AFRICAN DEVELOPMENT FUND

Transcription

1 AFRICAN DEVELOPMENT FUND PROJECT COMPLETION REPORT ALEMGENA-BUTAJIRA ROAD FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA TRANSPORT DIVISION, 2 INFRASTRUCTURE DEPARTMENT-NORTH, SOUTH & EAST REGIONS April 2007

2 EQUIVALENTS AND ABBREVIATIONS CURRENCY EQUIVALENTS Appraisal (August 1998) 1 UA = ETB PCR (April 2007) 1 UA = ETB WEIGHTS AND MEASURES 1.00 meter (m) = ft kilometre (km) = mile 1.00 square kilometre (km 2 ) = square mile (mi 2 ) 1.00 hectare (ha) = acres 1.00 kilogram (kg) = lbs. FISCAL YEAR : 7 th July 6 th July ABBREVIATIONS AADT = Annual Average Daily Traffic ADB = African Development Bank ADF = African Development Fund DFID = Department for International Development (U.K.) EIRR = Economic Internal Rate of Return ERA = Ethiopian Roads Authority EU = European Union GDP = Gross Domestic Product GOE = Government of Ethiopia (Federal Democratic Republic of Ethiopia) GTZ = Deutsche Gereuschraft fur Technische Zusammenarbeit (Germany) HDM = Highway Management and Development Tool ICB = International Competitive Bidding IDA = International Development Association (World Bank) IRI = International Roughness Index JICA = Japanese International Cooperation Agency LICB = Limited International Competitive Bidding LLCB = Limited Local Competitive Bidding NDF = Nordic Development Fund PCR = Project Completion Report RF = Road Fund RFA = Road Fund Administration RSDP = Road Sector Development Program ROW = Right-of-Way UA = Unit of Account VOC = Vehicle Operating Cost VPD = Vehicles per day

3 TABLE OF CONTENTS No. of Pages Project Matrix Basic Project Data Executive Summary i ii-iv v-vii 1. INTRODUCTION 1 2. PROJECT OBJECTIVE AND FORMULATION Project Objective Project Description Formulation, Evaluation and Approval 2 3. PROJECT EXECUTION Effectiveness and Start-up Project Design Modifications Implementation Schedule Reporting Procurement Financing Sources and Disbursement 5 4. PROJECT PERFORMANCE AND RESULTS Overall Assessment Operating Results Institutional Performance Management and Organizational Effectiveness Staff Recruitment, training and Development Performance of Consultants, Contractors and Borrowers Conditions/Covenants Economic Performance 9 5. SOCIAL AND ENVIRONMENTAL IMPACT AND REGIONAL INTRGRATION Social Impact Environmental Impact Regional Integration PROJECT SUSTAINABILITY 14

4 7. PERFORMANCE OF THE BORROWER AND BANK 15 (Continued) 8. OVERALL PERFORMANCE AND RATING CONCLUSIONS, LESSONS AND RECOMMENDATIONS Conclusions Lessons Learned Recommendations 17 This report has been prepared by Messrs L. Kiggundu, Transport Engineer and K.S.H. RAO, Consultant - Transport Economist, following their mission to Ethiopia from 9 th to 21 th April Any inquiries relating to this report may be referred to either the authors or to Mr. J. Rwamabuga, Division Manager, OINF.2 (Extension 2181).

5 LIST OF ANNEXES Annex No. of No. Titles Pages 1. Project Location Map 2 2. Summary Comparison of Appraisal and Actual Implementation Schedules 1 3. Economic Benefit-Cost Analysis 1 4. Performance Evaluation and Rating 4 5. Recommendations and Follow-up Matrix 1 6. Sources of Information 1

6 i ETHIOPIA ALEMGENA-BUTAJIRA ROAD UPGRADING PROJECT PROJECT COMPLECTION REPORT (PCR) Design Team: L.Kiggundu/K. S. H Rao Narrative Summary Verifiable Indicators Means of (NS) Appraisal (1998) PCR (2007) Verification 1. Sector Goal 1.1 To improve and expand the essential infrastructure with a view to support economic and social development programs. 2. Project Objectives 2.1 Reduce road maintenance and vehicle operating costs (VOC) on Alemgena-Butajira section and to promote regional integration between Ethiopia and Kenya. 3. Outputs 3.1 A two lane 120 km bitumen surfaced road with 7 m wide carriageway and two 1.5m shoulders from Alemgena to Butajira constructed. 4. Activities 4.1 Project Construction a) Pre-qualification of contractors b) Issue & receipt of tenders c) Evaluation, negotiation and award of contract d) Upgrading of Alemgena- Butajira Section (120 km) 4.2 Consultancy Services a) Approval of Terms of Reference (TOR) & shortlist b) Issue & receipt of Request for Proposal (RFP) c) Evaluation & approval d) Award of Consultancy services e) Commencement of services 1.1 Raise the level of road density from 21km/1000 km 2 to 27km/1000 km 2 by the year Roughness less than 3.5 IRI throughout the life of the project up to Reduced VOC by 34% in the year 2002 when the road is opened to traffic. 2.3 Maintenance costs on the road reduced by at least 50% over the life of the project. 2.4 Commercial traffic increase at 5% p.a. up to the year 2010 and 2.1% p.a. there after. Light traffic increases at 4% p.a. till 2010 and 2% p.a. thereafter km of bituminous road completed between Alemgena and Butajira in Inputs/resources 4.1 Inputs UA million a) Upgrading b) Supervision of works & audit 1.12 c) Contingencies Physical 1.90 Price 4.06 Total Resources a) ADF b) GOE 6.50 Total Road density in 2003/04 reached a level of 33.6 km/ 1000 km The current IRI of the project road is estimated at The VOC reduced by about 48% after opening of the road in April Recurrent maintenance cost reduced by 56% over the life of the project. 2.4 The current rate of growth is 8% p.a for commercial traffic and 6% p.a. for light traffic which is expected to continue for next 10 years. There after the rate of growth will stabilize around 5% and 4% p.a for commercial and light traffic respectively km of bituminous road completed between Alemgena and Butajira in April 2004, with a delay of about 28 months. Inputs/resources 4.1 Inputs UA million a) Upgrading b) Supervision of works & audit 1.09 Total Resources a) ADF b) GOE 4.50 Total Annual and construction statistics from Ethiopian Roads authority (ERA). 1.2 Traffic Statistics 2.1 Calculate VOC using HDM model. 2.2 Measure Roughness 2.3 Traffic Counts 2.4 Annual Budget of ERA 3.1 Quarterly Progress reports (QPRs) 3.2 Supervision Reports (SRs) 3.3 Project Completion Report (PCR) 3.4 Audit Reports 4.1 Appraisal estimates 4.2 QPRs 4.3 SRs 4.4 PCR 4.5 Audited accounts 4.6 Disbursement records Assumptions (Project Objective to Goal) 2.1 Appropriate level of competition will be maintained 2.2 Vehicle availability is sufficient to meet demand (Output to Project Objective) 3.1 ERA will maintain the road in accordance with the maintenance action plan after its completion. (Activity Output) 4.1 All procurement actions are on schedule to 4.2 Payments for invoices are not delayed 4.3 GOE s timely payment of counterpart local funds 4.4 Effective supervision by the Bank and consultant.

7 ii BASIC PROJECT DATA 1. Country : Ethiopia 2. Project : Alemgena-Butajira Road Upgrading 3. Loan Number : Borrower : Federal Democratic Republic of Ethiopia 5. Beneficiary : Federal Democratic Republic of Ethiopia 6. Executing Agency : Ethiopian Roads Authority A. ADF Loan Details Description Appraisal Actual 1. Loan Amount (UA million) Service Charge 0.75% per year on amount disbursed and outstanding. 3. Commitment Fee 0.50% per year on the un-disbursed portion commencing 120 days after signing of the loan agreement. 4. Repayment Period 40 years 5. Grace Period 10 years 6. Repayment 1% of the principal each year from the eleventh to twentieth year inclusive and 3% each year thereafter. 7.Loan Negotiation Date 4 6, May Loan Approval Date Loan Signature Date Date of Entry into Force B. Project Data 1. Project Cost Item of Cost Project Cost (in UA million) Appraisal Actual Foreign Exchange Component Local Cost Component Total Cost Source of Finance In UA Million Source of Finance Appraisal Actual F.E. L.C. Total % F.E. L.C. Total % ADF GOE Total

8 iii Appraisal Actual 3. Effective Date of First Disbursement: January Effective Date of Last Disbursement: Commencement of Project: July Completion of Project December C. Performance Indicators 1. Cost under-run : 10.6% 2. Time Overrun : 27 months * Slippage on Effectiveness : one year * Slippage on Completion Date : 28 months * Slippage on Last Disbursement : 30 months * Number of Extensions of Loan Validity Period : Two 3. Project Implementation Status : Completed 4. List of Verifiable Indicators and Levels of Achievement: Evaluation Criterion Score Maximum 1. Time Overruns 4 2. Cost Over-runs/Under-runs 4 3. Adherence to Contractual Conditions 4 4. Adequacy of Supervision and Reports 4 5. Operational Performance 4 Actual Total Score Average Score = 2.4 (Satisfactory) 5. Implementation Performance * Institutional Performance : Satisfactory * Consultants Performance : Satisfactory * Contractor s Performance : Satisfactory 6. Economic Internal Rate of Return (EIRR): Appraisal : 22.10% Actual (PCR) : 22.40% D. Missions Numbers of M/Y Project Cycle Persons Composition 1. Identification Person weeks 2. Appraisal 02/ T.E, T.En 4 3. Supervision 11/ T.E, T.En 2 06/ T.E, T.En 2 12/ T.E, T.En 2 06/ T.En 1 11/ T.E, T.En 2 04/ T.E, T.En 2 11/ T.E, T.En 2 06/ T.En 1 4.PCR 04/ T.E, T.En, T.Ec 5 T.E: Transport Economist, T. En: Transport Engineer, T.Ec : Transport Economist-Consultant

9 iv E. Bank Loan Disbursements (UA million) Year F. CONTRACTOR As at Appraisal Amount % Share Cum. (%) Actual Amount % Share Cum. (%) Total Loan Balance Cancelled UA 0.64 million Description Contractor Contract Description Construction Works for upgrading Alemgena-Butajira Road Name of the Firm China Roads and Bridges Corporation (China) Date Contract Signed Date Contract Terminated Contract Duration 1,161 days Amount ETB million G. CONSULTANTS Construction Supervision and Project Audit Name Intercontinental Consultants and Technocrats Pvt. Ltd A.A.Broamhead Co. (India) Contract Description Construction Supervision Project Audit Date Contract Signed Date Contract Terminated October 2005 Contract Duration 1,627 days (including 600 days defects liability period) Amount ETB million ETB million

10 v 1. INTRODUCTION EXECUTIVE SUMMARY 1.1 The Government of Ethiopia (GOE) formulated, with the support and wide consultation with development partners and stakeholders in 1997, a 10-year Road Sector Development Programme (RSDP) and implemented in two phases RSDP-I ( ) and RSDP-II ( ). The RSDP listed several roads and sector policy support options, which formed the basis for donor intervention in the programme. The upgrading of the Alemgena-Butajira Road was one of the high priority link roads identified by the GOE for financing by the Bank Group in the RSDP. The preparation activities for Alemgena-Butajira road were undertaken as part of Five Roads Feasibility Study financed through a Japanese Grant administered by the International Development Association (IDA). The final feasibility study (July 1997) and detailed engineering design (December 1997) formed the basis for the Bank s appraisal report. The project road was appraised in February 1998 and an ADF loan of UA 18.5 million was approved in June This PCR is based on the appraisal report, project files in the Bank, Borrower s progress reports, supervision consultant s Final Construction Report (FCR) and the Borrower s PCR, interviews and site inspection conducted during an ADB mission to Ethiopia in April Project Objective and Description 1.3 The transport sector goal was to support economic and social development programmes taking place in Ethiopia through the removal of transport bottlenecks and upgrading the road network. The objective of the project was to improve the road transport services in the project area by reducing road maintenance and vehicle operating costs and to promote regional integration between Ethiopia and Kenya. The project, as designed at appraisal, comprised i) Construction works for the upgrading of gravel surfaced road to bitumen standard with 7m wide carriageway with 1.5m shoulders on each side for a total length of 120 km between Alemgena and Butajira; and ii) Consultancy services for a) supervision of the construction works of (i) above b) project audit services. Project Execution and Implementation Schedule 1.4 The Ethiopian Roads Authority (ERA) was the Executing Agency for the project. A consulting firm provided supervision of civil works for the road upgrading. 1.5 The road upgrading works were completed 27 months after the appraisal schedule. The slippage was due to delay in procuring the supervision consultant and civil works contractor and design modifications during the construction phase. Project Costs and Financial Resources 1.6 The total project cost at appraisal was UA million including contingencies, net of taxes of which UA million was in foreign exchange. The actual cost of the completed project was UA million, which is 10.6% less than the appraisal estimate. 1.7 The project was jointly financed by ADF and GOE. The Bank was to contribute 100% of the foreign exchange cost (UA million) and the GOE was to contribute 100% (UA 6.50

11 vi million) of the local costs. Overall, the ADF was to contribute 74% and GOE 26% of the total project cost. At project completion, total disbursements under the ADF loan amounted to UA million, about 96.5% of the approved loan amount and GOE disbursed UA 4.50 million, which was about 70 % of the appraisal estimate. Overall Assessment 1.8 In spite of delays in project implementation, a well-designed 2-lane bitumen road between Alemgena and Butajira has facilitated significant reduction in vehicle operating cost and travel time and stimulated economic development in the project influence area. Economic Performance 1.9 The traffic projection at appraisal has been revised duly reflecting current (2005) traffic count of the ERA. The current traffic on the project road has exceeded the appraisal projection by about 12.5%. The recalculated EIRR of 22.4 % (Annex 5) is higher than the EIRR estimated at appraisal (22.1%). This EIRR of 22.4% confirms economic viability of the investment as compared to the opportunity cost of capital of 10%. 2. CONCLUSIONS, LESSONS AND RECOMMENDATIONS 2.1 Conclusions The overall objectives of the project have been achieved. The project has significantly reduced road transport costs (by about 48%) and travel time (by about 50%) on the Alemgena-Butajira road There was considerable delay (16months) during the procurement stage which was mainly due to the fact that Executing Agency was not well conversant with the Bank s procurement rules and procedures. This problem has been overcome through Bank s procurement workshops, easy access to information through the Bank s Country Office and ongoing T.A programs financed by the Bank and the World Bank. The improvement in this area is evident from the procurement activities in the subsequent Bank funded road sector projects The performance of the contractor, consultant and Borrower were satisfactory. The overall implementation of the project was found satisfactory with a rating of 2.4 out of a maximum of Inspection of the project road revealed that some sections exhibit raveling (loss of surfacing aggregates) leading to a poorer riding quality on these sections. There are also localized base, sub-base and surfacing failures resulting in the formation of potholes. There are high embankments without guardrails which pose a danger to motorists and pedestrians in case of accidents. The inspection further noted that the corrective measures currently employed to rectify the defects are not to the required specifications and therefore not effective There are adequate financial allocations to maintenance from the Road Fund budget for the sustainability of the project road and the only constraint is the capacity of the domestic construction industry to undertake road maintenance works.

12 vii 2.2 Lessons Learned Design modifications during project execution that increase the scope of works lead to implementation slippage. It is therefore necessary to identify all the project components at detail design stage to avoid slippage due to extension of the contract period and related additional costs (Para 3.4.2). The adopted design of a project assumes a maintenance regime for the road to serve its design life. It is important to ensure that the maintenance regimes assumed during the project appraisal are adhered to, to protect the investments, (Para 4.2.1). Sustainability of investments requires adequate capacity of local construction industry to undertake routine and periodic maintenance (Paras 6.3 and 6.4). 2.3 Recommendations It is recommended that: The Bank and the Borrower should take the necessary care to identify all project components and review the detail designs prior to appraising the project. This would minimize possible time/cost over-runs during construction phase. The Borrower should ensure that the maintenance strategies assumed during the appraisal are strictly followed for ensuring sustainability of the investment The Borrower should expedite the on-going programs and initiate new programs to enhance the capacity of the local construction industry to take up the routine and periodic maintenance works. The Borrower s staff should be encouraged to attend Bank s procurement workshops and interact with the professional staff of the country office for information and guidance. To assist the Borrower in the institutional capacity building efforts, the Bank should, in future projects, identify components for institutional capacity building.

13 1 1. INTRODUCTION 1.1 Ethiopia, a land-locked country, is located in the North-Eastern part of Africa and extends over a land area of 1.1 million sq. km. The country is bordered by Eritrea on the North, Sudan on the West, Kenya on the South and Somalia and Djibouti on the East. A significant part of the country is made up of high plateau and mountains. The mid-year 2005 population estimates place total population of Ethiopia at 73 million; with a growth rate of 2.5% per year. Of the total population, females constitute 49.9% and males 50.1%. The project road passes through Mirab Shewa zone of Oromiya Region and Gurage zone of Southern Nations and Nationalities and Peoples Region (SNNPR); with agriculture the mainstay of 88% rural population of the project area. 1.2 The transport system of Ethiopia comprises about 37,018 km of classified roads of which about 64% is in good condition; one railway line (780 km) connecting Addis Ababa with Djibouti; two international airports (Addis Ababa and Dire Dawa), 12 local airports & 38 air strips, river and lake transport of relatively little significance and marine shipping. Roads are the country s dominant mode of transport accounting for more than 95% of motorised freight tonnekm and passenger-km. At appraisal, the country had a total classified road network of about 26,500 km; of which only 20% was in fair/good condition. 1.3 As a result of inadequate maintenance over long periods, Ethiopia s road network had deteriorated to such an extent that, in 1996, about 80% of the classified roads were in poor condition; which in turn adversely affected agriculture activity by way of high transport costs, delayed evacuation and crop damage. To redress the situation, the Government of Ethiopia (GOE) formulated, with the support and wide consultation with development partners and stakeholders in 1997, a 10-year Road Sector Development Programme (RSDP) and implemented in two phases RSDP-I ( ) and RSDP-II ( ). The RSDP provides the key to transport development in Ethiopia, and listed several roads and sector policy support options, which formed the basis for donor intervention in the programme. The upgrading of the Alemgena-Butajira-Hossaina-Sodo Road Corridor was one of the high priority link roads identified by the GOE for financing by the Bank Group in the RSDP. For ease of implementation, the corridor was divided into sub-sections viz. Alemgena-Butajira (120.1 km), Butajira-Hossaina (95 km) and Hossaina-Sodo (94 km). The preparation activities for Alemgena-Butajira road were undertaken as part of Five Roads Feasibility Study financed through a Japanese Grant administered by International Development Association (IDA). The final feasibility study (July 1997) and detailed engineering design (December 1997) formed the basis for the Bank s appraisal report. The project road was appraised in February 1998 and an ADF loan of UA 18.5 million was approved in June From 1977, when the Bank started its transport sector operations in Ethiopia, the Bank has approved 15 operations for a total of UA million comprising 13 projects and 2 studies. Out of this portfolio, 9 projects and 2 studies have been successfully completed and one project terminated/cancelled. Currently three projects are under implementation. 1.6 This Project Completion Report (PCR) is based on the appraisal report, project files in the Bank, Borrower s progress reports and the Borrower s PCR, interviews and site inspection conducted during the Bank s mission to Ethiopia in April 2007.

14 2 2. PROJECT OBJECTIVES AND FORMULATION 2.1 Project Objectives The transport sector goal was to support economic and social development programmes taking place in Ethiopia through the removal of transport bottlenecks and upgrading the road network The objective of the project was to improve the road transport services in the project area by reducing road maintenance and vehicle operating costs and to promote regional integration between Ethiopia and Kenya. 2.2 Project Description The project at appraisal comprised the following components: i) Construction works for the upgrading of gravel surfaced road to bitumen standard with 7m wide carriageway with 1.5m shoulders on each side for a total length of 120 km between Alemgena and Butajira; and ii) Consultancy services for Supervision of the construction works of (i) above Project audit services 2.3 Formulation, Evaluation and Approval The project road was identified for upgrading under RSDP-I on the basis of preliminary feasibility study of five road corridors undertaken by the Ethiopian Roads Authority (ERA). The preliminary feasibility study was updated under funding from a Japanese Grant. The outcome of the final feasibility (July 1997) and detailed engineering design studies (December 1997) reconfirmed the high priority for inclusion of upgrading of the project road under RSDP-I Following GOE s formal request to the Bank for financing the upgrading of the project road under RSDP-I, a Bank mission consisting of a Transport Engineer and a Transport Economist visited Ethiopia in February 1998 to appraise the project. The loan conditions were negotiated and there were no issues of disagreement raised by the Bank or the Borrower concerning the project. The loan amount of: UA million was approved on 17 June 1998, and signed on 21 st July PROJECT EXECUTION 3.1. Effectiveness and Start-up The ADF loan for the project was approved on 17 th June 1998 and the loan agreement signed on 21 st July 1998 without entailing any delay. The loan was made effective on 10 th February 2000 with a slippage of about one year which was mainly due to the delay in fulfilling the loan condition prior to first disbursement i.e. to assign from Ethiopian Roads Authority a Civil Engineer, whose qualification and experience are acceptable to the African Development

15 3 Fund (ADF), to supervise and monitor the implementation of the project. This delay, however, did not affect the project implementation as the procurement process was concluded in October 2000; about 8 months after the loan was made effective. 3.2 Project Design Based on the detailed design studies, the pavement was designed for 3.0 million Equivalent Standard Axles (ESALs) for a design period of 20 years comprising a double bituminous seal surface with 19 mm and 9.5 mm aggregate on 150mm crushed stone base on 200mm natural gravel sub-base. Design speeds varied according to topography; 100 kph for flat terrain, 80 kph for rolling terrain and 50kph for mountainous terrain. It was envisaged in the initial design for the Awash Bridge to extend the sub-structure and only widen the existing decks of 7 spans to accommodate two lanes and to construct new full width decks for the remaining 4 spans. Extension works for minor drainage structures to accommodate a two-lane carriageway together with re-alignment on some sections was included in the initial contract. 3.3 Modifications During the construction phase, some modifications in bridge design, realignment of certain sections, adjustment of grade of the road and modification of culverts were made. These modifications entailed extension of the contract period and additional costs. The major modification was the complete replacement of the superstructure of Awash Bridge (91.5m long with 11 spans) as it was found to be in poor condition during the implementation of the project. Significant cracks were noticed in the spans proposed for widening and the design was modified to construct a new superstructure (2-lane deck) on the entire bridge length. The originally proposed centerlines and extension/ construction of culverts at some suggested locations were not found feasible/ practicable and such structures were revised and redesigned. 3.4 Implementation Schedule The Ethiopian Roads Authority (ERA) executed the upgrading works for the project road with assistance of the supervision consultant. The procurement process for the selection of the supervision consultant and civil works contractor was completed in September 2000, instead of December 1998 for consultancy services and May 1999 for civil works contractor, as planned at appraisal. The supervision consultancy contract was signed on 1 st September 2000 and civil works contract was signed on 25 th October This entailed a delay of 17 months Actual construction works commenced in November 2000, against July 1999 as planned at appraisal, resulting in a delay of 16months. The road upgrading works were targeted for completion by May 2003 (contract period of 30 months). However, due to the reasons listed below including the modifications/ variations to the original design (refer para 3.3 above), the civil works were substantially completed in April 2004, with a delay of 11 months: i) Delay in initial setting out due to lack of bench marks, ii) Though the works commenced in November 2000, the subsequent mobilization of the contractor consumed the entire dry season thereby delaying the permanent work till May 2001,

16 4 iii) Increase in Engineer s facilities, earthworks and disruption caused by obstructions/right-of-way problems, iv) Lack of knowledge of contractual matters by the Contractor s Site Management staff during the initial stages of the contract, v) Old equipment on site and lack of required coordinated procurement of spare parts, and vi) Exceptional weather conditions and rainy season of Thus, in all, the project implementation was delayed by 28 months comprising 17 months in the procurement stage and 11 months during actual construction phase. 3.5 Reporting Pursuant to the provisions of the General Conditions of the Loan Agreement on submission of reports, the ERA submitted Quarterly Progress Reports (QPRs) in Bank s format. Five annual audit reports were also submitted The Borrower s PCR submitted by the ERA followed the Bank s Operation s Manual Format for the Preparation of Borrower s PCR. The final audit report and Management Letter were submitted to the Bank. 3.6 Procurement Consultancy Services The consultant for supervision of road upgrading works was selected from a short-list of 7 consulting firms approved by the Bank in accordance with the Bank s Rules of Procedure for the Use of Consultants. The Request for Proposal (RFP) was issued to the 7 short-listed consultants on 7 th April 2000 and 5 firms submitted proposals. The Bank approved the recruitment process and the contract was awarded to the lowest evaluated bidder i.e. M/s. Intercontinental Consultants and Technocrats (ICT) of India on 1 st September Civil Works Contract The civil works contractor was procured through international competitive bidding (ICB) with pre-qualification in accordance with the Bank s Rules of Procurement. Tenders were issued on 21 st December Of the 6 pre-qualified firms, only five collected the bid documents and finally 3 firms submitted bids. Tenders were opened on 3 rd March The Bank approved the evaluation report prepared by the Executing Agency and the contract was awarded to the lowest evaluated bidder i.e. M/s. China Road and Bridge Corporation (CRBC) of China in October The contract was signed on 25 th October Audit Services As per appraisal, the consultant for audit services was to be procured through limited international competitive bidding (LICB). As the amount allocated for this service was not found attractive for LICB, the Bank, at the request of the GOE, approved limited local competitive bidding (LLCB) for this component. Based on this, following Bank s Rules of Procedure for the Use of Consultants, the Executing Agency awarded the contract, after obtaining due approval from the Bank, to M/s. A.A. Broamhead & co. on 12 th August 2003.

17 There were no disputes or complaints during the procurement process of the three components of the project. 3.7 Financial Sources and Disbursement Project Costs Total estimated project cost at appraisal was UA million including physical and price contingencies but net of taxes, of which UA million was in foreign exchange. The actual cost of the completed project was UA million, which is 10.6% less than the appraisal estimate. The cost under-run can be attributed to the competitive bids that were close to the Engineer s estimate and a reduction of 13.1% in quantities in the original BoQ. Table 3.1 presents a comparative picture of project costs at appraisal and at completion. Table 3.1: Summary - Appraisal versus Actual Costs (UA Million) Item Appraisal* Actual Actual Appraisal F.E. L.C. Total F.E. L.C. Total F.E. L.C. Total Civil Works Supervision Audit services Total Percentage Share Tax *Including physical and price contingencies Financial Resources The estimated and actual expenditures (in UA terms) by source of finance are presented in Table 3.2. Of the total estimated cost of the project (UA million) at appraisal, the ADF contribution was to be 74% (100% foreign exchange) and GOE 26% (100% local cost). At project completion, the share of ADF has increased to 79.9%. This is mainly because of the additional work attributable to design modifications during the project implementation that mainly entailed foreign exchange cost and is line with the provisions of civil works contract which required that 80% of contract amount to be paid in foreign currency. In spite of the increase in the relative share of ADF, the actual funding was within the provisions made at appraisal. Table 3.2: Financing Plan - Appraisal versus Actual (UA million) Source of Appraisal Actual Actual - Appraisal Finance F.E. L.C. Total % F.E. L.C. Total % F.E. L.C. Total ADF GOE Total Disbursement The loan funds were disbursed by direct method to the contractors and consultants. The slippage in the actual loan disbursement is broadly in line with the delay in project implementation. The loan amount, as per the appraisal schedule, was to be fully disbursed during But due to the delay in project implementation, the actual disbursement on the loan commenced in February 2001 and the last disbursement was in June 2005 instead of

18 6 December The loan balance of UA 0.64 million was cancelled. Table 3.3 presents a summary comparison between the appraisal and actual disbursement profiles of ADF funds. Table 3.3: Appraisal Versus. Actual Disbursement Profile (UA Million) Year As at Appraisal Actual Amount % Share Cum. (%) Amount % Share Cum. (%) Total Loan Balance Cancelled UA 0.64 million 4. PROJECT PERFORMANCE AND RESULTS 4.1 Overall Assessment The loan covenants /conditions were appropriate and valuable to the execution of the project. The success of the project itself is evidence that the loan conditions were sensible and no more additional conditions were necessary. The Government took a long time in fulfilling the loan conditions precedent to first disbursement. This, however, did not adversely effect implementation of the project, as the procurement process itself was not concluded by the time the loan conditions were fulfilled. Civil Works 4.2 Operating Results The road upgrading works were substantially completed in April 2004 and fully opened to traffic. The Bank s PCR mission visited the project road on 11 April 2007 and noted loss of surface aggregates (raveling) on some sections of the road which could be attributed to under application of the binder or inadequate compaction during the rolling in of the surfacing aggregates. These sections exhibit a poorer riding quality as compared to the remaining sections of the road. There are localized base, sub-base and surface failures and development of pot holes due to ingress of moisture into the pavement layers. Resealing of those sections with severe aggregate loss and pothole patching has not been carried out to good quality standards and therefore the measures have not been effective. There is need for close supervision of the maintenance works to ensure compliance with the required specifications of the corrective measures. It was also noted that at one of the drainage structures and on high embankments, guardrails were not provided to protect motorists and pedestrians in case of accidents. A few locations were noted that require warning road signs where reduction of speed is necessary due to changes in road environment at critical horizontal and vertical alignments. Although the Defects Liability Period expired in April 2005, GOE indicated that the contractor had undertaken to rectify the pavement defects at no extra cost to the client.

19 7 Traffic The Ethiopian Roads Authority conducts network wide 7-day classified traffic counts three times a year i.e. in February, July and November. Based on the three cycle traffic count data, ERA estimates annual average daily traffic (AADT) on different road sections of the national network. For the project road i.e. Alemgena-Butajira, the ERA traffic count data are available up to the year These AADT levels are presented in Table 4.1. Since the road was open to traffic in April 2004, the traffic levels have increased significantly. The AADT level which was 334 in 2003 (i.e. before upgrading) has touched a level of 424 in 2004 (first year of opening the road to traffic) and 520 in 2005; indicating an annual increase of about 25%. Further, the observed traffic level in 2005 has exceeded the appraisal traffic forecasts by about 12.5%.. Table 4.1: Traffic on Alemgena-Butajira Road (AADT Number of Vehicles per Day) Type of Before Upgrading After Upgrading Vehicle Car L/Rover S/Bus L/Bus S/Truck M/Truck H/Truck T & T Total Source: Ethiopian Roads Authority 4.3 Institutional Performance As indicated at appraisal, the ERA was responsible for execution of the road upgrading project. Project supervision and monitoring was the responsibility of the Deputy General Manager, Engineering and Regulatory Services Department of ERA. The Contract Administration Division of this Department was vested with the responsibility to implement the construction works. This division was well staffed and had adequate well qualified and experienced engineers for undertaking the job. A qualified and experienced engineer of the division was designated as Project Coordinator (PC) for the implementation of the project. The PC with the assistance of the supervision consultant was responsible for project implementation including all aspects of procurement and day-to-day supervision of the project There was substantial slippage in project implementation of 27 months, mainly delayed procurement (16 months) and additional time during construction (11 months) attributable to modifications in the original design and adverse weather conditions. In respect of procurement, the delay was attributable to i) long process in advertising GPN and SPN and pre-qualification of 6 contractors from out of 26 applicants (about 6 months) and ii) actual bidding, evaluation and contract award for civil works (about 11 months). Notwithstanding the delay, the project cost at completion was 10.6% less than the appraisal estimate and the quality of the completed road was satisfactory.

20 8 4.4 Management and Organizational Effectiveness ERA was designated as the executing agency at appraisal responsible for project implementation. The ERA, headed by a General Manager, has three departments namely, i) Engineering and Regulatory Services, ii) Operations and iii) Human Resources & Financial Management. A Deputy General Manager heads each of these three departments. While the broad structure of the ERA has remained the same, designations of some top management of ERA have changed. For example, the General Manager is now Director General and Deputy General Managers heading the three departments are now designated as Deputy Director Generals. Further, the Engineering and Regulatory Services Department has been reorganized into five divisions namely, a) Planning & Programming Division, b) Construction Contract Implementation Division, c) Network Management Division, d) Engineering Procurement, Design & Technical Services Division and e) District Engineering Divisions. Further, the Right-of-way (ROW) unit is now placed under Construction Contract Implementation Division to minimize delay relating to ROW issues and to fast track implementation of projects ERA is the apex body responsible for overall planning, construction, maintenance and management of the country s trunk road network and major link roads. The Board of Directors of ERA has the authority to approve the award of all contracts. The Rural Road Authorities (RRAs) of respective Regional Governments are vested with the responsibility for the construction and maintenance of rural/regional roads. The RRAs function as autonomous agencies under respective management boards. The ERA has a Rural Roads Technical Support Branch to provide the needed technical assistance and training support to RRAs Within the above organizational set up, the ERA is functioning effectively as is evident from the successful completion of a number of programs/ projects including Phase 1 ( ) and Phase 2 ( ) of the Road Sector Development Program (RSDP). At the time of the PCR mission, negotiations for Phase 3 of the RSDP were underway with the World Bank. However, problems like paucity of professionals and staff turn-over (refer para 4.5.1) sometimes cause slippages in project implementation. 4.5 Staff Recruitment, Training and Development During February 1998 (i.e. at appraisal), the ERA had 15,732 employees of which 4% were professionals. Women employees constituted 3.8% of the total; of which only 14% were professionals. Currently, ERA has about 13,000 employees comprising 5,545 permanent and the rest contract & seasonal staff. The reduction in the total staff strength of ERA as compared to 1998 level is mainly due to restructuring and establishment of District Road Maintenance Contractor Units (DRMCs). There are a number of vacant positions at engineer/ senior engineer levels. In spite of concerted efforts for filling these vacancies, ERA is finding it difficult to get qualified personnel. Another issue of concern is that the ERA is loosing professionals to private sector due to better packages ERA has two training institutes (one each at Alemgena and Ginchi) for undertaking on-the-job training programs for all levels of its professionals. In addition, for enhancing the institutional capability of Road Agencies advanced training courses in overseas institutions are also organized with funding from the ADF, World Bank, JICA, EU and DFID. The in-

21 9 house training activities of ERA are complemented through Technical Assistance (T.A.) under donor funding in the areas of transport economics, contract management, bridge engineering, etc. Further, programs are underway with funding from NDF, GTZ and Ireland for enhancing the institutional capacities of RRAs in the areas of transport planning, contract administration and capacity building. The on-going T.A. activities funded by the World Bank and ADF include extensive on-the-job training in ERA; short/long term overseas training to enhance ERA s capability in Human Resource Management, Contract Administration, Design Review, Project Planning and Procurement. 4.6 Performance of Consultants, Contractors and Executing Agency Consultants The quality of the supervision was generally good. Due attention was paid to procedure and to detail. A full complement of staff was maintained on site at all times to monitor the Contractor s site activities. These included a resident engineer, an assistant resident engineer, a senior pavement/materials engineer, a structural engineer, a highway engineer, a surveyor, a claims expert, inspectors of works and laboratory technicians. The inputs of the site personnel helped to produce a final product with the required specifications The consultant maintained a good working relationship with executing agency in the supervision of the project. Relations with the Contractor were strained at times due to delay in issuance of final detailed design drawings to achieve good progress. Contractor Overall the contractor s performance was satisfactory despite delay in mobilization, poor co-ordination of procurement of the required resources and high turn-over of site management personnel. Due to consciousness of meeting targets and production of good quality of work, the contractor took steps to improve his activities on site. Executing Agency(EA) The ERA was the executing agency for the project and dealt with all technical and management issues relating to the project and served as the contact for the Bank in terms of project related coordination The ERA maintained a close working relationship with the supervising consultant during the course of project implementation. Further, the ERA contributed to the project by assigning a qualified and experienced engineer, as coordinator of the project in accordance with the loan conditions precedent to the first disbursement. 4.7 Conditions/Covenants The GOE fulfilled all the conditions precedent to the entry into force of the Loan Agreement. However, there was a delay of about 12 months in fulfilling the loan conditions precedent to the first disbursement. This delay however did not affect the implementation schedule of the project.

22 Economic Performance Appraisal Expectations At appraisal, economic viability of the investment on upgrading the project road was assessed using a with and without project scenario approach. The assessment of economic viability was based on Economic Internal Rate of Return (EIRR). The vehicle operating costs (VOC) and various road maintenance interventions underlying the economic analysis were calculated using Highway Design and Maintenance model (HDM-III). The analysis was conducted using January 1998 prices, assuming a 3-year construction period ( ) followed by 12-month defects liability period. A 20-year analysis period ( ) was assumed. For the project road, the base year (1998) traffic level was 328 AADT comprising 18.2% light vehicles, 9.4% medium vehicles and 72.4% heavy vehicles. Based on the base year traffic levels, observed growth trends of population, Gross Domestic product (GDP), etc., the traffic projections were made for each year of the 20-year design period. The average annual growth rates adopted were: 4.5% for light vehicles and 3.6% for medium & heavy vehicles. The projected traffic was estimated to reach 385 AADT by 2002 (year of completion of upgrading) and 762 AADT by 2022 (last year of the design period) The project cost included capital cost (excluding price contingency and transfer payments) of upgrading works (UA million) and road maintenance (periodic and routine) cost. The benefits for the project consisted of saving in vehicle operating cost (VOC), travel time and road maintenance cost resulting from the improved surface condition. Based on the comparison of economic costs and user benefits under with and without project scenarios, Economic Internal Rate of Return (EIRR) for the project road was 22.1%. With this level of EIRR, the investment was considered economically viable. Recalculation of Economic Internal Rate of Return (EIRR) According to the latest traffic count data of ERA, the average annual daily traffic (AADT) on project road for 2005 was 520 AADT comprising 37% light vehicles, 21% medium and 42% heavy vehicles. The current traffic level has exceeded the expected traffic levels for the year 2005 as at appraisal (462 AADT) by about 12.5%, which is mainly due to developments in trade and industry in the project influence area (PIA) facilitated by the upgraded road. However, the share of heavy vehicle traffic is low now (42%) as compared to the appraisal estimate (72.4%). This factor has a negative impact on level of savings in VOC as compared to appraisal scenario Available traffic count data since the completion of the upgrading of the road has indicated an increasing trend, the average annual growth being about 25%. This is a very high growth rate and cannot be sustained over a long-term horizon of 20 years. An analysis of traffic growth on similar upgraded roads in Ethiopia has indicated an average annual growth of about 6% for light vehicle and 8% for heavy vehicle traffic. Based on Ethiopian experience, these growth rates are assumed up to 2015 beyond which the annual growth has been assumed to stabilise at 4% for light vehicles and 5% for heavy vehicles For recalculation of EIRR, the economic costs have been revised in the light of actual construction costs and economic benefits have been updated in line with the observed growth in traffic since the completion of the project roads. The economic analysis was carried out in July 2005 prices by converting the financial costs into economic terms. The actual cost of construction at completion net of taxes and duties but including the real increase in construction

23 11 cost was UA million. The actual economic cost of construction and supervision, and likely road maintenance costs (based on the appropriate maintenance intervention strategies) as well as the benefits emanating from the revised traffic forecasts (in terms of savings in VOC and travel time) formed the basis for reworking the EIRR. The HDM-IV model has been used to calculate VOC and EIRR Based on the above, the revised EIRR for the project road which works out to 22.4%, confirms the economic viability of the completed project (Annex 3). The revised EIRR is slightly higher than the appraisal EIRR (22.1%). The revised EIRR would have been much higher than the appraisal EIRR but for the lower share of heavy vehicle traffic currently on the road vis-à-vis the appraisal forecasts (42% versus 72.4%) and higher economic cost of upgrading (UA million at completion versus UA million at appraisal). If allowance were made for these two factors, the revised EIRR would be 28%. 5. SOCIAL AND ENVIRONMENTAL IMPACT 5.1 Social Impact The current travel time from Alemgena to Butajira has reduced by about 2.5 hours i.e. about 50% reduction in travel time. The weighted average vehicle operating cost per vehicle km (v km) during 2005 (for a traffic level of 520 AADT) reduced from ETB (without upgrading) to ETB (with upgrading) i.e. reduction of ETB per v km - about 48% reduction in VOC. With the assumed periodic and routine maintenance activities, this level of reduction, on the average, will be sustained till the end of the useful life of the project The direct positive impact of reduction in VOC is that the frequency of public transport has increased significantly. For example, as per ERA traffic data, during 2000 (i.e. prior to the upgrading) only 7 small bus and 63 large bus trips per day were observed on the project road. This frequency has increased to 95 trips per day for small buses and 88 trips per day for large buses in 2005 i.e. one year after opening of the upgraded road to traffic. This fact was confirmed by the project beneficiaries. Further, the transport operators have passed on the benefits of reduction in VOC to the passenger in terms of reduction in real tariffs. In this context it may be mentioned that in the project road corridor the road transport tariffs on paved roads are about 10-20% less as compared to the ones on gravel roads as brought out in Table 5.1. Table 5.1: Comparative Tariffs on Paved and Gravel Roads in Ethiopia Type of Service Road Type Reduction on Paved Roads Paved Gravel ETB % 1. Passenger (Ethiopian Birr/Passenger Km) 1.1 Inter-urban Large Bus % 1.2 Small Bus % 2. Freight (Ethiopian Birr/Tonne km) 2.1 Liquid Cargo % 2.2 Dry Cargo % 2.3 Small Truck % Source: Base Line Survey and Monitoring Indicators for Poverty Impact Evaluation, Final Report (April 2005) The upgraded road has also facilitated easy and cost effective access to markets. This has increased the awareness of farmers regarding market trends and enhanced their

24 12 bargaining power. The farmers have now formed associations and are able to command better prices for their produce in major markets like Addis Ababa, Nazareth and Ziway. For instance, as indicated by the Agricultural and Rural Development Bureau of Meskan Woreda, in Butajira area the current farm gate prices are: Birr 280/qtl for wheat, Birr 500/qtl for teff, Birr 260/qtl for maize and Birr 500/qtl for beans. The corresponding farm gate prices before upgrading of the road were: Birr 80/qtl (wheat), Birr 200/qtl (teff), Birr 50/qtl (maize) and Birr 180/qtl (beans). The increased farm gate prices, easy access to extension services, seeds, fertilizers, etc. are also contributing to the increase in production levels The improved road has a major catalytic role in the socio-economic development of its influence area. A number of new developments e.g. horticulture farms, industries (food processing, textiles, corrugated iron sheets, etc.), hotels, shopping centers are visible along the road corridor. As a result, the number of skilled work force that is attracted to the areas within the road corridor is increasing. Further, according to Butajira Municipal Administration, about 26 private investors have taken land on lease and are planning to set up industries, private schools and colleges, health centers, clinics, pharmacies, petrol stations, etc. The upgraded road has also contributed to considerable increase in small/petty trade along the road which is essentially managed by the rural poor/women. This activity has created additional employment for the rural poor During construction phase, about 100,000 skilled and unskilled person-days of employment per year was generated. Women workers constituted about 24% of the total work force. On the average, about ETB 300 per person were paid monthly as wages to labour. In addition, routine maintenance activities for the upgraded road is likely to generate about 120,000 unskilled person-days of employment; of which share of women will be about 20% The national policy of Ethiopia on HIV/AIDS emphasizes the participation of government agencies as well as non-governmental organizations (NGOs) and the community at large to assume responsibility to carry out HIV/AIDS prevention and control campaign. Realizing the magnitude of the problem and in response to the national policy, the ERA, as part of World Bank funded RSDP, has taken initiatives to address the HIV/AIDS challenges in the road sector in Ethiopia. The Environmental Monitoring & Safety Branch (ESMB) of ERA is responsible for guidance, supervision and coordination HIV/AIDS prevention activities. In addition, the contractor, as part of the civil works contract, regularly undertook the HIV/AIDS awareness program that included the distribution of pamphlets to the work force and lecture talks by the local doctors to which road side communities were also invited. Further, a clinic was established and operated in the construction camp and proper sanitary conditions were maintained at the living quarters for the labourers Notwithstanding the significant positive benefits of the upgraded road, the project beneficiaries along the road corridor with whom the mission interacted during the site visit have expressed concern about the increasing number of road accidents mainly due to speeding. The GOE is putting in place various strategies and programs, as part of the National Road Safety Activities under the aegis of National Road Safety Committee (NRSC).These strategies and programs include a) strengthening legal provisions relevant to traffic safety, b) implement stringent drivers training, testing and licensing procedures, c) implement defensive driver training for professional drivers, d) strengthen road safety responsibilities in transport associations and organizations, e) control unsafe usage of freight vehicles for passenger transport, g) pedestrian awareness creation programs and g) traffic

25 13 safety education for children. In this context it may be mentioned that pilot programs implemented in Eastern Shewa Zone within the above strategy framework have shown very encouraging results in as much as the total accidents in the zone in September 2006 have decreased by about 40%, fatality by 48%, serious injury by 54%, light injury by 56% and property damage by 34% as compared to September Environmental Impact The project road is not situated in or close to environmentally sensitive areas. Since the project entailed upgrading of the existing gravel road to paved standard, the Environmental Impact Assessment (EIA) undertaken as part of the feasibility study concluded that the environmental impacts due to the upgrading would be minimal and only of temporary nature. As such these can be easily controlled to acceptable levels by appropriate mitigation measures and good construction practices During the site visit, the mission noted that the contractor had fully reinstated all borrow areas and detours to their original state and to the satisfaction of the executing agency and local communities. Some stretches of detours in villages and towns (e.g. Awash, Lemon, Suten, Bui, etc) were left to serve as village roads at the request of local administrations. The project camp site 1 (Melka Kunture) was handed over to local administration for opening a new primary school The road upgrading has brought with it a number of positive environmental impacts (benefits) such as i) reduction in dust, ii) improved surface water drainage, iii) improved drainage system, iv) control of vegetation growth under culverts/ bridges and v) reinforcement of structures The Government of Ethiopia paid a total of ETB 9.97 million to people whose properties were affected by the project on account of ROW related issues mentioned at item vi) of para Regional Integration The upgraded road forms an alternative route to Kenya through Sodo leading to Cairo-Gaborone Trans-African Highway (TAH). The road from Butajira to Sodo is being upgraded to bitumen standard. When the road from Sodo to Kenya Border (Moyale) is upgraded to bitumen standard, the project road corridor can serve in the long-term as an alternative transit route to Kenya with potential to promote regional integration ultimately resulting in enhanced social, cultural and economic development activities between Ethiopia and Kenya. 6. PROJECT SUSTAINABILITY 6.1 Full benefits of investment on the road upgrading will be realized only if the asset is preserved in a good serviceable condition through out the design life of the project. This requires carrying out routine and periodic maintenance on time as per the specified standards. Needless to say, such regular maintenance activities require steady and secured financing. Recognizing the crucial role of maintenance in preserving the assets, as agreed during the RSDP donor meeting (1996), GOE established the Road Fund (RF) in March The objectives of RF are to finance maintenance works of the Road Agencies and to provide

26 14 sources of fund for road safety measures and programs. The RF is overseen by the Road Fund Board (RFB), an autonomous public authority, and comprises representatives of Federal Government (4), Regional States & Municipalities (6) and private transport sector stakeholders (4). 6.2 The RF revenues comprise levy on fuel consumption, vehicle license fees, overloading fines and central government budgetary allocation. To widen the revenue base other prospective road tariffs can be fixed as necessary. The RF revenue, allocations and actual transfers to different road agencies during the period 2000/01 to are presented in Table 6.1. Fiscal Year Table 6.1: Road Fund Regular Budget Allocation and Actual Transfers (ETB Million) Road Fund Revenue ERA Budget Allocation RRA Municipalities Total Actual Transfer 2000/ / / / / Source: Road Fund Administration 6.3 The RF follows the broad budget allocation pattern of 70% to Federal Roads (ERA), 20% to Regional Roads and 10% to selected municipalities. During the 5-year period (2000/ /05), the RF budget allocations were about 60% to Federal Road Network (ERA), 20% to Regional Roads and 10% to selected municipalities, on the average. According to Table 6.1, the collected RF revenues are in excess of the allocations/actual transfers made to different road agencies indicating that the current maintenance program is constrained by the existing capacity of the domestic construction industry. 6.4 The GOE has already initiated some policy measures and programs for encouraging and enhancing the capacity of local construction industry. A 5-year District Maintenance Organization (DMO) Capacity Building Project was launched in 2001 to strengthen maintenance. To achieve the objectives, the DMOs have been split into District Engineering Divisions (DED) and District Road Maintenance Contractors (DRMC); the DEDs responsible for the management function of determining the local maintenance priorities and monitoring performance of DRMCs. The purpose of the split is to transform and equip DRMCs to undertake cost effective road maintenance and prepare them eventually to compete with the private sector on equal commercial terms. As a result, the DEDs are now contracting out maintenance work to the DRMCs and are preparing pay certificates. The DRMCs have their own accounts and payroll and are responsible for their own staff recruitment. It is also planned that equipment and facilities will be leased on a full replacement basis to DRMCs. The GOE has reconfirmed its commitment for achieving the commercial entity stage by the DRMCs by introduction of term maintenance contracts for a period of 2-3 years on limited sections of the road network; participation in routine maintenance with planned scaling up in the coming years along with private domestic contractors. The GOE is currently awarding

27 15 about 40% of the periodic road maintenance works to private sector and this share is expected to increase progressively to 100%. 6.5 As a result of the DMO project, the road maintenance capacity has increased significantly, though still not adequate. Prior to DMO project, the entire maintenance work used to be handled by ERA s Force Account Unit which did not have the required capacity. Now with the restructuring of ERA s Force Account Unit into DED and DRMC and injection of additional capacity in the local private sector construction industry, there is a quantum increase in the available domestic road maintenance capacity. 6.6 To ensure that the future road maintenance works will be taken up as per schedule, the GOE has prepared a Maintenance Action Plan (MAP-4) for the period 2004/ /10. As per the MAP-4, the size of the maintainable part of road network is estimated at 65%. Table 6.2 gives the total maintenance need for the network in maintainable condition and RF revenues for next three years of MAP-4. The figures set out in Table 6.2 indicate that adequate funding availability for ensuring the sustainability of the road network. Table 6.2: Road Maintenance Need and Road Fund Revenue (ETB Million) Year Maintenance Need Road Fund Federal Regional Municipalities Total Revenue Total Source: Road Fund Administration 6.7 The sustainability of the project road is ensured by the DED of the Alemgena Maintenance District. The DED has contracted out maintenance work of the project road to DRMC and supervising the works and instructing the DRMC regarding the remedial measures where the maintenance works were not meeting the specified standard. Further, the contractor (M/s CRBC) that carried out upgrading works has committed to carry out the necessary remedial works, as per the time schedule to be submitted to ERA. 7. PERFORMANCE OF THE BORROWER AND THE BANK 7.1 The upgrading of the project has reduced road transport costs over the project corridor and also stimulated economic development. Throughout project implementation, the Borrower ensured timely availability of the required counterpart funds. The present condition of the road is overall satisfactory with the exception of some sections that exhibit loss of surfacing aggregates resulting in a poorer riding quality on these sections plus localized potholes due to base, sub-base and surfacing failures. 7.2 During project implementation, the Bank supervised the project through 8 field missions in which technical and disbursement issues were discussed and problems resolved. The Bank responded within reasonable time to the problems arising from project execution. Overall the performance of the Borrower and the Bank was satisfactory. The rating for the Bank's performance is 2.67 out of a maximum of 4 indicating satisfactory level of performance.

28 16 8. OVERALL PERFORMANCE AND RATING 8.1 Project completion was delayed by some 27 months when compared to Appraisal forecast. This delay in completion was due to a number of reasons outlined in Section In accordance with the implementation performance indicators (Annex 4), the overall assessment of implementation performance and project outcome are satisfactory with a rating of 2.4 and 2.76 respectively out of a maximum of 4. 9 CONCLUSIONS, LESSONS AND RECOMMENDATIONS 9.1 Conclusions The overall objectives of the project have been achieved. The project has significantly reduced road transport costs (by about 48%) and travel time (by about 50%) on the Alemgena-Butajira road There was considerable delay (16months) during the procurement stage which was mainly due to the fact that Executing Agency was not well conversant with the Bank s procurement rules and procedures. This problem has been overcome through Bank s procurement workshops, easy access to information through the Bank s Country Office and ongoing T.A programs financed by the Bank and the World Bank. The improvement in this area is evident from the procurement activities in the subsequent Bank funded road sector projects Delayed mobilization of the contractor and design modifications during construction phase resulted in 11 month slippage in project completion The performance of the contractor, consultant and Borrower were satisfactory. The overall implementation of the project was found satisfactory with a rating of 2.4 out of a maximum of Inspection of the project road revealed that some sections exhibit raveling (loss of surfacing aggregates) leading to a poorer riding quality on these sections. There are also localized base, sub-base and surfacing failures resulting in the formation of potholes. There are high embankments without guardrails which pose a danger to motorists and pedestrians in case of accidents. The inspection further noted that the corrective measures currently employed to rectify the defects are not to the required specifications and therefore not effective There are adequate financial allocations to maintenance from the Road Fund budget for the sustainability of the project road and the only constraint is the capacity of the domestic construction industry to undertake road maintenance works. 9.2 Lessons Learned Design modifications during project execution increase the scope of works and lead to implementation slippage. It is therefore necessary to identify all the project components at detail design stage to avoid slippage due to extension of the contract period and related additional costs (Para 3.4.2).

29 17 The adopted design of a project assumes a maintenance regime for the road to serve its design life. It is important to ensure that the maintenance regimes assumed during the project appraisal are adhered to, to protect the investments, (Para 4.2.1). Sustainability of investments requires adequate capacity of local construction industry to undertake routine and periodic maintenance (Paras 6.3 and 6.4). 9.3 Recommendations It is recommended that: The Bank and the Borrower should take the necessary care to identify all project components and review the detail designs prior to appraising the project. This would minimize possible time/cost over-runs during construction phase. The Borrower should ensure that the maintenance strategies assumed during the appraisal are strictly followed for ensuring sustainability of the investment. The Borrower should expedite the on-going programs and initiate new programs to enhance the capacity of the local construction industry to take up the routine and periodic maintenance works. The Borrower s staff should be encouraged to attend Bank s procurement workshops and interact with the professional staff of the country office for information and guidance. To assist the Borrower in the institutional capacity building efforts, the Bank should, in future projects, identify components for institutional capacity building. A matrix of recommendations is presented in Annex 5.

30 ALEMGENA-BUTAJIRA ROAD UPGRADING PROJECT: PROJ ECT COM PLETION REPORT PROJECT LOCATION MAP Annex 1 (Page 1 of 2) This map was provided by the African Development Bank exclusively for the use of the readers of the report to which it is attached. The names used and the borders shown do not imply on the part of the Bank and its members any judgment concerning the legal status of a territory nor any approval or acceptance of these borders.

31 Annex 1 (Page 2 of 2) ALEMGENA-BUTAJIRA ROAD UPGRADING PROJECT: PROJ ECT COM PLETION REPORT PROJECT LOCATION MAP This map was provided by the African Development Bank exclusively for the use of the readers of the report to which it is attached. The names used and the borders shown do not imply on the part of the Bank and its members any judgment concerning the legal status of a territory nor any approval or acceptance of these borders.