provinces, and be checked and modified by more sophisticated staff in DGH.
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ANNEX 3Page 14
In addition, a road deterioration model would be developed to enablemaintenance and major works to be evaluated on the same footing.
49. Benefit monitoring would be expanded so as to give critical feedbackto the assumptions and parameters used in economic evaluation. This includes:a) some development benefits/costs (vital signs of socio-economic well-being)would be monitored for a subset of samples; and b) monitored links would beexpanded to covered new links that were evaluated by the population model.
INDONESIA
THIRD KABUPATEN ROADS DEVELOPMENT PROJECT
Road Network Lenath by Road Class and Island Groun(kilometers)
Road: Nusa I_ Maluku & Total forCl.. Sumatra Java Ball Tenggara Kaliaantan Sulawesi Irian Jaya Indonesia
Sources DOH, 1990 kabupaten roads inventory (without adjustment on basis ofplanning surveys).
ANNEX 9
THIRD KABUPATEtJ ROADS DEVELOPMENT PROJECT
Design Standards for Kabupaten Roads and Bridges
ROAD CLASSIFICATION CLASS m A CLASS m 81 CLASS m 82 CLASS 1M CSURFACE TYPE ASPHALT SURFACE ASPHALT SEAL GRAVEL GRAVEL/ AWCAS
TRAFFIC VOLUME : ADTTRAFFIC VOLUME.AT > 500 500- 201 200-50 < 50I TRAFFIC DE6IGN CLASS 1 14) I 1 I t21 tI) I
FLAT TO MOUNT- FLAT TO MOUNT- FLAT TO MOUNT- FLAT TO MOUNT-T E R R A I N ROLLING HILLY AIMNG fL^ TC HILLY AINOUS ROLLNG HILLY AUNOUS ROLLIN HILLY AINOUS
TRAFFIC LANES 2 2 2 14 I1+ 1+ 1+ I+ 1+ I I IDESIGN D Ess"mAI S0 60 40 60 40 30 s0 40 so so 30 25I itm/Hr I . .SPEED WurMu,A 50 40 30 40 30 30 '40 30 30 30 30 20GRADIENT ANIMUWA 6 a 10 a 10 12 I 10 12 9 12 14IUMITTINSI OfIDes 3 6 a 6 8 10 6 a to 7 10 12PAVEMENT OEIA"LK 5.5 5.5 5O 350 5-0 5 0 4-5 45 4-5 4-5 4-5 :4-5 -WIDTH I oum 4-5 4-5 4-5 35 35 3-5 3.5 3-5 3S5 3-0 3-0 3-0SHOULDER afIm. 2*0 1-5 1- 1-5 1.25 1-0 1-5 1-0 1-0 1.0 1-0 O-75WIDTH MIMIMU I .5 1 25 1-25 1-25 1.0 1-0 1-0 -C 1-0 0 75 0 75 0-75__-~ ~ ~~~~________
1 N s-ON 0-OM 6-oM 4-5MJUAW"STIANDN10OKOmML 7W -ON T-OM T-OM S-sm).501a TWItT SOE t^ WALKI mil 6- 0 60M 6 -O 4-SMITEMPORlARY BRIDGE I moMIMMI 3-G0M 3 -Om 3-CM 30OMBRDGIE D_IGN LOADO IMINIUMI 70%, D 70%BM TO%SM To0% am 50% Itmporar I
SOURCE: IC11 - Tecinical Cuidellnes for Engineering Survey an<l Design of Kabupaten Roads, December 1991
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ANNEX 10
INDONISIA
THIRD KABUPATBR ROADS DBVULOPHINT PROJECT
List of Equipment
Unit Price Quantity Total Cost/a(USS) (USS)
a) Roadwork EquipmentBulldozerf+URipper 120 HP 110,000 2 220,000Motor Grader + Ripper 110 Hf 76,000 11 836,000Wheel Loader 1.2 m 72,000 4 288,0003 Wheel Roller 10 TON 40,000 54 2,160,000Pedestrian Roller 250 KG 11,000 1 11,000Mechanical Plate Comp. 80 KG 2,100 27 56,700Water Pump 3-4" 2,100 7 14,700Concrete Mixer 125 Lit 1,600 1 1,600Stone Crusher 30 TPH 150,000 2 300,000Dump Trucks 5 T 35,000 3 105,000Pick Up 1 T 10,000 6 60,000Motor Cycle 125 CC 1,100 13 14,300Service Pick Up 1 T 11,000 3 33,000Generator 30 KVA 7,000 3 21,000Air Compressor 125 CFM 11,000 3 33,000Radio SSB 2,200 1 set 2,200Metal Str. Wound Bit. Hose 25 mm0 47/lm 2200 lm 103,400
Subtotal 4,259,900
Spare parts (15%) 623,475
Distribution Cost (8%) 390,625
Total Roadwork Equipment 5,274,000
b) Workshop Equipment 100,000
c) Training Equipment and Materials 740,000
d) Laboratory EquipmentDCP 600 65 39,000CBR Laboratory 2,750 2 5,500Compaction Set 750 2 1,500Drying Oven 3,200 6 19,200Sand Cone 300 67 2C,100Liquid Limit Test 275 91 25,025Plastic Limit Test 100 93 9,300Gradation 2,500 66 165,000Speedy Moisture 3,000 38 114,000Balance 20 kg x 1 2,500 5 12,500
2600 gr x 0.1 750 20 15,000200 gr x 0.01 875 23 20,125
Los Angeles 6,750 65 438,750Concrete Block Tester 15,000 38 570,000Slump Cone 650 2 1,300Organic Impurities 1,100 17 18,700Allowance for South Sumatra kab. 180,000
Total Laboratory Equipment 1,655,000
Grand Total 7,769,000
/a Costs are net of taxes.
INDONESIATH5RD KASUPATEN ROAD8 DEVELOPMENT PROJECT
Road Works ComponedDoeWged Cod Table
Rupkb
quantity Unit Cost Bass Costs
92J9a 90894 94/95 Total 92-90 92/90 98/90 94/95 Tote l
Road Workshop equipt Training tech. ----------- ----Cetesoiw et Exeenditur.works end labe program comipon't Devolopt. Total I Amount U Amount,,stWry of Engenitur,
Note: part of technical assistance (1) and training program (2) to be funded under proposed KRF! Oroject.
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ANNEX 13
INDONESIA
THIRD KABUPATEN ROADS DEVELOPMENT PROJECT
Estimated Disbursement Schedule /a(USS million)
IBRD fiscal year Cumulative Cumulativeand semester Disbursements disbursements percentage
1993
December 31, 1992 10 10 5
June 30, 1993 18 28 13
1994
December 31, 1993 29 57 26
June 30, 1994 35 92 43
1995
December 31, 1994 40 132 61
June 30, 1995 40 172 80
1996
December 31, 1995 30 202 94
June 30, 1996 13 215 100
/a Assumes loan effectiveness in September 1992. and use of retroactivefinancing.
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ANNEX 14Page 1
INDONESIA
THIRD KABUPATEN ROADS DEVELOPMENT PROJECT
Reporting Requirements
Various types of reports will be generated under the project to meet GOI'sreporting requirements and feed into its monitoring system:
- monthly reports produced by the Field Consultants for Implementation(FCIs), the Training Consultants, and the Central Technical Consultants(CTC), providing details on the project, the contracts, implementationprogress, and payments.
- quarterly reports prepared by the same consultants and giving, inaddition to a progress summary, an evaluation of problems encountered andproposed solutions.
2. The Bank's reporting requirements will be a subset of the aboveinformation, in the form of a quarterly package to be assembled by the ProjectImplementation Unit (PIU) and including: (i) the CTC quarterly report preparedin accordance with the sub-paras below, and (ii) the other quarterly reports asannexes to the CTC's one. This package should be sent to the Bank by the last dayof the month following the concerned quarter. The specific requirements are asfollows:
a) Each report should not only record progress in project implementation,but also identify emerging problems and suggest solutions to achieveproject objectives.
b) The CTC report should cover all aspects of project components. Itshould consolidate and summarize the FCIs and Training reports, andelaborate more on the other aspects: engineering, planning, environment,and special studies. The information should be given in such detail as topermit an assessment of the performance of each kabupaten.
c) The basic data for the project, contracts, implementation progress andpayments details are the same as the ones used for reporting on on-goingprojects, especially the Highway Sector Project.
d) The consolidation of the FCIs reports will be done easily if allconsultants are using the same formats. The PIU will define such formatswhich, once agreed, would become the norm. This will facilitate the timelyrelease of the periodic reports.
3. In addition to the above reporting requirements, a set of performanceindicators has been defined as follows:
- amount budgeted for maintenance annually, per kabupaten and per province;
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ANNEX 14Page 2
- amount budgeted annually for operation and maintenance of kabupatenequipment and workshops;
- date of release of annual budget allocations for maintenance;
- number of training packages developed;
- annual number of trainees, training sessions, and trainee daysunder the training program.
These indicators, together with the physical achievements compared to thetargets, will be monitored throughout project supervision to allow for a periodicassessment of project performance.
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ANNEX 15Page 1
INDONESIA
THIRD KABUPATEN ROADS DEVELOPMENT PROJECT
Supervision Plan
1. Bank Supervision Input into Key Activities.
a. The staff input indicated in the table below is in addition toregular supervision needs for the review of progress reports,procurement actions, correspondence, etc. (estimated for thisproject to require four staff weeks per year).
b. Each of the nine provinces should be visited at least once duringproject supervision and two or three selected provinces should bevisited twice. The geographic concentration of the provinces shouldhelp in this respect. However, supervision missions should focus ineach field visit on only a few kabupatens which would be deemedtypical because of their geographical characteristics and theirperformance, as shown by the progress reports.
C. Staff from the Resident Mission will be involved to a large extentin the supervision of this project, in particular in the random ex-post review of the large amount of LCB-procured civil workscontracts and SOE documentation.
d. Most of GOI's work for improving systems and procedures will becarried out in Jakarta, and will therefore be supervised there byBank missions.
2. Borrower's Contribution to Supervision.
a. A Project Launch Workshop was organized by GOI in A-ril 1992. Inrelation with the advance contracting authorized under this project,this Workshop was held early enough to coincide with detailedpreparation of the first year program.
b. Project coordination will be the responsibility of the ProjectSecretariat (PS). In particular the PS will be responsible forcoordinating arrangements for Bank supervision missions. The ProjectImplementation Unit will be responsible for providing informationrequired by missions.
c. Progress reports are to be submitted quarterly, and their contentshould meet the requirements set forth in Annez 14
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ANNEX 15Page 2
Bank Supervision Input into Key Activities
ApproximateDates Skill Sta-ff Input
(month/year) Activity Requirements s t a f f -weeks)
A. Preparation for advance contracting
11-12/91 Review of TOR and invitation package HE, TE ) 4package for FCI and CTC consultancies ENV, TR)
02-04/92 Review of standard bidding documents HE, TE ) 3Publication of General Procurement PR )NoticeReview of Award proposals forFCI and CTC
06-07/92 Review of first year works contracts HE, TE 2and briefing of consultants
B. After loan sianing
09-10/92 Supervision mission HE, TE 4(to review start-up of civil worksand consultancy services,implementation of organizationalarrangements, progress in planningand environmental studies for 1993/94program)
11-12/92 Assist in preparation of 1993/94 HE, TE ) 2program on the basis of experience ENV, TR)of 1992/93 program.
01-02/93 Supervision Nlssion HE, TE) 8(to discuss 1993/94 program proposals, ENV, TR)evaluation of performance of kabupatensin carrying out maintenance, environ-mental se!reening and EIAs, and inceptionreport of training consultants)
05-06/93 Supervlsiun Mission HE, TE 4(to review, inter alia, second yearworks contracts and progress in programof studies)
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ANNEX 15Page 3
09-10/93 Supervision Aission HE, TE) 8(mid-term PIR to review all aspects of ENV, TR)the project, especially performanceunder loan conditions, adequacy of projectorganizational arrangements, quality ofconsultancy services and impact of theproject on the performance of road agencies)
11-12/93 Assist in preparation of 1994/95 id. 2program
1994 Three Supervision Missions id. 16
1995 Three Supervision Missions id. 12
1996 Two Supervision Missions id. 8(including one to prepare PCR)
_.___________________
HE - Highway Engineering, TE - Transport Economics, ENV - Environment,TR - Training
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INDONESIA
THIRD KABUPATEN ROADS DEVELOPMENT PROJECT
Main Economic Features of Prolposed First Year Rehabilitation/Imorovement Works
Number of Length Cost /a EIRRsubprojects (km) Z (Rp mln) (Average)
La Standard economic planning cost, not the final engineering cost.
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ANNEX 17Page 1
INDONESIA
THIRD KABUPATEN ROADS DEVELOPMENT PROJECT
Selected Documents and Data Available in Project File
1. Institutional Aspects
(a) List of Activities, Products, and Responsible Agencies/Organizationsfor Kabupaten Road Upgrading Programs by Project Stages, GOI,February 1992.
(b) Laws and Regulations Relating to Rural Roads, Project ManagementUnit, IBRD Second Rural Roads Development Project, October 1991.
(c) Final Report on Kabupaten Roads Master Training Plan Training NeedsSample Survey and Analysis,-Project Management Unit, IBRD SecondRural Roads Development Project, October 1991.
.d) Kabupaten Roads Master Training Plan (KRMTP) 1992/93 - 1997/98,Project Management Unit, IBRD Second Rural Roads Development Project,November 1991.
2. PlanninalProgramming Aspects
(a) Technical Guidelines for Planning and Programming, Project ManagementUnit, IBRD Second Rural Roads Development Project, July 1989.
(b) Planning Activities Under IBRD Rural Roads II, Methodology, ProjectManagement Unit, IBRD Second Rural Roads Development Project, July1990.
(c) Guidelines for the Preparation of Kabupaten Road MaintenancePrograms, Project Management Unit, IBRD Second Rural RoadsDevelopment Project, November 1991.
(d) Short List (P3) 1992/93 Major WorksBase List (P1) 1992/93 Maintenance WorksProject Management Unit, IBRD Second Rural Roads Development Project,January 1992.
(e) Selected papers on expenditures needs on kabupaten roads:- KR3 Maintenance Options, February 1992- Planning Review and Audit Procedures, November 1991- Poverty Issues, February 92,Project Management Unit, IBRW Second Rural Roads Development Project
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ANNEX 17Page 2
3. Technical Aspects
(a) Technical guidelines for the preparation and implementation ofkabupaten road works and for the management of equipment,GOI, 1991 and 1992.
(b) Special Study of Contractor Performance, USAID Rural RoadsMaintenance System Project, December 1990.
4. Environmental Aspects
(a) Forest Land Use, Forest Use Zonation, and Deforestation in Indonesia,prepared for BAPEDAL by John Dick, EMDL Project, June 1991.
(b) Environmental Assessment for IBRD Third Kabupaten Roads DevelopmentProject, Project Management Unit, IBRD Second Rural Roads DevelopmentProject, November 1991.
(c) Selected papers on environmental issues including outline TORs forenvironmental impact assessment of kabupaten road works, prepared forIBRD by Douglas Martin, consultant, March 1992.
5. Terms of Reference
- Central Technical Consultants, December 1991- Field Consultants for Implementation. November 1991- Training Consultants, May 1992
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- 87 -
Chart 2
HUa1 d'~-
*~~~~~~~ - -
TH-IRD KAIBUPATEN ROADS DEVELPHERT PROJEcT
Qrganization of theProvincial Public Works Offices (DPUP)
RIVERS| BUILDINGS F ROADSROADS I IESBRIDGE.IEUIMNPROGRAMME £CONSTRUCTIOli HOSIGQUIPMLESTISWAMPS __UINGSUPLIEPROGRAMME MAINTENANCE 1 MAINTENANCEIFA TA OWOSHP
F _ ____ DESIGNDESIGN & ROAD
_ __ ~~~INVENTORY
tOUIRCE MINISTER OF "OME AFFAIRS INSTRUCTIONNo 14 OF 1986 DAtED 20 OCTOBER 1M86
INDONESIe
THIRD KAMUPATEN ROADS DKVELODI PRJ=U
Organization of theKabupaten Public Works Offices (DPUK)
HEAD aO DPUK
LEGAL FINANCE |ANAi
TOWN AND EOIQUPMENTROADZS SANITATION REONL
EL"GLATIOS PLANNIN AND lSUPPLIES
CONSTRUCTION StLDINGS WATER SUPPLY | P ANNINO l N
MAINTENANCE HOUSING oS.T REGIONA PN y O"oH
_ L~~~~~~~~~~NVIRONMENT .
DESIGN AND
INVENTORY SUPPLIES
SOURNCE MTER OF HOME AFFAIRS INSTRtXTIONNe. 14 ofM DATED 20 OCTORER 1986
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DISTRICT BOUNDARIES> _o > * *UAW IUM Ut / .E MALAts!Aj FROVINCE BOUNDARIES
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